Lords Sitting of 19 July 1976

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.

HYDROCARBON EXPLORATION LICENCES
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they propose to offer further licences for exploration for hydrocarbons in the British sector of the Continental Shelf.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett): My Lords, arrangements proposed by the Government for the Fifth Round were set out in a Consultative Document published on 27th May. As a result of the ensuing consultation with interested parties, my right honourable friend the Secretary of State for Energy plans to invite applications soon, and to begin granting licences at around the end of the year.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that reply, may I ask him whether the Government have been able to modify the blackmailing position set out in the Document to which he referred, and whether they have come any nearer to the views of the industry with regard to public sector participation?
Lord MELCHETT: My Lords, as the noble Earl knows, we believe that the proposals represent a fair reward to oil companies and a fair return to the State, and I do not believe that the consultations, useful as they have been, will make us alter that view.
The Earl of LAUDERDALE: My Lords, could the noble Lord say whether
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all the Offshore Operators' Association members have accepted the principles set out in the Document?
Lord MELCHETT: My Lords, my right honourable friend will soon no doubt be announcing the results of consultation; but, as the consultations are at the moment continuing, I do not think the noble Earl would expect me to make a statement about them.
The Earl of LAUDERDALE: My Lords, would the noble Lord bear in mind that the Third Round, which required public participation as a ground for preference in dealing with licensing applications, was indeed the greatest flop?
Lord MELCHETT: My Lords, I am sure that the experience of that Round has been borne in mind in the arrangements for this Round, which I do not believe will be a flop.
Lord PAGET of NORTHAMPTON: My Lords, is the noble Lord aware that the Government are much to be congratulated on having recovered from the oil companies most of the swag which was presented to them by the Conservative Party?
Lord MELCHETT: My Lords, I am grateful for the noble Lord's usual kind and considerate view of the Government's policy.
Lord CAMPBELL of CROY: My Lords, is it the intention of the Government, as appears to be indicated in the Consultative Document, that companies who agree to a 51 per cent. participation will get priority over other companies?
Lord MELCHETT: My Lords, the full participation agreements will, of course, take some time to work out, as the noble Lord will appreciate; but it would be difficult for the Government to award licences to any company with an interest in an existing oilfield which was not in serious discussion with the Government about participation. However, I think it is true to say that almost all, if not all, of the companies are in serious discussion with the Government about participation.
The Earl of LAUDERDALE: My Lords, could the noble Lord help us in this further way? Would he agree that one of the difficulties confronting the Government at the present time is a slump in investment confidence in the offshore, and that that in turn is due to the Government's behaviour in going back on the ground rules affecting previous licences and their penal taxation exactions?
Lord MELCHETT: No, my Lords; I would not agree with what the noble Earl says, and I suggest that it might be wise to wait until we see how the oil companies respond to this Fifth Round of licences before we make such sweeping generalisations about the position.
Lord SLATER: My Lords, is the noble Lord aware that it would be very wise for this House and the other place to take particular note of what my noble friend has said in the course of his replies to the five questions asked about this matter by the noble Earl, Lord Lauderdale? In the course of the noble Earl's questions to my noble friend, I hope my noble friend took particular note of one word the noble Earl used; that is, when he talked about "blackmail". In the course of consultations, surely to goodness we do not enter such an avenue when we seek to discuss and arrive at an agreement with these people.
Lord MELCHETT: My Lords, as my noble friend knows, there are occasions when the noble Earl uses language which I think it is wise to take with a pinch of salt.

HONG KONG: CHILD LABOUR
2.42 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action is being taken by the Hong Kong Labour Department to combat the increase in child labour, and whether an investigation is being made into the allegation of Triad Society involvement in the recruitment of such labour.
The MINISTER of STATE (FOREIGN and COMMONWEALTH OFFICE] Lord Goronwy-Roberts): My Lords, the Hong Kong Labour Department is carrying out a progressively increasing number of inspections of factories in order to detect whether there is illegal employment of child labour and to bring offending employers before the courts. Over 120,000 such visits were carried out in 1975, as compared with about 76,000 in 1973. The Royal Hong Kong Police have not received any complaints that organised Triad societies are involved in recruiting child labour.
Lord BROCKWAY: My Lords, I thank the Minister for that reply. Is it not the case that this year there has been a great shortage of labour in Hong Kong and, as a result of that, increasing illegal employment of child labour? Is he aware that the Director of Education states that 68,000 children between 10 and 14 years of age are not at school because their parents cannot afford the school costs? Has he seen the report of the students of the Hong Kong Baptist College, which includes the fact that in the industrial area of Shamshaipo 8 out of 10 factories are now employing child labour? Is he satisfied that 70 inspectors are sufficient to deal with this problem?
Lord GORONWY-ROBERTS: My Lords, as to the shortage of labour, as Hong Kong is virtually extricating itself from a very marked economic recession no doubt there is a new call for labour. I would not for a minute say that at this stage it is creating a new problem of child employment. As to the figure of 68,000 children between the ages of 10 and 14 who are not at school, I should like to tell the House that the Hong Kong Government has plans to provide, by September 1978, schooling for all up to the age of 14. It has been demonstrated to me that these plans are realistic and will be pressed forward with all due expediency. The report to which my noble friend refers, if it is the one to which my attention has been drawn, was based on a survey conducted in 10 factories out of a total of 35,500 factories in the Colony. I suggest that a survey based on such a minuscule area is not totally dependable.
Lord BROCKWAY: My Lords, referring to the second point that the Minister

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made in his reply, regarding the activity of the Triad organisations, may I ask whether he is aware that children are recruited in Hong Kong by these middlemen and taken to the factories, led by what is known as a "Pied Piper"? Is he aware that for supplying the children these middlemen organisations take commissions from the children's wages? Will he get in touch with the headmaster of the Baptist College in order to secure further facts about this problem?
Lord GORONWY-ROBERTS: My Lords, certainly. I based my reply on the information available to me from the Royal Hong Kong Police, who say they have not received any complaints that organised Triad societies are involved in recruiting child labour. Of course I shall look at any evidence to the contrary which my noble friend can put before me, including what he has received from this Baptist College.
Lord GEORGE-BROWN: My Lords, just to put forward the other side of the story, would the Minister agree that the Hong Kong Government now reports to a Governor of tremendous sensitivity and great belief in the improvements that should be made, and who has in fact made enormous improvements? Instead of shooting at him should we not pay to him and those who report to him a certain respect and regard for what he has been able to do in a short period of years?
Lord GORONWY-ROBERTS: My Lords, I warmly agree, especially as this comes from a quarter of authority and experience such as that of the noble Lord. I am sure that Sir Murray MacLehose's record of dedicated service in this very difficult area needs to be commended, and to be commended frequently, especially when it is so easy to condemn the situation in Hong Kong which nevertheless shows tremendous advances in the last three or four years on what was there previously.
Baroness VICKERS: My Lords, in view of the fact, which I accept, that for several years it is not possible to undertake education, may I ask the noble Lord whether it is not better for these young people to be employed in some form rather than being on the streets?
Lord GORONWY-ROBERTS: My Lords, while one does not for a moment take a complacent view of child employment in this or any other country, there is something in what the noble Baroness says. The Chinese family organisation which coincides so often with industrial and productive activity, very often lends itself to a benevolent form of juvenile employment that we, in a country like this, would not find tolerable. I hope that I am not putting this too high, and that what I have said will not be misunderstood. At the same time, the Hong Kong Government, as the noble Lord, Lord George-Brown, reminded us, has ensured that in a number of specified industries there is a ban on the employment of young people below the age of 14, and the figures I have given, and indeed other figures I have provided in Written Answers to my noble friend, show that they are earnestly following up those regulations.
Lord BROCKWAY: My Lords, is my noble friend aware that many of these children are paid scandalously low wages, which are skimmed off by the middlemen recruiters, and that they are compelled to work more than 12 hours a day for those wretched wages?
Lord GORONWY- ROBERTS: My Lords, if they are compelled to work 12 hours a day, then those concerned are in default of very clear regulations and are subject to the inspections which, as I have tried to show, are being very rigorously pursued. As to the level of wages, Hong Kong is not the best or the worst when compared with cognate countries in that area. It is our firm intention, and certainly that of the Governor to whom reference has been made, that the substantial progress that has already been attained shall be pressed forward with redoubled energy in the next few years.

BERMUDA AIR AGREEMENT
2.51 p.m.
Earl AMHERST: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have any information to

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give the House on the negotiation of a new Air Agreement to replace the present Bermunda Air Agreement which is to be abrogated early in 1977.
Lord ORAM: My Lords, the Government reached the conclusion that the time had come to replace the Bermuda Agreement with a new agreement more appropriate to the conditions prevailing in the 1970s. Under the Bermuda Agreement, the United States has been deriving far greater benefits than we have. In addition, a number of improvements to make it function more efficiently were manifestly required. We shall work constructively with the United States authorities in order to secure the establishment of a more equitable and rational agreement to succeed the present one after 21st June 1977.
Earl AMHERST: My Lords, while thanking the noble Lord for that Answer, may I ask whether he can now tell us who will be leading our negotiating team? Can he assure us that that team will also comprise representatives of the British airlines as technical advisers?
Lord ORAM: My Lords, it is too early to give that information to the noble Earl, but I can tell him that a team has been in Washington this last week making preliminary arrangements and that there has been a very satisfactory meeting there. A series of meetings is scheduled for September to study the issues involved.
The Earl of LAUDERDALE: My Lords, may I ask the noble Lord to say whether the Government expect any serious progress in these negotiations to be made before the new President is inaugurated next year?
Lord ORAM: I would certainly hope so, my Lords. I understand that last week the atmosphere was such that the Americans are as anxious as we are to press ahead to an early conclusion.
Lord BALFOUR of INCHRYE: My Lords, in view of the very great importance to our nation of any new agreement, may I ask the noble Lord whether the Government would consider laying a White
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Paper of the proposals for any new agreement before finality and signature comes about?
Lord ORAM: My Lords, I will put that point to my right honourable friend the Minister.

GOVERNMENT STATEMENT
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m., my noble friend Lord Melchett will repeat a Statement on capital investment for the steel industry in Wales.
RIVER MEDWAY (FLOOD RELIEF) BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.
BRITISH TRANSPORT DOCKS BILL
Read 3a, and passed.

BUSINESS OF THE HOUSE
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That Standing Order No. 37 (Arrangement of the Order Paper) be suspended until the Summer Recess so far as is necessary to give the Government power to arrange the order of business; and that Standing Order No. 43 (No two stages of a Bill to be taken on one day) be suspended for the same period.—(Baroness Llewelyn-Davies of Hastoe.)
On Question, Motion agreed to.

PRACTICE AND PROCEDURE
2.54 p.m.
The CHAIRMAN of COMMITTEES (The Earl of Listowel): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That, as proposed in the Fifth Report from the Committee of Selection, the Lords following be named of the Select Committee to consider the Practice and Procedure of the House and to make recommendations for the more effective performance of its functions:

D. Atholl,

V. Hood,

L. Alport,

B. Burton of Coventry,

L. Champion,

L. Crowther-Hunt,

L. Fulton,

L. Hawke,

L. Home of the Hirsel,

L. Hoy,

L. Hughes (Chairman),

L. Kilbrandon,

L. O'Hagan,

L. Shackleton,

L. Wade,

L. Windlesham;

That the Committee have leave to adjourn from place to place and to report from time to time;
That the Minutes of Evidence taken before the Committee from time to time he printed and, if the Committee think fit, delivered out;
That the Committee have power to appoint Sub-Committees and to refer to such Sub-Committees any of the matters referred to the Committee;
That the Committee, or any Sub-Committee appointed by them, have leave to confer and to meet concurrently with any Committee of the Commons on Procedure or any Sub-Committee of that Committee together with any such persons as that Committee or any Sub-Committee of that Committee may select to attend for the purpose of deliberating and of examining witnesses, and have leave to agree with the Commons in the appointment of a Chairman for any such meeting;
That the Committee have power to appoint Specialist Advisers.
That the Committee do meet at half-past Four o'clock on Wednesday next.—(The Earl of Listowel.)
Lord SHINWELL: My Lords, before this proposition is accepted by the House I have a few questions to ask for the purpose of clarification. First, would the Chairman of Committees accept a proposition to insert the word "composition" in line 3 before the word "Practice"? That insertion, if acceptable, would he even more important than seeking to reform the procedure and practice of the House. Is my noble friend the Leader of the House aware that the composition of the House being what it is—I speak for myself but I should not be at all surprised if I speak for other noble Lords—the practice and procedure of the House is quite satisfactory? At any rate, we manage to survive with it and I see no reason for interfering with it and certainly not for emasculating it.
Secondly, would it not be desirable to refer to this very important Committee the fact that there are almost 1,000 Members of your Lordships' House and that probably 50 per cent. or 60 per cent. never attend any of our deliberations and have no intention of doing so, and that the activities of the House are probably confined to 200 to 300 Members, and even of that number only a minority are intensely interested in our deliberations?
Is he aware that some Members hardly ever appear and that there are some Members who are known to their colleagues to appear simply for the purpose of making speeches on subjects in which they happen to be interested, at the end of which they vanish and never interfere any more in our proceedings? Would it not be desirable in those circumstances to refer the subject of composition as well as the subject of procedure and practice to this Committee for consideration? Thirdly, is my noble friend aware that while I have no clear ideas on the subject of composition—about the hereditary position or the Life Member position—I think that the question of selecting Members for your Lordships' House is a matter of fundamental importance and one which surely should be considered by this Committee?
Fourthly, I notice that one of the functions of this Committee is to "adjourn from place to place". I am not quite sure what that means. If they are going to change their geographical position, there must be some reason for

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that. If there is to be a change from the precincts of your Lordships' House to some place with amenities which are much more suitable than those available to Members of this House, so be it. If there is one thing lacking here it is suitable amenities; ours are nothing like those enjoyed by the common people at the other end of the corridor. I hope that that remark does not raise a question of privilege in regard to those common people; they will probably get other language later on, should that be necessary. It seems to me that we should know what the phrase "adjourn from place to place" means. Does it mean, for example, that in order to ascertain the views of the Members of the United States Senate, or of Congressmen or perhaps of Deputies in Paris or the Bundestag in Bonn, these Members of your Lordships' House will repair to those places to ascertain their views, as if their views are really necessary? And what will all this cost? There is the rub.
In these days when we are always talking about the need for financial stringency—for example, cutting expenditure, something which is almost the motto of the Opposition; they are always saying, "cut expenditure"—I hope to get support for my proposition from noble Lords opposite that we should inquire into the purposes of this Committee. We want to know how far they will travel and how they will travel. For example, will they use Concorde? These are important questions. We ought to know before we decide to accept the proposition. A great deal depends on the answer that I receive whether proceed further, but, for the moment, I am content to ask the questions.
Viscount DAVENTRY: My Lords, can the Minister consider whether some Members of this House talk too much?
Lord SHINWELL: My Lords, that is certainly an important question and we may also ask why some Members never talk at all.
The LORD PRIVY SEAL (Lord Shepherd): My Lords, I suspect that I should rise, if only to intervene between my noble friend and noble Lords opposite, some of whom speak occasionally and
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some often. My noble friend Lord Shinwell asked whether there was anything sinister about the provision that the Committee could meet from place to place. If my noble friend will read the entire Motion, he will see that the Committee or any Sub-Committee, "… have leave to confer and to meet concurrently with any Committee of the Commons on Procedure or any Sub-Committee of that Committee …"
Those words were required in order that the Committee or any Sub-Committee could meet with another place in another place.
In regard to composition, my noble friend asked me that question some days ago and I replied to him that the question of composition and the relationship of this House with another place in a constitutional form had deliberately been omitted from the Motion that is before another place. I explained to your Lordships that we should therefore be equally restrained and should merely look at the question of practice and procedure to see ways and means by which the two Houses together can act to improve the quality of the examination of legislation, whether it be for central Government or, for that matter, for the European Economic Community, which we shall be discussing today. That is the purpose of the Committee and I hope that my noble friend will allow the Motion to be agreed to without dissent.
Lord LEATHERLAND: My Lords, my question is less complicated than that of my noble friend. It is similar to a question which I put two or three years ago when the composition of another Committee was announced. I see that the Committee is to have 16 members. Fifteen are men and one is a woman. Surely, fifteen to one is out of all proportion to what we ought to expect. There are noble Baronesses in this House who are very able and who take an active part in its proceedings. I suggest that some slight modification might be carried out in connection with the composition of the Committee.
Lord SHEPHERD: My Lords, I should not like matters of this sort to be decided on the basis of sex or age. If my noble friend has any criticism, it should be directed to the appropriate Committee of your Lordships' House, the Committee

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of Selection. It is for that Committee to decide who should be members, not for the Chairman of Committees, nor for me as Leader of the House.
On Question, Motion agreed to.

"DEVELOPMENTS IN THE EUROPEAN COMMUNITIES, NOVEMBER 1975 TO APRIL 1976"
3.4 p.m.
Lord SHEPHERD Lord SHEPHERD rose to move, That this House takes note of the White Paper Developments in the European Communities, November 1975 to April 1976 (Cmnd. 6497). The noble Lord said: My Lords, I beg to move the Motion which stands in my name on the Order Paper and, with the permission of the House, I shall address some remarks to the Motion that has been put down in the name of the noble Baroness, Lady Tweedsmuir. Anyone who has been in Government will know that July is always a bad month, and although I fully appreciate that my first duty is to your Lordships' House, I ask your Lordships' forgiveness if I leave at 4 o'clock to attend a series of meetings. I shall return as quickly as possible.
These two Motions require us, like Janus, to face both backwards and forwards. Backwards, as we review the developments described in the six-monthly report on the European Communities, and forwards as we look at the prospectus for Europe presented by the Belgian Prime Minister, Mr. Tindemans. We need not, I hope, confine outselves too strictly to the material in these reports, but use them rather as the main texts for a more general stocktaking. If I may be allowed a general personal comment, I believe that, hitherto, we have perhaps thought of ourselves and even at times behaved—and been thought of by others—as new boys in the Community. We can do so no longer. Our membership is now 3½ years olds and within six months the United Kingdom will for the first time have the Presidency of the Council of Ministers. We may have an opportunity of seeing the work of the Council of Ministers at close hand because, by and large, its meetings will take place in London. We shall find ourselves very much at the controls: and it is right that Parliament and the
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Government should now consider the direction in which they think the Community should move. We very much look forward to hearing your Lordships' views this afternoon.
The House will not, I believe, wish me to dwell at any length on the six-monthly report. The developments it describes are many and varied and, to some extent, have already been overtaken by recent events. Noble Lords will probably share my sense of relief that this is so, for it would be misleading to pretend that the period was very successful. Indeed, there were many problems. These were often those of the world at large, especially, of course, those on inflation, monetary instability and economic uncertainty. But when surveying this period we can take advantage of our double perspective. Pessimism would be out of place, since the picture is improving. Some of the failures and half-measures of that time are the successes of the present.
The European Council last week agreed on a formula for direct elections which met the requirements of Member States without creating an outsize Parliament. For our part, the formula satisfies our twin aims of providing reasonable representation for the constituent parts of the United Kingdom and ensuring that the constituencies are not too large. This decision represents a major step forward and illustrates the Community's ability to find acceptable solutions when there is the will to do so.
The Community has weathered the world economic crisis; and Member States are showing their determination to tackle the related and vital questions of restoring full employment and maintaining economic stability, both individually and in concert with each other. The second Tripartite Conference of Governments, the social partners and the Community's institutions, held on 24th June, expressed the Community's joint efforts in this respect, and its conclusions, which were approved by the European Council, will be carried forward over the months ahead.
It is appropriate at this moment to turn to the Tindemans Report, whose presentation during the period covered by the White Paper was a major event and one which focused sharply on the future. I should like again to congratulate the

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noble Baroness the Chairman of the Scrutiny Committee of this House and her Committee on their most helpful report on the Tindemans Report. It was a model of its type. We consider that M. Tindemans has provided a very valuable reference point for our own thinking about the future of the Community and our objectives in it. This is a large subject and not one which can be covered in a single debate. The Community itself is devoting many months to a study of the Tindemans Report, and the Government do not intend to take a final view on it until we have had the views of both Houses and have discussed the report within the Community a good deal more than we have been able to do in the past. But I would assure the House that we shall take a constructive position in these discussions.
My Lords, I shall touch only briefly on a few aspects central to the Community and to our membership of it. There is the matter of the promotion of economic convergence between Member States. M. Tindemans perceived this very clearly, and we shall wish to build upon existing Community mechanisms—such as the Regional Development Fund and the Social Fund—which are intended to assist this process by transferring resources from the richer parts of the Community to the poorer. Of course we cannot, and should not, expect an endless flow of resources. There is a great deal for us to do at home, but I am encouraged by the political will demonstrated by Finance Ministers to concert national economic policies and to co-operate closely within the Community to bring about closer convergence of its constituent parts. This is very much in our interests.
We hear a great deal these days about interrelationship. There is a clear and close connection between the economic performance of the Community and its social policies. Unemployment, which the Community is tackling in various ways, is an obvious and crucial example of this. More generally, M. Tindemans rightly emphasises the importance of making progress towards a modern society and a form of economic growth which respects human values and social needs. The Government certainly endorse this, and we consider it essential increasingly to involve the social partners
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in Community-level discussion of policies or issues which directly affect their interests.
The Tripartite Conference is one forum in which such discussions take place, and its value was recognised by the European Council last week. The Standing Committee on Employment, which M. Tindemans singles out in his Report, has been charged with certain tasks arising from that Conference. The Regional Development Fund, in the period covered by the White Paper, made commitments to the United Kingdom totalling more than £56 million—or approximately 28 per cent. of the total budget—to assist the development of projects in disadvantaged areas of the United Kingdom. The successful development of the Community will depend on the continuation of policies of this kind, and we share M. Tindemans' view of the need to improve the Community's institutions.
The House will be aware of the initiative at the European Council last week, as a result of which the new President of the Commission, Mr. Roy Jenkins, will be charged with the task of reviewing the structure of the Commission. This is, of course, only one element of the Community's institutional structure. I am sure that my noble friend Lord Goronwy-Roberts will have more to say about this and other aspects of the Tindemans Report when he replies to the debate.
So far I have singled out internal policies in my survey of the Community. On the external side, one of the more visible successes of the Community during this period has been the development of common policies and the adoption of common positions on a number of foreign policy issues. We regard this as among our foremost objectives, and we will pursue our original aim of seeking to ensure that the Community is outward-looking and that its external relations give full weight to United Kingdom interests. In this context the revision of the Common Fisheries Policy is of prime importance to us, as a policy whose implications will have direct and immediate bearing on the Community's and our own positions at the Law of the Sea Conference, and in meeting the needs of our own fishermen.
The Community must quickly come to terms with a world in which 200-mile fishing limits are general; and the House will know that my right honourable friend the Prime Minister made clear to the European Council our desire for a declaration of intent on the extension of Community fishing limits to 200 miles. We shall follow up this matter vigorously, and the House will have an opportunity to debate it in full on 28th July. In addition, in the period covered by the Report we have worked successfully towards forging common positions in the Conference on International Economic co-operation, or the North/South Dialogue as it is sometimes called, and in the Euro/Arab Dialogue.
Community agreements have been concluded with a large number of countries such as the Maghreb agreement and agreements with the countries of the Indian sub-continent. Others with Canada, Iran, the Mashraq countries, Spain and the Comecon countries are under consideration or negotiation. The Community has developed common positions on a number of foreign policy issues. On the Cyprus problem, the Nine have been working as one for a settlement; it is a long way away, but we are still working on it. They have made progress with common positions towards the problems of Southern Africa.
The Lomé Convention between the European Economic Community and the 46 developing countries from Africa, the Caribbean and the Pacific was signed on 20th February 1975 and came fully into effect on 1st April 1976 following ratification by all Community Member States and more than two-thirds of the developing countries concerned. The Convention runs until 1st March 1980. It provides generous concessions in the fields of trade and aid to the developing signatories. The trade provisions which entered into force last August under interim arrangements give the ACP preferential tariff—and quota-free access to the Community for all their industrial products and practically all agricultural produce. The only obligation placed upon the ACP is that they must treat the Community at least as generously as any other developed country and must not discriminate among the nine Community Member States in trade matters.
In the aid field, the Convention establishes the fourth European Development Fund, under which over 3,000 million units of account (some £1,700 million) will be reserved for the ACP countries over the remaining four years of the Convention. The European Commission has sent programming missions to most of the ACP States. Reports have been produced on some 30 missions and indicative programmes have been drawn up. There is additionally a sound working consultation relationship with the United States. Looked at in a historical perspective, the Nine have moved a long way towards common positions in world affairs since our accession.
None of this justifies the view that is sometimes expressed that the Community is in a state of collapse. It is here to stay, and with every day its reality becomes more established. Equally established is the fact of United Kingdom membership of that Community. Perhaps it was inevitable, as the anniversary of the Referendum came and went, that there would be people who would try to resurrect the argument over whether or not it is to the advantage of the United Kingdom to be a member of the Community. I do not think the country as a whole will give them any encouragement for doing so. The people gave the clearest verdict last year. What is now needed is to give the fullest attention to making the most of the opportunities Community membership offers both to further United Kingdom interests and to influence the Community's future development. So far as this House is concerned, we can fairly claim to be setting an example of the advice I have just given.
Before closing, I will once again pay tribute to the work carried out by the noble Baroness, Lady Tweedsmuir, and the other Members of the Select Committee on the European Communities. Not only have they scrutinised with their customary speed and efficiency a large volume of day-to-day legislative and other proposals: they have also produced well-informed reports, and reports of very great clarity, on some of the more important topics being considered in the Community, on which we had a total of eleven debates during the period reviewed by the White Paper.
These debates, and the reports on which they were based, have covered many of

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the issues to which the six-monthly White Paper refers: such diverse subjects as EEC company law proposals, the budgetary powers of the European Parliament, problems of nuclear safety and the EEC farm prices proposals. The Committee have continued to perform a most valuable service, and have played a major role in enabling this House to pay full attention to events in the Community, which these events require. These reports may have been of great value to your Lordships' House, but may I put on record that they have been of extreme value also to Her Majesty's Government.
My Lords, in considering the documents before us it is apparent that our future and that of the Community are bound up closely together. Our own problems are the Community's problems, and we can and should take full advantage of the Community's resources and policies in our efforts to resolve them. It is equally true that the Community's problems are our problems; and it is our task to make whatever contribution we can to their resolution and to the achievement of progress in Europe, which is inseparable from progress in the United Kingdom.
The White Paper and the Tindemans Report chronicle some of the steps to be taken and suggest others which may be considered. It is for Parliament to consider those proposals; it is for the Government to consider the advice given and then to negotiate, not only in the interests of the United Kingdom but in the interests of the European Community as a whole. My Lords, I beg to move.
Moved, That this House takes note of the White Paper Developments in the European Communities, November 1975 to April 1976 (Cmnd. 6497).—(Lord Shepherd.)
3.22 p.m.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie.): My Lords, I am very glad indeed that we are able to debate these two documents together; and on behalf of my Select Committee I should very much like to thank the noble Lord the Leader of the House for the generous tribute he has paid to the many Peers—I think we are nearly 80 in
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number now—who give of their time and experience to what is without doubt fascinating work. We feel that we owe a debt to those who gave us our terms of reference, because they are wide enough for us to look at the larger questions which confront Europe and not only the rather smaller legislative matters which come before us from time to time.
I should like, first, to congratulate the Government on having reached what I believe to be a fundamentally important decision for this country; that is, that we should have direct elections to the European Parliament. I think myself that an increase from 67 seats for Britain, which is what was originally thought of to 81 can but benefit the United Kingdom as a whole; and it will also offer the chance to ensure larger representation of, the component parts of the United Kingdom. I would hope, for example, that Scotland will have at least ten seats when this comes to be decided. But I noticed that the Secretary of State for Foreign and Commonwealth Affairs did not commit himself to this country definitely taking part in direct elections on our own system, first past the post, in the time approved by the other Governments, with one reservation by Denmark; that is, in May or June 1978. I would only say that surely the sheer horror of appointing 81 Members of both Houses would urge the Government to speed the preparation, above all because nominated Members would not have the same authority as elected Members.
It is my privilege to present on behalf of the Select Committee our report on the Belgian Prime Minister's Report on European Union. He is rather sad in his introduction. He sometimes seems to reflect the way in which many people look at the European Community today. He says:
"Why has the European concept lost a lot of its force and initial impetus?
He goes on:
"The European idea is partly a victim of its own successes: the reconciliation between formerly hostile countries, the economic prosperity due to the enlarged market"—
this may sound odd today but, taken from the start of the Common Market, this is true—
"the détente which has taken the place of the cold war, thanks particularly to our cohesion, all this seems to have been achieved and consequently not to require any more effort."

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He goes on to say:
"Our peoples are concerned with new problems and values scarcely mentioned by the Treaties. … We must listen to our people. What do the Europeans want? What do they expect from a united Europe?"
The Tindemans Report on European Union considers there are two main urgent matters which we must achieve if we are to promote unity among the Nine. First, direct elections to invigorate the Community's institutions; and, secondly, a common effort to fight inflation and recession. The Select Committee are particularly glad to have had a chance to consider this report, which is of undoubted political importance. The House may be aware that we, as a Scrutinity Committee, have long been almost buried under the draft legislative matters which we are asked to look at in detail. They seem to deluge us from time to time. Therefore, the work involved in study and in taking evidence inevitably means that we see only a part of the work of the Community; and the Select Committee have thought it important to examine the direction being taken by our partners and ourselves in Europe so that we can, maybe, get ideas on how this country can share in the shaping of Europe.
The Tindemans Report is especially interesting in that the Belgian Prime Minister is himself a federalist, although he has sought to say how we can cooperate by pragmatic means, and suggests certain practical ways in which we can achieve greater unity. Yet his report reflects the fear that the European Community has lost its force, and the object of his report is to suggest how the cohesion and power of the Community, as conceived in the original Treaty, can be enhanced. At first sight the Tindemans Report seems to suggest a two-tier community, comprising those States who have the power and the will to forge ahead and those who will need aid and help to catch up.
This conception of a two-tier Community has, however, been denied both in public and in private. Mr. John Davies (who, as the House will know, is chairman of the Select Committee on the European Communities in another place) and myself had the privilege of meeting Mr. Tindemans about his report, and we asked him why he thought it had been coolly received in the capitals of the Nine. He said that he had had to try to find a middle way
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between federalists and those who believe in the evolution of common policies. But, my Lords, even evolution must be stirred by energy and by beliefs. Had the United Kingdom been a member in the earlier years many of the problems which now seem so hard would not have existed. We should have built Europe together.
My Lords, as the House will appreciate, the Select Committee Report is a work of many minds. We have studied and commented upon the various sectors of the Tindemans Report and the order in which he fashioned them. There are a few omissions. One of them is rather extraordinary. Very little is said about the Common Agricultural Policy which takes up three-quarters of the budget. But the kernel of the Report so far as foreign affairs are concerned is this sentence:
"European union implies that we must present a united front to the outside world."
I should have thought that it was on this, from whatever quarter we came, that we would all agree. But when one examines the implications of security, of economic relations, of development aid, it does not always work out without some traumas.
There is a closer relationship developing now between the larger States of the Nine except where Italy's lack of effective political leadership has at present caused a vacuum. But this has caused some resentment among the smaller States. A recent example was the acceptance by the so-called Big Four of President Ford's invitation to the Puerto Rico Summit; without direct representation for the smaller nations or even of the Community as a whole. Of course, we must work with the Americans in every way, but Europe as a whole is our prime concern. So if the unity of Europe is vital to all our interests, it surely is important to study the institutions which govern all that we do. The Tindemans Report contains an important chapter on the action that can be taken within the Treaties and those which, in his opinion, should precede an Act amending or extending the original Treaties. We are much indebted to the noble and learned Lord, Lord Diplock, and his sub-committee for his careful analysis of this section of the Report. But it seems to many of us that much could be done by strengthening and improving the performance of the existing functions of the Community.

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To be frank, the order and priority of some of the documents that come before your Lordships' Select Committee seem to lack both rhyme and reason. We have discovered that there is no central body which decides on priorities or defines the scope of possible action and its policy consequences. There is, in fact, no central policy review body; there is no European "think tank". I, for one, am absolutely delighted that the right honourable gentleman the Home Secretary is to become the next European Commissioner. I should like to wish him every success and also happiness in an absorbing task; but I should like to ask the Government whether the Tindemans Report recommendation that the President should choose his own commissioners has been accepted. It seems to make sound sense.
I understand that Mr. Jenkins has been asked to examine the work of both the Commission and the Council of Ministers. It would obviously give him greater support in his work if he had a freer hand to choose his 13 commissioners. They are due to retire at the end of the year. Many are active politicians; and, while they swear fealty to the European ideal, they are, of course, nominated by their national Governments and therefore, being human, they are bound to ponder on their future as to what happens to them at the end of their four-year term.
As the House knows, there are now 20 directorates-general. One cannot help feeling that these should be greatly reduced. Mr. Michael Shanks, who formerly served the Commission, has suggested that there are really only six major areas of policy which could be grouped under six directorates-general. In the present structure, as the House knows, five of the 13 commissioners are named as vice-presidents and, therefore, one could have a kind of inner political cabinet so to speak. This could be composed of the vice-presidents and the president with the commissioners remaining heading a re-grouped number of directorates-general. These are ideas which are aimed at securing some method of decision on priorities and the avoidance of harmonisation in small matters which cause irritation in the public and can hardly help towards the unity of Europe.
In any case, I am sure there should be an organisation to serve the Commission
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in research and on long-term forecasts and priorities. The Commission itself asked for a study to be made two years ago, called Europe plus Thirty. The distinguished chairman was the noble Lord, Lord Kennet, who I am glad to see is to speak later. Many able people took part in that study; but I understand that the Commission will not decide whether to accept the ideas of this project team until the autumn.
In the meantime, two weeks ago, I had the honour to represent the noble and learned Lord the Lord Chancellor and your Lordships' House at a conference of Presidents of Western European Assemblies. I was accompanied by the Clerk of the Parliaments who gave me invaluable assistance. From the other place came Mr. Speaker himself—and Mr. John Davies because there were many subjects on which it was unsuitable for Mr. Speaker to take part. Among other things it was proposed to recommend that there should be an "institute for research" which seemed to me—and I dared to say so—to overlap work already commissioned by the Commission on which they had not yet made a decision. But the more interesting proposition, perhaps, came from the President of the Bundesrat who proposed a "Chamber of States" with members nominated by the national Governments of the Nine to act as check and balance to an elected European Parliament.
There is no doubt that elected Members will at once ask for increased powers. As this can only come about by the unanimous decision of the Council of Ministers, the relations between the Council and the Parliament will be of paramount importance. As we have no European Government, the implications for national Parliaments will, I am sure, be long debated and we shall have many other opportunities to debate them. But European union, as such, can come about in the end only if the 250 million people now represented in the Community understand it and want it to succeed. It seems to me that the two problems which fill their minds above all else just now are inflation and unemployment. If we could tackle these with success, then, in the words of our report:
"The EEC will have the added strength of public support based on the broad social and moral objectives of the Community."

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If Europe so far has no world political reality, let us remember the forces, both seen and unseen, that threaten us on every hand. As President Giscard d'Estaing said to this Parliament a short time ago:
"For once the wind is not blowing across the Channel—it blows from other quarters, and so brings us closer together."
So, my Lords, whatever the shape of European union that we cannot yet clearly discern, I believe that we shall have to achieve it in the end. We need only to stay together and to stay the course.

THE STEEL INDUSTRY IN WALES
3.40 p.m.
Lord MELCHETT: My Lords, with permission, I will now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Industry. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a statement about capital investment on steel in Wales.
"The Government have been faced with a very difficult and complex decision over the British Steel Corportation's proposals for major developments at Port Talbot and for the closure of steelmaking at Shotton. The Corporation's plans and several alternative schemes have been most carefully examined in the light of the many representations made to us from the areas concerned. It is the Government's view that the assumptions about capital costs and market prospects which lay behind the Corporation's proposals require a thorough re-examination in the light of inflation and of market prospects as the steel industry recovers from the severe recession of last year.
"I have therefore asked the Corportation to carry out a further review both of their own proposals and of alternative schemes involving continued steelmaking at Shotton, in the light of the latest available information. They have agreed to do so.
"This review will inevitably take some time to conduct in the necessary depth
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and detail. We have therefore proposed to the Corporation that they should undertake without awaiting the review those elements of their proposed investment at Port Talbot which would not prejudge in any way the decision on the future of steelmaking at Shotton.
"The Corporation have informed me that they are willing to proceed on this basis with the second phase of the coke oven replacement scheme, of which a first phase was authorised in February 1975. This will reduce pollution in the vicinity of the works and will contribute to operating efficiency. They are also prepared to consider the economic and operational feasibility of introducing some continuous casting to feed the existing mill at Port Talbot, giving some improvement in product quality. The new coke ovens and the continuous casting machine together with necessary modifications to the steelmaking, scrap and slab handling facilities, would represent an investment of some £100 million in total.
"The Government informed the Corporation of our readiness immediately to authorise expenditure of a further £250 million for the proposed new hot strip mill at Port Talbot. The Corporation have agreed to consider this proposal within the re-examination that they have undertaken to carry out."
My Lords, that concludes the Statement.
Lord CARR of HADLEY: My Lords, I am sure that the House is grateful for the repetition of that Statement on such an important matter. May I ask the noble Lord whether he realises that it can be with nothing but dismay that the House hears that, after all this time—now a number of years—there is still no decision about this vital matter. All we can have is the promise of a further review, and goodness knows how many reviews there have been already. The noble Lord admits that this review will take some time.
Coming to more specific matters, does the noble Lord agree that the urgent need of the British Steel Corporation is for a definitive decision about the new investment in basic iron and steel production, and that within this overall need the

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BSC need to know in particular whether the capacity of Port Talbot in the future is to stay at the present level, which I believe is about 3 million tons a year, or whether it is to be greatly increased to 6 million tons a year. Thirdly, may I ask the noble Lord whether he accepts that this investment of £250 million which was announced on the new hot strip at Port Talbot will not increase the total output of steel in this country? It fails to do so at a time when the big tin plate users and the big users of other forms of steel sheet are probably being driven more and more to import in order to meet their requirements. Is this not in itself a condemnation of the Government's lack of decision over the really urgent matters?
3.44 p.m.
Baroness SEEAR: My Lords, we from these Benches should also like to thank the Government and the noble Lord, Lord Melchett, for repeating the Statement which has been made in another place. I fear that I can only echo the comment made by the noble Lord, Lord Carr of Hadley, in deploring still further the delay in deciding what is going to be done about Shotton. I am sure that your Lordships' House will agree that in a matter such as this there comes a point when almost nothing can be worse than further uncertainty as to what is to be done; nothing can be worse either to the health of the industry or indeed the people employed in that industry, or contemplating going into that industry in this area, who cannot know, and have not known now for years, where they stand or where they can expect to stand in the near, let alone middle, future.
I should like to ask the Government from where this £250 million is coming. Is it a loan to be repaid by the BSC at some time? Is there any reason why it should not be raised on the market with a Government guarantee? If the future of the steel industry is good, why should this not be done? If indeed it is simply a further grant to the steel industry, we must point out that £250 million is a quarter of a billion, the billion which has nearly split the Government in deciding how they are going to save monies of this order.
3.26 p.m.
Lord MELCHETT: My Lords, taking the noble Baroness's point first, we will shortly have a Bill before your Lordships' House dealing with the capital investment programme of the British Steel Corporation. It may be best to leave the detailed discussion of that until that time. I take it that the noble Baroness is not suggesting that this much-needed investment should not be proceeded with, and my understanding is that the sums mentioned in the Statement come within the existing provisions of the British Steel Corporation's investment programme. The British Steel Corporation are empowered to raise money on the market if they wish. A Government guarantee amounts in public expenditure terms to exactly the same thing as the Government providing the money. I do not think that of itself is necessarily very helpful.
I appreciate what the noble Baroness and the noble Lord have said about the uncertainties which a further delay will cause and the length of time it is taking to reach a decision on this matter. But both the noble Lord and the noble Baroness will accept that this is an extremely difficult decision that has to be made. It is a question of weighing up the very grave social consequences of any reduction in the steel making capacity at Shotton in an area of high unemployment where up to 6,000 or more jobs would be at jeopardy. The noble Lord said that this had been under consideration for a matter of years. Of course, until the Government had the British Steel Corporation's formal plans for Port Talbot we could not begin to reach any final decision on the case for closing Shotton. The plans were received in January 1975 at a time when the recession was beginning and capital costs were rising. That changing situation has affected both British Steel Corporation's own proposals and the alternative scheme that was put forward by the workforce at Shotton.
It is for those reasons that we think it is better to ask the British Steel Corporation to look at the matter again than for the Government to reach a decision on figures which almost certainly do not any longer reflect the true position. The noble Lord, Lord Carr of Hadley, mentioned the new hot strip rolling mill at Port Talbot.

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It is true it will not lead to any overall increase in the amount of steel produced at Port Talbot; but it will dramatically improve the quality and my understanding is that is something which is urgently wished for both by the British Steel Corporation and their customers. The Statement says we would have been ready to authorise the new mill at this stage because it has always been part of the British Steel Corporation's plans for Port Talbot and it had no implications for Shotton's future. The British Steel Corporation felt that such a large investment should be considered together with the location and size of related steel-making investment, and they will be re-examining the economics of the Port Talbot hot strip mill along with the related matters and alternatives for Shotton.
However, I do not think that the British Steel Corporation, or anyone else, would say that this investment, or the lack of it, would have affected any shortages in the immediate upturn because, on the best estimate, investment at Port Talbot would not have been in production before 1980. I know that as a result of the industrial strategy exercise the British Steel Corporation are in very close touch with their customers and will be keeping a close eye on the position in the immediate upturn of the supplies of steel.
Lord SELWYN-LLOYD: My Lords, is the noble Lord aware that, as one who has had considerable concern over Shotton for a very long time, I am very pleased indeed that its future is at least to be further considered? A reprieve is better than the execution of a death sentence for 6,000 jobs. I hope that when the British Steel Corporation or the Government make a future decision it will be a wiser one than the last one.
Baroness WHITE: My Lords, is my noble friend aware that I am extremely grateful to the noble Lord who has just spoken, who was a neighbour at Shotton across the Dee and the Wirral, whereas I was the actual representative of Shotton for 20 years in another place? While we can very fully appreciate the feelings of noble Lords who consider that any further delay is undesirable, nevertheless until one can find a solution for the intense social problems of North-East Wales it really is not reasonable to demur at
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further investigation in the current situation. As the noble Lord has explained, the consideration so far has been based on information which is now somewhat out of date. I, for one, am delighted that in spite of the difficulties of delay there is to be further investigation.
Lord MELCHETT: My Lords, I am very grateful for what the noble Lord and my noble friend have said. Of course, any Government faced with this decision would like to be able to find an option which preserved the jobs at Shotton, and allowed the investment, modernisation and expansion at Port Talbot to go ahead. It seems it simply is not possible to find an easy way out and, as my noble friend and the noble Lord pointed out, the social considerations at Shotton are such that we feel the ultimate decision should be taken on the right information.
Lord LEE of NEWTON: My Lords, may I associate myself with the relief that has been expressed about the proposal for Shotton being re-examined. I should also like to point out to my noble friend that those who criticise the changes in the capital programme have not a very clean record themselves. Indeed, this Government have a long way to go to equal the procrastination and deferments from which the steel industry suffered during the time of the 1970–73 Government. Might I ask my noble friend whether the question of Shotton is not bound up with the total capacity required by the British Steel Corporation? He may remember that the 1970–73 Government cut down the global amount which the BSC were going to produce by a very large amount indeed. May we take it that that figure is now to be increased to something like the 35,000/40,000 million tons which those of us who were responsible for nationalising steel had in mind at the time when we did it?
Lord MELCHETT: My Lords, having had in a sense some indirect experience of the British Steel Corporation's problems during the 1970–73 Government, I do not think I would disagree with what my noble friend has said. As to the point of total capacity, that is extremely important and it will be one of the things which I am sure the British Steel Corporation will be considering in this study.

DEVELOPMENTS IN THE EUROPEAN COMMUNITIES, NOVEMBER 1975 TO APRIL 1976
3.56 p.m.
Debate resumed.
Baroness ELLES: My Lords, the noble Lord the Leader of the House and my noble friend Lady Tweedsmuir of Belhelvie have between them covered a vast area of policy-making and decisions on policy both in retrospect and for the future of our country. I think we must be particularly grateful to my noble friend not only for her remarkable and profound analysis of the development of the institutions, as she sees them, for the Community relative to the Tindemans Report, but I know that my noble friends would also like to join me in warmly thanking her and the members of her sub-committees—ever extending and ever growing in number—for the vast amount of work they do. Not only do they do a great deal of work, but they do it extremely well; and those of us who have to read such a great deal of material, particularly European material, are deeply thankful for their brevity as well as their precision and clarity.
But, really, how is it possible, from all the subjects before us this afternoon, to select those few which are more important than the others and, at the same time, try to remain within what might be called the tolerance limits—ever tolerant, nevertheless—of your Lordships' House? First, while appreciating that in this House we do succeed slightly better than is done in another place in the allocation of time given to European affairs, I would ask the noble Lord the Leader of the House whether he could request the Select Committee on Procedure to study the question of how best to allow proper time which is both adequate and relative to the situation concerning European affairs.
It is clearly inappropriate to debate the White Paper from the point of view of the quantity of matters contained in it, whether they go from direct elections to mutton and lamb or from potatoes to the European Investment Bank, when each item affects domestic matters. Surely it becomes more and more clear that European affairs are no longer part of our foreign affairs but part of our internal
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domestic interests. Therefore, in so far as it is possible, the European aspects should be considered when discussing matters which are relevant both to the Community and to our own national interests.
We already have the opportunity in this House, thanks to the excellent report of my noble friend Lady Tweedsmuir and her Committee members, to be able to debate draft proposals from the Commission; but it is matters of policy that your Lordships are generally not able to debate until after decisions have been taken by the Government. We appreciate that room for negotiation has to he allowed, but I wonder whether there could not be some arrangement whereby the monthly Statement on the future business of the European Council could not be more fully debated. For instance, it may be practicable to publish a Statement in the Official Report instead of one being read out and having what must obviously he formal replies, and then having some time allotted on the following day for a debate on items of importance or those which may be considered of importance by your Lordships' House. This may be possible already, but perhaps we could have some guidance on that issue. It is a matter which I think could rightly be considered by the Select Committee on Procedure.
Turning to the substance of the White Paper, the noble Lord the Leader of the House will understand if I do not follow him on every point or if I cover one or two aspects he has not dealt with. Section III on External Relations—Trade and Aid contains an impressive list of initiatives taken by the Community over the last six months, despite the fact that some people seem to think it has been a rather dreary and dark period in our Community relationship. Nevertheless, I consider that the formidable list of achievements in those six months are an indication of the growing importance of the Community, not only as the world's largest trading bloc but as a coherent political and commercial force with which it is in the interests of other countries to have links and agreements. I am thinking particularly of the agreement with Canada, which is of political as well as commercial significance, bringing once more a close relationship between Commonwealth countries and the EEC. This was one of the aspects with which we were all

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very concerned before we came into the Communities, and I think this is a prime example of how much Canada can do for Europe and how much we in the United Kingdom can do for both our Commonwealth friends and for the European Community.
The ratification of the Lomé Convention which took place in April is another very significant movement: and I should also like to mention the approach by COME-CON for a trading agreement. We would hope, however, that the Community will ensure that the West derives positive and compensatory benefits from any such agreement which is reached and that we are not engaging in another assistance programme for what we might call a stagnant economy in order that the Soviet Union may eventually defeat our whole Western way of life.
The application of Greece to join the Community is welcomed by this side of the House. It has frequently been said that Europe without the founding country of Western democracy would be unthinkable. We agree with this sentiment. Admittedly, some concern has been voiced—and I know that some of my noble friends have also voiced this concern—about relations between Greece and Turkey, particularly on the question of Cyprus. It is a matter for EEC initiative to help Cyprus find its own solution, and this should not become a matter for discussion in any negotiations on the entry of Greece. Of course, the association agreement with Turkey was not on the same terms as the agreement concluded with Greece, which envisages total removal of the Customs barrier by 1984.
It is said that the Greek economy would not withstand successfully the initial impact of the effect of joining the Community, but perhaps we should recall that the per capita income is just about the same as that of Ireland, a country which has received enormous economic benefit from its recent membership. But it is not the economic so much as the political aspect which is of overriding importance. Perhaps it does no harm to reflect from time to time on comparatively recent events—especially those of us who were involved in events at that time—and recall that at one period in our history Greece was our only ally. Al
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though we may consider that our role has changed, many of our friends still look to Britain for a lead and for support, and I think that that should not be forgotten. To deny entry to a country which has made such a successful recovery from dictatorship would, I think, be absurd.
There are two other matters raised in the Report on which I wish to comment The first is the matter of direct elections, and I join the congratulations which my noble friend has extended to the Government. We think that this agreement has shown a will to reach a settlement and, despite all the many proposals by many governments and individuals, I believe we are all fully satisfied with the successful result achieved last week. The decision of the European Council, that elections should take place in 1978 with a membership of 410, allows us 81 seats, as my noble friend reminded us. But I must say, here and now, that I am not quite so happy about her proposal for Scotland. In view of the heated debates over the ratio of population to seats, she might remember the problems arising over Luxembourg, and the fact that already the Scottish Members of Parliament in another place are far in excess of their true proportion of the population in relation to the United Kingdom. I understand that the division of the 81 is entirely a decision for the United Kingdom Government, and that no outside pressures can be brought to bear as to how it is to be made among the peoples of the United Kingdom.
Lord BOOTHBY: My Lords, may I ask the noble Baroness one question? Does she not realise that the Scots are worth twice the English?
Baroness ELLES: No, my Lords, I did not realise that. But I am grateful to the noble Lord for having drawn my attention to the point. The procedures necessary in order to have elections in the United Kingdom by the agreed date require the active co-operation of the Boundaries Commission. Is it possible to step up the procedure, so that their task may be completed in good time? Also, has any initiative yet been taken? I should be grateful if the Minister could reply at the end of the debate. We might also remember that Portugal, after 45 years of dictatorship, was able to hold two

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elections, draft and adopt a Constitution and install a President all within the space of 26 months.
Although I have already stated our great pleasure and our warm welcome for the decisions at the European Council, we feel that we must always he asking the Government why we must be made to appear incompetent, inept and unwilling to co-operate in something new, which is of interest and even excitement for the young of our country. If the eight other Member States can manage to arrange their affairs so that they hold their elections by 1978, why cannot we? If our procedures are so cumbersome, can we not have a look at them and see whether they can be modified or, dare one suggest it, even improved?
I speak on this point as an individual and not on behalf of my Party, because I represent only about half of my Party in this matter, though my view is, of course, shared by the most important member of it, but I should like to make a plea to all political Parties to see what they can do to get as many women candidates as possible for the direct elections. Women, as well as men, can make a positive contribution to the growth and development of the Community. In this regard, I would ask the Government what they are doing about coming to a decision on a fixed site for the European Parliament. It is hard enough to have to travel 100 days in a year, especially if one is married with family commitments, to three places within Western Europe. Undoubtedly, a fixed site would make an enormous difference to the possibilities of both men and women being able to undertake this new and very exciting commitment for our country. So we would ask the Government what line they intend to take on this matter, and whether they hope to be able to come to some decision with the other Member States at an early date.
Before turning to Tindemans, I should like to say that not only arc very major and important matters decided in the Community, such as the decisions taken within the six months covered by the White Paper, and to mention a small initiative to show what can be done in the Community by individuals. When I was a member of the European Parliament, I was
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asked to initiate a proposal to form a European Community youth orchestra. I left the European Parliament before that was possible but, thanks to the very valuable and helpful co-operation of the noble Baroness, Lady Fisher of Rednal, who then joined the European Parliament and became a rapporteur on the matter, the Commission have adopted the proposal and a new European Community youth orchestra will be playing in 1977, with most senior and important European conductors of world fame.
I say that only to show what can be done through the European institutions to help the youth of Europe understand better the meaning of European cooperation, and to use a media such as music, which requires no interpretation and has universal understanding. These young people will be playing throughout the nine capitals of the Community, starting next year. I hope your Lordships will forgive me for raising something which is not in the White Paper, but which shows the human side of the Community and the willingness of the Commission to co-operate on matters which are not of earth-shattering significance, but which are of significance to youth and to individuals within the Community.
Turning now to the Tindemans Report and the Scrutiny Committee's comments on it, although Tindemans is not a formal Community document it provides a blueprint for the future development of European policy and decision making processes. Some of the proposals in the Report have been overtaken by events, which seems to be the motto for this afternoon's debate. The co-operation of the European Community's Member States at the United Nations Seventh Special Assembly, and the eventual agreement in UNCTAD IV, show that it is possible to agree to speak with one voice on major international matters. Of course, it does not always happen—for example, there has been the question of Angola—but it happens from time to time, and I sometimes think it would be more beneficial for us to turn to those times when things work, than always to be carping when they do not.
Our relations with the lesser developed countries must surely be one of our priorities, both for our own and for their economic and social progress. There is

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no area of policy-making which shows more clearly the economic and political interdependence in the world of today. The approach is pragmatic in Tindemans, but we must slowly shift from co-ordination of external policies to a co-ordinated common external policy. That, I think, is the distinction which Tindemans makes between the position in the past and the position, as he sees it, for the future; not to co-ordinate individually on a whole lot of matters, but to create together one common policy as a guide and a direction in which the nine Member States must go. There is urgent need to look at our joint economic, industrial and social policies on a common basis. Unemployment is affected by all three of these areas of policy, and finance from Community funds should be applied in accordance with interdependent and interconnected policies. For instance, do the Government agree that a mixed economy is the best way for Europe to progress in order to improve the standard of living of its peoples? These are the kind of questions we shall want to have answered by the Government. We want to know the direction in which they envisage Europe should go. It is these practical issues which will decide whether we come to a satisfactory solution to the many problems that are facing the Community today.
On youth unemployment, what is the policy, in European terms, of the Government? We hear about job creation schemes in isolated parts of the country, but has any thought been given to an overall five-year plan for industry and investment in the context of Europe, to the kind of jobs which will be created, the kind of training which will be needed and the kind of education which children should be getting to fit them for the demands of a modern European society, with developments in science and technology rapidly overtaking current industrial programmes?
It is true that the Tindemans Report is based on the terms of the Treaty of Rome, but in dealing with the employment problem and economic convergence there is no mention that the Treaty provides for the mobility of labour to solve unemployment and regional imbalance. There has been very little mobility as between EEC nationals. The emphasis has been on third country migrants. What is the Government's view on this?
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Are they intending to go back to the terms of the Treaty and encourage mobility of labour under Article 48, or do they see a new vision of Europe, built upon the basis of industrial contributions from third countries?
The report touches on aspects of policy which are not within the legal powers of the Commission and which come within the competence of the Ministers as Foreign Ministers of national Governments. Articles 100 and 235 of the Treaty have been used very considerably in social and employment policies. Again, we should be glad of the view of the Government as to how they view this aspect of the development of the Community. The use of these particular Articles has assisted in what might be termed blurring the edges between the function of a Foreign Minister of a national Government and his function as a member of the Council of Ministers.
One has to think only of the problem of the rights of aliens—whether "migrant workers" means migrant workers who are nationals of the EEC or whether this term also includes third country migrants. This has a very important and deep significance for the economic and social policies of the Community budget. Surely this should be a matter for our national Parliaments to discuss if it is outside the power provided for by the Treaties, because it will also have very serious effects on our Constitution: whether migrant workers should be given the right to vote in local elections, whether they should be given the right to vote in General Elections, whether EEC national residents abroad should have the right to vote in direct elections.
There are whole areas of policy upon which we need guidance and some evidence of the thinking of the Government. Unless we are fully aware of what is happening there is danger of power being in the hands of our Foreign Ministers, uncontrolled either by the European Parliament or by our national Parliament, because they fall between two stools and can make decisions without being controlled by either. Then, indeed, the sovereignty which we sought to defend, and which so many of us talked about before joining the Community, will be eroded—not by the European institutions but by members of our own Government. This may be exaggerating the issue, but

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attention should be drawn to this difficulty when we are considering the development of the institutions.
I must distinguish clearly between matters which affect the citizens of Europe and our relations with countries outside. It becomes clearer every day that there is an urgent necessity to co-ordinate and formulate a joint foreign policy in order to speak with one voice on matters of European concern. This is beginning to happen and we welcome the evident co-operation—for instance, in the United Nations Security Council last week.
Mr. Tindemans has made a valuable contribution to the advancement of international co-operation at the European level. We have been gradually losing our political and effective sovereignty as individual nations in the context of world affairs, but we support the pragmatic and cautious approach of Mr. Tindemans in the development of the role of the European Council, the insistence upon the co-ordination of policies affecting external relations and the increasing opportunities for the citizens of Europe to take part, through the development of its institutions, in the decision-making processes. Just as was 1st January 1973, 1st January 1977 will be an auspicious day for Britain. On that date we shall have a great opportunity to play an effective and positive role in this development, with both a British President of the Commission—and I take this opportunity to congratulate Mr. Jenkins on his appointment and to wish him well in his new task—and also a British President of the Council. We should like to hear some of the New Year resolutions of the Government concerning their plans and policies and, above all, to see a sign of their determination, together with that of all your Lordships, that now that we are truly a part of the European Communities we shall all cooperate with our eight Member States in continuing the task of constructing a free and democratic Europe.
4.16 p.m.
Lord GLADWYN: My Lords, if I may say so without causing any offence, the White Paper now under discussion is one of the blandest documents I have ever read. You might think that in the EEC all is proceeding according to plan. True,
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there is an expression of mild disappointment in paragraph 24 concerning aid to non-associates and an acknowledgement of disagreement—though only, it seems, a temporary disagreement—on nuclear research and on energy. But on everything else, including political co-operation, and even agriculture, the impression is created that there are few real difficulties and that a far-sighted Council of Ministers, wisely guided by its civil servants, is proceeding imperturbably on its predicted path.
I know that, as stated, the paper is merely designed to describe major decisions and to refer to major work in progress. But, even so, many people feel, as has been stated this afternoon, that the Community has been stagnating rather than progressing during the period under review, and the least one can say is that any anxiety on this score is hardly reflected in the White Paper—nor is it, apparently, very present in the mind of the Government. Still, as I think the noble Baroness, Lady Elles, said, the White Paper is useful—and I would even say very useful—in drawing our attention to the enormous field of activity now covered by the Community.
To imagine that we could somehow withdraw from this great entanglement —although the idea still appeals to a number of our citizens and, indeed, to a number of the members of the two great Parties in this country—is becoming increasingly unrealistic. But if, on the other hand, this activity is to continue fruitfully and not to end up in shrill recriminations and in a reversion to economic nationalism, there must surely be some generally agreed concept of how it should best be organised. Each Government concerned, including our own, should have its own ideas on this rather essential point. So it is here that we come to the second and obviously the more important document under examination this afternoon; namely, the Select Committee's Report on Tindemans.
As was only to be expected, given its membership and its chairman, this report constitutes an admirable, as I think, and certainly a legally impeccable approach to the admittedly difficult problem of European Union. As I think the late General de Gaulle said—and he had a habit of making these rather sardonic remarks—"You cannot get European

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union by simply shouting 'Long Live Europe' and jumping up and down"; nor, indeed, as I myself think, though not everybody here today, including the noble Lord, Lord Northfield, may agree, by devising some ideal federal constitution which, apart from everything else, would not stand the slightest chance, as things are, of being approved by any of the nine national Parliaments which would he required, of course, to ratify it. Apart from anything else, our ancient nation States are not to be equivalent to the thirteen British colonies in North America in 1776, and if European Union is to come, then surely it must be something different from such historical precedents, and there are many of them. I may be wrong, but I have always held that it can only come about by a gradual reinforcement and development of the existing Community institutions which have, after all, been agreed by all the countries concerned.
In holding this view, however, I do not regard myself as a pragmatist if, by this term, is meant someone who wants to go ahead with increasing co-operation in all fields, without apparently having the faintest idea of what sort of European union will eventually emerge, if indeed it ever does emerge. Judging by what they have said, Mr. Hattersley and the Prime Minister come into this last category, and I think they are misguided for if they persist they are likely to be pushed by events rather than pushing them—the role incidentally, assumed by our beloved country ever since the Suez disaster.
Perhaps I may explain, therefore, what kind of union might, with luck, emerge, if we do try to construct it on the basis of existing institutions. Here, I think that Tindemans is right. The effective "Government" of the Community for the foreseeable future can only be the Council of Ministers—or the European Council acting in its stead—and it is impossible to imagine that such a Government can ever function effectively unless it has increasing recourse to the practice laid down in the Treaty which we have signed, of taking decisions if and where necessary—and I repeat "if and where necessary"—by a qualified majority vote. I remember that before the referendum, in an effort to explain to audiences
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how the Community could or should work, I defined this system—and here I quote myself—as
"one in which major decisions will be taken by what might be called a process of assisted consensus rather than by the imposition of the will of one, while minor decisions can be arrived at by qualified majority vote, minorities being confident that even if they lose on a short-term swing, they will certainly gain on a long-term roundabout".
I see the noble Lord, Lord Northfield, is nodding his head; I am glad that I have convinced him on this point at any rate.
It should be pointed out in the first place that under the existing practice—the existing rule—it would be most unlikely that this country would ever be virtually isolated on any important issue: in other words, that it would not have the support of at any rate one large Power or two or three smaller ones. In the second place, even if this country were so isolated, it would clearly pay to yield to the majority on all save the most vital issue, in the knowledge that by so doing she would be likely to get a majority decision on some other issue in which our interests—perhaps our vital interests—were concerned. Even on the highest or most contentious issue it would seem advisable, as I think, for the Government, in the very unlikely event of their being virtually isolated, to say that they agreed to the proposal ad referendum to the West-minister Parliament, and then to explain to that Parliament the likely consequences of standing out before, if necessary, deciding definitely to apply its veto. If the Government could find it possible to say that this was, very broadly speaking, the way in which they proposed to apply the decision-making procedure in the Council in the future, I have no doubt that their example would be likely to be followed by their colleagues and that a great step forward towards a new kind of union would have been made.
Naturally, as the Select Committee very properly points out, such a procedure could be applied only in spheres coming outside the Treaty—as I think the noble and learned Lord, Lord Diplock, will agree—if it were authorised by legislation approved by all nine national Parliaments. But if the procedure is applied in the sphere of the Treaty and is seen, over the years, to be successful, as I think it would

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be, is there any reason to suppose that it would not be possible for such approval to be given? I do not think so.
Take, for instance, monetary union—or, shall we say, to begin with, a common monetary policy. This cannot, as I believe the Committee truly observes, be forced on us for such time as we are in a weak economic position and the Germans hold all the cards. Of course not. But as we get stronger, as oil contributes to our balance of payments, so some advance in the direction of monetary union may well seem to be both desirable and necessary. And if the decisions are then taken by the means suggested, what is to prevent the system from being recognised as being applicable even as regards the difficult matter of defence? Here, may I say how glad I was to read in paragraph 9 that:
"Much could be done to obtain a greater degree of unanimity in the field of defence supply"
and research, thus apparently subscribing to Mr. Tindemans' recommendations on the subject, which, as noble Lords will probably recall, was effectively the same proposal made in the Resolution which I drafted and got through the European Parliament by a majority last December.
These prospects in any case should not alarm us. The Committee seems to fear that they may. It says that the Tindemans Report is,
"ahead of public opinion in the United Kingdom"
and that the whole question of qualified majority voting is,
"a sensitive field which can only he approached with caution".
I suggest, with respect, that they are too apprehensive. My own feeling is that a definite lead by the Government in the broad direction that I have indicated would be welcomed by the same sort of majority as approved our entry into the Community, more especially—and perhaps only—if it could be assured that there could be no question of our losing our national identity, still less of becoming a mere province of some great federation centred in Brussels, but simply of our agreeing to take part in a new international European system designed to reach common decisions for the benefit of all concerned. It all depends on how the question is put.
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If we can gradually build up the European "Government" in this way, what about the European Parliament and the Commission? I think we all recognise that the recent decision to go ahead with direct elections was of paramount importance, if only for the implicit recognition by the Ministers that there are decisions on matters coming within the Treaties, and notably the Community budget, which are almost exclusively within the purview of the Ministers and cannot, therefore, be changed by any action on the part of any national Parliament. If the Community is to be a democratic institution, there must consequently be a directly elected body which will give some popular sanction to the actions of Ministers, at least in this sphere. And once it is directly elected, it will naturally claim to accept or to reject not only a small proportion of the Community budget but the whole of it. It will also press for powers of what is called "co-decision" in other spheres; in other words, the right by a given majority to approve or disapprove of all major political decisions of the Council of Ministers. That will come. Certainly the new Parliament will not be able to exercise such powers unless there is agreement by all nine national Parliaments that it should possess them; but I shall be much surprised if by the end of the first directly elected European Parliament in, say, 1983, some such system is not in force.
This does not mean that we shall be progressing towards a Federation in the conventional sense. The European Parliament, even in possession of wide powers of "co-decision", will not be the equivalent of a national Parliament. I do not know whether noble Lords will agree, but as I conceive it, it will rather be a sort of combination of long stop and safety valve—if your Lordships can imagine such a thing. I agree with the Select Committee, for instance, that it is very doubtful whether it should have powers of initiative except of course indirectly, as I think the Committee suggests, through the Commission with which it should obviously, as now, work in the closest harmony. But it will not be a kind of constituent assembly—or rather, if it tries to be anything of the kind it will, like its predecessor, the Frankfurt Paulskirche Parliament of 1848, be in some danger of collapse.
What will happen eventually no one can say, but the old idea that the Parliament,

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directly elected, should concentrate on a scheme for a federal union, involving a Senate, or Chamber of States, a House of Representatives on which the Executive will directly depend, or from which it may even be drawn, together, no doubt, with a directly elected President of the entire "shooting match", seems to me to be now inconceivable in practice, and not even very desirable in theory. I believe indeed that a Chamber of States which was apparently recommended by the President of the Bundestag the other day, is, if realisable, very undesirable. If it were set up in the near future, it would simply be a rival to the Council of Ministers, and a dangerous institution indeed. I hope that that idea will be firmly suppressed.
My Lords, there remains the Commission. I believe the danger is that the Ministers, even if they tend more and more to act like a Government, as I hope they will, may come to regard the Commission as a mere collection of high-powered civil servants, useful for carrying out collective decisions, but not to be taken very seriously from the political point of view. This would be a great mistake. The Commission is a unique institution. It not only administers the Community, it also represents it, and as collective decisions are increasingly taken, it will tend to represent it more and more. Tindemans has quite rightly pointed to the necessity of putting an end to the inherently absurd distinction between treaty and non-treaty activity. I know the Committee sees some legal difficulties in this, but I have no doubt that they will be overcome eventually, and I think quite soon.
The so-called Davignon apparatus must clearly at some stage be merged with the Commission whose major function it will still be, in conjunction with the COREPER, to submit all kinds of plans and proposals in all spheres to the Minister for approval. But if it is to perform this role effectively during the next few years, it will have to function much more as a really collegiate body under strong and independent leadership. Here I agree very much with what the noble Baroness, Lady Tweedsmuir of Belhelvie, said. Mr. Roy Jenkins—we can all congratulate him on his appointment—has a great opportunity. We can only hope that not only will he rise to the occasion, but that the Ministers will give him his head.
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My Lords, provided the basic Convention is approved, as I have no doubt it will be, in this Parliament of Westminster, we shall from October or November onwards be concentrating chiefly on the ways and means of directly electing the 81 British Members of the European Parliament. I assume that in any case, by the spring of the year after next we shall have reached agreement on how to do this, if only for the fact that the nomination of no less than 81 Members of this and the other House would be as silly as it would be impracticable. It may be said that there are legislative difficulties in the way, but presumably a Government who are prepared to push legislation through by a ruthless use of the guillotine would be prepared, if necessary, to use the same methods in respect of direct elections to the European Parliament. Where there is a will there is a way; the only doubt is whether there will be sufficient will, not only on the part of the Govermment, but also on the part of a considerable section of their supporters, to say nothing of the Tory Opposition.
As for the electoral procedure, I can only repeat what the Liberal Party has been saying since the issue first arose. It is not the alleged precedent for adopting proportional representation in this country which should tell against the adoption of some variant of that system in respect of the European elections. The two major Parties can always stick out for the "winner takes all" system in the United Kingdom if they so desire, monstrous though we Liberals think it would be. It is rather the inherent absurdity, indeed the self-defeating imbecility, of applying our British system to the totally different sphere of European elections that should influence anyone who considers the question with any impartiality at all. No one in their senses, indeed, can logically dispute the conclusions arrived at in the section devoted to European elections in the recent splendid report on electoral reform by the noble Lord, Lord Blake, who, to the best of my knowledge and belief, is a Conservative. Unless our Party politicians can rise above mistaken considerations of purely Party interest, I am afraid that the directly elected European Parliament, on which so many hopes are placed, will not get off to a very good start; and that is the least one can say.

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My Lords, as your Lordships are no doubt aware, I am making way in October for my colleague Russell Johnston who, now relieved of his previous responsibilities in respect of devolution is, I am happy to say in a position to resume his seat. Nearly four years in the European Parliament, even as at present constituted, has convinced me of the constructive part which it is now likely to play in the creation of that European entity in which so many of us fervently believe. Of course, it will have to shift eventually to Brussels, and from being in the nature of things a friendly collection of well disposed and perhaps not very important politicians, nearly all agreed on European issues, it will have to become a serious battleground for conflicting political groups and notable political figures. Above all, it will have, for many years at any rate, to maintain the closest links with the national Parliaments, a liaison which, as I see it, can only be effected by the various political groups and parties themselves, and not by trying to set up some cumbersome liaison machinery, or so-called Conferences of Presidents. It may, indeed, be something new and strange; no one can say exactly how it will work out. What is certain is that unless it does work in the sense of providing the incentive, the essential popular spark for European unity, that unity will not come about, and that would be a real tragedy. In spite of the understandable caution of the Committee, I hope therefore that, as a nation, we shall greet Tindemans with a cheer.
4.38 p.m.
Lord KENNET: My Lords, may I start by apologising to the House for the fact that I shall have to make off in a cloud of dust, almost before I have finished speaking, because I have to go elsewhere and say the same things that I am saying now, but at much greater length. I apologise with particular grief because this is the first time I have ever had to use that particular discourtesy to the House.
My Lords, the Tindemans Report, let us not forget, was called for for two reasons. The first was to enable and encourage the British people to forget all about union, whether political, monetary or economic, during the referendum. In this aim, it was entirely successful, for
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the word was hardly breathed at all during our referendum debates. The second reason the Tindemans Report was called for was because many of the members of the Council of Ministers at that time, and especially our present Prime Minister, I think, maintained that they had not a clue what was meant by European union and it would be intrinsically desirable for someone to try to define it. Much constructive work is often done under the carpet when something has been swept there.
In achieving this second purpose, we must give the report a little less than full marks—not much less, but a little less. I was struck by the comment made by Mr. Hattersley in giving evidence to the Committee of the noble Baroness, Lady Tweedsmuir of Belhelvie, that it was the first time the Community had been able to look into its own future with any logicality beyond the end of this decade. That is true. It was a better and more logical look at institutions than we had ever had before. It was a great advance on the earlier series of magnificent and idealistic documents which punctuate the history of the Community—I will not enumerate them—which were all drawings, photographs if you like, of a desired state of affairs, saying "Here is where we ought to be," with no arguments about how we get there, and no comparison of the position which is recommended with alternative positions.
I think Mr. Tindemans did as well as he possibly could without the services of what the noble Baroness, Lady Tweedsmuir, has called a think-tank; in other words, some body of people who are capable of setting out alternative aims which might rationally be adopted by the body concerned, namely, the European Community; alternative routes to each of those aims, and the costs and benefits, first, of each of those aims, and, secondly, of each of the alternative routes to each aim.
This all sounds very grand, but it is simply called long-term planning or long-term forecasting, and there is nobody in the world who does not do it except the European Community. It is done by every Member State of the Community, and in the more developed Member States, like our own and France, it is done by every single Ministry for its

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own purposes. It is done by every developed State outside the Community, it is done in Eastern Europe and in the Soviet Union; it is done in the United States—in a completely different way, but it is done—it is done by Mexico; it is done by Iran and by Egypt. It is, of course, done by every major company in the world. No company above a certain size would dream of trying to invent its own future without some cost/benefit analysis, without some cross impact matrix studies and all the rest of the jargon, which is really a very simple way of thinking about the future set out in figures.
Only the Community does not do it, and this, to my mind, is one of the reasons why the European Community, on the world scene, has shown some of the characteristics of a car on a dark night on a busy road without headlights. When a politician sees a political and economic entity bumping other political and economic entities in the dark, and hitting the very street furniture itself in a series of, so far thank God! minor collisions and falling to pieces at the seams, his instinct is to say: "Here, let me take the wheel; I can steer a better course".
Early in 1974 the Council of the day had a better idea. They said, "Let us try headlights. These have been found useful elsewhere". So, as Lady Tweedsmuir mentioned—I was not going to mention it otherwise, because I have an interest, but she has done so, so I will follow her—the Council set up the study called "Europe plus Thirty". They were so excited about it, and thought it so urgent to get this long-term forecasting and planning capacity, that they voted no less than 500,000 units of account, which in present money values is nearly £500,000. They said "Report within a year, and here is the money to enable you to report within a year." We did. I am glad to say we underspent; we spent only 360,000 units. We got the report in.
The question we were asked was: "Should the European Communities" —because, as we know, the three of them are still legally separate—"endow themselves with a capacity for long-term forecasting in respect of all matters likely to affect the future of Europe?" So it is not limited to economics; it includes social factors, political factors, the state of
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education, agriculture, even the climate—we could not leave that out. "If so, what should this capacity look like?" In the Report we turned in we answered that question: "Yes, indeed, it should, and here is a 400 page description of what it should look like."
That Report is now in the public domain. That is to say, if you can afford the fare to Brussels, if you can find the right room in the basement and blow the dust off the report and persuade the official to give it to you, he cannot prevent you taking a copy away. But it will be published in the ordinary sense of the word this autumn. After that, I hope there may be some discussion in the national Parliaments and in the European Parliament about whether what we say should be done.
What we recommend is this. We avoid the word "institutions", because the Community already has three great institutions with a big "I", and we did not want it to be supposed that we were recommending the addition of a fourth institution. We recommend the addition of a small new instrument, consisting of about 30 or 50 people, which would be equally at the service of the Commission and of the European Parliament, and should work half its time for each of those, and perhaps in some spare time for the Member States and Member Parliaments, if they wanted it. I think Lady Tweedsmuir is perfectly right in saying that there is a possible collision or overlap here with the proposal made by the present President of the European Parliament at the meeting she attended a week or two ago in Bonn.
It seems to me still that the main reason why the Community needs such a capacity—besides the intrinsic one that any large body of people trying to do the same thing must try to plan a little—is that everybody else is doing it. The Community is at the mercy of its Member-States because it knows less, it has fewer statistics, it does less projecting of statistics. It indulges less in the application of political judgment to trend projection, which is the essence of forecasting—indeed, it hardly indulges in it at all. It knows less than the great multi-national corporations, both those which are based on its own territory and operate outside, and those which are

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based outside, typically in America and Japan, and operate into the Community.
Above all, it knows less than the OECD. At first sight one might not think this is a very terrible thing. Why should not it know less than the OECD? The OECD has been in existence longer. The general level of its staff is, I think by common consent, higher; it has abler people in its secretariat. It has got richer countries in it, and therefore there is more money to spend to carry out the studies. The OECD is now starting up a fairly major long-term forecasting operation, concentrating specifically on relations between the developed world and the developing world. It is possible to view this with alloyed delight. Most of what comes out of the OECD work will, of course, be of the highest interest and utility to all the Members of the Community and to the Community itself. But only most of it. It is not always automatically so that West European interests, particularly vis-à-vis the Third World, should coincide with American and Japanese interests. It is for that reason that some of us believe that it is important for the European Community to look at its own future through its own spectacles, and not rely on spectacles with American and Japanese tints.
May I conclude by saying what everybody else has said, and that is how much I rejoice in the appointment of Mr. Jenkins to the chairmanship of the Commission and how much I wish him well. It is perhaps a little more of an Augean stable than is commonly spoken of in respectable quarters. He will have a great task in reforming it, and the task will be, as I think Lord Gladwyn was saying—I am not sure I followed him, because he was going so fast at that moment—very largely to reintroduce the collegiate principle among the Commissioners, to prevent them being a body of national politicians, gathered together for four years, sitting back to back and facing their own national capitals at home, hoping to be judged good boys, all of which tends to make each sector of Community policy a fief of a given Member of the Community and tends to cause that sector to be run in the interests of that Member, which is a disastrous arrangement.
The degree of internal lack of communication within the Commission is some
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thing very hard for an outsider to understand. If you imagine the most entrenched positions of the most backward-looking of our Whitehall Ministries at the worst moments of their histories, you still have a long way to go before you can find anything like the way the Directors-General do not talk to each other inside the Commission building. Communication is vertical. The Director-General will talk to his Commissioner and tell him what he thinks ought to be done; he will get the orders he wants, go back to his office and deliver those orders down the line, and that will be done. Very often a crisis will then result in the social and economic fabric of the 250 million people for whom all this is supposed to exist. The crisis will then hit the Ministers in their national Parliaments, who will then go to Brussels or Luxembourg and have a meeting, and call upon the Commission to make a proposal; because, of course, they are not allowed to act by themselves, only on a proposal by the Commission.
To break the vicious circle it is obvious that a reform of the Commission, though not sufficient, is necessary. It is my own hope that something like the long-term forecasting and long-term planning instrument that I have been outlining may be a help in shining a uniform light all over the recesses of the Commission and connecting up the different vertical circuits which, at the moment, are so very much out of phase.
4.51 p.m.
Lord DIPLOCK: My Lords, there are occasionally parts of a report of the Select Committee for which, as chairman of the Law Sub-Committee, I bear a certain responsibility. I am conscious that they always appear to be critical in that they are designed to point out legal difficulties which particular proposals may involve. But that is the function of the Scrutiny Committee. It is the function of the Law Sub-Committee to look at the possible legal snags and to suggest solutions; not to act as a brake upon the progress, the development, of the Communities. Our task is to find the best way to make the legal system and the institutional machinery work to make the Communities a success.
Mr. Tindemans, by European union, wants two things: he wants, first, an

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expansion of the field within the competence of the Community institutions beyond that field which is already covered by the Treaty of Rome—in particular foreign affairs beyond the merely commercial type of convention, and security. The second thing he wants is to accelerate the progress towards economic and monetary union, which is a field well within the Treaty as it stands. As the noble Lord, Lord Gladwyn, pointed out, an amendment of the Treaty requires an elaborate procedure, and ratification by all the nine countries. Such an amendment requires, before it is made, unanimous agreement as to the limitations upon the further national sovereignty transferred to the Communities, and unanimous agreement upon the division of power between the institutions; the Council, the Commission, and the European Parliament. It is a natural temptation to a politician, particularly a pragmatic British politician, to say, "If we can find a field in which the heads of Government can agree upon a common policy, let us proceed as if the Treaty were amended to cover it, leaving the formal amendment until experience has taught us what its advantages are and what its limitations should be".
The distinction between what is within and what is outside the Community field under the Treaty cannot safely be blurred. There is a basic difference between the Community structure and the Treaty and any other commitment entered into by the United Kingdom Government with other States. The Treaty of Rome and the European Communities Act together constitute a unique constitutional document for this country; the Treaty is a unique constitutional document for all the Member States. Together for us they have created a new legal order: a direct source of legal rights and legal obligations to individuals; a transfer of legislative, executive, and judicial powers within the United Kingdom to Community institutions, and any further transfer requires the legal basis of legislation by Parliament.
A commitment entered into by Heads of Government, whether by treaty or whether by resolution of the European Council, can have no direct effect, can confer no legal rights, impose no legal obligations, upon the citizens of this country, whatever it may be able to do in other countries—and I think Belgium is one of them where
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it can. If the agreement, commitment, of Heads of Government related to a field outside the Treaty, to give it the form of legislation by regulation or Directive would give it no legal authority in this country. The United Kingdom courts would have to treat it as a nullity, and it would not fall within the interpretive jurisdiction of the European courts. The courts in this country would have no jurisdiction to refer it to the European Court.
May I make one final comment. A commitment to majority decision outside the field covered by the Treaty—may I say I agree with the noble Lord, Lord Gladwyn, that within the field covered by the Treaty (I speak as a lawyer) the sooner we get back to majority decision the better—is quite impractical and contrary to all constitutional theory in this country. A Government of today cannot commit a Government of tomorrow to a policy with which they do not and will not agree. If I have spoken perhaps bluntly on this issue it is because I believe that we should do a real disservice to the European Community if we were to attempt, for reasons of expediency, to blur a distinction which it is vital to retain.
I mentioned that monetary and economic union fall within the field of the Treaty, and within that field Mr. Tindemans desires to improve the machinery for reaching decisions more speedily and more effectively than we do today. That is wholly unobjectionable from the legal point of view, provided that so far as possible one retains consistency with the constitutional structure of the Community laid down in the Treaty.
There are only two comments which I desire to make on the Tindemans proposals in this regard. First, he recommends more delegation by the Council of decision-power to COREPER and to the Commission. To COREPER, I can see no constitutional objection to delegation. To the Commission, one must bear in mind that the Commission represent, as the Council do not and as the Assembly does not, the bureaucracy, the oligarchy. That they would do their job admirably in many respects I do not doubt, but there is no constitutional check under the Treaty on the exercise of that delegated power; no duty to report to Parliament and no duty to consult the Council. If it is proposed that there should be a wider delegation to

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the Council—and let us not forget that the European Court would give a much wider interpretation than the English courts to a delegated power—I would suggest for serious consideration that there should be an obligation, which could be done by agreement and as a term of the delegation, that the Council's proposals, their legislation, should be submitted to the Assembly for consideration before coming into force.
Lord NORTHFIELD: My Lords, the noble and learned Lord referred to delegation to the Council. Did he mean to the Commission?
Lord DIPLOCK: I am sorry, my Lords; I meant to the Commission.
Lord O'HAGAN: My Lords, may I ask the noble and learned Lord to explain how the Commission are not accountable to the European Assembly or the Parliament, in his line of argument, when the Parliament can dismiss the Commission by majority vote? May I also ask him to explain how in his view—I may have followed him imperfectly—the Commission could not carry out certain delegated functions when they already have certain functions in the field of competition policy which could be taken as an example, at least, of functioning in a way which could act as a precedent for the things he is criticising?
Lord DIPLOCK: My Lords, theoretically of course the Commission is accountable to the Parliament or to the Assembly because they have a power to dismiss it, though no power to prevent its being reappointed again. By lack of responsibility I meant lack of responsibility for the particular terms of the legislation concerned; not generally a power to turn them out but a power to look at what they are proposing for legislation, to comment on it, to criticise it and perhaps have the opportunity of getting it checked.
The one other matter on which I wish to comment is the proposal in the Tindemans Report that the Assembly should be able to discuss all matters and send resolutions for the consideration of the Council. Of course that is appropriate, but if the resolutions which it sends are
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proposals for legislation, then it would be more consistent with the constitutional structure that those should go to the Commission first before they go to the Council because if they go to the Council first then, under the Treaty, the Council must send them back to the Commission. I suggest that a much more profitable development would be to continue and extend that co-operation between the Assembly and the Commission by which the Assembly makes suggestions to the Commission for matters on which they might propose legislation from the Council.
May I make a final observation, for I have taken up too much of your Lordships' time. A new supranational political entity—that is what the Community is—is not, I think, necessarily stagnating because it is not continuing to expand its activities into new fields and is not producing a continually increasing volume of legislation. The time may come to consolidate, to digest, what has already happened and to correct errors and make improvements; I have in mind particularly the Common Agricultural Policy. It is to be expected in an institution of this kind that the speed of legislative activity should change. In the early years it had the comparatively easy and well-worn task of removing internal barriers to trade. Freedom of establishment followed and that threw up rather more intractable problems; monetary and economic union at present, at this stage of recession, present even more. But the progress of the Community is not to be measured by the quantity but by the quality of its legislation and the administrative work of the institutions. It takes time to get legislation right, particularly when there are nine nations, not only one, to be considered, and it is in that respect that the Select Committee is endeavouring to play its part in helping to make the machinery work better.
This morning I looked at the row of Statutes in my library and I found that 80 years ago it took about 10 years to produce the 2,500 pages of legislation which this House passed last year. I asked myself: is this country 10 times greater, 10 times happier and 10 times better governed than it was in the 1880s and 1890s? Lest I should be suspected of expressing a political opinion, wild horses will not drag from me the answer I gave myself.
5.9 p.m.
Lord CASTLE: My Lords, the nobls Baroness, Lady Tweedsmuir of Belhelvie when introducing her admirable report made a passing reference to the "deluge of paper"—reports, recommendations legislation and so on—which descends on that Committee. I assure her on behalf of my colleagues, momentary refugees from Europe, that this House is like arriving on Ararat after the Deluge to which we are subjected day by day, week by week. Very sincerely, my colleagues and I congratulate the noble Baroness and the chairmen of her Sub-Committees on the extraordinary amount of time, and the thoroughness, with which they examine the proposals and legislation that come from Brussels. We are deeply grateful to them. In the nature of things, this debate is of a diffuse nature, but perhaps none the less valuable in that we are giving rein to our personal prejudices in what we choose to talk about.
I must tell the House that my own impression of the Tindemans Report may possibly coincide with no one else's. I remember that the report arrived almost as a New Year gift to those of us who had been in Parliament only five months and who were doing our conscientious best to become good Europeans and to fulfil the hopes of the British people when they decided for Europe. We looked for a Sign: this, the Tindemans Report, was to be it. My noble friend the Leader of the House has called the report a major event and a reference point. Perhaps it is.
Mr. Tindemans had been going round Europe talking to the Prime Ministers and Foreign Ministers of the Nine and we understood that his report was the distillation of their ideas as to how the Community should develop. And develop it must, because we were told that the Community and its institutions had "to develop or die". Ever since we Labour Members had joined the Parliament—and not because we had joined—we had heard and read how the European set-up was in decline. Mr. Gaston Thorn, President of the Council of Ministers, had said that, "the only achievement of the Community in 1975 was that it did not fall apart"—a rather more gloomy picture than some which have been painted this afternoon. Everybody knew that something had to be done.
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So, when we got our privileged preview typescript of the Tindemans Report before it had been seen even by the printers, we read it eagerly—and long. Most of us—I am speaking not only for my colleagues in the Labour delegation but for most of us in the Political Committee of the Parliament—read it with growing disappointment. So, I must say, did the world outside. Mr. Tindemans had fulfilled his brief. For a day or two, the report merited mention and discussion in the serious newspapers. But there was hardly a line in the popular Press and barely a mention on the television or the radio. Though it has been with us for seven months, not one person in a hundred in this country outside this building would be able to say what the Tindemans Report was about. I tried that out this weekend on a company of young people. One thought—and I assure your Lordships that I am not fibbing—that it was the only "U" film on show in the West End of London; another thought it was a report on corruption in the Girl Guides; and another thought that it was a guide to the pools.
This is much as I should have expected, but though the ignorance is not tragic, it is revealing. Worthy as were the intentions which led to the conception of the report, the truth is that it was not what a jaded and dejected Europe needed. Though it was good of its kind, its delivery for public debate was badly timed. Europe was not its old, buoyant self. Far from it. The realities of its day-to-day life were that 5 million of its people were unemployed and that inflation was biting hard. The confidence that Europe had developed during the 1960s was undermined. The Tindemans Report appeared not to heed those facts. The Common Market had had its moments, but this was certainly not one of them. The Treaty of Rome, the Big Idea, the Grand Design were, so far as the people outside, and indeed, many inside, the legislative bodies of the Community were concerned, being translated into a mere profit and loss account—mostly loss. We had heard recently about wine growers rioting against dumping of cheap wine by their brother Europeans; we had heard of subsidies for silk worms; we had heard of butter and dried milk mountains. The vision which good, practical politicians had seen had seemed

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to fade into a humdrum, bureaucratic harmonisation of this, that and the chicken on the table.
In such a situation—or so it seemed to me and some of my colleagues—in such a political climate, the Tindemans Report had no immediate importance. I retain that original point of view. Let us by all means continue the discussion among outselves here and in other assemblies like this about whether Summit meetings shall be called Summit meetings or Meetings of the Council, whether majority votes—which have been referred to so often today—shall be the rule or the exception, whether or not the Commission should have a voice in the Council and how and whether the Treaty of Rome shall be amended. I shall look forward, as I am sure will your Lordships, to detailed discussion on every one of those points. However, at this moment so little regard has been paid to this report that, so far as I know, not a single Assembly has committed itself to a full, deep discussion nor made a decision. Let us be realistic and face the fact that, with the limited amount of time that all of us can give to the discussion and debate of European matters, this is not a priority for the next two years.
The debate will radiate not from Tindemans but largely and quite rightly from the preparations for the decisions on a directly-elected Parliament or Assembly of Europe. This, not Tindemans, is the historic challenge. A mass of urgent work has now to be done in that field, for it is there that the changes in the power and function of the European institutions will be decided. Four hundred directly elected MPs, properly conscious of the legitimacy of the power which they will exercise, will not be fobbed off with spending 150 days a year beating a drum which neither Council nor Commission listens to. Mr. Tindemans knows that and he has made some tentative suggestions.
I believe that the new vitality which the Community needs, will, as in all democracies, spring from those elected Members of Parliament. They will be the vehicles of change in the institutions. They, and no 1975 constitutional planner, no matter how well-equipped, or how full of good will, will decide their powers. It will be
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they who, by vigorous assertion and imagination, can be expected to shape the new Europe; and that knowledge makes me hopeful, provided that we begin preparations for that great event forthwith. The kind of candidates we select to change Europe is of the utmost importance. This should be the concern of us all. It should be the over-riding duty of every European from today onwards through the next two years. I wish that a new subject—Europe—could be included in the curriculum of every secondary school and of every "further educational establishment"—which is what I believe night-schools are now called. I wish that the media would follow this up with European news and current affairs programmes, so that a properly informed electorate goes to the polls in 1978—or later, if that is what is desired.
Lord BOOTHBY: My Lords, I should like to interrupt the noble Lord in his very interesting speech to ask him just one question. What type of relationship does he envisage there to be between a directly-elected European Parliament and the national Parliaments of the countries concerned?
Lord CASTLE: My Lords, the noble Lord has started what I am sure will be a most fascinating debate as the days go on. Many of us have put forward ideas. Many of us would like to see the Members of the European Parliament ipso facto Members of this House pro tem, occupying a similar position—though not in the sight of God—to the Bishops. If I may continue this point about the necessity for propagating the idea of Europe, I should put somebody like Angela Rippon on to read the news and opinions on Europe every night, and her auditory addicts—count me among them—could be cured of insularity for ever.
Tindemans will not have reported in vain, even if he has only set the agenda for long-term discussion. Whatever happens to this report, our present priority is to start looking forward and finding men and women of high public standing and potential as candidates for Parliament. Through their quality, integrity, wisdom and devotion our British Members of Parliament in Europe can take a lead—perhaps a decisive one—in seeing the kind of Europe which

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emerges. We shall hear many sniggers, they will hear many sniggers from erstwhile friends, about opting out from the real political struggle—
Lord GEORGE-BROWN: I am sorry, my Lords, that I came in late, and if the noble Lord wishes to say to me that I should not ask him a question, then that would be reasonable. But the question I want to ask is this. Is he in favour of those of us who are not nominated by his Government being able to stand for election at the first elections in 1978? The noble Lord may have answered this point before I came in, in which case I apologise deeply, but I should like to know what is his view about this.
Lord CASTLE: My Lords, I do not think that I am under any real obligation to answer that point, but I should have no objection to seeing the noble Lord stand for the European elections and I should have great joy in seeing him defeated.
Lord GEORGE-BROWN: That is silly.
Lord CASTLE: But of course the noble Lord knows, as well as I do, that our opinions differ on many social and industrial matters, and I should wish that my Party wins those elections with the kind of candidates which I—
Lord GEORGE-BROWN: My Lords, if the noble Lord will forgive me for interrupting again, I must say that the remark he made at the end was silly since we have been friends for so long. I was actually asking whether he was arguing that I could stand as a candidate in 1978 for a selected part of the country. I was not discussing whether I would ask him to come and speak for me—or whether I would ask his noble friend, the noble Lord, Lord Ardwick. I was merely asking him whether he would be in favour of my being allowed to stand.
Lord CASTLE: My Lords, I would be in favour of any Peer being allowed to stand if he could find sufficient sponsors to get him to the poll. If that is the noble Lord's intention, it will be a very interesting development to watch.
In conclusion, speaking as a Socialist I should like to borrow a phrase which
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belongs to another Party and say that just now I think that what matters is men, not measures, so far as Europe goes. That is why I was so heartened to find that a man of the eminence of Mr. Roy Jenkins had been appointed to the most powerful position in Europe, and I was delighted, too, that that pleasure was reflected on all sides of the House this afternoon. I have no doubt whatever in my mind that with his experience, his stature as a statesman, his understanding and his charm, Mr. Roy Jenkins will make bigger changes in Europe than the Tindemans Report.
5.27 p.m.
Lord O'HAGAN: My Lords, I shall try to follow the noble Lord, Lord Castle, in one respect only, which is the change of mood between the first part of his speech, when he was rather gloomy about the future—or at least the immediate past—and the second half of his speech, when he was much more cheerful about what lies ahead. Recently—for the first time, I am ashamed to say—I read a line in a poem by Wilfred Owen which goes:
"Happy are those who lose imagination";
and for any enthusiast for the European Community it was possible to be happy about the way things were developing only if one had lost all imagination about what could and should be happening; and the comment of President Thorn, which the noble Lord, Lord Castle, quoted was, I am afraid, all too true.
Several things have happened that make the outlook more cheerful. The choice of Mr. Jenkins to go to the Commission as its new chief is one of these, and another is the decision by the Council of Ministers to press ahead with direct elections. But another reason for hope, as I think, is that Her Majesty's Government—without Mr. Jenkins, but with a determination to benefit from the massive commendation of the people in the referendum for our continued membership of the Community—have the chance, at the beginning of next year, to use all the disappointment that has been built up in the past, so as to make the future something quite different. There will be a new Government in Germany; there will be some more stable Government is Italy, we hope; and all the omens look good.

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My Lords, I should like to follow what my noble friend Lady Elles said in her comments about the role of the British Parliament, and your Lordships' House in particular, in the discussion of Community matters. Of course, the White Paper that we are talking about today is a valuable retrospective account of what has happened, but it is virtually useless as the basis for a serious debate about what should be going on in the Community. We should talk about what is going to happen, not about what is already in the history books; and I should like to endorse my noble friend's suggestion that the Select Committee on Procedure look at the possibility of using the monthly statement of what is coming up in the Council of Ministers as the basis for a debate in this House on what the Community will be doing in the future—and it may be that some of the reports of the Scrutiny Committee could be used as the bases for some of these debates. The noble Lord, Lord Northfield, looks as if he is going to sleep. I am sorry, but I think it is very important that this House uses its collective wisdom to look ahead, and not to dance a ritual dance about what is already dead inside the EEC.
We have also to look at the way the Community is going. There is some hope that the Commission will be reformed. If I may add a slightly less enthusiastic note, I hope that Mr. Jenkins will be able to be ruthless as well as elegant within the Commission. I hope that he will carry out his mandate to eliminate certain areas which need a lot of attention, and to introduce people who can perhaps apply a slightly less European and idealistic turn of mind but a greater expertise, particularly in the scientific and environmental fields, to the preparation of Directives.
If we are looking ahead to the beginning of next year and to the role which Her Majesty's Government can play in the re-invigoration of the European Community, there are certain obvious items which need attention and which we should be starting to think about now. One of them is agriculture. I would hope that Her Majesty's Government will issue their ideas in the form of Green Papers, so that they can be discussed by your Lordships' House and another place as well as in the European institutions. I would ask the Government: How many subjects have been sent to the Central Policy Review
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Staff in preparation for our chairmanship of the Counicl of Ministers at the beginning of next year? Who is doing the long-term thinking for our presidency? Will it be done primarily in the Cabinet Office or in the Foreign and Commonwealth Office; and will the results of some of these thoughts be published, so that we can all discuss them and add our comments to them before decisions are taken in the Council of Ministers?
It would be possible for Her Majesty's Government to issue, and it might even help them, if they were seeking to make some major reforms in the agricultural field, if they were to issue, a Green Paper of the sort I have been mentioning which listed some of the alternative methods for dealing with the fundamental structural problems of the Community. We cannot trust the Commission to do so yet, not until Mr. Jenkins has had a go. If anybody seriously contemplated making a fatuous suggestion about reforming the CAP, Monty Python could not do better than the proposal to tax margarine to make it as expensive as butter. It really does fall into the category of the line of poetry that I was quoting from Wilfred Owen:
"Happy are these who lose imagination".
If you make that sort of proposal, your faculty of imagination must wholly have left you.
Before the new, reformed Commission is able to grapple with these fundamental structural problems to get away from the price mechanism as the sole way to deal with structural surpluses and to start thinking about paying people not to produce, bribing people out of production, having variable levies, in all of which we in this country are very experienced indeed, would it not be a good idea for Her Majesty's Government to show their European spirit and to make a contribution to the solving of these problems (which the Germans, I am sure, would be very keen to have solved as well, so that they may stop paying for the consequences) by issuing a Green Paper? This would demonstrate, as I have said, our European spirit, as well as the sort of thing that we would be prepared to push through when we are President of the Council.
Lord GEORGE-BROWN: My Lords, is the noble Lord willing to give way?

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His argument in favour of the margarine manufacturers is in fact an argument in favour of great monopolists. I ask the question: Does he quite understand that he is arguing for Unilevers and various other multi-national monopolists against the farmers who actually produce butter?
Lord O'HAGAN: My Lords, I will say two things. I am arguing in favour of a serious reform of the Common Agricultural Policy to make sure that farmers get a fair return at the same time as making sure that consumers get a fair deal. The only other comment I will make is that if the noble Lord will come and speak for me when I stand for election to the European Parliament I will seriously consider coming and speaking for him.
Lord GEORGE-BROWN: My Lords, I disregard that. I do not want to.
Lord O'HAGAN: Then I am sorry. My Lords, I will not take up the time of the House by illustrating other areas in which Her Majesty's Government could involve the public and Parliament in the way in which they are preparing for their presidency, but I hope they will do better than has been done in the past. For example, in his opening comments today the noble Lord the Lord Privy Seal referred to the Tripartite Conference, which is a body whose name is so deafeningly boring that no newspaper ever comments on what it does. But, my Lords, it provides a forum for management, the trade unions, the Finance Ministers and the Governments of the Member States to come together and look at the social implications of the economic situation of the Community. This is the sort of thing to which public attention could be drawn, and I hope that Her Majesty's Government will seek to do it, not by issuing propaganda but by outlining some of the proposals which they have and which they hope to implement from the beginning of next year.
My Lords, it is always easy for a European enthusiast, in talking about the future of the Community, to sound like Jimmy Carter on an off day, because there is a certain religious undertone which comes into one's voice which makes one sound rather intolerant and extremely difficult to listen to. I am therefore not
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going to do that; but it is heartening for those of us who feel like that to know that it may be possible to communicate our enthusiasm to others through the mechanism of the preparations for direct elections. We have seen that, contrary to all the pundits, a large number of British people voted—and voted "for"—during the Referendum. I think that the same could easily happen again, in spite of what the pundits say, in the direct elections campaign.
I should like to add my voice to those of other noble Lords who ask the Government not to be deterred by the endless ruminations of the Boundaries Commission. I am not suggesting that the Boundaries Commission should be bypassed; all I am suggesting is that their deliberations should be hastened as much as possible so that there is plenty of time for constituencies who have a real regional or local feeling about them to be well before the public mind before the people in those areas are called upon to vote for members of the new directly-elected Parliament. I should therefore back up the other Members of your Lordships' House who spoke hoping that we can get on with this so far as possible and as fast as possible.
We are not talking of the future of the universe or of the future of the world: but we are talking about—or I hope we are—the future of our Continent, which has an enormous impact on the future of the world. One has only to think about the ramifications of Lome and many other external activities of the Community to realise that it would not be too much to say that what the Community already does has world-wide implications. The importance of the Community has not yet entered into the daily processes of mind of everybody in the United Kingdom: but I hope that the prospect and actual arrival of direct elections will do so; and, as a candidate, I will do my best to make sure that it does.
5.42 p.m.
Lord ARDWICK: My Lords, I should like to congratulate the noble Baroness on the Report of her Sub-Committee. I am sorry that her name does not appear on it. I should also have liked to see the names of all those wise and moderate people who apparently accepted this

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Report. I take it that is not the custom and that this is the only reason why the names are not there.
One of its useful purposes is that it focuses attention on Mr. Tindemans's very well calculated vaguenesses. At the very beginning of the European affair we used to divide ourselves into federalists—to which category Mr. Tindemans belongs—and functionalists, the category to which I belong and to which I believe the majority of British people belong, no matter what their politics. Now we are all in Europe together; and Mr. Tindemans has had to produce a Report which would not bring the federalists into despair and yet would not make the functionalists fighting mad. That is why he uses the splendidly ambiguous word "union", which means all things to all men. It can mean simply getting closer together, without any formal bond, or it can mean, ultimately, the closest federal union. Yet we all ought to be able to agree now on moves towards union, at least in the weaker sense of the word. We should be able to believe that—if we have the faintest belief in Europe at all. We ought always to be looking for ways of doing things together; when doing things together will bring general benefit.
There is another useful word employed by Mr. Tindemans which has also a strong meaning and a weak meaning. He believes, as the Committee believe, and as I believe, in the need to co-ordinate external policies. The word "co-ordinate" can mean simply bringing things into a more logical relationship; or it can mean to take part in common action. Mr. Tindemans believes, as I believe, that there should be a gradual movement towards common policies. He has had a rather grim task to encourage the Community to think of ways of moving forward while it was still actually moving backward—like somebody trying to plan D-day while the troops were still coming back from Dunkerque.
I do not think that those of us who were latecomers to the Community can appreciate the shock that the veterans of Europe had when, four years ago, the Community stopped going forward and seemed to go backwards a little way, from union towards disunion. Just before this all seemed to be well. The years of frustration occasioned
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by de Gaulle were over and the Common Market seemed to have found the elixir of economic life: perpetual growth, increasing welfare and full employment, from which in time even Italy would benefit. Then came the recession, the oil crisis, the inability to find a common energy policy and the drift towards national solutions. One of the great virtues of the Community is that we have not drifted further back in this recession as we might have done; we have not tried the harsh national solutions that we might have tried, if the Community had not existed.
My Lords, in the 12 months that I have been a Member of the European Parliament, I have felt sometimes as if I were between a set of Jeremiahs, people always sceptical about the Community, and Job's comforters, ardent Europeans filled with woe. I would describe myself as neither an ardent European nor a sceptic. I am an earnest European and, because I am a newcomer to the European Parliamentary scene—although a veteran of the European movement—I am still full of hope. What fills me with hope is the richness of the current European dialogue. Perhaps it takes somebody from outer space, an innocent and insular eye to perceive what I might call the European process as it looks today.
First, there is Parliament itself. Some people, by the way, are so in love with the principle of direct elections that they tend to write off the present Parliament as ineffectual and illegitimate: that is, to the Continental mind, it does not possess the somewhat mysterious quality known to historians as legitimacy. All I can say is that it contains many able and distinguished politicians, assiduous in their duties, with a deep knowledge of the labyrinths of the Community and a strong feeling for Europe. I believe in direct elections; but I hope that the first elected Parliament will contain enough men and women of this calibre and with an equal appetite for work.
Most of the real work of the Parliament is hidden from the public gaze. It takes place in committees where the Commission's proposals are not only discussed but discussed in the presence of the responsible Commissioners or their officials, subjected to rigorous inquiry and often to challenge. When the committees have done their work there is

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further debate in the political groups both in the hard, immediate subjects which are coming up in Parliament and on long-term policies. In the Parliament itself the debates are conducted in the presence of the Commissioners and Members of the Council, too.
But this is not all. The dialogue does not end there. On the aircraft to Brussels, in the hotels and restaurants one is continually coming across Ministers, Junior Ministers, officials, trade union leaders and industrialists—all taking part in some form of committee meeting about the complex affairs of the Community. Added to these are the representatives of the special interests groups. The farming unions of Europe are there today; and there is even talk of their leader, Sir Henry Plumb, becoming a Commissioner. And when we come home we find a Select Committee of your Lordships' House is engaging in the dialogue. We put our heads round the door and they are up to their necks in the European affairs that we have just left behind.
So, my Lords, do not let us despair. To use Churchill's homely phrase, we are becoming more mixed up together. The mix will inevitably lead to union and, perhaps long after our time, to some form of federal or confederal system. At the moment there is new hope in Europe. First, the economic upturn seems real—it is better than people dared to hope—and the economic convergence, on which hopes of increased unity of eventual union must be based, seems to be developing. Alas! there is still an inflationary problem. It looks as though we shall see a new economic phenomenon—that is conspicuous growth without conspicuous decrease of unemployment.
The second cause for hope is the decision to go ahead with direct elections. I agree in principle, but some people, even including my noble friend Lord Castle, have rather exaggerated hopes of what a directly elected Parliament can be. I do not think it will have behind it any popular pressure in favour of the nations of Europe giving up some national sovereignty in the interests of European union. Those who think otherwise are mistaking the opinion of pro-European pressure groups for public opinion, or are basing themselves on public opinion polls which get positive answers to propositions
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whose implications the public have not yet grasped. I cannot think, for example, if there were elected Members of the European Parliament at this moment when there is a dispute about fisheries that the elected British members would be pursuing a strongly European policy in favour of the Commission's proposals, and that they would not be putting the British national interest first. I think people are human; and particularly when they have to face the electors it would be very difficult for them to take a consistent pro-European supranational line and not take a national line. Nevertheless, the decisions to hold direct elections have caused some buoyancy.
The next cause for cheerfulness is that the President-elect is Mr. Jenkins. Some of us see his impending appointment with mixed feelings. We have gained a European President and we have lost a most distinguished national leader. It is however important that Europe is going to be led virtually for the first time—since Mr. Mansholt's reign was so brief—by a Social Democrat. The voice of European progress will be an English voice of great persuasive power. I think it will have a special effect in Britain and I hope in Denmark and Scandinavia generally, too. It is very important that the voice of Europe is now going to be the voice of a politician and the voice of a Social Democrat. I am sure people who belong to other Parties will see the importance of this in the general European interest at this moment. Above all, the Commission will be in the hands of a man who has proved his efficiency in two great Departments in Britain. It will be in his hands at a time when there is urgent need for administrative reform, political vision and a more effective relationship between the Commission and the Council. For most of the things, it is of course the Commission which proposes and the Council which still disposes.
But which Council? That is always a problem. There is always a problem of names when we discuss this matter. I have raised this question of nomenclature in the European Parliament, so far without effect. I hope I can get through to my noble friend on the Front Bench or even to the new President-designate of the Commission. The names of the European institutions are in a confusing mess. They are confusing even to Parliament

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arians. They are a nightmare to people running information services, particularly newspaper clippings libraries. They are incomprehensible to the public, yet it is the public who are going to be asked to vote for a European Parliament.
To come back to my question, "Which Council?", there is a Council of Ministers; there is the European Council—the confusing name given only recently to the Heads of Government or State who used to be known as the Summit. Then apart from this there is the Council of Europe which has nothing to do with the Community. The Economic Community's Parliament is, strictly speaking, the European Assembly. That is its official name in the Treaty. The Council of Europe has an Assembly, too. To make the confusion worse confounded, the two assemblies use exactly the same building in Strasbourg. A further confusion is that one of the Community institutions is the Economic and Social Committee and this has nothing at all to do with the Economic Committee or the Social Committee of the Parliament. The mix up is so great that I have had at least one dinner at an embassy which thought that because I was on the Economic Committee of the Parliament I was a member of the Economic Community's other Institution. So I plead with my noble friend or Mr. Jenkins to look at this problem. Surely it is a fundamental of democracy that different institutions should have different names which give some indication to citizens of their basic purpose.
5.55 p.m.
Baroness SEEAR: My Lords, I should first like to apologise to your Lordships and particularly to the noble Lord, Lord Goronwy-Roberts, because, unfortunately, I shall not be able to be here for the winding up of this debate. I have to chair a committee which was fixed long before I knew the date of this debate. I am speaking primarily as a Member of the Social and Economic Sub-Committee of the Select Committee. As noble Lords will be aware, the noble Lord, Lord Fulton, is chairman of that Sub-Committee. He had greatly hoped to be able to speak today and I know he gave a great deal of care to the preparation of what he planned to say, which is based on a section of the Select Committee's report to which
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he contributed greatly. Unfortunately, for urgent domestic reasons he is not able to be here. His wife is sick, not I believe and hope seriously sick, but sick enough to detain him in Yorkshire. It is with very great regret on his part that he is unable to be here today. I do not claim—I would not dare—that I am in any sense speaking for him, but we have discussed from the point of view of membership of the Social and Economic Sub-Committee the kind of points we should like to present to your Lordships, and although the noble Lord, Lord Fulton, takes no responsibility whatsoever for what I am saying, I hope in some limited degree I am reflecting the points he would have liked to make.
The Tindemans Report strikes a note of muted optimism. The speeches today have also struck a note of muted optimism. But Tindemans is a politician and the Members of your Lordships' House are politicians speaking to politicians. It would be unwise in the extreme if we were to fail to look at the less agreeable facts starkly in the face. Until recently there has been in many minds a real fear that the Community, for which some of us have worked and fought for nearly 20 years, might be moving into a state of disarray leading even to total disorganisation. The position is that if we are to avoid becoming merely a customs union and then from being merely a customs union to face the inevitable consequence of breaking up once again into national entities each out for their own end, we have to go forward. We cannot stay where we are. We have to take a leap into the future however much we may guard the path as we go so that we do not run into unnecessary difficulties. It is clear—this has come out in the speeches today—that we cannot stay in the position we are in.
As my noble friend Lord Gladwyn said, we do not know the precise structure of the political organisation which will ultimately emerge. It is almost certainly like no other political entity that we have had in human history. We have spoken of federalism, and many of us still talk of federalism, as being the nearest known institutional political form to the kind of organisation to which we wish to move. But, for my part, I think it is perhaps misleading to talk too much of the term "federalism" because that conjures up in the minds of so many people pictures of the American situation.

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They have been misled by believing that what we hope to achieve is the mirror image of the United States. That, I believe to be far from the truth. It is part of the excitement to those of us who were interested in political ideas and it is part of the excitement of the development of Europe that we are forging a new type of political organisation for which the name is as yet unknown.
So ahead we must go. But how are we to take these moves forward unless there is behind the Governments a real groundswell of popular support and indeed of popular enthusiasm, if we can get it, for the way ahead? If we can all too easily agree at the level of Ministers, and if we can all too easily agree inside both Houses of Parliament the steps that are needed, we can also find that the leaders have moved on but that those they represent are not coming along behind them and there is no solid popular support for the direction in which we are going and for the changes that have to be made. Therefore, the question is: How are we to get that popular support which we are going to have to have if the essential moves ahead are to be real and enduring?
This can happen only if ordinary people everywhere—and let us confine ourselves to this country, because this is our first responsibility—see that in Europe, and preferably in Europe alone, and I believe "in Europe alone" to be true, there are answers to the problems which are the real and urgent problems for them. People of our generation were seized by the European idea, because the problem that fired us was the problem of seeing that there would be no future military conflicts in Europe. It is perhaps a measure of the success of Europe that that is not an objective which fires the young of today because they take it for granted, despite the history of a thousand years, that France and Germany will not fight each other again. The military security, the prospect of peace in Europe which was the inspiration of the early Europeans, simply is not, in my view, the inspiration of the younger voters, the younger men and women of this country, whose support we must have if we are to go forward with the European idea.
What, then, are the issues which will rally them? First, as other speakers have said, they want the security of a reasonably
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safe economic future and they want reasonable economic prospects for themselves. That might sound very materialistic but, to my mind, it is entirely right and reasonable. If they can be led to believe that there is a safer and sounder economic prospect for young Europeans in the new and better co-ordinated Europe that some of us would wish to see, then they will begin to rally again, as people of our generation rallied in the years after 1945.
Again, because they care not only for themselves, there is the great problem of poverty—poverty in sections of their own countries—and perhaps, above all else in the eyes of the young, the problem of the distribution of wealth between rich countries (which are mainly European countries) and those of the developing world. Can they be made to see that it is only through European co-operation that we can hope effectively to do what must be done, and what they urgently feel on ethical grounds needs to be done, in the relationship between the developed and the developing countries? In areas of this kind and in the work that has to be done in the future, I believe there is an opportunity for rallying the support of the generations which need to become enthused about the European idea and which, quite frankly, are not enthused about it at the present itme but whose support is absolutely essential if that muted optimism of Tindemans and of your Lordships' House today is not to be a false optimism.
When we on the Social and Economic Committee look at the kind of issues coming before us, they are very much what the noble Lord, Lord Fulton, has referred to on several occasions as "second order issues". Certainly they are important matters concerning training, the professions and conditions of work and matters dealing with secondary concerns of health and social security; but there is very little coming from Europe that can fire the imagination of people who are not close to the workings of Europe and to demonstrate to them that here is the instrument through which, and only through which, they can find an answer to the questions they are asking, or indeed to the questions which all too many of them are becoming too afraid even to ask.

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Can we not do something here to show far more plainly to men and women up and down the country what Europe really can mean in terms of the problems which are problems to them? I believe we can do this only if we can get to grips on a European level, as, if you like, a demonstration exercise, with tackling some of the really tough problems. If we find one or two issues to which people in this country will respond as the real issues of our time, and if we struggle with them—and one great example here would surely be unemployment—and show that a European initiative may be the best, and indeed the only, way of dealing with the question of unemployment which hangs like a pall over the young generation—if we could show that Europe could do this, then I believe we should begin to get the battalions of ordinary people coming behind us in support for Europe in a way that we most emphatically have not got them coming behind us at the present time.
The noble Lord, Lord Fulton, pointed out to me, as he was preparing to talk to your Lordships' House today, that he had been looking at the experience of the bitter way in which America had worked through to unity. As I said earlier, I am not suggesting that the pattern of unity America found is the pattern of unity that Europe will find. But to refer to the work of the historian, Morison, who wrote of the results of the American Civil War, he said this:
"Others learned their lesson from the powerlessness of the Confederation even to protect its own property, much less to help a state in distress. Out of all this came an emotional surge—without which nothing great can ever be accomplished in America—towards a new federal constitution ".
In this country today there has been no emotional surge towards Europe, except in a very few and very rarefied areas. The support in the Referendum was genuine support but in many ways, if the truth be told, although I was myself active and enthusiastic in that campaign, it was in a sense a negative rejection of "going it alone", rather than a positive enthusiasm for the European idea. We need that emotional surge, but it will come only following the experience of a real tackling of real problems which appeal to the imagination of ordinary men and women.
There is one thing more I should like to say, and I know that the noble Lord,
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Lord Fulton, would have said it far better had he been here today. If we are to move to a new Europe we have to prepare now in educational terms to be ready, and we have to prepare the younger generation in educational terms to be ready to be Europeans. We in this House are Europeans by conversion. Most of us are very poor Europeans in many of the most important ways. I can speak only for myself but I have halting French and a menu German, and that is no basis on which to be an effective European. The knowledge that any of us had of the roots of European civilisation and of the ideas that move and sway other sections of Europe is very slight and inadequate. Can we not begin now to find ways, on a far larger and more effective scale than anything that has yet been done, to bring together in our educational system opportunities for a much greater movement of the young between the schools and universities of the countries that make up Europe, so that they are growing together in thought and activity at that stage of life when mixing together is all important?
6.11 p.m.
Baroness WHITE: My Lords, I should like to add my congratulations to those already expressed to Roy Jenkins. I am sure your Lordships will understand if I do so with the peculiar partiality of a compatriot. I trust also that it will not have escaped the notice of your Lordships that in this annus mirabilis not only did we beat everybody at Rugby football—that we take in our stride—but we have attained a triple Parliamentary crown. We have the Lord Chancellor, the Speaker of the House of Commons and the Prime Minister all hailing from the Principality, to which we are now to add the chief designate of the Commission in Brussels.
I feel that it is a most important conjunction that Roy Jenkins should be going to Brussels at a time when, from the beginning of next year, we shall be in a position of peculiar influence in the Council of Ministers. It therefore behoves us in this House and in the other place very much to concentrate our minds in the next few months on how best to take advantage of this opportunity which, in the natural course of events, will not present itself very frequently. I hope that we shall be able so to influence the

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processes of the Community that it may emerge from the period of disappointment and recession to which many speakers in this debate have already referred.
Of course, I entirely agree with the noble Baroness, Lady Seear, that we do not have in this country at the moment the kind of emotional concern for the affairs of Europe which would certainly he a prerequisite of any kind of political union on a federalist or any other pattern. It seems to me that that can be focused only when we have already created the political institution namely, the directly elected Parliament. I do not think we can expect it to happen earlier. I myself have serious apprehensions as to how this new political experiment will work, partly for a reason which I have already mentioned in your Lordships' House. To expect those of us who come from Wales—possibly for those who come from Scotland it may prove easier—to digest virtually simultaneously two major political changes in the Parliamentary sphere is asking a very great deal. We are in an uncomfortable state following our local government reorganisation, which has not brought satisfaction. Many of us feel that that, in itself, was so ill-advised that even after such a short period it should be changed once again—
Baroness ELLES: My Lords, will the noble Baroness allow me to intervene? Is she proposing that devolution should be postponed in that case?
Baroness WHITE: My Lords, the noble Baroness cannot possibly put that construction on what I am saying. I am simply suggesting that it is a peculiarly difficult situation for the ordinary man and woman, who, after all, are expected to provide the electoral basis for all these institutions, where one has very recently changed local government, and is then proceeding—and I am of the opinion that we shall proceed—to a form of devolution for Scotland and Wales, which will be a very great change in both countries, while at the same time being expected to take in the European dimension. It would be difficult enough on the English scene, and I am just suggesting that there is additional difficulty in Wales and Scotland, both on the mundane plane of political organisation, which is not entirely to be disregarded, and even more in the reaction of the people concerned.
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It will be difficult for those who will present themselves as European candidates—I do not know where the noble Lord, Lord O'Hagan, proposes to present himself; he has Welsh connections and might do quite well in the Principality—to make intelligible the kind of issues to which the noble Baroness, Lady Seear, referred. It will be still more difficult to make intelligible the matters of second order business with which our Select Committee occupies itself, and sometimes third, fourth and fifth order business. It is difficult enough for most of us to follow the intricacies of the documentation which emerges from Brussels. I make those few remarks in no unhelpful sense, but simply to indicate that it will need a great effort of imagination and will, as well as hard work on the details of programmes and so on, from everyone who hopes that Europe will proceed to a state of political development which we can accept with any satisfaction
I doubt whether the Tindemans Report is helpful in this situation. I must confess that I am not a federalist; I am a functionalist by nature and upbringing. I am not excited at all by the notion of federation. I think it would be a state of affairs which we should not find very comfortable. Much of what Mr. Tindemans said I found not particularly convincing and, in some respects, even rather boring. That, no doubt, was due to some deficiency of my own. But I was interested that those who have been much more closely concerned, as members of the European Parliament, also did not seem to be quite so enthusiastic for Mr. Tindemans' point of view as we might have expected. I entirely agree with the noble Lord, Lord Castle, and others that far more important is the issue of direct elections and what may emerge from them. That is in no way derogating from the task which Mr. Tindemans has most faithfully carried out; it is just a political truth.
On the other hand, we in the Select Committee of which I have the honour to be a member, under the admirable guidance of our chairman the noble Baroness, Lady Tweedsmuir, have been concerned with the more particular interests touched upon in the Tindemans Report, and at that level I think he said a number of things which are distinctly helpful. If I may refer—I hope very briefly—to the

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briefest section of the Select Committee's Report, Part 6, on the environment on page 10, we there drew attention to the two matters upon which Tindemans touched. One was the matter of organisation in the Commission which we do not find very satisfactory. Again I hope I say this in no carping spirit because those who are concerned with these environmental matters are I am sure doing their utmost. At present they do not have adequate resources to do the kind of job which I am sure they wish to do as much as we would have them do it.
The other matter is a much more important philosophical and constitutional matter. Mr. Tindemans pointed out quite rightly that when the Treaty of Rome was promulgated it was almost entirely based—although it had many political overtones—on economic terms and functions. The dominant Article 2 is couched accordingly in terms of economic harmonisation and economic growth.
Mr. Tindemans very properly pointed out that in the years which have passed since the Treaty was drafted and adopted public opinion in Europe and in other parts of the world—most notably, possibly, in the United States but really it is a world wide phenomenon—has become, suddenly and sharply, most acutely aware of the fact that we live in a physical environment which is of the greatest importance for the future of the human race. It is an environment that we share not only with Europeans but with all other human and living creatures in one common biosphere. It is only very recently that we have woken up to the fact that by misuse, or profligate use, of the resources of our environment we may be betraying not only ourselves but future generations. Therefore, the notion that we can happily go on expanding and expanding our economic growth is not tenable. One must look far more critically than we have ever done before at the effect which our activities have on our environment and at what policies we should adopt with such considerations in mind.
It was only in 1973 that the Community gave public recognition to this principle in its declaration on the environment. It has still not been incorporated in the Treaty. Some of us have suggested that
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Article 2 should be amended, but having listened to the noble and learned Lord, Lord Diplock, I am daunted by what would be required to be done to alter the Treaty of Rome. Therefore it is at least comforting that whatever other weaknesses or deficiencies there may be in Brussels, they seem to be prepared to proceed with a very substantial environment programme, which I commend to the study of your Lordships, whether or not any mention of the environment is made in the Treaty. That I regard as a very substantial bonus mark for an institution of which I am otherwise rather critical.
So we are grateful indeed that Mr. Tindemans himself should so clearly have drawn attention to this development. In our very brief comment on his report we quote him as saying:
"Our peoples are concerned with new problems and values scarcely mentioned in the Treaties. They are calling for a new type of economic growth displaying more respect for the quality of life and for the physical and human environment."
This is one of the causes which appeal most strongly to the young generation in all countries of the world. It is one which, if the European institutions can be successful, may provide one of the emotional urges for which the noble Baroness, Lady Seear, was calling.
Finally, may I refer to the efforts which the non-Governmental organisations in Europe who are concerned with environmental affairs are themselves making? They have established in Europe the European Environmental Bureau, and I have here their comments on the Tindemans Report. If I may just underline one particular request they make, it is that those in the Commission who are charged with responsibility for environmental affairs should not be so restricted and inward looking as they are in the Brussels context—as was so vividly described by the noble Lord, Lord O'Hagan, and other noble Lords who have spoken—where each directorate regards itself as completely self-contained and is hardly able to speak to those who work for other interests. But the voluntary organisations are anxious that concern for the effect of policies upon our physical inheritance—they may be land use policies, or industrial policies, or energy policies—should permeate all sections of the Community organisation and not be confined simply to the one which has the direct official responsibility.

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In its commentary on Tindemans the European Environmental Bureau say in terms:
"Meanwhile, the Environment and Consumer Protection Service of the Commission should see its task not merely as pursuing a programme of its own independently of other directorates of the Commission but as promoters of the idea of environmental quality within the other directorates".
Those of us who had occasion recently to meet some of our own officials who represent us at official gatherings in Brussels were much disappointed to find that this idea does not seem to have permeated some, at least, of our official representatives. We hope very much that they will raise their eyes from the details of these innumerable Directives which are issued from Brussels and recognise that here one has a most challenging situation. One should be able to relate these environmental issues to matters of much wider policy than the relatively narrow Directives, important as they are, dealing with pollution of water, with problems of noise, and so on and so forth. I hope very much that whatever happens in the political developments of the next two years or so, some of these ideas will permeate both the institutions in Brussels and also ultimately our own European electorate in this country.
Lord O'HAGAN: My Lords, before the noble Baroness sits down, she has commented on the attitudes of some of the officials who represent us at meetings in the Community and complained that they do not take an over-view. Would not the noble Baroness agree that it is impossible for the officials to look beyond the brief setting out what they are meant to do and that the only way for them to take a wider view of all the environmental considerations would be for their political masters to ask them to put forward a Green Paper on the environmental issues in preparation for our Presidency next year?
Baroness WHITE: My Lords, I appreciate what the noble Lord has said but I have always believed that it is the officials who are really the masters. They advise the Ministers.
6.28 p.m.
Lord DUNLEATH: My Lords, I have listened with great admiration and no small
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amount of awe to the erudition of the contributions made to the debate so far by both noble Lords and noble Baronesses. It leads me to the conclusion that I must be the most objective and unbiased speaker in the debate this afternoon, because I am completely free from and untainted with any knowledge of the EEC situation—so much so, indeed, that as I was coming over this morning in the aeroplane I was practising my pronounciation of "Monsieur Tindemans", slightly to the disquiet of the air hostesses and my fellow passengers. But having heard what I have heard this afternoon about "Mr. Tindemans", I will not venture on to such dangerous ground again and, indeed, will make no further reference to the gentleman, thus shortening considerably my speech. I hope, however, that your Lordships will forgive my rather simplistic approach to the debate, and may I say with respect that I shall welcome very favourably any interventions which your Lordships may make if I should happen to stray into error.
I have read the documents associated with this debate with great interest and I welcome the seemingly solid progress that is being made in the development of the European Parliament, and certainly the progress that is envisaged for the near future. The Party which I represent, which is the Alliance Party of—dreaded words !—Northern Ireland, and I welcome greatly the fact that the proposal is to have direct elections and direct representation because we feel this means that there will be a very much better chance of any available funds being deployed to the best advantage in disadvantaged areas, such as Northern Ireland, where, as your Lordships know, unemployment is at the highest rate in the United Kingdom and the economic outlook is far from happy at the moment. We feel that direct representation in areas such as that will help in ensuring that any available funds are deployed to the best advantage. We also feel that it will be very helpful if it is not only the case, but is seen to be the case, that assistance from the Community is not substitutional for but additional to any that comes from the United Kingdom Government funds.
This means that there will be a heavy responsibility on the Members of Parliament elected to the European Parliament and therefore a heavy responsibility on the

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electors throughout the United Kingdom, and perhaps even more, a heavy responsibility on the Party selectors who choose the candidates for that Parliament. For instance, your good, old fashioned "no Pope here" candidate will not cut much ice in the European Parliament, particularly in view of the fact that the Treaty of Rome has so frequently been misrepresented as the Treaty with Rome. We must have people who will genuinely represent all parts of the United Kingdom in the European Community and who will know what they are talking about.
My belief is that proportional representation would be the best method of election to the European Parliament. I think my Party is in agreement with the Liberal Party that this is the best form of election, and referring also to elections to the House of Commons at Westminster. I can only say that surprisingly enough it has worked well since 1973 in Northern Ireland. It has meant that the automatic vote has gradually decreased and that the voter tends to make more of a conscious decision before casting his vote. Multi-Member constituencies mean a certain amount of duplication of effort, but at the same time they keep the elected representatives more on their toes, as I know from my own experience, and also enable a fairer pattern of representation to be achieved.
I do not imagine that the time is yet ripe to have proportional representation for the House of Commons at West-minister. I wish it were. If it is not—and I hope I am wrong—the argument may be adduced that to have direct elections to the House of Commons but proportional representation elections to the European Parliament would cause confusion. I submit that that would not be so very serious a snag. There are a lot of sick jokes in currency at the moment about the stupid Irish. We have not had all that much confusion between proportional representation for the Northern Ireland Assembly or Convention and direct elections for Westminster, so surely the superior intellects of the voters on this side of the water would not experience difficulty! In passing, while speaking about Westminster, I would say that I agree with those who suggest that in the absence of devolved Parliament in Northern Ireland a higher number of
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MPs would be justifiable for Northern Ireland, but that is not the subject of this debate.
Turning to the problems of small regions and looking at the proposed allocation of seats in the European Parliament, on the face of it, it would seem that the smaller countries are being treated over-generously, with places like Luxembourg and the Republic of Ireland getting a disproprotionate number of seats compared with their population. But when one thinks about it, this is reasonably fair. The point I want to make is this: if small countries are given over-generous treatment because their problems are not necessarily fewer in number or lesser in magnitude than those of countries with a larger population, should this criterion not be applied to smaller regions?
To the best of my knowledge the proposals are that of the 81 seats allocated to the United Kingdom, apart from the bulk of them, which quite rightly will go to England, there will be 10 allocated to Scotland, five to Wales and three to Northern Ireland. is it really consistent that Northern Ireland with a population of 1½ million should have three seats when the Republic of Ireland, with a population of 3½ million—just over double; not three times—should have 15 seats? All right, it could be said that the three members from Northern Ireland have the backing of all the other members from the rest of Great Britain. But I would submit to your Lordships that perhaps there is a case for considering that small regions with peculiar problems—and particularly in the case of Northern Ireland with the remoteness problem, the unemployment problem, the economic difficulties—should have larger representation, possibly to the tune of four or five.
So far as the direct elections are concerned, I feel that Northern Ireland should be treated as one constituency, and I would hope that four or five members could be elected from Northern Ireland as a whole. I put it to your Lordships that, if the number were increased from three to four or five, this would make more likely the chance of a reasonably good spread across the sectarian and community divide, which is what my Party is all about. But, above all, I think what is essential—and I have been

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delighted to hear so many speakers refer to it this afternoon—is to cultivate in the next 22 months public awareness of the European Parliament.
I was involved in a canvass at the time of the Referendum last year. In trying to advocate to people that they should vote in favour of Britain staying within the EEC, I found that, first, they were not interested, and secondly, they knew nothing about it. I think it is the view of so many people that it is rather like the solar system: if you take an unfavourable view of sunspots, there is nothing much you can do about it, so therefore, you do not acquaint yourself with it, you take no steps about it, and you do not make any effort over it.
In the next 22 months we must get over to people that there is something they can do about the European Parliament and the Community as a whole, that they have to think carefully about the policies involved, and that they have to think carefully before selecting or electing members; otherwise, as other noble Lords and Ladies have said, the public is not going to be behind the European Parliament and it is not going to achieve what I think nearly all of us here are hoping for.
6.41 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I should like to follow the noble Lord, Lord Dunleath, in the last words of his speech. I think it is of vital importance that we should get the British public to understand what the European Parliament is all about, and what the question of direct elections will mean. This is extremely important, and what the noble Lord has just said is also very important indeed. I could not agree more with the noble Baroness, Lady White, on the problems of small countries deeply involved in local government reorganisation, which is not as successful as we would have hoped; devolution, not knowing what we are going to do or what is the right thing to do, and about which there has been a good deal of controversy; and then being offered, and accepting I am sure, the responsibility of elections to the European Parliament. These are very difficult things to deal with, and to try to get the British public interested will take a lot of hard work, care, help from the media, and so on. But I certainly agree that the British public should, and must, be
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interested because we are all committed to the European idea, and so far as I am concerned, committed with great enthusiasm. I have always been a supporter of it.
We cannot exaggerate or underestimate the amount of good that has been done by the noble Baroness, Lady Tweedsmuir of Belhelvie, in organising these committees. It seems that everybody present in the House at the moment is a member of one committee or another. I must say that I have learnt more in the two years that I have been on Committee D, the Committee which considers agriculture, than I could possibly have learnt in any other way. These committees are functional and highly successful. I have been listening to everybody talking about the particular committee upon which they sit, and in this way a great contribution is made to the wav in which all of us can play a part in understanding and the spreading of propaganda, if you like, or however we may like to put it, to the British public on the importance of understanding and being an enthusiastic supporter of the EEC.
In reading the papers, particularly those on the Tindemans Report, it is a little disappointing—and I am speaking now as a very enthusiastic member of Committee D dealing with agriculture—that there is only a very short reference to agriculture. When I was reading these, the other Command Paper, and also the Tindemans Report, I wondered why it was that such small reference was made to this subject in the report by Mr. Tindemans because this subject has so absorbed the Six ever since the Treaty of Rome was signed—and now it is the Nine. I have come to the conclusion that it is because this is such an exceedingly difficult subject.
Agriculture is so varied and so difficult to organise on the basis of unity that I am not at all sure that it really is a possibility in the sense in which one can organise things like the environment, or energy, or what-have-you. It is a very difficult thing to do. It is dependent on forces over which we have no control, such as the weather, climate, type of soil, and so on. We cannot grow in this country what is grown in Italy; we cannot grow in this country what is grown in other parts of the EEC, and vice versa. So it is not an easy matter

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at all to work out an agricultural policy which will suit everyone. Furthermore, much of the EEC agriculture is part-time. The farm units are so small they are not farms in our sense of the word at all. In Scotland, we would call them crofts. It is the crofting idea that a lot of the small farmers in the EEC are really engaged in, and even then they are not engaged full-time; they are doing something else, and going to work on their small patch of land during the course of the day, the evening, or however it is organised.
It is not easy to relate that to our type of agriculture which is about the most efficient, certainly in Europe, and I would be prepared to say in the world today. On the whole, the units are a great deal larger than in Europe. The efficiency which we have achieved, the desire for low cost for high quality, and for sales promotion are some of our principles—principles which we discussed last year when discussing agriculture with Mr. Lardinois, when I thought that in many ways the ideas they had were not the same as our own.
The idea that agriculture is a subsistence industry and that sales organisations are not really developed in Europe is quite different from the situation here. We base our whole agricultural policy on being as efficient as we possibly can be, and by having as good a sales organisation as we possibly can. I have no doubt that these problems have weighed very heavily with M. Lardinois, which may well be the reason why he feels he cannot go on at present. But I think a good deal of the policy has been very successful. I think the grant aid allocated for disadvantaged areas has been very helpful and successful. Many of the economic policies are beginning to be successful, and are beginning to co-ordinate agricultural interests. But, of course, it is a slow progress. The differences in conditions are very great indeed.
I am just wondering whether it is possible to have the same rules for food production in all countries when all the conditions are so very different. Section IV of Cmnd. Paper 6497, which we are also discussing today, refers to agriculture and fisheries in more detail than does the Tindemans Report. This
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section shows there has been considerable progress among the Nine. But it still seems to me necessary to think about sales of produce as well as of production. There is little about sales in any of this. Therefore, one comes across the huge surpluses, whether they be of milk or any other product, which in my opinion might well be avoided to some extent if there was a real sales drive. Taking milk alone, the amount of milk consumed in France, Holland or Belgium is far, far less than that consumed in this country per head of the population, because we have a splendid organisation in the Milk Marketing Board. I am glad the Common Agricultural Policy has agreed to let our Milk Marketing Board continue because it has done highly successful work, and has the backing of the whole of cur dairy industry.
I only wish we could persuade the agricultural interests in Europe to consider doing something on the same lines as with some of their other products. I think the idea of selling food should not be separated from the production of food, otherwise the balance gets completely wrong and you have what I think someone referred to as these meat mountains, milk mountains and so on and so forth.
Paragraph 39 of the Cmnd. 6497 refers to preliminary discussion on the agricultural structure. I would like to suggest that whoever takes over from M. Lardinois should work very seriously on this problem. We have learned with great pleasure of the appointment of Mr. Roy Jenkins to the Commission of the EEC, and no one could have had a more enthusiastic reception from all sides of this House and the other place. I am extremely delighted that he is going to be our leader there. I agreed with Lord Castle when he said very distinctly that what was wanted in Europe and the European Parliament were men and women of stature; it is vitally important that when our representatives are elected to the Parliament they should be people of great stature.
I was delighted to see recently in an agricultural paper, and I think it was also in the newspapers, that there was a possibility that the Agricultural Commissioner might be chosen from the

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United Kingdom, and the name of Sir Henry Plumb was mentioned. I hope that this may be a happy prognostication which might be fulfilled, as I believe that, if we had a really outstanding agriculturist like Sir Henry Plumb, it would be a great help to the agricultural policy.
If noble Lords would turn to the Tindemans Report, it lists a number of people interviewed by M. Tindemans on the different subjects he covers in the report. I was a little startled to see under "Agricultural Organisations" a list of trade unionists—Len Murray, David Basnett, Norman Willis, A. Hargreaves and Jack Jones—admirable gentlemen, but none, I think, could be called agriculturists. Then I see above, at number V, a list of Trade Unions, and these are R. Butler, President of the National Farmer's Union, George Cattell, Director General-of the National Farmer's Union, Asher Winegarten, Deputy Director-General, National Farmer's Union. This has either been an error of printing, in which case I hope somebody will correct it, or something very odd has happened, because nobody could say that to discuss the important subject of agriculture you would go to the agricultural interests described as Trade Unions here and the trade unions described as agricultural organisations here. Perhaps that may be mentioned and put right.
I have spoken about agriculture in the EEC because I am an active member of the sub-committee, but I would support those who have spoken about direct elections. I feel encouraged that some of those who have spoken as members of the European Parliament at the moment feel that things have started to go better and that people are more interested. Lord Ardwick has encouraged me with his account of work being done by the appointed members of the European Parliament and the amount of cooperation which exists today. I am heartened by this. I hope it will continue. I hope that in about a year's time, when we are discussing these matters again, we will be able to point to a very successful reorganisation of the European Parliament, and that we can send to Europe first-class people from this country, who I think would have a tremendous influence in Europe today.
6.54 p.m.
Lord BRUCE of DONINGTON: My Lords, I should like to join with my colleagues in the European Parliament in expressing my own congratulations to the Committee headed by the noble Baroness, Lady Tweedsmuir, and indeed to her personally, for the clarity of the reports that are produced by her Committee. Many of us by this time have become used to placing rather more reliance on the observations made by the noble Baroness's Committee than we do on some of the allegedly more authoritative comments contained in the papers themselves. We are, indeed, grateful to her.
I am a little worried by the course that this debate has taken. It seems to me that in so many of the contributions that have been made, admirable and well-documented as these may undoubtedly have been, we have to some extent confused hope with reality. If one went through the White Paper we are considering today, one would not gather the impression that there was anything seriously wrong with Europe today, but, of course, the reality is that things are not going at all well in Europe today. Until we recognise this, there will be but little chance of affairs in Europe improving. There are at the moment 5 million people out of work in Europe, and there is inflation, however improving. But there is no sign from any of the Member States, including my own, that they have arrived at any European solution for this problem. Of course, that may not be—and I am not suggesting it is—the fault of the European Community institutions themselves. Neither am I blaming it on the Treaty of Rome. But what I am saying is that from the observations of the nine Ministers they are no nearer a solution to the problems of Europe than is implicit in their insistence on the old solution of cutting public expenditure as a means of curing unemployment, a doctrine which I thought was as dead as the dodo following 1931. There is no evidence at all that the Council of Ministers have made any serious and structural analysis of the European economy itself.
Baroness ELLES: My Lords, would the noble Lord allow me to intervene? Would he not agree that by not cutting public expenditure we still have enormous unemployment in this country, and it is increasing?
Lord BRUCE of DONINGTON: I was not saying that at all, my Lords. What I was saying was that there was no evidence that the nine Ministers have made any structural examination of the real nature of the European economy as a whole, or if they have, they have kept it very secret from us. About a year ago, the Commission itself published a document, a very important document called The Problems of Inflation. It in fact went to some length to discuss the role played by private corporate power in Europe, the whole problem of the impact of the conduct of the very large multinational companies—which I am not seeking to decry in any way—not only on price levels themselves, on the problems of inflation, but also by transfer pricing and also by the movement of vast sums of money across the exchanges permissible under the Treaty of Rome. This was causing imbalance between the various balance of payments situations in several countries of the Nine. There is no evidence that such an examination has been carried out or, if it has, that any attention has been paid to it.
The first report of the Regional Fund just produced by Commissioner Thomson draws attention to the fact that far from during the last five years the regional imbalances having improved, in fact the situation is getting worse year by year. I am not going to speculate as to what extent this has been caused by, or follows from, the freedom to move both capital and labour all over Europe, I merely record the fact that according to Mr. Thomson's first report, if one took the the position of Paris and Hamburg as against Southern Italy and Western Ireland in 1972 the difference was four and five times as much GNP per head in Paris and Hamburg, and the position is now five and six times rather than four and five. There is no evidence at all that the Member States or, for that matter, the Commission are making any endeavour at all to correct this imbalance.
One would have thought on reading the Treaty of Rome that the Member States could have invoked Article 92 of the Treaty in order to have made special arrangements in order to increase the amounts available to the Social Fund. There is no point in making extra arrangements for the Regional Fund because the Regional Fund is geared to the contributions of the
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Member States. Only 20 per cent. or 30 per cent. according to the nature of the project is supplied by the Community, the remainder has to come from the resources of the Member States, and so there is this imbalance.
It is one thing to trace the causes of the imbalance backwards, but it is another thing to take steps to remedy it. There is no point in going back into history to reveal, something which is undoubtedly true so far as this country is concerned, that we had a favourable balance of payments with the Community prior to 1970, and it is today running at over £2,000 million. It is one thing to say, as is undoubtedly so, that when the first assessment was made of the Common Agricultural Policy on this country, way back at the time of the White Papers of 1970 and 1971, an additional burden on the balance of payments of the order of £50 million by the end of the transitional period was contemplated, as against the approximately £800 million additional burden on the balance of payments last year owing to the operation of the Common Agricultural Policy.
There is no point in going back to the recrimination about that. What is important is to ascertain what steps are being taken to remedy it, because this country cannot play its full part in the Community, and cannot do its duty by its citizens, unless it makes quite clear to the world and to the Community what it proposes to do about it. One thing that it can do is to contribute to changing quite radically, as the noble Lord, Lord O'Hagan, indicated, the whole agricultural policy. I beg my noble friend not to regard the Common Agricultural Policy as being the tablets of wisdom handed down from Mount Sinai. I really hope that he will not, because I can assure him, if he may feel disposed to defend the operation of the existing Common Agricultural Policy, that he will find that he will be out of step with other European countries, and I suspect too with the Opposition in this House and in another place.
If there is one thing that is universally agreed throughout the Community by all the Member States, it is that the Common Agricultural Policy should be changed. What there is not agreement about is how it should be changed. It is my sincere hope that my own Government,

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the British Government, will be able to bring their mind to bear on this subject and make their own original contribution. The existing system of price intervention, at a price higher than prevailing in the world market, has not only cost our country this extra burden running into hundreds of millions of pounds on our balance of payments, it has also entered into the price structure of the prices that people pay in the shops, and acts, to the extent that it is excessive above world prices, as a poll tax on the entire population and has a profound bearing on the attitude that they take towards the whole concept of the European Community and its impact on them.
Unless the demands that are now being made, and the pressures that are mounting in the Community, for the rapid phasing out of the monetary compensation amounts, for the rapid adjustment of the Green Pound to the exchange value of the pound, are resisted and a new policy is put forward—I hope at the instance of the British Government—there will be a rise in food prices in January 1978 that will blow the bottom out of any social contract policy and any incomes policy. Let there be no illusion about that.
Baroness ELLES: My Lords, I am sorry to intervene again, but would the noble Lord therefore admit that the support from the Community to British food prices has been enormous, thanks to the MCAs?
Lord BRUCE of DONINGTON: My Lords, undoubtedly it has been, but unfortunately it has not been as much as the extra burden on our balance of payments, because it is cumulative. If the balance of payments deteriorates by some £800 million due to this particular cause, this itself has a depressing effect on the rate of exchange which then causes the payment of more monetary compensation amounts, and so on, and it becomes self-propellent. I therefore hope that we are going to have a more constructive attempt to reform the Common Agricultural Policy. At the moment the position is that 68 per cent. of the Community's budget is in fact being spent on 10 per cent. of its working population. If you take that in conjunction with the figures that I have put forward, which are authenticated, in relation to the Regional Fund,
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this is something that will strike at the very roots of the whole of the Community institutions unless Governments correct this.
I have been critical concerning the working of certain parts of the Community's policy. This does not mean that I think that the institutions, even operating within the Treaty, cannot be made to work. What it does mean is that we have to make an effort to make them work, and that we have to stop kidding ourselves that it is going to work all right if only we leave it alone. One result of my being able to participate, as representing this House, in the Community is that I have been able to learn a little better how the other countries think. I hope that by now they have begun to know a little better the motives which animate us. Whatever the shortcomings of Britain may be—and we are sometimes accused of dragging our feet—it is undeniable that in the European Parliament the attendance record of the British delegation, from whichever Party, outstrips that of any other nationality. There we have not dragged our feet.
For ten years of my youth I lived in apprehension of the war that as a young man I knew was coming. When it came it wasted six years of my life, as it did for many others who were engaged in war efforts of various kinds. One of the greatest advantages—one which perhaps we do not yet realise, but one which we may sometimes think about—is that because of the existence of the Community, that is now impossible. We in Europe do not have to live in fear of war among the Member States. That is worth fighting to preserve and I hope that we will fight to preserve that feeling of security in the European sense. We will fight for it not by pretending that problems do not exist, not by pretending that things are better than they really are but by getting down to the nitty gritty work of making it work in conformity with our own beliefs.
7.12 p.m.
Lord RHODES: My Lords, it is always refreshing to listen to the noble Lord, Lord Bruce of Donington. He spoke of the few years which he lost out of his life because of the war. The war took 13½ years out of my life. I do not

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intend to speak for long but I must first ask Lord Bruce, in view of his remarks about public expenditure, whether he is satisfied that it is being expended efficiently. In my view there has never been a time when public money has been handed out more profligately, but the question whether there is any virtue in not cutting public expenditure now, in the face of the inefficiency which goes with it, is a subject for argument on another occasion.
I came to this subject on the side, as it were; I evinced an interest in the Committee which was set up under the guidance and chairmanship of the noble Baroness, Lady Tweedsmuir of Belhelvie, which has been very successful, and I think that I was one of the first to point out the difficulties facing everybody when it came to understanding some of the problems which came to us from Europe via Brussels. Indeed, the first document in this connection that was handed to me was about the shipping industry. It recommended the rationalisation of the industry and one recommendation was that the industry in Jarrow, which at that time was quite busy, should be closed down. I recognised at once that here was a case of somebody writing papers for a Commissioner who knew nothing about the political implications for this country of such a step. I thought it was political dynamite, and I said so. Eventually it was withdrawn and ther began an investigation into some of the sources of the proposals coming from Brussels, something about which I shall have more to say later.
In the last few years democracy has had many trials and tribulations. Democratic institutions throughout the world have come out of those trials and difficulties pretty well and one which has stood up, maybe on rickety legs, is the EEC. I agree with much that was said by Lord Bruce and others about the need to have fire in the belly to grapple with the tremendous problems in the EEC. One of these, mentioned by Lord Bruce, is unemployment. The only countries in the world which do not have unemployment are the Communist ones and that is because they have a tight grip on labour. An example of this is in the East. There is no unemployment there. The authorities dish out little baskets to the workers on a building site
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and send them off running from one place to another carrying small quantities of earth, and at the end of the day they are given a bowl of rice for their labour. Perhaps they have the ultimate answer; they regulate how much technology can be admitted in relation to unemployment.
At the other side of the world we have the Russian example, with a tight control over labour. There the workers cannot strike and the amount of money they earn is dictated by the Establishment. At present unemployment is being mopped up by the manufacture of armaments and anybody who has travelled throughout the world as I have recently will have seen what is going on and cannot fail but to have been impressed by the fact that Russian hardware is mounting everywhere. Soon there will be hardware in every ocean of the world. With them, military geophysics has given place to geopolitics, which can mean confrontation all over the world. That is why Tindeman is right: the EEC must speak with one voice.
I do not believe that we in this country can solve our unemployment problems working on our own. We must be in an organisation like the EEC with its 250 million people, but, as Lord Bruce said, we will have to approach the matter in a different manner and the priorities in the EEC will have to be right before we can do it.
Mention has been made of direct elections. These could be the saving grace for the EEC. If you have direct elections, you must go to the country with a programme and, if you go to the country with a programme, you must say what will be the period of that programme. Up till now, there has been no mention in any shape or form in any document that I have seen about a programme of work. It has been ad hoc. Quite haphazard. The ideas coming out of the Commisson have been agreed about, I presume, in all the EEC countries. Whether all the countries have taken the work as seriously as we in our Committee have, I doubt very much.
If we can have direct elections we must make it quite clear to the country what is involved, and they will respond. A programme will have to have something on the lines of a Queen's Speech. I thought that the noble Baroness, Lady Tweedsmuir,

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hit the nail on the head when she said that there was no control of who decides priorities. How can an organisation function without such direction? But the initiative that has been taken by the Heads of State during the past few weeks, and has given me great hope that at long last this lack has been realised and that shortly we shall be working to a programme in the EEC.
I should like briefly to follow up the remarks of the noble Lord, Lord Castle. He was talking about schools, and information and making the EEC common knowledge. He felt that it was necessary for us to be in it and part of it. We should be explaining to the people of this country some of the elementary problems that confront the EEC. For instance, who can tell what a mountain of skimmed milk is? What on earth are we talking about when we speak of mountains of skimmed milk, mountains of wine, mountains of butter? Why is it that out wives have to accept high prices so that something in the EEC can be adjusted? Will somebody explain, please, why cannot the media—the BBC and ITV—showing pictures of great lorries tipping up apples that ought to be available on the market stalls of towns and villages in our countryside, explain why it comes about.
For goodness sake! let us stop this pedantic-talk about the EEC and get down to some of the simple basic facts of the kind that the noble Lord, Lord Bruce, was talking about. If we could simplify and give everybody a feeling that by being members of an organisation such as the EEC we were improving the possibilities of solving some of the problems of the day, there is no question we could restore some of the lost enthusiasm.
7.24 p.m.
The Earl of BESSBOROUGH: My Lords, I am very glad that we are having another Grand Tour of Europe this afternoon, though we had a mini-tour which was given us by the noble Lord, Lord Northfield, the other evening. Usually, grand tours take a few weeks rather than hours and I must admit that telescoping all the work of the Community covering virtually every department of government is quite a task, and I do not wonder that we are running a little late. However, I also look forward to the next debate on the Budget.
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At the outset, I should like to thank two noble Baronesses of this side of the House. Noble Baronesses have made a tremendous contribution to this debate. Firstly, I need hardly say that I wish to thank my noble friend Lady Tweedsmuir for her Committee's extremely useful report, for, as the noble Lord, Lord Bruce, has said we often find these reports produced by our Select Committees easier to cope with than the reports which we receive in Brussels. I congratulate her and I also congratulate my noble friend Lady Elles on her contribution
I should like to deal first with the question of strengthening the institutions. This relates to Chapter V of Tindemans, to get back to Tindemans. I refer especially to the institution which must be uppermost in our minds at present—that is, the European Parliament and its composition after direct elections. I believe that we should be very glad that the Council of Ministers was able last Monday night to reach agreement about this. I feel that the Heads of Government, including our own Head of Government, should be congratulated on having achieved the numerical compromise, even if the noble Lord, Lord Dunleath, is not quite happy about Northern Ireland. We have not had much to crow about in the Community and this decision of 12th July was certainly historic. Indeed, it is the view of most of us in the European Parliament that it was the most exciting decision since the Treaty was signed 18 years ago. We shall, in 1978, have a truly political human core to the Community. I feel that this is an amplification of the thoughts of the noble Lord, Lord Rhodes.
I agree, too, with my noble friend Lady Elliot, who also made a very interesting contribution, that political leaders in this country should now come forward and declare their willingness to stand for election to the Parliament. Certainly, if the new and enlarged European Conservative Constituency Associations were already in being, I should offer myself as a candidate and I hope that other noble Lords—including, of course, noble Baronesses and, certainly, those younger than myself (and, in this connection I am very glad to hear that the noble Lord, Lord O'Hagan, is determined to present himself) but even some who may be older on all sides of the House—will

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likewise declare in principle their willingness to stand. As far as we are concerned, this will, to my mind, make us politically legitimate even if, hereditarily, we may already be so.
It is easier for us in this House to state our intention in this matter than for members of another place; rightly, they have their future in their present national constituencies to consider. Clearly, it is more difficult for them to commit themselves or even to state their intentions. No doubt, in their case the dual mandate will continue at the outset and, certainly, I can see no reason why, in your Lordships' House, we should not continue to exercise a double duty. "Mandate" is not quite the right word for your Lordships since we have no popular electoral right to sit in this Chamber, even if we certainly have a duty to do so by the writs which we have received.
I have quite a long list of noble Lords of all three Parties and on the Cross-Benches—though I shall not read it to your Lordships—who, since it appears virtually certain that we shall be eligible to stand, would, I believe, make very appropriate members. I am certain also that they will be appropriately rewarded for their work, which they can hardly be considered to be so far. In other States, the most distinguished political leaders of varying ages and political hues have either been, are now or have stated their wish to be members of the European Parliament after direct elections. To mention a few, in France, I think of M. Alain Poher, the President of the Senate who was interim President of the Republic in the interval between M. Pompidou and M. Giscard d'Estaing. I think of M. Mitterand, the leader of the French Socialists. He has come forward.
In Germany Herr Willy Brandt and Herr Apel, the present Minister of Finance, have let their names go forward. In Italy Signor Andreotti, who is at present forming a Government there, has been for many years, and indeed still is, a member of the present European Parliament, and Signor Agnielli, the most distinguished of all Italian industrialists, has also volunteered. In Belgium, Mr. Tindemans himself—the author of this report—has stated that he, too, will stand for election. This means that they really do believe in
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European union. Of course there are the names of two or three commissioners as well who are either standing or are proposing to stand. My Lords, who has come forward in this country? I believe that some, like the noble Lord, Lord O'Hagan, have indicated their intentions, but I know of no well known or truly famous names.
When we come to Mr. Tindemans' first proposals concerning Parliament, I must confess they are rather disappointing. He proposes that the Council:
"should immediately allow the Parliament to take initiatives by undertaking to consider the resolutions which Parliament addresses to it."
He goes on to propose that during the development of European union:
"this practice should be given legal value through a Treaty amendment …"
Finally, concerning Parliament's powers Mr. Tindemans proposes that Parliament:
"should be able from now on, to consider all questions within the competence of the Union, whether or not they are covered by the Treaties."
Here, to be frank, I do not think that Mr. Tindemans has carried out quite as much research as he has in other sectors in what is undoubtedly a most interesting and valuable report. In practice, Parliament can already "take initiatives" by addressing resolutions to the Council, and the Council never refuses to consider them, whether they take the form of an opinion on a Commission proposal, or the form of an initiative report and resolution. There is no need therefore for this practice to be given any legal status by a Treaty amendment, as Mr. Tindemans proposes.
So far as the third suggestion is concerned—that Parliament should be able to consider any question whether or not this is covered by the Treaties—Parliament, as the noble Lord, Lord Gladwyn, knows, already reports on and debates resolutions on important questions of interest to it which lie outside the Treaties, and this on its own initiative, so long as the plenary session or the Bureau of Parliament authorises the interested committee or committees to draft the report and resolution. On the initiative of the noble Lord, Lord Gladwyn, Parliament has debated and adopted resolutions on defence co-operation and the Conference, on Security and Co-operation in Europe, on the initiative of a Belgian Member,

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M. Radoux, who is now preparing a report on the intensely military subject of the mutual balanced force reductions negotiations in Vienna.
Traditionally, and to the extent that Parliament needs a specific justification for these reports, Parliament has claimed that a paragraph in the Bonn Declaration of July 1961 is sufficient. But despite the rather disappointing nature of Mr. Tindemans' proposals, he does use and repeat this word "initiative". The European Parliament's Political Committee, of which my honourable friend Sir Peter Kirk is rapporteur, is indeed preparing proposals concerning the extension of Parliament's powers. This could involve a greater right of initiative by Parliament in the legislative process. It would, I think, go some way to meeting, from Parliament's side, the statement made by the Heads of Government in 1974 that:
"The competence of the European Assembly will be extended, in particular by granting it certain powers in the Communities' legislative process".
I do not want to anticipate what Sir Peter Kirk may himself propose within the coming weeks. But one thing is clear to me—and with this I agree very much with the noble Lord, Lord Castle—and that is that once they elect their own Members of the European Parliament, these Members will not wish to be denied a degree of legislative initiative and control comparable, I would say, within those areas covered by the Treaties, to those enjoyed by national Parliaments. Indeed, the logic of direct elections is that directly elected Members cannot be political eunuchs, even if at the outset there may not be immediately any increase in those powers.
In the section of the Report on the role and strengthening of the Commission certain proposals are made by Mr. Tindemans concerning the appointment of the President and Members of the Commission. As we all know, Mr. Tindemans' first proposal that the President of the Commission should be appointed by the European Council, has already come into operation, and I am sure that all of us in this House have indeed wished Mr. Jenkins well in fulfilling the major task that lies ahead of him. We have great hopes.
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Mr. Tindemans suggests that the newly appointed President should appear before Parliament to make a statement and to have his appointment confirmed by vote, and that he would then appoint his fellow commissioners in consultation with the Council. Again, speaking personally, I cannot but regret that Mr. Tindemans and the Governments wish to retain the tradition that the appointment of the President of the Commission, a body whose political responsibility is to Parliament—and it is important to remember this—rather than to Member States, should be nominated solely by agreement between those Member States.
In view of direct elections, and in view of the need, recognised by Heads of Government themselves, to increase Parliament's role in the coming years, it would seem more logical, and I think institutionally sounder, that the nomination of the new President should be by agreement, or as has been mentioned earlier this evening, by co-decision between Governments and the Parliament. While it is only normal that the President of the Commission should consult Governments concerning the appointment of these colleagues, the European Parliament should in my view also have a decisive voice in their appointment. We cannot, as Mr. Tindemans has said, develop a meaningful European union unless the Nine speak and act as a single entity in dealing with the outside world.
To achieve a genuine European foreign policy, Mr. Tindemans argues that it is necessary to go beyond the present system of political co-operation and to achieve a real European foreign policy. In order to develop such a policy, Mr. Tindemans holds that the pre-condition is that there must be an obligation to reach a common point of view and that the European Council should be obliged to arrive at common decisions on specific issues of foreign policy. I very much hope that the Government will take up this extremely important suggestion and that the Foreign Office will make constructive proposals, within the Davignon Committee, concerning foreign policy areas which could be most realistically chosen. As Mr. Tindemans says, come what may we should present a united front at multilateral negotiations relating to a new world economic order. This means that

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we should in every case place the primary interest of joint action above our divergent opinions and interests.
I much admire the way in which Mr. Tindemans has the courage to stick his neck out on the issue of European defence. I fully realise that it is probably premature for the Community to relaunch the idea of a European defence community, but security is an essential element of foreign policy and cannot be divorced from it. There is, of course, a question mark concerning Ireland's role, as a neutral, but it should not be too difficult to find procedural devices to cover this point. The vital issue would be that France must agree to take part in these discussions, but since she does participate in the work of the recently-created European Programme Group it is to be hoped that there would be no objection on her side to this. Finally, I consider that Mr. Tindemans' proposals regarding co-operation in the manufacture of armaments are well worthy of consideration by the Government. The time is too short for me to go ino this now, but I hope that the Government are considering this particular suggestion by Mr. Tindemans.
There are many other points in the report on which I would have touched if time had permitted, but I have tried to concentrate on those issues of Europe's role in the world, and the strengthening of the role of Parliament in the light of direct elections, which are to me of the greatest significance. I thought that the noble Baroness, Lady Seear, made one of the bull points in our debate when she said that an emotional surge was needed. I would say that there must be an emotional challenge, and I fear, my Lords, that that challenge may have to come from outside the Community.
7.42 p.m.
Lord NORTHFIELD: My Lords, I was glad that the noble Earl came back from his blatant advance electioneering to the Tindemans Report. I wish him and his noble friend good fortune in getting ten constituencies, as we now know them, to agree to have them as candidates at the forthcoming elections.
The Earl of BESSBOROUGH: And the noble Lord opposite, my Lords.
Lord NORTHFIELD: My Lords, it will be a very amusing time. If elections involving the eminent people who he says are lining up for the purpose really take place, it will be a most intriguing election when the time comes, and I wish him all good fortune in it.
My Lords, I am a strong critic of the Tindemans Report, and I want very briefly to say why that is so. I regard it as mainly all tactics and no strategy; and I want to say what I think is wrong with having a report of that kind at this stage in Europe's history. After all, the exercise on which Mr. Tindemans embarked started in 1972 when, at the Summit Meeting then, the Heads of Government set 1980 as the target date for European union. They reasserted this in 1974, and asked Mr. Tindemans to draw up the agenda for European union. So this is a sort of once-a-decade exercise and it has got to be good, I am sure, to be approved and applauded. I regard it as a tragically missed opportunity in European history; one of those chances to make a landmark in the development of Europe which were not taken.
However, before I come to my criticisms, may I make two points? Of course, I approach this not as a federalist at all. I am not complaining that Mr. Tindemans is not a federalist. He is, of course, although his report is not all that noticeably so. I am not a naive federalist who wants instant Europe tomorrow or the next day; I see it as something evolving past the end of this century. So I am not, so to speak, criticising his report because it is not going fast enough for me. I do not go quite as far as the present Prime Minister, who said in February 1975 to the House of Commons that he did not believe—and I quote:
"we are in sight of moving to a Federal Europe by 1980, or indeed by any later date".
I would not go quite as far as that, but I see the point that he is making; it is a long process.
Secondly, I am not critical of the details where Tindemans is positive. I thought his Chapter 2 on Foreign policy and his Chapter 4 on a Citizens' Europe, and Passports, and all those things, were all very helpful—patching up the Europe we have got. It is not European union. This was a sort of mini report on a few odd

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ideas, and I do not mean to be disrespectful to him, for, so to speak, giving Europe a slight push forward. This exercise is however a once-a-decade sort of thing and and I suggest it should have been used for something bigger—to analyse what is going on in Europe and how we are evolving, and what the next two decades are all about—as well as giving the minutiae that he descends to as part of the work in the report.
Let me come then to precise criticisms and I will try to be more explicit. First of all, there is no doubt about the ringing tones of the instructions given to Mr. Tindemans. He was not asked to chart a couple of years ahead. He was asked by the Summit Conference of 1974, and they say,
"In this connection we consider that the time has come for the Nine to agree as soon as possible on an overall concept of European union".
"An overall concept of European union"—and this is all elaborated in a long paragraph about consulting everybody, European Parliament, opinion in the countries and so on. This was to be a grand exercise and a fundamental analysis—at least so many of us thought.
Indeed, this is what is needed. After all, the Community started in 1958. We have had it now for nearly 20 years and nobody has done any stocktaking of any note. Nobody has said: "How much has this Community evolved compared with what was in the Treaty? What have we added, what have we subtracted, what have we changed? How have the institutions begun to work out? How do they look, how are they shaping up for the next couple of decades?" None of that is in Mr. Tindemans Report.
To recall what really happened in 1958 we have to take our minds back to the historical situation at that time. The idea of a political Community had foundered in 1954 at the time of the demise of the European Defence Community. This idea of the Treaty of Rome was put up to fill the gap at the time, and it built on the experience primarily of the Coal and Steel Community. The thinking was that you could have a High Authority like the Coal and Steel Community has. In this case it was the Commission, which would run more and more of Europe as we surrendered more and more to the centre. The idea in the Treaty of Rome—
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there is no doubt about it: these are historical facts—was that the Commission was regarded as an embryonic Government, a Government "in waiting" as more and more supranational decisions were taken in areas like energy policy or the Common Agricultural policy. They would be added to the duties of the Commission, the Commission already having by the Treaty certain duties over Customs duties and rules of competition. Thus more and more as the years were going by it was envisaged that the High Authority, the Commission, would gradually take over more and more. This was the hope—that gradually Europe would federate because, as they said at the time, there would be a spillover into political affairs from the growing economic union. As the economic union developed it would spill over and inevitably involve political union, and all on the High Authority blueprint.
Of course, my Lords, nothing of this has really happened and what Tindemans should have done after 20 years is to analyse what really has been happening in Europe and say therefore: where do we go next as a result of that? What has actually happened is that the Commission, far from having this role as an embryonic Government, has gradually been downgraded. What has happened in addition is that its place has been taken by the Council of Ministers. Let us look at this.
First, we know that the historical context has changed. We no longer think of High Authorities and slick solutions of this kind. The tide of federal union has disappeared. There are not the historical imperatives. We are not afraid of Germany or of rearmed Russia; we have détente. We have a real growth of national bureaucracies, and the nation-State, since 1958, has been rehabilitated—to the sorrow, perhaps, of many Europeans; but this is a fact. The European tide in that simple sense has begun to retreat.
Secondly, in the inter-governmental and supranational parts of the Treaty there has not been the progress that the maximalists expected. There is not for example a real energy policy. There is not, in large parts of the Treaty, that agreement between Governments to make a policy and to give it to the Commission to execute it and to be the masters of on

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the High Authority blueprint. A great deal of Europe has got stuck hard into an inter-governmental situation instead of becoming para-federal. There is no spill-over from the economic affairs to the political union because economic and monetary union—which Tindemans hardly begins to analyse—has become impossible for the time being. This is because of the divergence of our economies. You cannot federate or have economic and monetary union with the economies diverging in the desperate way they are doing at the moment. This he does not analyse. His chapter on economic union is pathetic. It does not face the facts of the difficulties.
More, importantly, look at what has happened to the Commission. All sorts of non-Treaty matters have been brought into the Community system. Foreign policy is now right in the European system. It is not mentioned in the Treaty; but it is now part of the work of the Council of Ministers.
Parliament is now allowed to ask questions on it. We have broadened the activity of the Community beyond the Treaty into all sorts of inter-governmental areas of which foreign policy is the most notable, while environment is another. This is useful, but it is vastly different from what the Treaty originally envisaged. There is even talk of going into defence. Nobody expects that if we bring defence into the Community, we can give it to a high authority to run in the next few years or decades. The Treaty is outmoded in this sense.
Lastly, instead of the Commission-Parliament dialogue being important, that is no longer important. What is important in Europe now was not even mentioned in the Treaty of Rome; that is, the dialogue between the Council and Parliament. It was not even mentioned in the Treaty that there should be relations between them. They have built them up from the point of answering questions to colloquies, to having major debates; and there is an emerging sense of a Government facing Parliament—contrary to what the Treaty of Rome envisaged. Indeed, we can say that it has gone so far (in a way that the Treaty did not foresee) that there is now actually formal conciliation between the Parliament and the Council over the Budget. The Commission is only,
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as it were, sitting in the middle as an arbitrator. This is not the emergence of another Community on the style of the Coal and Steel Community with a High Authority, this is the emergence of something that we understand better in politics, a real Government of real politicians facing a Parliament.
In those circumstances and with all that evolving in this way, there will be an elected Parliament in 1978, who are going to say, "We must face the people with real power and make them behave in a collegiate manner, answerable to us as a governing Council of Ministers." What the Tindemans Report should have been doing is to examine that Europe which has now come about despite what was in the Treaty.
In that circumstance, the really important body is the Council of Ministers. They suffer from the simple defect that they are fragmented. They have no integrated approach. My noble friend Lord Rhodes and others talked about the work programme of Europe being "haphazard"—that was his word. The noble Baroness who introduced the debate made similar remarks about the need to bring order into the work of the Community. This does not happen because the Council is not a conscious collegial body, but a body of Ministers who have meetings, or of Foreign Ministers who dash backwards and forwards on aeroplanes and have no secretariat with the job of providing an integrated view of the development of Europe. Yet these are the people now who are the emerging Government of Europe: and nothing is happening to put order of a critical kind into their work. The Council of Ministers, I suggest, is the body which needs to be fashioned into a conscious instrument of European progress, giving Europe momentum—in addition to the extra momentum that the Commission, with its attenuated power, can give by working hand in hand.
These changes that I have been setting out were not analysed by Tindemans. He gives the game away in a specific paragraph where, when he is talking about the freedom of action of the Commission, he says:
"That freedom of action was best expressed by the powers conferred on the High Authority of the Coal and Steel Community. We must follow this example."

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We know what is wrong with Tindemans. He is an old fashioned federalist who still believes that; he could not bring his mind to grasp that what is needed in Europe is an analysis of what has really happened compared with the outdated hopes of 1958.
What ought he to have recommended? He should have recommended, say, something that the Wyndham Place Trust has recommended or the ideas that a number of us have put up for the refashioning of the Council. If this is to be the political head of Europe, it must become a responsible collegial Executive. The Wyndham Place Trust suggested in their report that one way of doing it would be to appoint the President of the Council of Ministers for one year. Tindemans also says that. They go further to make a crucial distinction: that he should be a Minister of a national Government who is sent to Brussels for a year to do nothing else other than to run the Community, to push the Council of Ministers together, to give it dynamic leadership and to get the bandwagon rolling in an orderly way that has not happened so far.
My own proposals go further. I have suggested that we ought to be sending resident Ministers to Brussels who could gradually form a collegial Executive. They would have the advice and, indeed, the presence of colleagues from their own Governments from time to time as needed when specialist matters were under discussion.
In some way, my Lords, we must begin to face up to the fact that it is the Council of Ministers that has now evolved as the supreme body and not the Commission. We must begin to think consciously how to adapt its role and push us forward into the future. He might have gone so far, in fact, as to spell out the progress of Europe up to now and then to indicate how we use the Council of Ministers in this new form, accepting the lessons of history, and to draw together the threads of the new kind of Community and possibly move towards a new Treaty of Union. This, in his Institutional chapter, would have made sense. As it is, I am afraid that his Institutional chapter is lame and unconvincing and only largely harks back to the past.
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Finally, I see that Mr. Tindemans has been elected to head the new European Party, the European Peoples' Party (EPP). I see in The Times on 9th July that he spoke in Luxembourg. Mr. Tindemans attacked the growing tendency among members to transform the Community into a mere free trade area. How right he is! He said:
"If these currents of opinion develop, we shall soon find ourselves in a Community we never wanted."
If we find ourselves in that sort of intergovernmental community Mr. Tindemans would be one of the people to blame. He has wasted 10 years in effect. He has failed to grasp the need to analyse the Europe that we have rather than the Europe we set out with. He has failed to draw together the lessons about how constitutionally we now begin to advance towards the end of the century. I did not want to ask any more of him than that. do not want the blueprint. I do not believe that Europe can emerge tomorrow or the day after; but I expect from leaders of great nations surrounded by great advisers, that they would analyse what we have been doing for 20 years in a realistic way and then set us on the road to something more worthwhile at the turn of the century. I remain gravely disappointed that he muffed that chance and lost his opportunity.
Lord ARDWICK: My Lords, before the noble Lord sits down and concludes his extremely interesting speech, could he tell me what he visualises regarding the future of the Commission? We have the Commission which is a collegial body; he is now making the Council into a collegial body. Is the Commission to fade away and to transfer its expert staff to the Council?
Lord NORTHFIELD: My Lords, this is a point which the noble Lord, Lord Gladwyn, I and others, have discussed on many occasions. The answer is simple. As I indicated, for the time being the Commission has its duties under the Treaty. It will run in harness with the developing Council for the time being, adding its momentum, its initiatives to the development of Europe. But ultimately, as the Council gets more powerful, there is no doubt that the Council at that time, if it

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has become really collegial and is beginning to be divorced from Member Governments—as will occur in 20, 30 or 40 years time—the Commission will begin to fade away and become largely a bureaucracy entrusted with various jobs by the Council of Ministers. All this has been argued about and is known to many of us who spend our time in Europe on these matters. I am not trying to belittle the question; I am simply saying that there is not any real magic or even mystery about all these things. If we would all sit down and say what is happening as opposed to harking back to original blueprints, we would all get on much faster.
8.2 p.m.
Lord BANKS: My Lords, of the two documents with which we are directly concerned in this debate, the White Paper on Developments in the European Communities and the Select Committee's appraisal of the Tindemans Report, like other noble Lords I found the second of these much the more valuable. The six-monthly reports on developments in the Community are little more than in each case a catalogue of events and activity about which we have already read in the Press or elsewhere and no opinions are expressed. We are told, for example, that Mr. Tindemans presented his report on European union, but nothing of the reaction of our Government or any other Government. As my noble friend Lord Gladwyn said earlier, we get from that record an indication of the immense breadth of the activity going on under the auspices of the Community, and from that point of view it has value.
The Select Committee, on the other hand, makes a number of judgments on different aspects of the Tindemans Report. For example, we read:
"The Committee consider it desirable that the Community should ultimately be able to speak with one voice in its external affairs."
The noble Baroness, Lady Elles, said earlier that when we are thinking about the need to speak with one voice we should not continually pick on the failures—and there are plenty of these—but should highlight the successes. I agree with her on that. The success of the joint decision at the Helsinki conference immediately comes to mind. On the other hand, we cannot ignore the occasions
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when it seems to us that the Governments are running absolutely contrary to that principle of having a united front so far as the rest of the world is concerned, as for example in the case of the Puerto Rico conference. That seems to be completely contrary to the whole concept of the Tindemans Report of having one delegation, one person, a country, to speak for the community, and one is bound to criticise when that happens.
We read that the Select Committee endorsed the generally accepted view that monetary union should remain the ultimate objective of the Community, but recognised the many obstacles to its attainment. At the opening of this debate the noble Lord, Lord Shepherd, spoke of the need for the convergence—it is not happening at the moment—of the economies of the nine countries. I am not sure whether the Government still regard economic and monetary union as the ultimate objective. There are these enormous obstacles, to which the Committee refer. I still believe that we should have that as the ultimate objective and I should like reassurance that that remains the view of the Government.
While the Select Committee accept those two propositions, they are more critical of other proposals such as that for majority voting in the Council of Ministers, about which my noble friend Lord Gladwyn spoke very persuasively earlier today. I should like to speak about that in a moment. The Select Committee made clear that they have not sought to reach conclusions on the merits of European union as an ideal. It is clear from a perusal of the evidence given to the Select Committee by the right honourable gentleman the Minister of State, Mr. Roy Hattersley, that the Government are in the same position. This is a tenable position for a Select Committee which represents all the different points of view within a legislative chamber. I do not think it really is a tenable position for a government to hold. Mr. Hattersley says that he cannot support the ideal of "political union" until he knows what it is. But when people start to sketch out all that the political union might involve some overall picture of future development—he deplores their abandonment of what he calls the "traditional techniques of English empiricism".

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Over the week-end I heard those techniques described by a student of British foreign policy as, "Waiting for something to hit you before you got out of the way". Those techniques leave us without a sense of direction and unable, as a consequence, to give a lead. All Mr. Hattersley is prepared to commit himself to is the inevitability of closer political co-operation, which is a very vague phrase among the Nine. But to me the vital question is whether the Community is to develop as an alliance of virtually independent nations on the famous Gaullist principles, or whether it is to develop, however slowly, on a supranational basis. I am not talking about anything so bold or frightening as a federal constitution.
It is clear that the founding fathers intended the Community to develop on a supranational basis, since they provided for a directly elected European Parliament. They provided for an executive arm in the shape of a collegiate body—the Commission—whose members were pledged to think and act in the interests of the Community as a whole and not of any individual country, and since they provided, except on certain specified issues, for majority voting in the Council of Ministers, the Community's legislative body. The Member nations have delayed our direct elections; they have reduced the significance of the Commission, as the noble Lord, Lord Northfield, was saying, and they have abandoned majority voting on almost all issues. They have, however, allowed the Parliament to acquire some new powers in respect of the budget.
Faced with that situation, Mr. Tindemans has called for direct elections as soon as possible and an increase in the powers of Parliament. The noble Earl, Lord Bessborough, has cast some doubt on the precise proposals that Mr. Tindemans puts forward, his right to initiative, but he is urging an increase in the powers and the enhanced role for the Commission through greater use of Article 155. He is arguing, too, for an increase in the authority of the Commission through the confirmation of the appointment of the President of the Commission by the Parliament. He argues for majority voting in the Council and says this should become normal practice. We are hoping—and this hope has been expressed many times this
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afternoon—for direct elections to the European Parliament by 1978.
May I underline the point which was made by my noble friend Lord Gladwyn, that we on these Benches hope most sincerely that these elections will enable political Parties in this country to be represented in porportion to their strength. The noble Lord, Lord Dunleath, was talking about Northern Ireland and the possibility of having more than three seats. If there are three seats it would be possible to represent the minority, but only if it is done on a proportional basis; otherwise the majority will collect them all. That is a point that needs thinking about very carefully.
We are hoping for direct elections by 1978 and I agree with the noble Baroness, Lady Elles, that there would seem to be no reason why we should not achieve that. But what about the powers for the Parliament? Do the Government feel that increased powers for the Parliament is one of the objectives for which they will strive in the Council of Ministers? What about the role of the Commission? Is the review of structure of the Commission which I understand has the full support of and may even have been proposed by the British Government, being undertaken because the Government would like to see an enhanced role for the Commission?
I should like to say how very much I support what the noble Lord, Lord Northfield, was saying about the need ultimately to come to the position where we have a resident Minister in charge of the Council of Ministers, or resident Ministers comprising that Council. I cannot think that we shall ever run Europe satisfactorily so long as it is being run by leading statesmen of Europe, but in their spare time. Therefore, underlying all the questions I am asking is this one: Do the Government want to build on the supranational principle or do they wish to restrict or modify it?
In a previous debate the noble Lord, Lord Goronwy-Roberts, said that there were eight other Governments in the Community and that we should not always be picking on the British Government and blaming them when things do not go right. Of course, I would completely agree with that; and in the course of what I have been saying this evening there has been some implied criticism of the

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Governments of the Community as a whole. But of course it is only through the British Government that in this House we can get at the government of the Community. If I were convinced that the British Government were pressing on reluctant colleagues in the Council of Ministers the reforms to which I have been referring, then certainly I would be silent so far as any criticism on the British Government is concerned.
The noble Lord has tended to say—and one can well understand it, "We are going as fast as we can. Don't press us". But it is not only a question of pace: it is also a question of the direction in which we are going. For example, the Dutch Foreign Minister was reported in The Times on 8th July as saying that the Community structure had reached an advanced stage of erosion and we might well wonder how long it would be before the European teachings and everything achieved on the basis of them would simply be a valuable historical curiosity. He also went on to express his conviction that the work of the Council of Ministers could not proceed efficiently and fruitfully if they continued with the requirement that all decisions of the Council should be taken unanimously. The next day in the Guardian Mr. Tindemans was reported as detecting a growing tendency to transform the Community into a mere free trade area. There was no longer, he said, any real European democratic legitimacy for decisions taken at Community level. No doubt there is some exaggeration in those statements which was born out of frustration which they may have been suffering; but what the Foreign Minister of Holland and the Prime Minister of Belgium are saying is that the supranational principle has been and is being eroded. The Tindemans Report contains limited but definite proposals to reverse that trend, and the question to which I seek an answer is simply this: Do the British Government wish to reverse that trend or do they, perhaps, welcome it?
8.15 p.m.
Lord GORONWY-ROBERTS: My Lords, as was to be expected, this has been a wide-ranging debate, and an equally wide-ranging debate presses upon us as the next business on the Order Paper.
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Out of fellow feeling for my fellow Minister I will endeavour to be as brief as possible, but in a debate like this, with 18 speeches each containing a separate clutch of 18 questions, the inherent difficulty will be appreciated, I hope, on both sides of the House.
I will attempt to answer some of the questions raised by your Lordships at the very beginning, before moving on to outline the Government's view at this moment of the Tindemans Report, upon which the Scrutiny Committee has offered us a thoughtful and professional report, under the admirable leadership, once more, of the noble Baroness, Lady Tweedsmuir, and for which the House, and certainly I and the Government are deeply grateful.
The main points which occurred to me as I listened to the debate fall under a number of rough headings. There was a group of constitutional points which, quite naturally, the noble Baroness herself put forward. For instance, she proffered a suggestion which was echoed by at least one other speaker in the debate; that is, that the President of the Commission should himself appoint the European Commissioners. Her Majesty's Government are not in a position to accept this suggestion, but the Tindemans Report proposed an interim measure. The new President of the Commission has just been appointed. He is the present Home Secretary of this country, and I should like to join in the general congratulations extended to him and also in the general expectation that Mr. Jenkins will indeed render to Europe, and thereby to the cause of democracy throughout the world, outstanding services as President of the European Commission.
Mr. Tindemans suggested that the President of the Commission should help Member Governments to prepare for the meeting which would appoint the other Commissioners. That seems to me perfectly acceptable, and it should be given a try. I am more doubtful about the proposal that in later years appointments should rest entirely with the President and with the Assembly. The Government feel that the initiative will almost certainly have to rest with Governments.
I should like to continue for a moment with this group of constitutional or procudural points, if your Lordships will bear with me. The noble Baroness, Lady Elles,

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asked whether the work of the Boundaries Commission in drawing up particular constituency boundaries could be speeded up. I think she said that no other Member State has found any difficulty about doing that. Certainly Denmark, to name but one, has come out clearly and publicly with the expression of its own reservations. No doubt there are other reservations which have not been as publicly announced as those announced by this country and by Denmark.
The answer to the noble Baroness, Lady Elles, is this. There are no powers in the present legislation to enable instructions to be given to the Commissioners on the drawing up of European Assembly constituencies. This is a matter for national decision, and the Government will wish to consider the views of the Select Committee on Direct Elections which is now examining it. It will be for Parliament to decide in the legislation what role the Boundaries Commission should play, in view of timing and other considerations.
In answer to the noble Lord, Lord Gladwyn, and others, I repeat what my right honourable friends the Prime Minister and the Foreign Secretary have said more than once. We genuinely aim to be in a position to hold direct elections in the United Kingdom in 1978. We have consistently said, also, that if there are real difficulties we shall explain them and we shall expect our partners to understand them. We have made no secret of the fact that there are serious difficulties which must be overcome, and we are hopeful of overcoming them. This point could not have been put better than it was put this evening by my noble friend Lady White, who indicated to the House, before going on to very substantial matters relating to the environment, the real difficulties in putting together a procedure for direct elections by that due date, the efforts we are making and the fact that only real difficulties will prevent us from achieving that goal.
In the same group, there was the point made by the noble Lord, Lord Gladwyn, about majority voting. It will continue to be our policy that the Council should seek to achieve a consensus. The norm will be agreement by consensus. But we do not wish to be dogmatic and will not exclude a vote when no important national interest is at stake. It may well
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be that from that practical, sensible basis there will be a development towards majority voting at a faster pace than I can anticipate at this moment. The fact is that we are taking into account not only our own beliefs and feelings about how fast one can inject majority voting into matters which are of important national purport, but the known views and feelings of our partners. We are not the only member of the Nine who takes a very anxious view of this revolutionary transfer of authority from a nation to an international body.
I have said more than once from this Box that we have been engaged in Europe, and are now engaged in Europe, in a massive operation, something which we cannot expect to promote at a faster pace than the facts and feelings of Europe will warrant. This is really the answer to the noble Lord, Lord Banks. It is so easy to ask: What do the Government think about the supranational principle? It takes many debates, many books, a great many speeches and hard thinking to evolve an answer to that question. It is not enough to say, "We are for it". There are plenty in Europe who will say that without meaning it, and without expecting it to come about. We are not going to say anything of the kind. By dint of careful scrutiny—and how well we are served, especially in this House—by hard thinking, by producing the kind of publication which my noble friend Lord Northfield has produced, and realising that we are engaged in a major historical enterprise, we shall try to answer that question, not in a single debate or at a single point in time, but over a fairly long period.
The noble Lord, Lord Gladwyn, also used a phrase which I greatly welcomed. He spoke of a gradual development of existing institutions. This seems to me to link with the argument which my noble friend Lord Northfield was deploying. I wish he had spoken for a longer time on the theme that he chose for himself. It seems to me that we are coming very close to the point in that phrase, and in a number of other things said in this debate about the need to look at the position as it is, as it has emerged, and not to be too tied to blueprints, statements and even agreements; although, of course, agreements must be honoured until they are replaced by the proper

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procedure. But I took my noble friend's point to be that we should take from the situation as it has evolved the main facts of our thinking today, and try to build upon it.
Hopefully, we may emerge more quickly than most people anticipate along the road to a proper internationalism. It is certain that we are not today in Europe, or indeed in the world, facing the challenges of 1958 as much as the challenges of 1938. I entirely agree about that. The main fact of today is the recrudescence of nationalism. We have seen it coming. In 1958, nationalism was on the retreat before federalism. Today, it has come back fighting in this country, in Europe and, indeed, in every part of the world, and it is against that fact that we have to approach the massive task of creating, first in Europe, an international system and hopefully, on that basis, a much wider international organisation.
I pass quickly to the points made by the noble and learned Lord, Lord Diplock, who expressed doubts about delegation to the Commission as recommended by M. Tindemans. I think the noble and learned Lord's speech will greatly repay study when it emerges in cold print tomorrow. I found it a fascinating as well as an authoritative analysis of the position, with which I was in considerable agreement. There are points of disagreement which are, perhaps, a little recondite, and I shall wait until I have the benefit of the presence of the noble and learned Lord before I go into those.
Related to the group of constitutional points were procedural points raised by, among others, the noble Lord, Lord O'Hagan, who, as an example of what he had in mind, referred to the Common Agricultural Policy. That is an issue worth debating on its own, as well as an example of what he sought very effectively to argue on the question of procedure. I was greatly taken by the speech of the noble Baroness, Lady Elliot, who referred with familial expertise to agricultural policy, and by the speech delivered by my noble friend Lord Bruce who, among other things, adjured me not to regard the CAP as the Sinai tablets of wisdom. May I assure my noble friend that in no way do I regard the Common Agricultural Policy as being enshrined in the Sinai
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tablets of wisdom. I hope that that is a sufficient assurance to my noble friend whose speech was, of course, based upon great knowledge and considerable service so far in the European Parliament.
Much of what my noble friend said I think that this House and, indeed, Europe should take to heart. It links with what other Members of this noble House had to say about the way in which, for instance, the Common Agricultural Policy (although I am not picking on that in particular) has evolved into a kind of Heath Robinson contraption which it is fatally possible to criticise and, in so doing, to denigrate the very idea of a united Europe. This is the danger: of being so admirably enthusiastic about the conception of a united Europe as to close one's eyes to the glaring deficiencies of many of the things that are happening under the aegis of the Treaty of Rome. The true friends of Europe must be prepared to grasp these nettles and to do what I took the noble Lord, Lord O'Hagan, and others, including my noble friend, to be doing; namely, to see whether we can make more possible the great objective of political unity by solving more quickly the great impediment of economic deficiency.
This takes me from agriculture, not without a certain sense of relief, to another group of suggestions with which I entirely agree—they were made by the noble Baroness, Lady Seear, my noble friend Lord Rhodes and others—in support of the idea that we must carry the people with us, in particular young people. We may draw up, as yet Tindemans and the rest of us may draw up, all kinds of blueprints and reports, but if there is not an answering spark—or, as the noble Baroness, Lady Seear, called it, "an emotional surge"—we shall not get very far. Coming down to brass tacks, the noble Baroness and others said that it is necessary to show that Europe, working together, united in practical work, means something in terms of the real problems that confront people, in particular young people. This is pragmatism, even if it is not empiricism—a word which has been denigrated this evening in a very graceful way. Let us call it "this pragmatic idealism".
Unemployment and inflation, the two related evils, were quoted in very powerful speeches and the Government entirely agree. We believe that the co-ordination of policies between Member States has an

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extremely important part to play in mastering inflation and reducing unemployment, particularly among the young. It is the helplessness created by unemployment that lies at the heart of the appeal of certain philosophies, if that is what we can call them. Those of us who grew up in the 1930s remember that Fascism and Nazism fed on the unemployment of youth, the hopelessness of youth. It is a vital political as well as economic purpose of Europe and, indeed, of the whole world to master these twin evils.
The tripartite conference, to which I was delighted that the noble Lord referred, between Governments of Member States, the Commission and the social partners—that is, representatives of employers and trade unions—has already proved to be a major democratic instrument not only of thought but, it seems, of action. The conference on 24th June focused on the theme of the restoration of full employment and stability in the Community. I shall not delay the House by referring to the declaration that followed which instanced concrete measures which would ensue. The Government welcome this. We shall be pressing for action and taking part in the Community action that we hope will follow.
The noble Earl, Lord Bessborough, referred also to direct elections and to the powers of the Assembly. On the question of powers, as I have said, it is the Government's intention that the first direct elections shall take place in 1978 but on the basis of the Assembly's existing powers. We have said this for some considerable time.
The Earl of BESSBOROUGH: My Lords, to begin with.
Lord GORONWY-ROBERTS: Yes, my Lords, to begin with. I freely grant that hopeful subordinate clause "to begin with". It will be for decision by this Parliament and the eight other Parliaments, acting unanimously. I do not think that they will adopt a majority vote, whatever we say, on whether in due course to pass over further powers to the European Assembly. We ought to get rid of the idea that we are afraid of the transfer of power. I certainly am not and join my noble friend Lady White. It is not a question of opposition
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to the transfer of power. It is the need for two things—for periods of digestion between constitutional innovations which are, of themselves, somewhat revolutionary and for coherence.
My noble friend Lord Ardwick made an extremely important point when he called our attention to what we have all realised without putting it, as he did, with such great clarity: the way in which the various European international bodies use practically the same names—the Council of Europe, the European Council, the Council of Ministers, and so on. It is by no means simplistic to suggest that we might usefully get down to the question of nomenclature and clarify our minds by using the right labels. But that would not be the end of it, any more than my noble friend suggested that it would. There is a need for hard and clear thinking to achieve a coherence of relationship.
This evening we have had some extremely useful suggestions. I shall not be tempted to discuss even those which have particularly appealed to me, but central to them all is the search for a pattern, a kind of hierarchy of decision. Within our own country—and once again I refer to a speech we have heard—we are used over a long period to a kind of graduation of power from the parish to the nation, indeed to the united nations, of the United Kingdom. We are looking at devolution in the same way, to fit into this clarity of power. Now Europe has not developed in this way. I make no complaint: it is a massive achievement that it should have got so far.
As my noble friend Lord Bruce of Donington reminded us, those who grew up in the 'thirties and then went through the six years, as he and many others did, suffered from the fact that this process of power stopped at the nation-State. The conception of Europe in 1946–47 and thereafter was to try to carry on from the nation-State, knowing that the nation-State and nationalism had in fact nearly wrecked the world—and may yet do so. If revived nationalism in every part of the world, including Europe, is not caged and tamed by an international organisation, we are all prepared to start in Europe with it, with a view to Europe saving itself by its own vision and possibly the world by its example—if I may vary a famous phrase.

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I pass quickly, with apologies for having taken some time over these specific points, to the Tindemans' Report. I have a statement here—what I would call a necessarily interim statement—of the Government's attitude. I will try to compress it without referring to this excellent note, but if anybody wants to borrow these notes, he may do so.
The Earl of BESSBOROUGH: My Lords, will the noble Lord put them in the Library?
Lord GORONWY-ROBERTS: My Lords, they are not in a fit state for publication at the moment because like all my notes they are subject to constitutional amendments from time to time, and certainly to semantic interference. May I sum it up in this way: we regard Mr. Tindemans Report as a very useful, comprehensive report which avoids dogma. He himself, as we all know, is a Federalist; a literal Federalist. But he has deliberately eschewed even his own dogma in this report. It provides a basis—the best basis so far—for a discussion of the way in which Europe can move in the next few years towards a more meaningful union. He makes four or five major points; for instance, on political cooperation, or putting it more simply, a joint foreign policy. I would say that I am a European for that. I want to see the other come, but my motivation always has been political rather than economic. I still have my reservations; who has not? As my noble friend Lord Bruce of Donington said, there are reservations up and down the Community about the economics of it, but surely there can be no reservations about political co-operation.
This again will not come overnight. I can assure the noble Lord, Lord Banks, that the United Kingdom is very much in the van in pressing for a consensus approach in international organisations, and indeed in other directions, on foreign policy. He will have noted with satisfaction the way in which Europe almost got into a common position in regard to the vast problems of Southern Africa, and it was not the fault of the United Kingdom. She was not the one out of the Nine which made that in fact less effective than it might have been. We
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are constantly pressing—and indeed frequently succeeding—in getting joint approaches in capitals—in New York and in other locales: and it is growing.
On that first point, Mr. Tindemans makes some sensible proposals and to a very large extent we agree with him, and indeed we have shown that especially in the last six to 12 months we have agreed in practice. I wish I had time to look at the question of economic, monetary and social matters, which is the second point he raised. I must say this much: we share many of the doubts expressed by the Scrutiny Committee on what Mr. Tindemans has to say on this matter and we shall have to go into that in more detail later. We agree with the noble Baroness, Lady Tweedsmuir, in presenting the report, and with the noble Lord, Lord Bruce, among others, that the emphasis placed by Mr. Tindemans on the need for transfers of resources from the more prosperous to the less prosperous regions of the Community is essential for the survival of the Community. It is not a Community if it is two-tiered or many-regioned in economic progress. It is a Community if it is clear that its essential purpose is to develop all parts, all countries, all regions, all peoples of the Community.
The point was also made about a citizens' Europe and indeed suggestions were made about getting popular support and popular participation. A good deal is going on now. We must constantly look at practical ways of bringing together individuals—especially young people—across Europe. Finally, there was the point about institutions, but I think the debate answers itself on institutions. I hope that this kind of debate, which after all is printed verbatim, will serve as a quarry for future thinking. What has been said has not always formed a consensus: every man or woman is his or her own constitutionalist, especially on Europe. Nevertheless, it has been a useful and valuable debate, although not a conclusive one. We are on the way. My noble friend Lord George-Brown is not here, otherwise I would have added "brother". We are on the way, and I give way to my noble friend Lord Jacques who has to tackle even more erudite subjects in a moment or two. This is a massive operation. Enterprise or enthusiasm and idealism must not lead

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us to a position that we get into panic or pique if it does not develop as quickly or in the directions we want. After all, it got going a bare 20 years ago. The marvel is not that it has done so little but that it has got so far, always remembering the difficulty of reconciling clamant competitive nationalisms in a world which so far from getting rid of them seems increasingly to have to fight them.
On Question, Motion agreed to.

THE TINDEMANS REPORT
Baroness TWEEDSMUIR of BELHELVIE: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That this House takes note of the Report of the European Communities Committee on the Tindemans Report.—(Baroness Tweedsmnuir of Belhelvie.)
On Question, Motion agreed to.

EEC: PRELIMINARY DRAFT BUDGET FOR 1977
8.50 p.m.
Lord MAIS Lord MAIS rose to move, That this House takes note of the Report of the European Communities Committee on the Preliminary Draft EEC Budget for 1977. The noble Lord said: My Lords, it is my privilege to introduce to your Lordships' House the Report of the European Communities Committee on the Preliminary Draft EEC Budget for 1977. Your Lordships will have received a copy of the report, but I regret that your Lordships have not had it for a longer period, and have therefore not had a greater opportunity of studying it. Your Committee has been working considerably against time in order to produce the report in time for today's debate. Nevertheless, I trust that your Lordships have had an opportunity to study at least some of the salient points. May I draw the attention of your Lordships to those points which your Committee consider to be particularly important?
Your Lordships will recollect that last November your Committee expressed some concern at the delay in the production of the draft budget proposals for 1976,
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and perhaps your Lordships will take some comfort from the fact that this year the draft budgets have been produced earlier than on previous occasions. May I also remind your Lordships that in our report last year, to some extent we concentrated on the need for more effective scrutiny and control of Community expenditure, and on the procedural and institutional means necessary in order to effect this improvement.
This year, for the first time, the Preliminary Draft Budget, having been produced earlier than previously, has allowed your Committee and the House to consider and to debate the consequences and effects of that Preliminary Draft Budget before, in fact, the initial Budget Council of Ministers meets on 22nd July. Therefore, for the first time it provides us with an opportunity to bring influence to bear on the Government, and to examine how much progress has been made in the last year in the improvement of financial control within the Community. Your Lordships may perhaps think that as today is the 19th July, and the 22nd July is the date when it is considered by the Council of Ministers, this does not leave us very much time to make our feelings felt, but at least it is a considerable improvement on last year. I will not at this stage comment further on the improvements in control. I propose to leave this in far more capable hands, those of the noble Lord, Lord Cobbold, who will be speaking later in the debate. The report also gives a factual summary of the 1977 budget proposals, together with suggestions for the improvement of control.
Turning to the detailed budget proposals for 1977, your Lordships will note that it is anticipated that the total expenditure for that period will amount to 9,260 million units of account. Working on the basis of 2·4 units of account to the pound sterling, that amounts to £3,800 million sterling, an increase of 684,000 units of account over the figures given for 1976. The principal increases are in connection with research and investment, which show an increase of 48 million units of account; miscellaneous aids and subventions are increased by 84 million units of account; the Regional Development Fund, an increase from 300 million units of account to 500 million units of account. Your Lordships will probably remember that last year, the 1976 Budget included

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500 million units of account under that heading, but it was subsequently reduced to 300 million units of account.
My Lords, the biggest increase of all is in connection with the Agricultural Fund. That shows a very substantial increase indeed, amounting to 1,230 million units of account—that is as far as the guarantee section is concerned. There is a slight reduction so far as the guidance section is concerned. With regard to food and other aid, here again there is an increase from 237 million units of account to 283 million units of account, and lastly, but by no means least, there is a big increase in the provisional appropriations from 21 million units of account to 239 million units of account. I will have something more to say about appropriations later on.
On the other side of the scale, the Social Fund has been reduced from 441 million units of account to 172 million units of account. I must direct the attention of your Lordships to the fact that although the increase for 1977 over 1976 is substantial, the 1977 figures are still provisional, whereas the 1976 expenditure is almost certain to be larger than the Budget figures suggest. This is principally due to the fact that supplementary budgets were expected, in particular one to cover agricultural monetary expenditure. Since the report was printed and published, we received information as late as last Friday that a supplementary budget for 1976 has been presented by the Commission in Brussels, and may well be considered by them on 22nd July, at the same time as they consider the Budget before your Lordships today. As yet we do not have the English text of that document, but we understand the proposals of the Commission are in the region of 632 million units of account, reflecting decisions taken in the 1977 Agricultural Price Review, and developments in the agro-monetary field. This has been partially offset by gains on the differences in the rate of exchange. If the amount I have just mentioned is added to the 1976 budget, your Lordships will find that it compares almost exactly with the budget for 1977.
It is difficult to make a strict comparison between the 1977 figures and those for 1976, due to the fact that several items of expenditure, such as the Social Fund, this year have been affected by the extension of the
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commitment to the appropriation system whereby only payment appropriations are entered in the budget. Nevertheless, the increase in the 1977 figures over those of 1976 is significantly lower percentage-wise than the increase of the 1976 figures over those for 1975, and also the 1974 figures compared with 1973.
My Lords, under Article 203 of the EEC Treaty, the Commission is required to place the Preliminary Draft Budget for the succeeding year before the Council of Ministers not later than 1st September. Last year, your Committee did not in fact receive the Budget papers translated into English until mid-September, when your Lordships' House was in Recess. Although they proceeded at once to consider the report, it was not possible for this to be debated in your Lordships' House until 7th November, long after the Budget Council of Ministers had established the Draft Budget. Therefore, there was no opportunity for Finance Ministers to take into account the views expressed by either House before their meetings of 22nd and 29th September.
Furthermore, because of the timetable, there was very little time for either the Council of Europe or the European Parliament to consider the views of other institutions, for the procedure had to be completed by December. Under the new timetable, which is experimental for this year, the Commission has produced for the first time a Preliminary Draft Budget by 15th June. The Council at once referred this to the Budget Committee consisting of officials of Member States and representatives of the Commission. Unresolved issues are thus to be discussed within the Committee of Permanent Representatives and then at a meeting of the Budget Council, which will be held on 22nd July, the date to which I have already referred, they will, acting on qualified majority, establish the draft budget and forward it to the European Parliament.
That institution will consider the draft budget between 10th September and 28th October and will propose modifications to the obligatory categories of expenditure and amendments to the non-obligatory categories. Then it returns to the Council, who will have until 20th November to accept or reject the modifications and to modify the amendments. Thereafter the Parliament will

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have a further 23 days to act on any changes made by the Council, and finally the Presidents of the Parliament will declare the budget adopted on 19th December.
I would draw your Lordships' attention to the fact that this is an experiment only for this year. In the light of experience the Council will decide whether or not to follow the new timetable in future. It may be of some satisfaction to your Lordships and to those in another place that this advanced budget timetable has been adopted as a result of pressure from national Parliaments. I am sure your Lordships will appreciate that, although it is obviously a step in the right direction to produce the budget at an earlier date, it does bring with it certain disadvantages in that the new budget is presented before the final outcome of the previous year's budget is known or can be forecast. It can also be said that the earlier you produce a draft budget the less reliable it is likely to be. On the other hand, I think all our experience in the past has been that the more frequently you produce a budget, the more information you have from the previous years, the more accurate the budget will be.
We are in the early days of a vast undertaking, and for that reason if we want the early production of budgets to continue we must accept the fact that the final outcome may not be as accurate as we should like. But, on the other hand, I think your Lordships will agree that the advantage of having a budget earlier far outweighs any disadvantage. I will not go into detail, but I would direct your Lordships' attention to the present policy and the problems which arise from including in the budget commitment appropriations.
Under the financial regulations of April 1973 the Commission may enter into commitments to spend money only within the amount of substantive provision in the current year's budget. The problem which arises from this general rule is that where expenditure extends beyond the financial year in question the money to be spent in future years can only be committed if the whole of the necessary expenditure has already been provided for in the budget. Consequently appropriations are entered in the budget for specific actions which cannot or may not be completed and
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paid for, or for that matter even committed in the course of the budgetary year in which the amounts are included. For instance, where a commitment is validly entered into but not paid an automatic carry-forward is allowed. Even when no commitment has been made, there is still the possibility of a nonautomatic carry-forward taking place. The amounts involved in this are very considerable when compared with the total amount of the budget.
In addition, this undoubtedly adds to the difficulties of an adequate financial control. For instance, payments carried forward from the preceding year represented 28·9 per cent. of the 1975 Budget. That is over a quarter, getting on for a third, of the total amount of that budget. I am afraid I do not have the figures yet for 1976.
In the budget we are considering today only the payment appropriations will be entered into the appropriation column of the budget, and the commitment appropriations will form part of the remarks column under the appropriate item. Any appropriation for commitment not used by the end of the financial year will be cancelled, thus limiting budget entries to sums actually paid out, and will substantially decrease the appropriations carried forward. This is a sensible move. But it does have one disadvantage, and that is that in certain aspects the 1977 Budget figures are not strictly comparable with previous years. Working on this basis in the preparation of the 1977 Budget there has been a certain amount of anticipation; namely, that there will be acceptance by the Council of a proposal for a regulation amending the financial regulation of 25th April 1973, which empowers the budgetary authority—that is, the Commission and the Council—to apply the distinction to any multi-annual project it wishes.
My Lords, when we debated the 1976 budget last November your attention was drawn to the question of control, and it was control, or lack of it, which caused your Committee more concern than virtually anything else. Attention was then drawn to the fact that national Parliaments could exercise control, should they desire to restrict budget expenditure, only indirectly through the influence of

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their own Government Ministers in the Council of Ministers. Nevertheless, your Committee is pleased to note that an effort has been made to achieve greater transparency in the presentation of the budget. In particular it is essential that there should be a clearly defined distinction between firm authority to spend during a particular year and tentative figures relating to subsequent years or for a project as yet lacking firm policy approval.
Nevertheless, although your Committee is glad to note the intention to present commitments and payment appropriations under separate headings, it is essential that this should be done in such a way as to avoid the slightest risk of the commitment figures being regarded as having, or providing, the authority of an actual budgetary provision for expenditure in the financial year to which the budget relates. For this reason your Committee strongly recommend that consideration should be given to showing all commitment figures separately from the payment commitments, in much the same way as this information is presented annually in the United Kingdom Annual Public Expenditure White Papers, which, as your Lordships know only too well, are separate from the annual Estimates and imply no authority whatsoever to spend. Your Committee last November made a number of criticisms and suggestions with regard to financial control in general. I believe that the noble Lord, Lord Cobbold, will deal with these particular points in detail later on in this debate—and who better qualified so to do? He will, I know, explain what progress or lack of progress your Committee have noted during the past year.
One point which I am sure will be welcome is that the Committee have noted that, although the United Kingdom share of the 1977 Budget will be 19·24 per cent. of the total, or 1,781 million units of account—and, coming a little closer home, £742 million sterling—it is nevertheless likely that a substantial part of this will be offset by receipts from the budget. This assumption is made because in past years our receipts from the Social and Regional Funds have been high, and also we have benefited considerably from the monetary factors—that is, the monetary compensatory amounts paid by the EEC to the United Kingdom in respect of the
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shortfall between the unit of account and the Green Pound. This is dealt with in detail in the report, and I will not burden your Lordships further.
My Lords, there is much more in this report to which I should have liked to refer but I am conscious of the fact that there are a number of other noble Lords who wish to take part in this debate and I would not wish to delay them further. In conclusion, if I may crave your indulgence, I should on this occasion like to pay tribute to Mr. Paul Wooley, who was the technical adviser to Sub-Committee A and did tremendous work for us, and who has now departed to a senior post in the International Monetary Fund in Washington. I would also again pay tribute, as I did once before, to the Parliamentary secretariat, and on this occasion in particular to those young ladies down below who worked terribly long hours in order to produce the typed version of this draft report and without whose efforts undoubtedly we might not have been debating it today. I should also like to thank the members of my Sub-Committee A for the tremendous contribution they have given both in time and from their great experience. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on the Preliminary Draft EEC Budget for 1977.—(Lord Mais.)
9.11 p.m.
Baroness ELLES: My Lords, my noble friends will certainly wish me to thank the noble Lord, Lord Mais, for his very clear and lucid exposition of the main points of interest and importance contained in the draft Budget before your Lordships this evening. Like he did I shall certainly try to apply a self-denying ordinance and not touch on many matters, all of which in the draft Budget could be discussed at great length and are of great importance. We, on this side of the House, certainly appreciate the importance of this draft Budget. We are also grateful of course to the noble Lord and his Sub-Committee for all the work they have done in preparing the 45th Report which we have before us this evening in order to help us understand better the problems raised in the presentation and procedures connected with the draft Budget.

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Before passing on to the substance, we should also like on this side of the House to congratulate most warmly the noble Lord, Lord Bruce of Donington. I do not know whether it should be congratulations or commiserations we should be offering, but I should like to congratulate him on his appointment as rapporteur for the Budget in the European Parliament. It is certainly the most arduous of all the rapporteurships, and on this side of the House we certainly wish him very well in his very arduous and exacting task during the coming months.
I should like first to mention the question of the timetable for discussion and consultation on the Budget. This seems to be a great improvement on last year's arrangements. We on this side of the House pressed heavily that there should be an alteration; that there should be time to discuss this more fully, and particularly more time to discuss the draft Budget, look into the implications, and be able to have some influence on decisions which will he taken over the coming months.
In this connection, we wish to express our thanks to all those who have undertaken and been involved in changing the timetable. It has obviously meant a great deal of work not only for the Commission but for the Treasury and all the Government Departments connected with this change. From this side of the House we wish to say that we very much appreciate this. Lord Mais was perhaps a little diffident and put a few reasons to show why it was not perhaps such a good idea, but we feel that for the present, for this year, we should appreciate the trial of this new timetable and we do not consider that there is any reason for being quite so diffident as the noble Lord was.
In regard to the formalities of the presentation of the Budget, we welcome the separation of commitment appropriation from payment appropriation as a more practical and clearer method of proceeding and we realise that this achieves a certain transparency in the way in which the Budget is presented and this must bring only benefit to all those who have to deal with this document. I am not sure that I took correctly the point which Lord Mais raised about showing all the commitment figures separately. In my humble understanding
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of the draft Budget, these commitment figures are, in fact, shown separately, I think in another column; I do not quite see why the noble Lord considers that they should he show n completely separately from the Budget. I should have thought that it would have been helpful in this sort of document to know the kind of commitment that will come forward in the following years. I think they are shown sufficiently separately to give an indication of onward expenditure in the coming years and I welcome the separation in the way it is now being shown.
The political implications reflecting the draft Budget proposals are in accordance with the need for all Member States to control their public expenditure and we appreciate that the percentage increase over last year's Budget may be even less than that which is calculated at the moment in view of a possible quite large supplementary budget which will be coming forward soon, so that although it is in the present document shown as 22 per cent., I imagine that that percentage will be reduced considerably, or certainly to some extent, by the time the supplementary budget has been produced before 22nd July.
Despite inflation and the Budget being an estimate of expenditure, it should at least try to represent as nearly as possible in a concrete forecast the commitments and payments for 1977. We appreciate that this is almost impossible, considering the enormous element of the Budget which is connected with agricultural matters and with the uncertainties in this field which are ever present. The drought must seriously have affected the agricultural policy, particularly in relation to dairy produce and all the guarantees that are given to farmers in this area.
I imagine, therefore, that the present figures shown for the agricultural sector will need to be revised considerably, and presumably there will also need to be supplementary budgets in this field. I do not think the fact that they have to be changed really matters all that much. What we really need is an idea of the kind of expenditure that will be involved over the coming year. I do not think that any Government have ever been in a position to give a correct account of what will be spent in the coming Near, and this is merely another example of

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the impossibility of forecasting expenditure, especially in an area where even the weather plays a considerable role in affecting expenditure.
I must say a few words about the agricultural expenditure because concern is sometimes, if not frequently, expressed about the proportion of expenditure dedicated to agriculture; it is somewhere in the region of 67 per cent. this year. Whatever has been said about CAP, it has achieved three things. First, food prices were kept down in the European Communities during a time when world food prices were rising.
Secondly—this is a point which is always overlooked by those of us who live in an area of plenty—we have had plenty of food and have not suffered from a shortage in the way that practically every other part of the world has suffered and, whether one talks of mountains or lakes, I am certain that the 249,999 million other citizens of the Community share the same feelings when it comes to being able to buy food in the shops. Thirdly, it has supported farmers' income and, by the assurance of support for their incomes, has encouraged them to continue in their productive activities. If none of those points had been considered and had not been achieved by CAP, we should have had reason for complaint. Nobody denies that the whole thing must be looked at again—revised and considered in the light of new developments—but perhaps people are too ready to criticise CAP without looking at its benefits. Indeed, in this country, as was announced the other day, we received £338 million towards agricultural expenditure and this has undoubtedly influenced the fact that we have been able to keep food prices down to a comparative degree. I should just like briefly to comment on the imbalance between the guidance and the guarantee sectors, as we consider it. We would rather see more spent on restructuring of farms and rather less on the guarantee in relation to the amount which is available for expenditure.
Secondly, I should like to speak about the fact that so much of this money is given to support farmers' income. It is this support of farmers' income which is related to national policies. Would they
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need support from the European Community if they paid less tax and if succession duties did not seek to make them give up their livelihood? Domestic issues and, above all, national fiscal policy, cannot be divorced from considering the European Community Budget expenditure. I shall not enlarge on this but, clearly, a good deal could be said on the way national policies deal with individual incomes, whereas, in the Community, the farmers' income is separated from anybody else's income. I believe that this was realistic when about 50 per cent. of the population were engaged in farming activities. However, we have gone through a changeover from farming to industrial life in the Community and I wonder whether it is not now time to consider that the number of farmers in the Community in relation to other professions and careers should be considered in the context of income support through national policies or even through a European social and employment policy, rather than taking it as an agricultural item.
My third point relates to the failure so far to develop and co-ordinate policies on any other than agricultural matters which fall within the Treaty, such as the common transport policy. That combined action may be taken at diplomatic level vis à vis third countries is one matter, but is it not time for a more comprehensive and constructive transport scheme in the Community? The fact that there is no other main policy within the Community is what leads to the emphasis on agriculture. It is not because agriculture is put above every other policy. It is the fact that no other common policy has been developed which calls upon Community funds. Surely, too, expenditure on employment policy, which does not take up a very large percentage of the Community Budget, would be an area at which we should be looking. Of course, I am not suggesting that we should increase the expenditure in the Budget, but merely that there might be a shift of resources from one area of the Budget to another. Certainly, employment policy is very much overdue for consideration by the Community.
I want just to say a word about the regional policy. Of course, the Regional Fund has benefited the United Kingdom considerably. We are getting about 28 per cent. of the total amount of £540 million

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over the three years and, in talking about the effects of the Community on the United Kingdom and the knowledge of the citizen of what Europe does for him, I believe that there can be no better way of telling him than by letting him know how much we benefit financially from the Community. I happen to be one of those, like many others in your Lordships' House, who do not believe that the economic side of the Community is what is most appealing; there are many other very important reasons why we consider that the European Community should be developed. Nevertheless, I believe that there is no better touchstone of the effects of the Community than to know how much of the enormous Budget which we are discussing is coming straight back to the citizens of this country.
One point which I noticed in one of the documents that I was looking at was the suggestion that when we have loans from the European Investment Bank or from the ECSC, they should be shown in some way—that mention should be made in hoardings that the money is a loan from the EIB, just as one sees "Ministry of Works—or whatever the present Department may be—Development by such and such a local authority". Information should be put on hoardings in order to show that Europe is actually taking part at a local level and is taking an interest in an area or is connected with some new infrastructure in some other part of the country. This is particularly important for the regional fund, because I understand that about 40 per cent. is going to Scotland, and an enormous amount to Northern Ireland and to those areas of the United Kingdom which have greater need than perhaps the South-East or other of the more prosperous areas.
I should like to mention the question of additionality. I wish to refer to what was stated in paragraph 15 of the Forty-fourth Report from the Scrutiny Committee relating to the Tindemans Report. Admittedly, the sentence related to economic integration, and I quite understand that the thinking of the Committee was related to economic integration through a larger Community budget. But it went on to say:
"expansion should only be approved if it can be demonstrated that Community expenditure is acting as a substitute for, rather than as an
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addition to, national or local government expenditure."
I took that as being a Freudian slip and possibly a reflection of the practice of the Government.
I should like some confirmation or denial from the Minister as to this problem of additionality. We on this side of the House should like to know how much is paid from Community funds which goes into the Treasury and which is not passed on necessarily to local authorities or to Government programmes. Are these funds, which are coming into the United Kingdom, used entirely for initiating new programmes? Are the Government themselves paying 50 per cent. of the programmes for which Community money is meant to be used? The regulation says, in relation to the regional fund, that the Fund's assistance should not lead Member States to reduce their own regional development efforts but should complement these efforts. I should be grateful if the Minister is able—in what I am sure will be the very short time available to him—to comment on this. If he has not time tonight, will he kindly write to me on this matter of additionality and state what the exact position is in regard to Community funds? This is an important aspect of the effects of the draft budget on national expenditure.
We read with interest the evidence given to the Scrutiny Committee, particularly a passage relating to a change in the unit of account used for the budget and the difference between the actual market rate and the juridical rate. I understand from the minutes of evidence produced that the Treasury has agreed that there should be arrangements to introduce a concept of a new unit of account more realistically related to the "basket". Apparently this is not considered to be a severe difference in cash terms. Can the Government give some indication as to the terms of this agreement, and say what will be the time scale? Is it to happen fairly soon? Might we also have some estimate of the cost and effect on agricultural prices as a result of the change in the use of another unit of account? Again, if he cannot give an answer tonight, perhaps the Minister would be good enough to write to me on this matter later.

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I also want to comment on the proposals discussed in paragraph 22 of the Forty-fifth Report on the Preliminary Draft EEC Budget from the Scrutiny Committee with regard to one of the Commissioners acting as a Finance Minister. We have not got a view on this at the moment, and we should like some kind of indication as to the appointment of this Commissioner. He would presumably be one of the 13 Commissioners who would be given the sole task of looking after the finance of the Community. We should like to know if this matter is being discussed and considered by the Government, and what kind of view they are likely to take when they take over the presidency of the Council. Is it something for which they are going to press, and what is their general policy on the appointment of a Finance Minister?
In conclusion, my Lords, and very briefly, we on this side of the House very warmly welcome the increased measures for the control of expenditure and, particularly, the establishment of a subcommittee of the Budget Committee, on which I believe the noble Lord, Lord Bruce of Donington, serves. I am sorry, my Lords, I understand he does not, but certainly Mr. Shaw, from our side, serves of this sub-committee. I understand that this sub-committee has been found to be a practical way, at least for the time being, to implement some form of control prior to the setting up of a court of auditors, although I understand that they will both in fact continue in function. We of course welcome the ratification of the amendment of the Treaty setting up the court of auditors; and, again, here we would ask the Government to press their colleagues in the other eight Member States to see that they also ratify. I understand that Denmark has now in fact ratified—the noble Lord, Lord Bruce, will be able to confirm this, or my noble friend Lord Bessborough—but certainly we should like to see the others ratifying as soon as possible. Of course, if one had a suspicious mind one might wonder why they were not ratifying, but certainly we in this country consider that a court of auditors to control public expenditure on such a vast scale is an essential in order to create the confidence of the citizen in the processes of the Community, and we very much welcome the setting up of this court of auditors.
Finally, my Lords, in the mechanism of budget presentation and in the prospects
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for tighter budgetary control we consider that there is progress, and we appreciate the efforts of our colleagues in the European Parliament, on all sides of the House, in getting as far as they have. Also, of course, we recognise the cooperation of the Treasury in this regard. To conclude, again we would wish the noble Lord, Lord Bruce of Donington, well in his arduous task; and we thank the noble Lord, Lord Mais, for the presentation of this report.
9.32 p.m.
Lord BANKS: My Lords, I should like to join in thanking the noble Lord, Lord Mais, for the very clear way in which he introduced this preliminary draft Budget to us this evening. I should also like to express very genuine appreciation of the Report from the Select Committee, which is extremely comprehensive and very clear. Last year, when we had the counterpart of this debate, I remember trying to emphasise how small the budget really is, and I am struck by that fact again this year. The Select Committee point out that it is ·62 per cent. of the Community GNP as against ·59 per cent. last year; so that is an increase of ·03 per cent., which I think the Community will not find it difficult to bear. It is, the Select Committee tell us, 1·9 per cent. of the total national budget of Member States. The Select Committee point out, however, that an increase in the Budget is to be expected in future years, and this must be so particularly if, as we hope, the Regional Fund and the Social Fund get under way.
In this context, I should like to take up the point referred to by the noble Baroness, Lady Elles, when she was talking about additionality. It seems to me that in present circumstances, when the amount from the Regional Fund is somewhere about 8 to 10 per cent. of what we ourselves spend on the regions, this amount should not be used as a substitute for what we normally spend; but if there is a very considerable transfer of resources through the Regional Fund and through the Social Fund on a scale quite beyond that at the present time, then I anticipate that that ought to be a transfer of expenditure from national to Community level. I think that is a point which the Select Committee were making in their comments on the Tindemans Report.

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If, in fact, we see in the future this increase in the budget, then it will certainly be important to see that the proper checks on expenditure, both when it is proposed and after it has taken place, are established now. I endorse all that the Select Committee had to say about this and the important role to he played by the European Parliament. I also regret that only the United Kingdom and Denmark have so far ratified the proposal for the establishment of the audit court. If we may expect new expenditure in the future, there is little of it this year. New operations take up about 1·4 per cent. of the budget and the largest amount among them is the 100 million units of account set aside for the establishment of the capital for the European Export Bank.The Regional Fund takes more this year, going from 300 million to 500 million units of account. This is the last instalment of the agreed programme. We must hope that a new programme will succeed it with increasing expenditure. Whether this happens will depend, I imagine, to a large extent on the German Government; and their attitude may well depend on the general response throughout the Community to the matters which we have just been debating. The decrease in the percentage taken by agricultural expenditure, once separated from agricultural monetary expenditure, is welcome and perhaps is the first step on the road to a more balanced budget in which agriculture will not take something like 70 per cent. or so of the whole.
Agricultural monetary expenditure, I understand, takes about 12 per cent. and the Select Committee tell us the Commission are, not unnaturally, unhappy about this position and propose to reform the provisions relating to monetary compensatory amounts and to change from the present unit of account to a unit of account based on a basket of Community currencies.
These moves may well affect the United Kingdom adversely, but would, nevertheless, appear to be overdue; and, in any event, as the noble Lord, Lord Mais, explained, our costs are not what we imagined they might be at the time of entry, or have not so far proved to be. The Select Committee say that the use of the present unit of account is not wholly indefensible since it provides help for a
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country when its currency depreciates; but it is help which must be abruptly terminated when the adjustment comes eventually and which does appear unfair to other countries in the meantime. It would seem preferable to have a more graduated adjustment such as the new unit of account would provide and specific separate approved assistance for any country which might require it at any time.
The percentage increase in the budget is less than for a number of years, as has already been said, and the Select Committee, as we have also heard, say that it will be 22 per cent. I understand that this is taking the preliminary budget against the preliminary budget last year after allowing for the new distinction between payment credits and budgetary commitments. I understand that if we take into account the rectification budget presented by the Commission a few days ago, this will mean that the increase in the proposed budget over the 1976 budget will be 9.33 per cent. for payment credits and 13.2 per cent. for budgetary commitments. But I suppose there may be a similar supplementary budget in 1977 and everything depends on how accurate is the forecast. The budget is, after all, a forecast of the financial effects of policy decisions already taken; nevertheless, it offers us an opportunity to assess the significance of the different policies being pursued.
Finally, I am left with three outstanding impressions. First, that the budget is still dominated by agriculture; secondly, that we spend a very small sum on the Social Fund and on the Regional Fund, welcome though it is; thirdly, what a small amount altogether we are spending on what is potentially so ambitious a project as the creation of a European union, whatever interpretation your Lordships may individually place on that term following on the debate which we had earlier this evening.
9.40 p.m.
Lord BRUCE of DONINGTON: My Lords, I should like to take this opportunity of thanking the noble Baroness, Lady Elles, for the kind remarks she addressed to me concerning the responsibilities that the European Parliament have entrusted to me. I should like to think

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that in due course that may reflect some credit upon this House. I read carefully the document that has been prepared by the Committee of the noble Lord, Lord Mais. I congratulate him and his Committee most sincerely on the extreme clarity of this report which has been produced in under one month from the issue of the preliminary draft budget. If one could have seen the actual volumes of the budget—seven in all—with their vast bulk and thousands of pages, one would have appreciated that it must have needed a considerable amount of work to assimilate them, or assimilate the most essential parts of them. As one who has had the opportunity of studying the documents, this is one of the best summaries I have ever seen of any kind of European document.
This is the last occasion that we shall have before the European Parliament representatives—of which I am one, together with the noble Earl, Lord Bessborough, Mr. Michael Shaw and others—meet the Council next Thursday, 22nd July. We shall make our views known then on the kind of action we think the Council ought to take and what attitudes of mind the Council ought to take regarding Parliament's views on the preliminary draft budget. We hope that on that occasion the Council and Ministers will not have made up their minds as to what they propose to do. After all, they do not have to submit their draft budget to Parliament until 10th September. We therefore hope that what we may be able to say on 22nd July may have some influence upon them and what we say here today has some influence on our own Ministers representing us on the Budget Council.
It is possible to take two views of the type of budget which has been presented to us. It is a very small budget in relation to the total resources of the Community's total income and expenditure and, at about £3,801 million—which is projected expenditure—it is at about the level of a medium-sized multinational company. It is under 2 per cent. of the total national budgets of the Nine: it is an insignificant fraction of the gross national product of the Nine. As I said, there are two attitudes one can take. There is the attitude, "After all, this is another expense on the budgets of the national
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Parliament". Of course, much cheap political capital can be made by individual politicians wishing to look, in the eyes of their Parliaments, the most zealous in cutting down every bit of expenditure possible regardless of its purpose.
The way in which I hope your Lordships will look at it, and in due course the European Parliament will look at it, is this: Does it meet the real demands of the Community in accordance with the provisions of its Treaty? In other words, does this really amount to the correct type of expenditure and the correct priority of expenditure in order to achieve the best results within the economic climate available and bearing in mind the powers of the Member States? Is this the best way of going about it? This latter way of looking at the budget is the one that I would hope the European Parliament would take and the one which will be taken by your Lordships. Even if we take the broader view, as I hope we shall, it is of course necessary to ask: Is this a satisfactory reflection or instrument of Community policy?
This does not mean that we should not exercise the utmost care in scrutinising items of expenditure in order to see that there is no waste. This must be so, and particular attention will obviously be paid to Titles 1 and 2 of the budget, which incorporate the expenditure of the Commission itself in terms of staff salaries, establishment expenses and so on. The noble Baroness may rest assured that we shall pay great attention to the words which have fallen from her lips on this peripatetic Parliament moving between one, two or three places, as the case may be.
We shall also, of course, examine staff under Title No. 1. In this connection, if I may, I should like to remind your Lordships of some very sensible observations that fell from the lips of the noble Lord, Lord Carrington, in the debate on the 14th July. He was talking about the way we seemed to be losing our confidence in this country, and he said:
"… it is not helped by the continual carping and criticism of our institutions by the media. Of course, I do not mean there should be any cover-up of our failures or that there should not be exposure of wrongdoing. But the sneering and the cavilling at our institutions goes much too far."

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The noble Lord went on to give examples; then he continued:
"Those responsible for this and those who allow it should ask themselves very seriously whether they are doing much of a service. It may be smart and it may be slick; but it is dangerous and it is contagious."—[Official Report, 14/7/76; col. 324.]
There is already similar evidence within the media of a deliberate campaign of denigration being mounted against the civil servants in Brussels. I think that ought to stop and that those who own and edit newspapers might undertake a similar degree of responsibility as was advocated by the noble Lord, Lord Carrington, the other day. Indeed, some of us may think that if the final truth were known the social value of some of these statesmen, both at home and abroad, is at a proportionately higher level than the salaries and expenses paid to some owners and editors of our national newspapers, whose affairs are never under public scrutiny.
Having said that, my Lords, it is necessary—and we shall endeavour to do it—to give serious scrutiny to every item of expenditure to see whether it is cost-effective so far as our limitations go. It is our intention that the whole organisation, irrespective of whatever Mr. Jenkins may do, shall be brought under Parliamentary scrutiny and under scrutiny from the Community Budget Committee on this occasion.
I shall not go further into matters connected with the budget proper, except to point out that the expenditure on agriculture represents 68 per cent. of the total. This is largely an open-ended commitment. It is important that this should be borne in mind. It is called, "compulsory expenditure". Parliament exercises no control at all over it and the Council do not evidence any particular desire to control it either. It is, in fact, open-ended expenditure and, therefore, open to some of the criticisms that have emanated not only from ourselves but also from the noble Baroness herself.
Also, if I may presume to answer another point raised by the noble Baroness, the Regional Fund is subject to specific regulations which are laid down in Volume 18 of the Official Journal of 21st March 1973. It is important to realise that every time a payment appropriation is made out of the Regional Fund
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of the European Community there is a like percentage commitment on the part of the Member State affected. If 30 million units of account are paid to a certain country from the Regional Fund, that country is expected to provide 70 million units. That means that if a Member State considers itself to he subject to the necessities of austerity and wants to reduce its own Government's expenditure, or if we in this country decided to cut our expenditure on regional development, the amount which was received from the Regional Development Fund would automatically be cut.
So, even though Parliament has power to increase the total availability within the Regional Fund, because it is regarded by the Commission as non-compulsory expenditure the amount that any country draws out of the Regional Fund ultimately depends not upon the will of Parliament, but upon the will of the Member State concerned. I certainly hope that that will be borne in mind, in the light of the strictures which the House was good enough to permit me to make earlier on the gross disparity which has developed between the richer parts of the Community and the poorer ones. This shows that very considerable responsibility rests upon Member States, if they all bow to the current clamour to cut public expenditure, because if cutting that expenditure impinges on regional development they will be making the position worse than it ever was before. I hope that Her Majesty's Government and my noble friend will bear that point in mind.
In theory, the European Parliament has the right to increase the expenditure in the Budget by 122 million units of account, which is approximately £51 million. It may well be on this occasion that, far from advocating that the Budget should be cut, the European Parliament, supported by delegations from this House and from the other place, may suggest increases if an extra amount is required for research and development, data processing and all the other Community projects. I therefore hope that my noble friend, who is to reply to this debate, will convey to his right honourable friend the fact that we shall expect new account to be taken of the general attitude within the Community as a whole, and in the European Parliament, which will be no less intense than it was last year; and that we want a responsible

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Budget and not one that merely echoes a parrot cry, unsupported by any economic analysis or by any social recognition, and which simply says, "Austerity for austerity's sake".
Finally, on the assumption that the Council will decide to amend the preliminary draft Budget produced by the Commission, we hope that the provisions of Article 13 of the Financial Regulations, which require the Council to state its reasons, where necessary, for departing from the preliminary draft, will be borne in mind. I say this with feeling because the draft Budget came back from the Council last year with some what comic amendments to the effect: "For reasons of austerity we have decided to do this". This will not do; it is not in accordance with Article 13 of the financial regulations.
I share entirely the concept which was touched upon by the noble Baroness, Lady Elles, concerning the budgetisation of loans. Although the European Investment Bank is established under Articles 139 and 140 of the Treaty, the loans made and repaid are not stated in the Budget. With the noble Baroness, I much prefer the adoption of the procedure that we tried to adopt in this country of above and below the line expenditure so that we may see what are the capital outlays and returns. I hope that this will be done. I hope also that in due course the Financial Commissioner will be able to give us an explanation of why the net interest charges in the current Budget have not been stated in respect of loans made and effected during the last financial year. Doubtless there will be a memorandum upon the matter.
Also, we and, I think, the House would prefer that the sums which are being made available under the Lomé Convention—the sums which will be disbursed for stabilising prices to the developing countries concerned—should also be budgetised. At the moment all payments and receipts in regard to the Lomé Convention are outside the budget. We think that they should be inside it. Therefore we want transparency and we hope sincerely that the remarks which have been made tonight by your Lordships in all parts of the House to my noble friend will have some bearing on the response that we get on 22nd July.
9.57 p.m.
Lord COBBOLD: My Lords, the noble Lord, Lord Mais, in introducing the Motion, has covered the general sense of our Report, but it may be of interest to the House if T refer in rather more detail to one of the particular aspects to which the Committee has given special attention. First, I should like to echo on behalf of the Sub-Committee and, perhaps, on behalf of the Select Committee, the congratulations to the noble Lord, Lord Bruce of Donington, on the very important and somewhat difficult task which he has undertaken and I should like to thank him very much for the extremely valuable evidence which he and two of his colleagues from the other place gave to us in the course of our inquiry about the Budget.
It should first be emphasised that the EEC Budget is not exactly a Budget as we understand the term. It is more akin, as has been suggested in the Report, to an estimate of the likely financial consequences of Community proposals. If I may quote from last year's Report:
"The Committee concentrated on the need for more effective scrutiny and control of Community expenditure."
This year the Committee have felt that their principal duty was to consider to what extent the criticisms and suggestions made in last year's report have been dealt with. The Committee have felt bound to conclude that although there are some welcome improvements, there remains a great deal to be done before control procedures can be regarded as satisfactory.
In saying this, I should not wish to underestimate the difficulties. Many of your Lordships know from practical experience the problems and frustrations involved in securing effective control of expenditure in local and national Administrations, even when they have decades and even centuries of experience. In a Community administration, still in a formative stage, the problems are far greater, both because of their complexity and also because of the need to dovetail the experience and methods of the various participating countries. Nevertheless, it is a matter which must be tackled and must be tackled more urgently and more vigorously than it has been up to date. The position has nowhere been set out more clearly and more forcefully than in

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the Government White Paper of December last, to which the Committee hope the House will give the strongest support.
The problem falls broadly into two parts. First there is pre-budget control; that is to say, an effective machinery for costing and controlling the financial consequences of policies and proposals as they come forward. Secondly, there is ex post facto control to ensure that monies have been properly spent and that accountability lies on the officers, departments and institutions responsible for recommending or authorising expenditure.
On the first point, some progress has been made since the Committee's last report, particularly in the development of so-called fiches financieres which are in effect costing documents which accompany each proposal. The Committee feel, however, that this particular development needs to go a lot further before it covers the ground. In the context of the fiches financieres procedure the Committee strongly recommend to Her Majesty's Government that when draft Directives are put forward to the Scrutiny Committees in this House and in another place the departmental memorandum should always he accompanied by the clearest possible forecast of any financial consequences.
The Committee attach even greater importance to the proposal that there should be a financial commissioner concerned with financial and control duties only and not burdened as at present with other responsibilities. His position would thus be more like that of a Treasury Minister or senior official in a national Administration. But even if this proposal is adopted it must be recognised that real control of expenditure lies with the Council of Ministers, where the difficulties of overall financial supervision, such as is normally exercised by a Finance Minister in a national administration, are obvious enough. These difficulties have been stressed to us in evidence, as has the importance of ensuring that effective financial analysis comes forward to the Council with each proposal.
Your Committee have noted the material increase of 1976 estimates over 1975 for administrative costs. Attention has also been drawn to the present system whereby the Council of Ministers exercises no control over the expenditure of the
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European Parliament, where costs are inflated by several factors, including the use of six languages and, as has already been mentioned, the peripatetic nature of the Parliament.
It is however gratifying from our national point of view to note that in the table of contributions to the EEC Budget the actual out-turn for 1975 shows a net benefit to the United Kingdom. This result is in part due to receipts from Social and Regional Funds, but in part to the depreciation of sterling. As has already been mentioned, the proposed application to the budget in 1978 of a European unit of account reflecting current exchange rates would of course have profound consequences for the United Kingdom contribution.
I turn now to the second point, that of ex post facto control, involving adequate arrangements for audit and for accountability of officers, departments and institutions responsible for expenditure. On this, the Committee feel bound to record their view that, while there are pointers in the right direction and while a great deal of hard work is being done to achieve proper mechanisms, the progress made since the last report is very disappointing. Until the proposed arrangements for an Audit Court are ratified, with machinery somewhat similar to the Public Accounts Committee with which we are familiar, your Committee do not feel it possible to have confidence in the audit system. They have been disturbed to hear in evidence that the bodies at present responsible for audit do not have completely free access to information and also that various frauds which have given rise to criticism in the past have by no means been eliminated.
Your Committee hope that this House will give the strongest support to the efforts which are being made by Her Majesty's Government and also in the European Parliament and its Budget Committee by Members of this House and another place to accelerate the progress which is urgently needed in these fields. I should not like it to be thought that your Committee have approached the problems of the budget and of financial control in too carping a spirit. The United Kingdom has joined the Community at a stage when the ideals of its founders have to be translated into the nuts and bolts of

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arrangements covering such mundane matters as money and food. The Community institutions are busy translating their ideals into reality. Your Committee fully appreciate both the difficulties involved and the efforts being made to overcome them even when we deplore the slow
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ness with which progress can be made. One might add, my Lords, that it is perhaps not for the United Kingdom to appear in too white a sheet in these matters, or as perfectionists in the art of financial forecasting or of controlling escalating costs, whether they be due to inflation or to other causes.
10.6 p.m.
The Earl of BESSBOROUGH: My Lords, like all the other speakers, at the outset I should like to thank the noble Lord, Lord Mais, for conducting us again, if I may use the pun which 1 used last November, through this complicated maze, or labyrinth as another noble Lord has described it. He has certainly rendered us good service in producing this report. I feel that we should also congratulate the noble Lord, Lord Cobbold, who has clearly been his principal adjutant and who has presided over the Committee in the absence of the noble Lord, Lord Mais. I was very sorry not to be free to attend, together with the noble Lord, Lord Bruce of Donington, and my honourable friends in another place, to give evidence before the Committee.
I should also like to say that we all welcome the appointment of the noble Lord, Lord Bruce, as rapporteur for the 1977 budget. I have fortunately been in a position to hear him agreeing very often with my honourable friend Mr. Michael Shaw, who leads our budget delegation. It really leaves me little to say, because I agree with everything he said, and also with everything the noble Lords, Lord Mais and Lord Cobbold, said. However, there are just one or two minor points which I might have put to the noble Lord, Lord Mais; indeed, which I wanted to get to him before the report was printed, but I am not going to deliver myself of these little points, rather similar to ones I produced last year, in view of the lateness of time.
But there is one important point I should like to make which I think was probably indicated by the noble Lord, Lord Bruce of Donington, although perhaps he did not say so specifically. There is no reference in the report to the margin of manoeuvre which the Parliament has in this respect over non-compulsory expenditure—for example, aid to the associated developing countries. A similar comment could also be made in a later paragraph, paragraph 40, where the entries that Parliament can make under this margin were not in fact referred to.
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My Lords, as your Lordships know, I was very much involved in this procedure last year, and it is extremely important to the European Parliament, which has the final say in this expenditure. I should also point out that I feel the budgetary authority—and this again is a slip in the document—is Council and Parliament, and not of the Commission; that is in paragraph 13. 1 feel that this paragraph might perhaps have paid a little more attention to this point, and its last sentence is perhaps too generous towards the restricted attitude of the Council towards the budget entries.
Overall, I have the impression that the sub-committee's report could perhaps have been better directed towards considering the shape of the Community budget that your Lordships would like to see, rather than to dwell overmuch on questions of control which are, I think, better dealt with by the European Parliament, including the noble Lord, Lord Bruce of Donington, and my noble friends, and on which the United Kingdom Parliament is perhaps not quite so well qualified to comment.
I should have liked to say something about this notion of commitment appropriations. I will do so briefly, because I think that they are not perhaps fully understood. The notion is in line with the Commission's belief that the budget of the Community should be a budget of forecasts, and should enable the Commission to enter into commitments without obliging it actually to effect the payments in the one financial year. I should also, in that connection, have liked to speak of the revision of the financial regulation. What is going to be proposed is not going to solve all the problems, but it is an important matter which the noble Lord, Lord Bruce, and I are at present considering.
I would make one comment on the energy sector, in which I am specially concerned. The Commission have proposed major increases, and ft is as well they have, for exploration for hydrocarbons and uranium within the Community, plus financial interventions in the cold storage sector. This is a total increase of 55 million units of account, or 83 per cent., in commitment appro

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priations, with a much smaller increase, of course, only about 13 per cent. for payment appropriations. In the general research activities of the Community a steady increase is proposed, in line with the decisions on the multi-annual programmes that have intervened since the beginning of 1975. So for the whole of Chapter 33 (on research) of the preliminary draft budget an increase in payments appropriations amounts to some 48 million units of account. However, since the major commitments for the four-year or five-year programmes were entered into in 1976, there is an actual fall in commitment appropriations for 1977.
I was asked to say something on one particular supplementary budget, which seemed to some of us in the European Parliament to be essential, although in principle we are very much opposed to supplementary budgets. This was the one which was adopted recently concerning the del Fruili earthquake in Northern Italy. Your Lordships will remember the disaster which took place there. I was sent by the European Parliament to represent it in the disaster area to see what steps were being taken by the Community authorities, and whether the aid from the Community of some 60 million units of account was opportune.
I need hardly say that this was one of the most moving and agonising experiences of my life. I was present when the 923rd body was drawn out of the rubble. But these disasters certainly do increase Community solidarity, and perhaps some good thing comes out of terrible disasters of this kind. In this case Parliament used an accelerated procedure to approve the supplementary budget, because it was our opinion that it was urgently needed, and that it would be inopportune for any of the European institutions to seem to be delaying the project, even in the name of defending their budgetary rights. On the control aspects, the actual special programmes proposed for that part of Northern Italy are in the form of the assimilation of that region into existing Community policies. Therefore, the general financial provisions of, for example, the Council Directive on hill
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farming and the basic agricultural regulations will apply.
On the third aspect of the proposals—the regulation on special assistance for repairing infrastructural damage caused by the earthquake (Document (76) 279), inasmuch as it was proposed to expedite procedures, without necessarily consulting the Regional Policy Fund committees, difficulties in financial control could be raised, but it was envisaged that general Community supervision would be sufficient. I hope it will be. In any case, we shall be watching this very carefully, and I am sure that the Budget Committee's sub-committee on financial control will be keeping an eye on any problems that might arise from this point, and I shall certainly be doing so personally by another visit to the area.
In conclusion, I believe that it is a positive factor that your Lordships have been able to examine the preliminary draft Budget at this stage of the procedure; namely, before the Council draws up the draft Budget on 22nd July. This is an improvement on last year. The new calendar, brought in largely as a result of pressure from the European Parliament, and I think from noble Lords here, will enable both national Parliaments and the European Parliament to exercise more effective scrutiny. Commissioner Cheysson has already characterised this Budget as banal. More charitably it could be described as a budget of consolidation. It should certainly not invite the axe from the Council when it draws up its position on Thursday. If that axe were wielded, then certainly the Budget would, in my view, be a step backward and would indicate a lack of will to persevere with European integration. I trust that it will not do that, and I trust that the noble Lord the Minister will be able to assure me that it will not happen.
On the points of presentation of the draft Budget, the Commission should be congratulated for providing a very detailed and extensive explanation, in Volume 7, of the draft Budget. It is by far and away the most comprehensive political document accompanying a Budget so far. Whatever other criticisms we may have heard this evening, it is certainly

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the most comprehensive document which has so far been produced by the Commission. It should serve as a model for future years, and I should like to pay this tribute to the Finance Commissioner, M. Cheysson, and his staff for the work which they have accomplished in a very much shorter time than in previous years.
10.20 p.m.
Lord PRITCHARD: My Lords, at this hour will not detain the House for long. The brief theme of what I wish to say is to stress, both as an industrialist and a banker, that there should be an improvement in the costing of the EEC figures and that there should be greater opportunity for your Select Committee and its subcommittee to comment on and criticise, constructively of course, the extent of the financial burden which is laid on EEC Members in the light of future inflation.
We are all used to making our own budgets, be it personal or in industry, and we are used to a discipline being imposed on us so that we include not just the things that we can do with but the things that we cannot do without. I feel that in the EEC, in many instances, because it is somebody else's money and they are not responsible for raising it, they do not have the same discipline. The noble Lord, Lord Bruce of Donington, spoke more eloquently than I could about this whole financial area and I support him in what he said. Equally, the noble Baroness, Lady Elles, touched on the financial benefits that this country is receiving, and I very much support her when she says that it is important that this is made clear by Her Majesty's Government to the public who are not aware of this fact. I wish also to emphasise what the noble Lord, Lord Cobbold, said about the need for stricter control over spending and a stronger audit control. These are in my opinion two points where there is considerable weakness in the Commission that would not be tolerated either by Members of the other House or indeed by any commercial company in the Community.
The Select Committee was told in evidence by the Treasury of an improvement in the fiches financiéres, to which Lord Cobbold referred, which is the financial explanatory memorandum which accompanies each Commission document. We welcome this and we believe that it is
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highly important that this improvement should be sustained. Ministers and officials in the Council and in its Working Parties should test and scrutinise with the greatest possible care the Commission's estimates and costs. The House will have seen at the end of each report that we have made the suggestion that the Governments' explanatory memoranda should, as a matter of course in all cases, give an indication of the costs of their proposals in as much detail as possible. In doing so, they would only be following the practices of most of their Parliaments, and certainly our own, whereby Bills are furnished with an explanation of the financial implications when they are introduced.
Further, your Select Committee and its sub-committee A dealing with finance, economics and regional policy—both of which I have the honour to be a member—will then make it their practice to seek information from Government Departments as to the cost of the proposals and will report on the information they receive in a particular paragraph dealing with the financial implications, in the way that has been done up to now in regard to the legal implications of EEC draft legislation. This is standard practice and it is a great credit to my chairman of sub-committee A, the noble Lord, Lord Mais, that he has done what he has done in such a very short time after receiving the document. I strongly support the congratulations of Lord Bruce and others on the amount of work that he and his colleagues have done in such a short time in presenting such a concise and yet full report.
In the First Report of the Expenditure Committee in another place, dated December last year, it was stated:
"We feel bound to conclude that, even allowing for unannounced policy changes, the Treasury's present methods of controlling public expenditure are inadequate in the sense that money can be spent on a scale which was not contemplated when the relevant policies were decided upon."
This criticism was of course levelled at our own national control, but I believe that the same criticism can be levelled at the EEC, perhaps to an even greater extent.
I should like to end by asking the Minister whether it is possible to answer two questions in his reply although, as he has not had much notice of this, perhaps this may not be convenient, in which case

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I should be grateful if he could let me know the answers in due course. The first question is in connection with the effect of inflation. We all know that actual expenditure must often exceed planned and approved expenditure simply to purchase the same amount of goods and services. What will be the position in the Community? If the cost of a policy increases because of inflation in the Member States, will money expenditure be held constant and the programme therefore reduced, or will the full programme be pursued and therefore the cost increased? Secondly, that question has implicitly assumed that the rate of inflation is the same for all Community countries, whereas we all know that to be inconceivable. What, therefore, are the implications of the differential rates of inflation in this context?
10.27 p.m.
Lord RAGLAN: My Lords, I thought that, as chairman of Sub-Committee D on Agriculture and Consumer Affairs, it was incumbent upon me to say something about the agricultural budget, so long as I could make my speech not too long and boring. I should like first to refer to the subject of our previous debate this afternoon. Mr. Tindemans refers only briefly to agriculture: in fact, he gives it only eight lines. In the Select Committee's comments on his report, we said that we considered this surprising in view of the fact that agriculture, as has been mentioned this afternoon/ represents over two-thirds of the Community's budget. I suppose that Mr. Tindemans might reply that the Common Agricultural Policy was already a fact and that he was thinking more about the future than about the present. On the other hand, my noble friend Lord Northfield might have something to say about that as well.
Nevertheless, in those eight lines, Mr. Tindemans manages to make what to my mind is a highly controversial statement. He says, having said that agriculture is our most highly developed and integrated form of common action:
"Agricultural policy reflects one of the aspects of European union in that it guarantees farmers incomes and living standards comparable with those of other groups in society. This objective is one of solidarity and justice."
The inference of that statement, so far as I understand it, is that the CAP exists,
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in Mr. Tindemans' view, to ensure parity of income for farmers vis-à-vis industrial workers. Although your Lordships will discuss these social matters in greater depth when we come to the debate on the Select Committee's Report on Farm Structure, I feel I should point out that Mr. Tindemans, in saying what he did, has given ammunition to critics of the CAP—and there are still many in this country—who are continually saying that the CAP is entirely producer orientated and thinks of the consumer not at all. If that really were the case, and Mr. Tindemans was right in his assumption, I think we should have all have a justifiable cause for complaint. The Select Committee says as much in Part IV of its report on Tindemans. But it seems to me that the CAP is in fact much more well-meaning and beneficial than that in practice, even if it is frequently to be criticised in the practicality of its schemes.
We start with the broad idea behind the CAP that it is wise and it is prudent to be as self-sufficient as possible. The formulaters of the policy think that there is no virtue in importing foreign food. Why import it if we can produce it ourselves? Next, one runs into the problem that if one goes for self-sufficiency one is bound to have surpluses from time to time, and that it is surpluses—and this may seem paradoxical—and not shortages which usually beggar producers. If one has something to sell in time of shortage, one can make a lot of money out of it, but if one has an enormous surplus one cannot sell any of it very often. So just as we in this country thought up deficiency payments to help farmers in time of surplus, so the Common Agricultural Policy makers invented intervention; that is, a floor price for the commodity below which the Community intervenes and buys the surplus.
We must not forget that we in this country also have traditionally bought surpluses of those commodities in which we have chosen to be self-sufficient, such as milk and potatoes. But in our case this has been done not through an intervention board but through statutory marketing boards. There is much evidence to support the view that for certain commodities marketing boards are much more sensitive instruments for control and fine-tuning than the Intervention Board of the CAP. But the purpose

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behind both these instruments is broadly the same, which is that if you have self-sufficiency you have surpluses; surpluses harm producers; and that jeopardises production the following year—in other words the result of a free market is chaos, and the necessary alternative, which is a managed market, costs money. The continual argument within the CAP is how that market, which is as near as possible a free trade area, is best managed.
One of the points of disagreement is, and will continue to be—and this is where I began my remarks—what proportion of the agricultural budget will be directed towards market management itself, and how much, and in what way, it should be directed towards supporting farming as a way of life in those areas of the Community (and we must not forget that we have also many areas in Britain) where it is not possible to maintain a decent income out of farming, due to small farm size, or unfertile locality or substandard methods of farming.
Looking at the budget forecast, one sees that the Commission reckons that to support the CAP it will be necessary to find about £2,587 million; that is about £10 per head of the EEC population. This £10 compares with about £6 per head which United Kingdom agricultural policy was costing in the last year (that is, 1972–73) in which separate account was kept of expenditure. Allowing something for inflation and something else for the fact that our agricultural support budget was applied only in respect of half the food that we ate, the Community forecast budget does not really, it seems to me, compare too badly in cost with what our own used to be. Certainly the allegation that money spent on the CAP is money spent on a ramshackle extravaganza appears to me to be very wide of the mark indeed. We do not get too bad a value for our money. But, my Lords, we must continually look for ways in which we can get better value, and we must surely be mindful of what my noble friend Lord Bruce of Donington said about the commitment being open ended. Incidentally, it represents only about 1½ per cent. of the total budget of the nations in the Community. Nevertheless, there may come a time when a limit will have to be set.
My Lords, in considering the draft budget, one must first of all remember
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that, since agricultural expenditure is about 70 per cent. of the Community's budget, any large alteration in the agricultural bill is likely to have a big effect on the total budget. Earlier draft budgets have been presented in September the previous year, and advancing this one to June will have the effect of making the forecasts more unreliable and tentative than usual. For instance, many important agricultural commodities had not started their 1976–77 marketing years in May, when the Commission were trying to get out their figures. Nevertheless, one cannot have one's cake and eat it, and if we want to consider the budget earlier we must be mindful of the drawbacks. The Commission, as has been mentioned this evening, will submit a Letter of Amendment in September which will correct the initial agricultural estimates on the basis of later information.
My Lords, certain assumptions have been made in the construction of the budget, any one of which can make a big difference if they are not confirmed. First, they assume that the Council of Ministers will agree to adopt the Commission's co-responsibility measures for milk producers. This is not the time to debate those measures, but some people think that the Commissioners are being clever without being practical enough. Secondly, the Commission assume that the Council will agree to the halving of the existing levels of monetary compensatory amounts before the start of the 1977–78 marketing years; and, finally, the Commission assume that the Council will agree to limit the price rises which it will undoubtedly award to Community farmers next spring, so that the extra charge on the budget is only 200 million units of account—that is, £83 million. The assumption that all monetary compensatory amounts should be halved has important implications for Britain. As my noble friend Lord Mais said, we have done very well out of these payments in the past, especially in terms of shielding consumers from the full effects of the falling pound; and the Government's desire to shield people from the true cost of food will be balanced by the reluctance of our partners to continue to subsidise us.
Lastly, I would remind your Lordships that the agricultural budget is in two parts: the guarantee fund, which is applied to produce, and the guidance

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fund, which is applied to improving the means of production. The forecast holds a surprise for all those who thought, perhaps like the noble Baroness, Lady Elles, that the greater part of the CAP's problems was derived from the need for structural reform—that is, the amalgamation of holdings and the need to increase efficiency—for the Commission propose holding expenditure on improving long-term structure to a rigid limit of 325 units of account, and not even all this is expected to be spent in 1977; about half of it, in fact. The Select Committee's Report refers to this as "disturbing". My own opinion is that I think it may really reflect what in my view is welcome realism in the Commission, in that it is one thing to talk about structural reform and to offer bribes to bring it about; it is quite another to cajole small farmers to accept these incentives and to change their way of life accordingly.
The answer to the problem of structural reform appears to be not to accord with Mr. Tindemans' sentiments and assumptions, but to pitch the price of agricultural produce at such a level that the very inefficient are not kept in business and are not given parity of income as of right, and to let time and the lure of more profitable jobs elsewhere be seen as necessary allies to a policy of subsidised resettlement. In other words, I think that changes are already going about as fast as they can reasonably be expected to go. Your Lordships will know that ways of thinking can take long enough to change, and ways of life take much longer to change. I think it is very important to remember that when considering the CAP and its budget and its development in the future.
10.40 p.m.
Lord JACQUES: My Lords, if I am a little cryptic I think that the House will understand. I should first like to congratulate the Committee on their report which is both full and comprehensive and which has been prepared in such a short period of time. I would also congratulate my noble friend Lord Bruce of Donington on his appointment a rapporteur in relation to the budget. I think that we all know him and expect him to do useful work for the Assembly and to be a credit to the United Kingdom.
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The time-table we have this year is experimental. It was partly at the instigation of the United Kingdom; and, in the course of the debate, the advantages and disadvantages of that time-table have been quite clearly stated. I need not repeat them. I must say that since the time-table is experimental we must keep an open mind, but the Government will bear very much in mind what the Committee has said and what has come out in the debate. There is in addition a three-year forecast which is not yet available.
The change that has been made to the form of the budget on commitment appropriations and payment appropriations has been quite fully explained to the House. The Government welcome this change; it simplifies. But we expected that the commitments would be restricted to projects which were going to be spread over more than one budget year: Provided that is done, we certainly welcome this simplicity.
We notice that the Scrutiny Committee have suggested that the commitment appropriations should be kept quite separate—something similar to our Public Expenditure Statements. We have grave doubts about that. Our Public Expenditure Statements are concerned with the planning of expenditure. These commitments are more than the planning of expenditure: they are usually the amounts up to which the Commission is authorised to commit. Therefore, we have very grave doubts as to whether or not they should be in a separate document.
The Commission, of course, sees the preliminary draft Budget as a forecasting document. It includes all items for which there may be a need for expenditure. The Budget Council usually deletes items for which there has not been policy agreement. In consequence, there are almost certain to be supplementary budgets; but supplementary budgets go through exactly the same procedure as preliminary draft budget. We are convinced that this is a better way of controlling the finance.
The preliminary draft Budget of 9,260 units of account is an increase of 22 per cent. on the agreed budget for 1976—and I mean the agreed budget before the supplementaries. But that increase is understated. We must bear in mind that when changes are made such as the changes that

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have been made from commitments appropriations to purely payment appropriations, then, in the first year in which the change is made, there is a reduced level of expenditure. Your carry forwards are obviously going to be greatly reduced. The only carry forwards you have are those from previous years. It follows, therefore, that this 22 per cent. increase is an understatement and the real increase is something substantially more than that. Consequently, that has to be borne in mind.
So far as the attitude of the United Kingdom is concerned, let me say to my noble friend Lord Bruce of Donington that this Government have never, do not, and will not advocate austerity for the sake of austerity. We advocate austerity only when we think it is absolutely necessary to protect our currency or reduce our rate of inflation. That is our policy. It has been clearly stated and I restate it.
Consequently, since we do not seek austerity for the sake of austerity at home, we are unlikely to do that in the Community. But because of our position at home—and we have to bear something like 20 per cent. of the cost—we will seek to restrain increases in ways which are sensible. We shall try to get sensible priorities. Already, although the preliminary draft was published only on 15th June, there have been changes which will affect the budget. For example, on 29th June there was a measure of agreement on new methods of controlling the number of staff and controlling the pay increases which they will receive. This agreement will give rise to some recalculations in the budget.
The noble Lord, Lord Bruce of Donington, put two questions to me in writing which I can answer briefly. He asked, first, if inflation continued, whether the control in the Community's budget would be on a cash level, or whether provision would be made for the increase in cost. The budget itself provides for anticipated increases in cost, but if this is not sufficient because of inflation, then it is a matter for the Commission as to whether or not it seeks a supplementary budget. It is a matter for the Budget Council and the Assembly as to whether or not they accept those supplementary budgets.
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The second question was: what is the effect of differential depreciation? That must depend upon the sector of the budget concerned and the place where the money is spent. For example, if the sector of the budget concerned is original fund, and the money is spent in a country where inflation is at the most rapid rate, then the consequence would be that while the same amount of money might be spent, it would buy less in the country concerned.
Last year 64 per cent. of the preliminary draft budget was on agricultural guarantee. This year, on the face of it, the figure is 63 per cent., but one has to take into account that there have been changes in the budget, particularly in regard to monetary compensation. Monetary adjustments which were formerly charged as part of the agricultural budget are now charged separately. If one allows for that, then agricultural guarantees account for 69 per cent. of the 1977 preliminary draft as compared with only 64 per cent. in 1976. So the cost of the agricultural guarantees has increased more than the increase in the total budget.
We all know the reason for such a big percentage of the budget being agricultural guarantees. This is the only area where the Community meets almost the whole cost that would in other circumstances have been borne by the national States. In all other sectors, the Community simply makes a contribution. The major part of the cost is borne by the national exchequers of the Member States. Of course there is very little that the Budget Council can do about this position. The Budget Council is not concerned with making policy; it is concerned with seeing that what is provided is the amount that will be needed to finance the policies which are made elsewhere.
What can be done are two or three things. First, we can examine the budget, whether for agriculture or anything else, to make sure there is no fat hidden in it. Secondly we can question the changes that have been made to make the agricultural budget look somewhat smaller than it would have been. Thirdly, we can examine those areas where the estimates are highly speculative. Fourthly, we can seek to eliminate any elements of contingency reserve; and of course we shall do so in so far as we are part of the Budgetary Council.

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I should like to say a few words on the United Kingdom's contribution. In 1976 the contribution was 16·3 per cent. This year it will be 19·24 per cent., but I must point out that at current exchange rates it will be only 13 per cent. Our gross national product is 16 per cent. of the gross national product for the Community. Therefore, we could hardly expect that we should be able to claim some compensation from the correction mechanism which applies when the contribution made by a State is excessive in relation to its gross national product — because, taking the current rates of exchange, our percentage is much less than our percentage of the gross national product.
However, we must bear in mind that there are going to be changes. It has already been provisionally agreed that as from 1st January 1978—and remember, my Lords, that means the next budget we shall consider—instead of the present units of account for budget purposes being related to gold, there will be a unit of account which is Market-related. This, of course, will make a substantial difference to our contribution; but in our case we have a proviso that we would accept the Market-related unit of account, provided there is satisfactory agreement for the two remaining transitional years of 1978 and 1979, and that there is a reasonable interpretation of, I think, Paragraph 131 of the Treaty of Accession; so that we have some protection. But we also have to bear in mind that from 1980 onwards the budget will be on a full "own resources" basis. I think it is within those years—that is, the years 1978, 1979, 1980 and onwards—when we may very well have to look at the correcting mechanism which was agreed in the renegotiation for the collection of our contribution. I believe that in those years we may well be pleased with the foresight shown by the former Prime Minister who renegotiated the correcting mechanism.
Finally, I should like to say a few words on financial control. Last December, the then Prime Minister took the initiative. Germany proposed that there should be a Finance Commissioner. We strongly supported that. A new Commission has to be appointed in 1977, and in 1977 this matter will certainly come to a head. So
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far as the Court of Auditors is concerned, I think I need only say that apart from ourselves and Denmark, who have ratified, several other countries are in the course of their procedural processes in ratifying. We understand that at least three of those countries are very near to ratification.
So far as the documents are concerned, I think there is some exaggeration here. The trouble in regard to documents and auditing arose over two matters. First, there was the question of the minutes of the European Development Fund. The question was whether the Audit Board should automatically have all the minutes, or only some of them. The Commission referred this matter to the Committee of Ministers, which took the view that the Board should not automatically get all the minutes—they were sensitive minutes, in many cases—but should get those which were needed for the purposes of audit. I believe that the other case was in connection with aid to developing countries, and the matter in dispute was whether the Audit Board should get the documents at once, or after a project had been completed and closed. The view taken by the Commission was that they should get them after a project was completed and closed. So that while there was some point to be made, we should be careful not to exaggerate.
Lord BRUCE of DONINGTON: My Lords, will my noble friend forgive me for interrupting? Is he aware that the circumstances that gave rise to the misgiving about documentation did not arise from the two examples he gave? What caused the misgiving was the payment to maltsters in connection with malt subsidies. That is the case that was considered by the controlling sub-committee, and that is where there was some difficulty about the provision of documents to the Audit Board.
Lord JACQUES: My Lords, I can only say that that is somewhat different from the advice that I have received, and the point raised by my noble friend has not been raised with me. But I can say that, under the treaty which is now in course of ratification, the Audit Board will have much wider powers and this problem will be completely overcome, whether it applies to maltsters or to anybody else.
Lord HOY: My Lords, I do not want to interrupt at this late stage, but the suggestion was made that a committee like the Public Accounts Committee might play a very satisfactory part in connection with this type of accountancy. As one who served on the Public Accounts Committee for more years than I care to remember, I hope that my noble friend might consider that a committee like the Public Accounts Committee could undertake this job to the satisfaction of all concerned.
Lord JACQUES: My Lords, we are pleased to have noted that the Assembly has appointed an Audit Committee which will be somewhat similar to the Public Accounts Committee, and we welcome the proposal. So far as the financiers are concerned, we believe that they have been much improved but the quality varies somewhat, which is to be expected since we all ourselves vary a good deal. We believe that financial control does not wholly depend upon institutional changes; it depends upon improving procedures. We know that our colleagues in the Community will be plugging away all the time to improve the procedures—and this also applies at home.
10.59 p.m.
Lord MAIS: My Lords, the hour grows late and T will not detain your Lordships longer than I can possibly help. I should like to thank noble Lords and the noble Baroness, Lady Elles, for taking part in this debate and I hope that they have not been delayed overlong. I should like to add my congratulations to those already offered to my noble friend Lord Bruce of Donington on his new appointment, and I am sure that our affairs are in good hands. May I thank your Lordships for the kind remarks that you have made about the Report, which are greatly appreciated? I know that they will also be appreciated by the Committee and the staff, to whom the credit belongs. I thank your Lordships very much for taking part in this debate. I hope that it has served a useful purpose.
On Question, Motion agreed to.

CHRONICALLY SICK AND DISABLED PERSONS (AMENDMENT) (No. 2) BILL
Brought from the Commons; read 1a, and to be printed.
DOMESTIC VIOLENCE AND MATRIMONIAL PROCEEDINGS BILL
Brought from the Commons; read 1a, and to be printed.
INDUSTRIAL COMMON OWNERSHIP BILL
Brought from the Commons; read 1a, and to be printed.
MOTOR-CYCLE CRASH-HELMETS (RELIGIOUS EXEMPTION) BILL
Brought from the Commons; read 1a, and to be printed.
PROTECTION OF BIRDS (AMENDMENT) BILL
Brought from the Commons; read 1a, and to be printed.
STOCK EXCHANGE (COMPLETION OF BARGAINS) BILL
Brought from the Commons; read 1a, and to be printed.
FINANCE BILL
Brought from the Commons; read 1a, and to be printed.
FOOD AND DRUGS (CONTROL OF FOOD PREMISES) BILL
Returned from the Commons with the Amendment agreed to.
DIVORCE (SCOTLAND) (No. 2) BILL
Returned from the Commons, with the Amendments agreed to.
COUNTY OF SOUTH GLAMORGAN BILL [H.L.]
Supplemental Report from Her Majesty's Attorney General received and ordered to lie on the Table.