Lords Sitting of 9 July 1979

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

PAKISTAN: NUCLEAR INSTALLATION
Lord BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether components for a uranium enrichment plant near Rawalpindi designed to produce a nuclear bomb, have been sold from Britain to the Pakistan Government.
Lord TREFGARNE: My Lords, there are goods having a general industrial application which could also be used as components in a nuclear facility. Such goods, which are available worldwide, are not under export control. They could therefore have been exported to Pakistan or anywhere else. There is, however, a range of goods and materials, including equipment and components specially designed for nuclear facilities, which is under control to all destinations. This range is kept under review, and applications to export such goods are given the closest scrutiny in accordance with the importance the Government attach to non-proliferation.
Lord BROCKWAY: My Lords, I thank the Minister for that reply. Is it not the case that, through Pakistani agencies, a firm at Swansea had made two deliveries of uranium to Pakistan before the Department of Energy made any inquiries as to its use for military nuclear purposes? Is it not also the case that there is a factory in Cheshire financed by an international consortium called URENCO, from whose Dutch plant plans have been sent to Pakistan; has not the United States now stopped aid for this project, and will our Government do the same?
Lord TREFGARNE: My Lords, we do have information of some components supplied to Pakistan last year that might have been used for the enrichment facility which they have, we understand, established, but I have no information on any other goods supplied. Certainly the matter referred to by the noble Lord sounds to me to be speculation.
Lord WYNNE-JONES: My Lords, can the noble Lord say whether the particular equipment which is said to have been supplied to Pakistan is the centrifugal enrichment equipment? If it is, would he not agree that this is a very grave matter? Would he not also agree that this country, like the whole of Western Europe, is in fact very much dependent upon American good will with regard to uranium enrichment, and that if we do not obey the rules which are generally laid down we really make it almost impossible for the Americans to agree to supply us with any enriched uranium or any of the various facilities required for the fast breeder reactor, for instance?
Lord TREFGARNE: My Lords, I certainly agree that we ought to obey all the rules, and we certainly honour all our obligations under the non-proliferation treaty. We did not supply centrifugal enrichment equipment to the Pakistanis. We did supply some frequency changers, otherwise known as inverters, but that is not the same as the equipment itself.
Lord BROCKWAY: My Lords, in view of the statement in another place, that there is to be a tripartite arrangement between West Germany, the Netherlands and this country to control classified materials, may I ask the Minister whether he regards that as adequate when there is now concern that Pakistan may be developing a hydrogen bomb, as well as an atom bomb, which might be used in a war in the Middle East ?
Lord TREFGARNE: My Lords, the Pakistanis have said that all their research and development work is designed to exploit the peaceful uses of nuclear energy.
Lord BOYD-CARPENTER: My Lords, arising out of that answer, can my noble friend say whether the installation in question is a safeguarded or an unsafe-guarded one?
Lord TREFGARNE: My Lords, it is an unsafeguarded facility; that is to say, it does not fall under the control of the International Atomic Energy Authority.

VIETNAMESE REFUGEES: UN CONFERENCE
2.42 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have been informed of the terms of the seven point programme which the Vietnam Government reached with the United Nations High Commissioner for Refugees (30th May, 1979) to facilitate the orderly and safe departure of people wishing to leave Vietnam, and whether the offer of the Vietnam Government to attend a conference of countries concerned to implement the agreement has been accepted.
The SECRETARY of STATE FOR FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, I am aware of the terms of the programme to which the noble Lord refers. The United Nations Secretary-General has called an international meeting in Geneva on 20th and 21st July to discuss the problems of Indo-Chinese refugees. The Vietnamese Government has been invited to attend that meeting.
Lord BROCKWAY: My Lords, in thanking the Minister for that reply, may I ask him this question: Does the agreement between Vietnam and the United Nations High Commissioner for Refugees amount to an arrangement by which the Vietnamese may leave if they have homes or families abroad, or if they have an intention of livelihood? Has Hanoi accepted the proposal to come to the conference where it is proposed that priority should be given to a discussion by which this agreement might be implemented?
Lord CARRINGTON: My Lords, the noble Lord is perfectly right. The agreement covers people who have had offers of resettlement because of links with
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relatives abroad, but of course in terms of the problem the category is so small as to be almost useless. It represents, I think, about 10 days of the exodus of Vietnamese refugees from Vietnam. Something very much more drastic than that is needed to bring home to the Vietnamese Government the scale of what is happening. The Vietnamese Government have been asked to attend the conference, but I do not know whether they have accepted.
Lord AVEBURY: My Lords, while agreeing with the noble Lord that the Vietnamese Government have a heavy responsibility for what has occurred, is it not in our interest that this conference on 20th and 21st July—which, I understand, is being held partly at the request of the United Kingdom Government—should be an outstanding success in terms of the resettlement of refugees who have already left, and particularly those in Hong Kong who are awaiting resettlement from Hong Kong waters? Would the Foreign Secretary tell us what offer Great Britain is prepared to make at the conference to increase the number of refugees we have already taken, so as to set an example to the other nations taking part to increase their own contributions?
Lord CARRINGTON: My Lords, the Vietnamese Government do not have simply a responsibility for what is happening; they have the whole of the responsibility for what is happening. Of course, the Government, who were instrumental in calling the conference, wish to make it a success and we are discussing what more we can do.
Lord SHINWELL: My Lords, in view of his statement that the Vietnamese Government were invited to attend the Geneva conference, may I ask the Foreign Secretary whether he has been informed of what their reply has been? It seemed to me that he indicated that he did not know what the reply was.
Lord CARRINGTON: My Lords, I do not know yet whether the Vietnamese Government have accepted or not.
Lord GORONWY-ROBERTS: My Lords, while we on this side of the House would wish to ask the Foreign Secretary

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whether he is aware that he has very strong general support in the attitude he takes to this question, may we repeat our view that the Geneva conference, to be of any use at all, must be attended by the perpetrators of this crime?—and that is not certain. In addition, it should have the most comprehensive agenda and those responsible for this infamy should not dictate the conduct or content of the conference. Questions about the continuing sources of these masses of refugees which are to be discussed are not only the questions raised by the noble Lord, Lord Avebury—which refer to what we do with those already expelled. That would be to connive at the policy of the Vietnamese by making it more possible for them to continue what they are doing now. We should look to the results of what they are doing. Finally, may I suggest—
Several noble Lords: Question!
Lord GORONWY-ROBERTS: My Lords, the phrase " may I suggest " is an interrogatory introduction to what I was going to say. Is the noble Lord aware that we on this side would welcome an early and comprehensive statement by him on this matter arising from his first-hand examination and experience of this problem in Hong Kong?
Lord CARRINGTON: Yes, my Lords, if I may answer the last question first, I think that perhaps the right thing to do is to make a Statement to the House after the conference has taken place on 20th July, when we shall have more of an idea of what other people have been doing to help and what other countries can do to help. Perhaps I can then say more than I am able to say this afternoon.
I agree with everything that the noble Lord opposite has said. I do not think the scale of this problem is perhaps yet understood. One of the facts I discovered in Malaysia was that recently 40 per cent. of the Vietnamese refugees who arrived there are of Vietnamese ethnic origin and not Chinese. The problem is not just related to the ethnic Chinese in Vietnam but also to others. It may be that the scale of this problem is greater than we understand. Therefore, it is very important that the world as a whole should condemn what the Vietnamese Government are doing.
Lord HARRIS of GREENWICH: My Lords, may I ask the Foreign Secretary whether he is aware that many of us in all parts of the House very much welcome his statement that the responsibility for this very grave situation is entirely that of the Government of Vietnam and of nobody else? May I also ask whether he would not agree that it would be particuarly helpful if many of those who have consistently supported the case of the regime in Vietnam would join their voices with those of many of the rest of us in applying pressure to the Government of Vietnam for them to accept their international responsibilities? Lastly, may I ask whether the Statement on the conference could be made before the House rises for the Summer Recess?
Lord CARRINGTON: My Lords, the answer to the last question is, yes. I agree with what the noble Lord said. Sometimes I am appalled at the double standards that people have about these matters. I wonder what would have happened if we in this country had pushed off into the North Sea half a million of the people who were not ethnically our own.
Lord SHINWELL: My Lords, following the Question I ventured to ask on this subject last week, may I ask the Foreign Secretary whether he can state, in order to clarify the matter and to help us further, which countries have now agreed to attend the Geneva conference and whether there is any likelihood of the Soviet Union and the Chinese People's Republic attending?
Lord CARRINGTON: My Lords, I am afraid I could not say that without notice. I believe that about 60 or 70 countries have been asked. This is within the compass of the Secretary-General's arrangements and it is not for Her Majesty's Government to decide who is asked. I think that the Soviet Union have been asked and, speaking without notes, I have an idea that they have refused to come. I am not sure about China.
Lord BROCKWAY: My Lords, I agree with the noble Lord's statement that the problem is much more complex, but I disagree with some of those who say that the sole responsibility is in Vietnam. The conference is to be for only two days.

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Will the noble Lord give priority first to the conditions under which the boat people leave Vietnam? Secondly—and more important—will he give priority to the terrible problem of their resettlement in the world? Can he say whether there is any truth in the proposal that Guam Island may be used for temporary purposes?
Lord CARRINGTON: My Lords, the conference is very largely directed to the humanitarian aspects of the problem and not to the political aspects, though I think it is inevitable and indeed right that during the conference it will be made abundantly plain—at any rate by Her Majesty's Government—where they think that the blame lies; but it is predominently humanitarian. All the aspects about which the noble Lord is speaking will be taken into consideration. There have been suggestions about various places being used as temporary locations where the refugees can go. But I do not think any of them has been processed very far so far.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, I think we have had a very long run at this Question. I propose that we move on to the next Question.

RHODESIA: SANCTIONS-BREAKING
2.52 p.m.
Baroness HORNSBY-SMITH: 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 which countries voted in support of UN sanctions against Rhodesia and are known to have continued trading with that country to the advantage of their own trading and the detriment of those countries which have honoured the embargo and thus sacrificed valuable trade.
Lord CARRINGTON: My Lords, resolutions calling for sanctions against Rhodesia have been supported by virtually all members of the United Nations
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General Assembly. Breaches of sanctions have been established only in cases where Governments have mounted successful prosecutions. We have drawn attention in the United Nations Sanctions Committee to a large number of cases in which sanctions are believed to have been breached by individuals or companies in other countries, and by institutions in the State-trading countries.
Baroness HORNSBY-SMITH: My Lords, may I thank the noble Lord for that reply. It would appear from his Answer that cases have not been brought against several of the State-trading countries. Would he not agree that this proves that the campaign against sanctions which is so loudly protested by some of those breaking them, is really a case of them feathering their own nests and improving their own trade and thus denying us a valuable market which is traditionally ours? Is it not time we pursued cases against them and called their bluff?
Lore CARRINGTON: My Lords, it is not of course for us to take action against those who break sanctions; it is for the countries themselves. But the noble Baroness is quite right, we have on various occasions named Bulgaria, Czechoslovakia, the German Democratic Republic, Romania and the Soviet Union on the grounds that we had information meriting further investigation and the breaches of sanctions had been committed by institutions in those countries, but the allegations were denied or ignored by the Governments of those countries concerned.
Lord PAGET of NORTHAMPTON: My Lords, is it not a fact that almost the entire Rhodesian tobacco crop—which has largely increased since sanctions—has been taken by the Soviet Union? Of the African countries, is it not also a fact that far and away the biggest breaker of sanctions has been Zambia, and that Zambia's lamentable agricultural condition is now being rescued by the generosity of Rhodesia?
Lord CARRINGTON: My Lords, I am grateful for the information which the noble Lord has given to me. I do not know the truth of his first supplementary question. As regards the second, I have no

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doubt that that is true and that there is a great deal of food going over the border.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, is the noble Lord aware that the Zambians are being assisted by the South Africans? It is assistance which they desperately need because their crops failed and they need maize. They are using Rhodesian transport; and since the noble Lord had not referred to Governments which have actually infringed sanctions, one must for the record ask him to confirm that the United States broke sanctions over chrome.
Lord CARRINGTON: My Lords, the noble Baroness is quite right about the Zambians using transport through Rhodesia and getting food from South Africa. It is badly needed there because the Zambian economy is not in a good way. There would not be anybody in your Lordships' House who in the circumstances would do other than try to help the Zambians.
May I be reminded of the second question?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, it was with regard to chrome.
Lord CARRINGTON: My Lords, that also is a fact.

NATIONAL ENTERPRISE BOARD: ACCOUNTS
2.55 p.m.
Lord BOYD-CARPENTER: 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 in the light of the recommendations of the Public Accounts Committee in the previous Parliament they will now direct that the accounts of the National Enterprise Board be opened to and audited by the Comptroller and Auditor-General.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, my right honourable friend the Chancellor of the Duchy
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of Lancaster announced in another place on 23rd June that the Government intend to proceed with the review of the functions of the Comptroller and Auditor-General which was put in hand by the previous Administration in January last. My noble friend's Question raises issues which need to be considered against that background, but a statement will be made as soon as possible.
Lord BOYD-CARPENTER: My Lords, may I thank my noble friend for that Answer. Is he able to reassure me that priority will be given to this issue in the review to which he referred, first, in the light of the clear expression of view by the responsible and senior committee in another place and, secondly, because at the end of the last Parliament the sum of £4,500 million was granted to this body to deal with, by the last statute to get Her Majesty's Assent before the dissolution?
Viscount TRENCHARD: My Lords, my noble friend is quite correct to remind us of the views of what he terms the most " responsible and senior committee " in another place, and of the fact that this matter has been going on for some time. It is indeed a question of priorities. The duties of the Comptroller and Auditor-General in general are being looked at; but, as my noble friend knows well, the whole role of the NEB is being considered. In that context, we need to get entirely clear and agreed the role of the NEB before we announce the results of this matter.
Lord ORR-EWING: My Lords, is my noble friend aware that the original recommendation from the Public Accounts Committee was made on 25th July 1978? Nearly a year has elapsed and the last Government promised a decision on this matter to this House in Question Time in November 1978. Therefore, there has been an unconscionable delay. Would he bear in mind that, if the NEB is given some residual powers, these accounts should be subject to the Comptroller and Auditor-General in accordance with the decision and recommendations of the PAC?
Viscount TRENCHARD: My Lords, I thank my noble friend for that observation. We are fully aware of the

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length of time that this matter has been kept waiting. We are also mindful of the fact that one must get clarity and certainty about the role of such an important body as the NEB before one takes final decisions on the process of audit or control of its accounts.
Lord PEART: My Lords, would not the noble Viscount recognise that one agrees with examination of accounts and that is acceptable, but this body has performed a very valuable service to the economy of this country and it is important from the point of view of the regions? I hope the National Enterprise Board will not be axed.
Viscount TRENCHARD: My Lords, in our review of the NEB the noble Lord's views have been expressed clearly and in considerable detail to us. We have taken into account—and will continue to take into account until the moment of decision—all views which are expressed on the past role of the NEB.
Lord REIGATE: My Lords, would my noble friend agree that, in fact, the role of the NEB had nothing to do with the Question asked by my noble friend, which is entirely a matter of carrying out a recommendation of a committee of the House of Commons?
Viscount TRENCHARD: My Lords, as I have already indicated, we have said that we will continue the review started by the previous Administration which goes into the role of the Comptroller and Auditor-General not only in relation to the NEB but in relation to other matters as well. But, if I may say so, I think there is relevance in my previous answers, in that to submit in haste to a new procedure in relation to its accounts a body whose role is being discussed in major degree is not an entirely sensible procedure either. But both these bodies—and I am sorry to disappoint my noble friends—are under review. The importance of the point raised in the original Question by my noble friend is fully accepted by the Government and will be taken into account, and we hope to announce the result shortly.
Lord GLENKINGLAS: My Lords, will my noble friend allow me to expand
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a little on his answers to these questions? There really is no connection at all between the role of the NEB and whether or not somebody should look properly at what it is doing. I accept that the Government have a month or so to look at it, but to talk about acting in haste when it has already been well over a year seems to me to be a little optimistic.
Viscount TRENCHARD: My Lords, all I would say, rather than repeat what I said earlier, is that we have not been looking at it for very long and I think the two subjects are connected.
Lord BOYD-CARPENTER: My Lords, will my noble friend accept that the anxieties which have been widely expressed this afternoon are certainly not diminished by the published statement of the chairman of this body, that responsibility to Ministers is equivalent to responsibility to Parliament? Is there not a very strong case that a body so headed should be subject to the most rigid parliamentary scrutiny on the money it has already spent, whatever its future may be?
Viscount TRENCHARD: My Lords, I do not wish my previous answers in any way to mean that the Government do not accept that the NEB should be responsible to procedures of scrutiny which will satisfy Parliament.

IPCS: PAY DISPUTE
3.2 p.m.
Lord SOAMES: My Lords, I think it would be for the convenience of the House if I informed your Lordships that some staff working in the Palace of Westminster are taking industrial action beginning today. The Institution of Professional Civil Servants (the IPCS) has instructed its members employed at the Palace of Westminster to strike for a fortnight from today. Thirty-two staff are involved, but I cannot yet tell the House how many will obey the strike call. These staff are engineers and technicians responsible for the maintenance and operation of virtually all services in the Palace of Westminster. They supervise about 170 Department of the Environment industrial staff who are not in dispute and are expected to continue to work so far as they can. It is

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expected that they would repond to any situation involving serious risk to health and safety. The Property Services Agency will make every endeavour to maintain at least a minimum level of service.
I deplore the action which leads me to make this Statement. It is, as your Lordships will be aware, only one part of the current campaign by the IPCS. I firmly believe that when two parties find that they are in an honest dispute with one another—which is what we have here—the right course can only be to go to arbitration according to the well-established procedures, and in particular should this be true when a Civil Service union finds itself in dispute with the Government. The Government have offered this and have agreed to abide by the ruling of the arbitration tribunal. The union's response has been to escalate industrial action which, given the circumstances, I see as totally unjustifiable. I deeply regret the inconvenience which may be caused to your Lordships.
Lord PEART: My Lords, may I say that I personally deplore the action very much. I support very strongly what the noble Lord the Leader of the House has said. I regret that the union will not accept arbitration and I wish that it would think again about this. I noticed that today's Press said that they had been offered by the Civil Service Department staged rises of up to 26½ per cent. Will the noble Lord confirm that? But even if this is so, it shows that really it should go to arbitration.
Lord BANKS: My Lords, I should like to thank the noble Lord the Leader of the House for making the Statement this afternoon. Certainly, we on these Benches regret the situation which has made this Statement necessary. We are glad that the Government have offered arbitration and have agreed to abide by the ruling of the arbitration tribunal. We wonder whether there has been any response at all from the union to this offer; whether it has actually rejected it or whether it has just ignored it. At any rate, we hope that the offer will be accepted in due course and that the dispute will be satisfactorily settled very shortly.
3.5 p.m.
Lord SOAMES: My Lords, I am
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grateful to the noble Lord the Leader of the Opposition and the noble Lord, Lord Banks, for what they have said, and for the support that they have given me in what I told your Lordships' House. As to what was offered to the IPCS, all Civil Service grades subject to pay research have been offered salary scales calculated in precisely the same way according to the same interpretation of the evidence. Other unions have accepted this but the IPCS have not, arguing that the results would leave them worse off than an up-dating of previous settlements. But pay research is not, as noble Lords will be well aware, a comparison with the past, but a comparison with the present and the present salaries paid to comparable staff outside. If this causes salary relativities to change, then that must be accepted.
Lord PEART: My Lords, can the noble Lord say whether the business of the House will be severely affected, and in what way? I think it would be for the convenience of Members if we knew.
Lord SOAMES: My Lords, I sincerely hope not. The trouble will arise if things break down. The lifts will be working, for example, and those who work the lifts are not in dispute. The only trouble will be if a lift breaks down. But I assure your Lordships that if a lift breaks down with one of your Lordships inside it, means will be found of getting him out of it. Where steam supply is concerned, the boilers are automatic and that should go on all right, unless it breaks down. If it breaks down, your Lordships might be inconvenienced in the restaurant, and places such as that. The air conditioning could break down and that would be nasty, particularly for the other place. Your Lordships will be glad to hear that sewerage is unlikely to be affected. But supply services, including such day-to-day services as carpet repairs, furniture moving and furniture repairs, are likely to he disrupted.
Lord LEATHERLAND: My Lords, can the noble Lord the Leader of the House assure us that the Accountant's Department will still be working?
Lord SOAMES: My Lords, I cannot immediately think what prompts that

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question from the noble Lord, but so far as I know there will be no interference.
Lord ORR-EWING: My Lords, is the noble Lord aware that in his original reply he said that the union had instructed its members to strike on such-and-such a day? Can he say whether the union has taken pains to circulate the offer which is on the table at the moment, so that these people who have been instructed can inform themselves of exactly what is at stake? Is he aware that it is not just the convenience of Parliament—which is of course of great importance—that is involved, but the vital and very essential and sensitive services in different parts of the country which will be affected by the campaign being run by this union?
Lord SOAMES: My Lords, I quite agree with the last part of what my noble friend Lord Orr-Ewing has said. There are sonic very serious aspects to this industrial action, of which this is but one example. As to the extent to which the union has circularised its members about the offer, I rather have the impression that it has concentrated more on its side of the case than on the Government's side of the case. On the other hand, I have done my best, and my right honourable friend the Minister of State at the CSD has also done his best, to ensure that everyone in the country, including of course the members of the union, realise what the position is and the offer that is on the table.

NORTHERN IRELAND ACT 1974 (INTERIM PERIOD EXTENSION) ORDER 1979
3.9 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Elton)The PARLIAMENTARY UNDERSECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Elton) rose to move, That the draft order laid before the House on 14th June 1979 be approved. The noble Lord said: My Lords, I beg to move that the draft Northern Ireland Act 1974 (Interim Period Extension) Order 1979, which was laid before the House on 14th June, be approved. It is from this Act that the powers vested in Her Majesty's Government for the direct
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rule of Northern Ireland are derived. In discussing this order, the House may find it convenient also to consider the draft Northern Ireland (Emergency Provisions) Act 1978 (Continuance) Order 1979. With your Lordships' agreement I shall be moving that this order also shall be approved at the end of this debate.
Before dealing with the two draft orders, I should like to welcome the noble Lord, Lord Blease, in his capacity as official Opposition spokesman on Northern Ireland affairs. I am well aware of his long and distinguished record of public service in Northern Ireland, not only in the trade union movement but in many other fields as well. I shall certainly not forget the depths of experience of Northern Ireland from which he will speak in this House, and I think your Lordships will share my view that this appointment is a fortunate one not only for Her Majesty's Opposition but for this House and the Province as a whole.
It has become a tradition—and I think a good tradition—for the Motions before the House today to be the occasion for a brief résumé of Government policy in Northern Ireland. I shall in turn speak of political matters, of the economic situation in the Province and of security. To begin with the political aspect, the draft Interim Period Extension Order which we are discussing today allows direct rule to continue for a further 12 months. Regrettably, it is fairly obvious that direct rule must continue for a further period. There is no immediate prospect of establishing any alternative system of government, but the eventual replacement of direct rule by an alternative democratic arrangment remains the goal of Her Majesty's Government. Until it is reached, we have to do the best that we can to render direct rule as fair and as efficient as possible.
My right honourable friend the Secretary of State has already embarked on a series of consultations with the leading politicians in Northern Ireland. His aim is to find, with their help, a means of restoring greater control to the people of Northern Ireland over their own affairs. We have no illusions about the magnitude of this task. It is no good getting some existing set of constitutional arrangements down

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from the shelf, dusting them off, and saying, " These work wonderfully well in such and such a country; we'll put them into practice in Northern Ireland ".
Northern Ireland is not like any other State or community in the world. There exist within it two political traditions, two different sets of aspirations, two interpretations, even, of history itself and there is continuous tension between them. Any new governmental arrangements in the Province must be specially planned to recognise these divisions and be carefully engineered to accommodate this tension. What we have to do is to devise a system that so matches Northern Ireland's needs that it works not only in administrative terms but in political terms as well. That means that it must be seen as fair and just in Northern Ireland itself, as well as at Westminster. This is no easy task and not one that can be rapidly accomplished, but my right honourable friend the Secretary of State has already set his hand to it.
It will, as I say, take time. There is little room for error and none for indiscretion. It is becoming rather fashionable among the political commentators of the world to remind Her Majesty's Government at frequent intervals that the world is looking to them for a political initiative and to show that by this phrase is meant some dramatic and fundamental advance in one direction or another.
We are determined not to remit, for a moment, our work towards a solution, but we are equally determined not to embark hastily or ill-advisedly upon any experimental path. In Northern Ireland false steps cost very dear and credibility, which is dearly bought, is easily lost. We have to prove every step before we take it. In this work, if in no other, our motto has to be " Make haste slowly ". Until we have an acceptable and a workable answer, until new structures of government can be erected, direct rule has to continue.
The draft order before the House today is, therefore, a recognition of necessity. It is not a new departure; it is not an end in itself. And it should not be allowed to obscure the Government's commitment to replacing direct rule by a system of government giving greater control of Northern Ireland affairs to the people who live there.
That being the case, we must consider the policies that Her Majesty's Government will be pursuing under the existing arrangements and the circumstances in which they will be doing so. In economic terms, Northern Ireland is in no easier a position than the rest of the United Kingdom. Indeed, its situation is measurably more difficult. But economically the Province stands or falls with the rest of the nation.
The Government have wasted no time in seeking to restore the United Kingdom as a whole to economic health. We are determined to restore incentives, to raise the rate of return on capital employed, to reduce the role of government and to shift the burden of taxation from income to expenditure, all of which we anticipate to be highly beneficial to our community. Northern Ireland will benefit from these changes, as will the rest of the country, and it is right therefore that Northern Ireland should contribute also to the public spending cuts which in the current year will, as my right honourable friend the Chancellor of the Exchequer has announced, amount to almost £1·5 billion for the United Kingdom as a whole. Northern Ireland's contribution is £35 million.
But simply because the Province is playing its part in cutting public expenditure, let it not be thought that we are not fully aware of the special problems which exist there. The urgent need for new investment and new employment opportunities to boost prosperity generally and to combat unemployment is something to which we will be giving particular attention. The rate of unemployment stands at present at 11 per cent. In the public spending cuts we have done everything possible to reduce to a minimum any adverse effect upon that rate. We have also decided to extend the Meat Industry Employment Scheme until further notice to aid the agricultural industry. We shall be keeping in close contact with the European Community to ensure that Northern Ireland takes full advantage of our membership of the EEC, and it is worth remarking in that context that so far this year £24 million has already been committed to Northern Ireland from the Regional Development Fund and the European Social Fund.
I would make one final point in this context. In considering public expenditure cuts, we have had particular regard to the need to ensure that the law and order programme is not weakened by lack of funds. Expenditure in this field is not affected by the public spending reductions. There can be absolutely no question of any diminution in our efforts to combat violence and terrorism because of lack of money.
This brings me to the question of security in general. In this field the task before us is still a large one. The aim remains that of defeating terrorism, and of extending effective policing throughout the whole of the Province. Since this House last discussed the powers contained in the Emergency Provisions Act in December, the security forces maintained their efforts to bring the terrorists before the courts, and in this they have met with considerable success. The cost of these efforts has not only been in cash, and I know I shall have the full backing of all noble Lords in paying tribute to all members of the security forces—the RUC, the Regular Army, the Ulster Defence Regiment and not least the staff of the Prison Service—for the courage they have shown in their dedicated and loyal service to the whole community in Northern Ireland. I notice that my list does not include the RAF Regiment, but it should be there. All of us admire the determination and fortitude which they have shown in carrying out their responsibilities with skill and restraint in the face of murderous attacks on themselves, their families and their colleagues.
In the past three months we have, unhappily, seen an upsurge of terrorist violence in Northern Ireland. The terrorists have refined their organisation, making it harder to penetrate. Attacks on the security forces have increased, and noble Lords will have heard recently of attacks on hotels across the Province which will inevitably affect the tourist industry. Activity has been especially marked in the border areas, and the Government are discussing with the Irish authorities further means of improving the co-operation of their respective security forces to deny the terrorists the advantage which the border offers them.
The dangerous conditions under which the security forces have to work need
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to be recalled in considering the implications of the Bennett Report. Your Lordships will recall that this report recommended a number of changes in the administrative procedure observed during the questioning of suspects by the RUC and certain modifications to the existing machinery for the investigation of complaints. We had previously announced our acceptance of two of the most important of the committee's recommendations which relate to access by solicitors to persons in custody and to the installation of closed circuit television in interview rooms. The first of these has already been implemented by the chief constable and arrangements for the second are well advanced. Following detailed consultations with all the parties involved, a decision has now been reached with regard to the remainder of the recommendations and the Government have placed in the Library of both Houses of Parliament a summary of the action which is to be taken. Virtually all the recommendations are to be implemented.
Despite the sweeping allegations which have been made in some quarters about the RUC's conduct of interrogations, none of the evidence studied by the Bennett Committee led them to believe that there was a widespread practice of ill-treatment. By implementing the report we are demonstrating quite clearly that the RUC has nothing to hide. It is to be hoped that the RUC will now be recognised for what it is: a highly professional and efficient force, dedicated to the service of the whole community in Northern Ireland.
I am sure that noble Lords would not wish to see any of the powers contained in the Emergency Provisions Act stay on the statute book for a day longer than is needed. Nor indeed would this Government. But in the light of current terrorist activity they have concluded that it would not be appropriate to let the present powers lapse, more particularly since we in this Administration have had little more than two months in which to see them in operation. But, while we do not yet feel able to recommend that any of the powers should cease to be available, I would repeat the assurance given last week in another place, that all the provisions of the Act will be closely reviewed before the expiry of this order in six months' time, when it will, of course, be

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necessary again to seek the approval of both Houses of Parliament for the extension of the whole Act or of any of its provisions. For that order, my Lords, and not the one that I have moved, runs only for six months and not for 12. I therefore commend to the House the two orders before us today. I beg to move.
Moved, That the draft order laid before the House on 14th June 1979 be approved.—(Lord Elton.)
3.22 p.m.
Lord BLEASE: My Lords, first, I should like sincerely to thank the Minister for his kind remarks concerning myself. I am pleased that my first duty as Opposition spokesman on Northern Ireland affairs affords me the opportunity to offer my congratulations to the noble Lord, Lord Elton, on his appointment as Under-Secretary of State for Northern Ireland. The Minister can be assured that he will have my support, and I feel sure the general support of all in this House, for those measures which are considered best to promote the goodwill, peace and prosperity of the Northern Ireland people. Like his predecessor, my noble friend Lord Melchett, the Minister has spent a lot of time in the Province since his appointment and seems determined to get to know the people as well as the problems as quickly and as thoroughly as possible. I feel sure that this is a wise and helpful approach. I should like also to say that my noble friend Lord Melchett and his other ministerial colleagues of the previous Government set a high standard of application, which was respected and generally appreciated by all sections of the community throughout the Province.
The Minister has already mentioned the tremendous problems facing Northern Ireland, and we all realise the very difficult task and onerous duties that confront the noble Lord the Minister and his fellow Northern Ireland Ministers. There are no easy solutions or simple answers to the deep-seated problems and complex questions which beset Northern Ireland.
Concerning the two draft orders before us today I should like to indicate my support for the proposed measures. In giving this support to the Government I share with many in this Chamber and in another place, as has already been men-
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tioned by the Minister himself, a deep regret that the current situation in Northern Ireland necessitates the retention of such legislation. Perhaps my personal feelings and approach can best be stated by repeating what Mr. Tom Pendry said when he spoke in the seven and a half hour debate on these orders in another place. He said—and I quote:
" The orders are in many ways distasteful. I would be among the first to vote against them if circumstances were significantly different from those now pertaining. However, my short experience as a Minister in Northern Ireland compels me to agree to the orders and to recommend them to the House ".
We on the Opposition Benches will give every encouragement to the Government in their efforts to find an acceptable way of restoring to the people of Northern Ireland more control over their own affairs. However, it will not come as a surprise when I say that I expect we shall freely disagree with the Government's notions of how they intend to promote the social and economic welfare of the Province.
As a former trade union official who was never elected as a public representative, I wish to make it perfectly clear that I do not claim or pretend to represent the people of Northern Ireland in this House. I have accepted with great pride the honour bestowed upon me by my party, to speak on Northern Ireland affairs from the Opposition Front Bench. I do so as one who has conscientiously tried over the years to get working people in Northern Ireland to focus on the interests and aspirations which unite them rather than on those matters which divide. It is this outlook and experience which make it so easy for me to applaud the tone, as well as the content, of the statement made by the Minister and by the Secretary of State since taking up office in Northern Ireland, and also the statements made by the Minister's colleagues in the Northern Ireland office.
I am glad to see that the Secretary of State has explicitly recognised that there are two political traditions and two aspirations to be understood and satisfied, and that no political progress can be made unless each side recognises, in a positive way, the sincerity of the views held by the other. I hope those concerned will note his blunt and frank statement that:
" Progress will require movement to new positions ".

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I am afraid he can have heard little in the debate on these two orders in another place that could have encouraged him to be optimistic about an early response to his call for new and fresh attitudes. It is quite natural that our public representatives should be so preoccupied with matters concerning policing and security. There is pressure from all sections of the Northern Ireland community for measures to protect life and property and to deal effectively with the perpetrators of violence.
At the recent annual General Assembly of the Presbyterian Church in Ireland statements were approved, commending the security forces for their courage, efficiency and devotion to duty in upholding law and order. Along with other public bodies the General Assembly joined in deploring the carefully planned propaganda campaign attempting, to discredit the police and the prison authorities. Against the background of the systematic allegations about methods used by the police during interrogation procedures in Northern Ireland, there has been a general welcome for the Government's proposal to implement virtually all of the Bennett Report recommendations.
While at this stage I do not think there is much usefully to be gained by pressing the Minister for further information about the full intentions concerning the report, I would simply add that the general principle of strengthening public attitudes to the RUC by attending to matters of resolve and accountability should also apply to all other branches of security. I believe there is much to be gained in the interest of public confidence by a review of the measures and methods used by the security forces and the prison services in respect of relations with the public. The terrorists' campaign and propaganda methods are sophisticated and expertly promoted. This kind of propaganda requires to be countered by experienced journalists and media personnel and their ready willingness for open consultation and the availability of relevant information from appropriately organised officers concerned with the maintenance and respect for law and order. Much public disquiet arises from not having professional communicators readily available at all levels of the security forces. Much could be gained by having a close
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examination. The public require reassurance on many of these aspects of security acts. But I believe the greatest and most immediate contribution that could possibly be made to the improvement of security would be that very movement to new positions which the Secretary of State and the Minister have stated to be essential to political progress.
Consider the question of cross-border co-operation. Some elected representatives say that they want nothing to do with the Government of the Republic; others insist on what they call the Irish dimension. Clearly, if the Irish dimension means anything, it must mean a united front on the part of the democratically elected representatives, both North and South of the border, against all those who seek to impose their will on the people by force.
I commend the Secretary of State for his visit to Dublin so soon after taking up office, in order to discuss co-operation on security with the Prime Minister of the Irish Republic. It was commendable because it was done in the face of outbursts of criticism from the very people who shout the loudest about security problems. The same lack of logic applies to the issue of power-sharing. If the sharing of power means anything it means sharing of responsibility for security and the restoration of respect for law and order. I hope the Government will encourage some movement by the political parties in regard to these fundamental and vital aspects of security, aspects concerning cross-border co-operation and support for the police.
I am also pleased that the Irish Congress of Trade Unions is to play an even greater part in the work of the police authority. For years the trade union movement has been in the forefront of encouraging meaningful cross-border co-operation. I feel sure the Irish Congress of Trade Unions will contribute much to better understanding between the public and the police.
I must express disappointment, however, that the new Administration seems not to have given the same weight as its predecessor to the extent to which social and economic problems fuel sectarian bitterness and are at the roots of civil disorder. It is true that in 1976 my

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colleagues in the Labour Government imposed cuts of about £42 million in public expenditure in the Province, but they came to recognise, as indeed did the late honourable and lamented Airey Neave, that the Government would have to provide substantial financial assistance to Northern Ireland. This finance is best used for employment and industrial development.
In the debate on these orders in another place, on 30th June last year, the then shadow Secretary of State for Northern Ireland said:
" We Conservatives recognise that … like other regions with special problems, Northern Ireland needs special measures if these problems are to be solved ".—[Official Report, Commons, 30/6/78; col. 1717.]
In the current social and economic climate in Northern Ireland it is clearly absurd to expect a cut-back in the public sector to be offset by more activity in the private sector. We have massive problems of chronic unemployment and terrible needs arising from urban decay which, given the background of continuing violence, can be tackled only by direct Government action. The previous Administration had only just begun to get to grips with the staggering problems. For example, in Belfast the public agencies were geared up to tackle roads, environmental amenities and housing when the public expenditure cuts were announced. Perhaps the noble Lord the Minister would care to comment on the economic and social aspects of the situation, which received only the most superficial and scant treatment in the debate in another place. In particular, I should like to know whether it is the Government's intention to continue to impose cuts in Northern Ireland proportionate to those in the rest of the United Kingdom, and, if so, why the Government have changed their view expressed when they were in Opposition that " regions like Northern Ireland require special consideration ".
It is not my intention today to subject the Minister in this House to a catalogue of the difficulties and problems of the people of Northern Ireland. The Minister will be well aware of the expressed public concern about employment and about economic and social issues. We hope that these will be debated on another occasion very soon. For the record, I would wish to mention a few issues that have been
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drawn to my attention: the future for the youth employment service and the youth opportunities programme; the development of Enterprise Ulster; the encouragement for small industries and the Local Enterprise Development Unit; the effects of the cutbacks on education and particularly research facilities and grants at Queen's University, Belfast, and the new University of Ulster.
The Minister will also know of the concern of the Northern Ireland Committee of the Irish Congress of Trade Unions about rising unemployment, especially about the contemplated increase in unemployment in the public services and what that will mean. He will probably know also of a special conference which is to be held on 23rd of this month by the Irish Congress of Trade Unions in Belfast to deal specifically with the problems they now see. He will also be aware of the disappointment expressed by the Standing Advisory Committee on Human Rights and by the peace people, who had submitted some modest recommendations for changes in the Northern Ireland Emergency Provisions Act 1975. I was pleased to hear that these matters will be reviewed and given consideration and changes will be contemplated in six months' time.
On this side of the House we recognise that direct rule is everyone's second best solution and that successive Governments have longed for the day when acceptable devolution could be negotiated. A year ago Members on the Front Bench on either side of the House were more optimistic about this objective than they are today. But it seems even administrative devolution may fail to satisfy more than a few of the Northern Ireland public representatives. However, I am convinced that government can nurture responsibility only by sharing it. The elected representatives on the Northern Ireland majority community side have experienced frustration at having little control over matters which affect them. Now they must know how the Northern Ireland minority community has felt during all these years. I would hope that they would now wish for others what they wish for themselves. The precept of practising what one preaches must also apply to those who seem to want to share power but not the duties and responsibilities of office, such as supporting

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the police and other law enforcement bodies.
I have spoken at some length and I hope plainly. I must say in honesty that I welcome the thoughtful and plain speaking approach of the Minister and of the Secretary of State for Northern Ireland in these matters. In the debate last week the Secretary of State said that we must be quiet, patient and persistent in seeking acceptable forms of government for Northern Ireland. I also welcome his pledge to be fair and impartial on the full range of Government functions for as long as direct rule persists. I have no doubt that given the patience, the goodwill and the generosity which I have found to be so characteristic of both these Houses, and given the joint resolve of both the Government and the Opposition, we can look forward to the time when these orders no longer have to be reviewed and renewed as they are today.
3.37 p.m.
Lord HAMPTON: My Lords, it gives me great pleasure to take this opportunity to congratulate the noble Lord, Lord Elton, on his recent appointment at the Northern Ireland Office. I understand that he is to have special responsibility for education, and we know that this is a subject in which he has no little interest and much valuable experience. The way in which the young are brought up today will critically influence the relations of the two communities tomorrow. We wish the noble Lord every success in his challenging but eminently worthwhile task.
I find myself humbled at following the noble Lord, Lord Blease, with his great personal experience of, and service in, Northern Ireland, but I hope it is accepted that I at least share his aims of working in any way possible for a happy future for this troubled Province. I think I have at least one advantage in coming fresh to the subject; I am not weighed down so heavily as are some with the frustrations and the tragedies of the last 10 years. I am optimistic for the future and I shall say why. But first let me state my party's position. The policy of Great Britain towards Northern Ireland is not infrequently referred to as bipartisan. More than 4 million Liberal voters
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cannot be brushed aside quite as lightly as that, but let me hasten to add that we, too, do accept that these two orders under consideration today must be passed.
We, too, are determined that there shall be no capitulation to violence. We accept that direct rule must continue for the time being. We accept that the civil power must be given military assistance for as long as required. Lastly—and this is our distinctive suggestion from these Benches—we suggest that it could be helpful for a 15 to 20 member advisory council to be elected by the people of Northern Ireland, to voice every viewpoint and to have constructive discussion with each other as well as with the Secretary of State. I might add that when my honourable friend in the other place suggested that this council would need to be elected by proportional representation his words were greeted with non-comprehending derisory jeers. I say no more. We put the idea forward for consideration
Lord ELTON: My Lords, if the noble Lord will forgive me for interrupting him, I think I lost a word in what he was describing. What would be the constituency of this conference?
Lord HAMPTON: My Lords, it would be held in Northern Ireland.
Lord ELTON: I am much obliged to the noble Lord.
Lord HAMPTON: Is that a sufficient answer for the noble Lord?
Lord ELTON: My Lords, I take it that it is the same as the combined constituencies of the Westminster Members of Northern Ireland.
Lord HAMPTON: That is right, my Lords, yes. I shall now briefly deal further with what should, I believe, be both tactical and strategic aims for the Province. Fortunately, there is much accord between the three main political parties on this, and this is one point which gives me grounds for hope. I am glad that " virtually all " (to use the Secretary of State's own words in the other place and the noble Lord's words in your Lordships' House) of the recommendations of the Bennett Report are to

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be implemented immediately, and I know that this will please the community of the Peace People, representatives of which I recently had the pleasure of meeting. But I should like to make the following points clear. We, too, in no way accept the widespread allegations of torture and brutality thrown out by the IRA. We believe it to be a perversion of the truth by a body which holds that the end justifies any means.
None the less, we believe that Amnesty International, a London-based organisation, was right to show that we at least are prepared to have our methods of interrogation independently considered, that we accept that certain activities have taken place on occasion which we deplore, and that we are now determined that the suggested safeguards should be introduced, so that justice is not only done but is seen to be done. I trust that Amnesty will re-emphasise that there are many countries where the need for an independent inquiry into the treatment of prisoners is very greatly more urgent than in Northern Ireland. We join the Peace People when they say:
" We acknowledge the difficult circumstances under which the Royal Ulster Constabulary operate, and have great respect for the way in which the overwhelming majority of the Force have gone about their difficult and dangerous duty ".
The Army—and they certainly merit a sincere tribute, too—and, as the noble Lord mentioned, the RAF Regiment and the RUC, are serving a vital but in some ways only a negative purpose. Their task, largely, is to prevent terrorism and all the evils it can bring, now and in the future. But there needs to be positive action to bring together what are so significantly and sadly termed " the two communities ". It seems generally accepted that the trouble-makers are only a tiny minority of the populace, and this fact is another which I believe gives grounds for hope. I trust that I shall not be condemned as too ignorant and starry-eyed if I say that I believe that the forces for good can turn even the present grim position to good account. I respect the work of the nonsectarian Alliance Party, and am greatly impressed by the work of the All Children Together Movement. They seek to bring children into happy contact with each other as a vital step towards breaking the dangerous tensions which can otherwise
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build up between " them " and " us ".
At an ecumenical conference organised by the All Children Together Movement in March of this year, one speaker closed her address with these words:
" There is now the great opportunity for a deep religious link to be forged between the different Christian bodies which in turn, through our young teachers, could spill out into the classroom and into the community as a whole ".
To emphasise my faith in the courageous attitude of so many people in the Province in the present difficult times, perhaps I may here quote words of Mrs. Lineham on her retirement from the chairmanship of this organisation recently. She said:
"If we are to reach real peace in this world and if we are to carry on a real war against war we shall have to begin with children, and if they will grow up in natural innocence we won't have to struggle, we won't have to pass fruitless, idle resolutions, but we shall go from love to love and peace to peace until at last all corners of the world are covered with that peace and love which consciously or unconsciously the world is hungering for ".
It is my belief that, given time—and I like to believe that it will not need so very long as some people fear the major problems that confront the Province can be resolved; and they will be resolved by the people of Northern Ireland for themselves. In the meantime, it must be no part of our policy to say that we care not whether they sink or swim. No one should not sorrow at the brutalities of today, whether they take place in Ulster or at Westminster. But I believe that we too often forget the many more actions that we can admire, rather than condemn. I am tempted to follow Churchillian oratory, but will limit myself to just two lines:
" Say not the struggle naught availeth,
The labour and the wounds are vain …"
Out of the present troubles must, and will, come a brighter future.
3.46 p.m.
Viscount BROOKEBOROUGH: My Lords, I should like to start by congratulating my noble friend on his appointment to Northern Ireland, and to assure him that, whether he likes it or no, he will find himself converted to a good Ulsterman before very long; and I feel very happy with his most thoughtful speech today. I also studied, with great difficulty, the debate in another place in the form in which it was presented, and I found much to encourage me in the approach of his right honourable friend

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the Secretary of State and the Minister of State. Their approach of caution on political matters shows great wisdom. I have much sympathy with the Secretary of State in coming so new to this very complicated problem, and certainly in regard to political affairs he needs time. I should like to congratulate the noble Lord, Lord Blease, on taking up his task, and certainly his speech—his first from the Front Bench—demonstrates what all we in the Province know of his tremendous knowledge, experience and wisdom.
At the beginning of this Administration I should like to state in a rather starker way some of the problems that are facing the Administration. I want to try to convey to this House the feelings which the statement made by the Secretary of State aroused among those of us who have lived through the 10 years of torture and torment, because, to us, certainly on security, there really is no time for reflection. These feelings are made the stronger by the courageous way that the Secretary of State, with tremendous precision, described the security situation. He told us what of course many of us knew: that the last two years were only a breathing space for the IRA to reorganise, re-arm and re-group, and they are now in a position to be more professional and potentially more dangerous than they ever were. But the question which we must ask ourselves is: Are we back to square one, with increasing violence by the IRA? The law-abiding community, the Protestant community as well as the law-abiding minority community, will ask for clear proof that the Government are responding to this new threat with new and more effective weapons. Indeed, I feel that there must be some criticism of the past Administration, in that this new threat appears to have taken people by surprise.
In the noble Lord's speech he mentioned two crucial issues: the issue of cross-border security and interrogation. The security problems of Northern Ireland when violence has erupted have been solved quickly only when there has been complete co-operation between the Dublin Government and our Government; and, of course, we welcome the fact that the Secretary of State was able to agree with the Foreign Minister on the need for improved cross-border co-operation. But
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that co-operation appears to be limited to police co-operation. It appears to have ruled out altogether any question of co-operation between the two armies. But to the law-abiding citizens of Northern Ireland it seems a staggering fact that, 10 or 11 years after this common threat, as agreed by the Foreign Minister in Dublin, we are still talking about improving co-operation. Surely we should be far past that. It is, to me, quite a condemnation of a state of affairs which has existed too long.
I should like to tell you about the security situation as seen by people living close to the border. There are, in the County Monaghan salient, gangs of up to 20 men who can operate freely across the border. They live there, and providing they operate within 15 or 20 minutes of the border they can get back to the safe haven of the Irish Republic. These are most efficient gangs. They have up-to-date NATO-type equipment or Warsaw Pact-type equipment.
May I give just two examples. In the last few months there was a prison officer who went to a wedding in Clogher, seven miles from where I live. He was murdered in front of the church. Two of my friends were at the chapel in Lisnaskea, again seven miles away. They were murdered on the chapel steps. The gang which did the last murder are believed to have something like 20 murders to their name. Whatever the number of them is, they are criminals of the highest order to whom another death means absolutely nothing. To my mind it is a condemnation of successive Governments that we have allowed a friendly country to harbour these armed criminals.
I wonder what would happen if there were gangs able to operate across the French border from the German side. What would happen then? In the South the Dublin Government says, " We cannot operate against them because they are not breaking the law in our country ". But if this was to happen over the borders in Europe, whatever the laws were at that moment, some method would be found to change the laws and put these men out of circulation. It is because of the failure to deal with this problem that we in my part of the world find it difficult to believe that both Governments have the will to win and to deal with this problem.

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Having described that, what do our Government and the Irish Government propose to do about it? We were told that there is a plain clothes police force of the Garda which has been operating on the border. It has been operating for some months but I do not see much result, and it does not impress me at the moment. What else are we offered? Rather like naughty boys, we have been told as a Government that we ought to be operating the Criminal Jurisdiction Act. That Act enables the courts in the Republic to try people for crimes committed in the North. But that Act will not work. Although there have been one or two occasions when it has been possible to work it, Dublin knows, and we know, that before it can be implemented we have to produce a prima facie case on which the Republic's courts can operate.
The only way to secure convictions is by interrogation by men with all the necessary background and knowledge to produce confessions. It has been said in a statement that the Irish Government is considering allowing Royal Ulster Constabularymen to make a trip across the border in order to conduct interrogations together with the Garda. I do not take much comfort from this, for two reasons. First, it is highly unlikely that the southern Government will implement this recommendation, and I should like to ask the noble Lord what news he has on this matter.
Secondly, and this is almost as important, the first act of the present Government in Dublin on coming to power was to abolish the law enabling terrorist suspects to be held for seven days for interrogation. We know from our experience that 48 hours is simply not enough to achieve the desired result from people so deeply involved and so hardened in the job. This concession, even if it came off, would be of no value. So far as the cross-border situation is concerned, there appears to be no advance at all.
May I now look at the question of interrogation in Ulster. The Secretary of State has said:
" The successful interrogation of suspects is a vital weapon in the armoury of the security forces and I will not see it needlessly blunted ".
The truth, as I see it, is that this weapon has already been needlessly blunted by his predecessor, and that process has been
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taken a stage further with a confirmation that almost all the Bennett regulations are to be applied. A distinguished member of the legal profession said to me the other day, " If the Bennett rules were to be applied in the extreme, in the case of interrogating a schoolboy caught stealing a bicycle pump they could not produce a confession." The facts support this claim.
Ever since the publication of the Bennett Report there has been a definite decline in the number of confessions made by important terrorists. It is terribly important, in interpreting the statistics about convictions and confessions, to make a distinction between the top men who are hardened and the small fry who are naturally ready to confess rather more easily. The problem we face—the dilemma that all Governments face—is where we protect the ordinary law-abiding citizen at the expense of people suspected of crime. In my view, it is possible that we have gone too far, at the expense of many lives.
What is the danger from all this, and what am I worried about? It is simply that the IRA violence, which was so graphically described by the Secretary of State, is bound to go on increasing. Last night the 299th soldier died as a result of a radio-controlled bomb, probably detonated from across the border. This would be an appropriate time for me to join with the noble Lord, Lord Elton, in paying tribute to all members of the security forces. My admiration for them is unbounded. But the danger is retaliation. If we do not get convictions, if the security forces are not seen to be achieving results, then we shall have retaliation. I regret to say that there are renewed signs of paramilitary activity on the Protestant side.
There was mention of the EEC election results. The result of that election has been the dominance of the Member for North Antrim of another place. In the election to another place his cause was helped by transport and buses from the UDA and the Loyalist paramilitaries. Why has that gentleman managed to make such a success? It is due to the utter disillusionment with the handling of security. That is why he has had such a tremendous success of late.
The political implications of this are quite profound. To me it is as plain as a

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pikestaff that devolved government, based on any agreed principles, is not going to happen in Ulster. I believe that the Government, and the Opposition Front Bench, probably accept that. The problem is that we have to offer a sensible, agreed form of devolution and then, when it is rejected, to get on with government, and with making direct rule more accessible and more amenable. What is required after that is a definite British policy designed to make local government democratic and accountable by restoring the proper powers to it.
However, my solemn warning is this: it is just not good enough to produce no response to the IRA challenge. There are other solutions. Why should we not get agreement with the Irish Government to have hot pursuit across the border after these armed gangs? After all, it is accepted under international law. To rule out the death penalty and executive detention will leave us in a position where retaliation will occur.
There must be a security initiative and a political initiative. I am not suggesting that this political initiative should not be carefully thought out over a proper time, but there must be the summoning of a conference to register the fact that for the moment devolution cannot be achieved, and to start the task of reviving local government. Without those two initiatives we would, I believe, suffer the worst eruption we have seen, and I therefore support these orders.
4.1. p.m.
Lord HYLTON: My Lords, I wish to follow on from what my noble friend Lord Brookeborough said about detention and interrogation, and ask the Government whether they would examine very carefully the state of affairs that prevails in the Netherlands where, as we know, the Dutch Government have been up against some very tough terrorists. I understand that there a man can be detained for up to six or seven days before he is either charged or released, but that during that period there are considerable safeguards built into the system to make sure there are no abuses or even suggestions of abuse.
I am extremely grateful to my noble friend Lord Elton for the brief resumé he gave of the Government's approach to Northern Ireland and I hope he and other
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Front Benchers in your Lordships' House will consider whether we should have a full scale debate on this subject at an early date. As has been pointed out today, we have had nearly 10 years of military involvement in Northern Ireland, 10 years of violence and terrorism, 10 years without a satisfactory solution, and at the end of that period it is estimated that perhaps some 20,000 people are still giving support to the Provisional IRA of a more or less active kind.
Regarding the Emergency Provisions Act Order, I commend to your Lordships and the Government a document produced by the Northern Ireland Peace Movement which contains eight proposals; I am not sure I would agree with them all and certainly I am not in a position to judge whether some of them may be a little idealistic, and others may perhaps be premature at this time. But, at any rate, I would ask the Government to give them careful consideration, and I do so because the Northern Ireland Peace Movement has done a great deal of work with the victims of violence, with detainees and has done much to encourage respect for the Royal Ulster Constabulary, and its achievements in community work generally throughout the Province are worthy of respect.
I wish to highlight proposal No. 6, which asks whether consideration could be given to the repeal of the Emergency Provisions Act and the Prevention of Terrorism Act and the replacement of both statutes with one emergency law for the whole of the United Kingdom. Such-legislation would in present circumstances have to be active in Northern Ireland and some of its provisions would apply to the whole of the United Kingdom, as is the case at present with the Prevention of Terrorism Act, and all of the provisions would have to be capable of being invoked when need arose anywhere in the country.
There are I believe parallels with French law, which provides for something called an Etat d'Urgence or, at a stage further, an Etat de Siège. I believe there is a need for such general and comprehensive legislation not only because of the Northern Irish situation but also because the two Acts that would be repealed were both rushed through Parliament somewhat quickly. Then, again, in London and England we have to cope with the effects of international terrorism arising out of

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disputes anywhere in the world, which can lead, for example, to the assasination of ambassadors, as we have seen. Again, we have to be able to cope with industrial disasters such as Flixborough and, in Italy, at Seveso. Then, again, there are the grave dangers from the transport in England and into Scotland of plutonium, on which I have a Question on the Order Paper.
Returning to Northern Ireland, there seems to be great uncertainty about some aspects of the law and the practice of the security forces, and I will give a few examples. A long time ago we had the famous " no-go areas ". Since then we have seen local truces with various paramilitary bodies and we have seen funerals of para-military personnel. We have seen illegal processions and illegal baricades. All these things could be or have been said to be the flexible application of the existing law; one could also call if the non-execution of the law as it stands. That is one side of the question.
There is another and different side of the question, and that concerns various military and security practices for which there may be no legal authorisation, and I am thinking of what is known as " head-checking ". That I understand happens when the Army goes into a house just to find out who is there, whether they are people who are supposed to be there whether they include others or, whether some of those who would be expected to be there are absent. Then, there are plain-clothes operations by military personnel, and again good case can be made out for that; after all, I believe that 18 per cent. of the personnel of the Metropolitan Police force in London are at any one time operating in plain clothes. There are questions of interrogation in depth and matters of the assembly by the Army of population records. It may well be that none of these things are authorised by law, but I should hve thought it highly desirable that, if they are necessary, they should be authorised.
I would ask the Government whether they consider there is in Northern Ireland sufficient, adequate and close co-ordination between the civil Government and the police and the Army. The headquarters of these three bodies are, I understand, in three different places, at Stormont, Nock and Lisburne. Is there perhaps a
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case for bringing together, physically and geographically, at least the operational sides of these three headquarters? Then again, when the security forces are operating at local level in what have been described as ghetto areas, surely there should be the closest possible linkage between the local administration of civil matters, the police and the Army. Here we may have something to learn from the French system of préfers and regional prèfers.
Still on the topic of security, I would ask the Government what are their views about identity cards, perhaps for everyone over the age of 12. These were mentioned in the Gardiner Report in paragraph 94. In relation to finger-printing, I understand that at present suspects who have been arrested can be finger-printed but that nobody else can be. As for the use of various kinds of existing records such as census data, social security records, bank account details and driving licences, surely the security forces should have access subject to proper safeguards. Incidentally, driving licences in Northern Ireland already bear the holder's photograph, unlike driving licences in this country.
My final question to the Government is: do they see their total campaign in terms of security, of justice, of employment, of social welfare and of political initiatives (if ever there can be any) as one co-ordinated whole? This, I suggest, may well be the lesson that we should draw from the experience of the counter-insurgency campaign that was so successful in Malaya. I believe that it is up to Parliament to make sure that the security forces in Northern Ireland do not in any way have to work with their hands tied. It is equally important that the Government should win the propaganda war against their enemies. If they can do that, they will gain the minds and hearts of the people, and thus succeed in separating the minority who are prepared to use violence, from the vast law-abiding majority. As I said in an earlier debate on the Address, neither violence nor repression is enough, and I would further suggest that reconciliation is absolutely essential.
4.12 p.m.
Lord PLANT: My Lords, I want to declare an interest in the subject of the debate. As your Lordships know, I am

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chairman of the Standing Advisory Commission on Human Rights in Northern Ireland, and therefore I have an interest in the debate. I should like to congratulate the noble Lord, Lord Elton, upon his appointment and to say that people in Northern Ireland have formed a very favourable impression of the new team. It is also right that tribute should be paid to the previous Secretary of State who, in a very difficult period, did outstandingly good work. I should like also to pay a special tribute to my noble friend Lord Melchett for the work that he did in education, especially among children. It would be remiss of me not to mention the tragedy that befell Airey Neave. I travelled to Northern Ireland with Mr. Neave on several occasions, and I found him a most courteous person and a great comrade.
The Standing Advisory Commission on Human Rights last year began a detailed examination of the operation of emergency legislation in Northern Ireland, with particular reference to its implications for human rights in the province. Recently we submitted to the Secretary of State advice on three issues. First, we advised that Section 12 and Schedule 1 to the Act, which contain powers to detain people without trial, should not be renewed. These powers, which replaced the former power to intern, have not been used for four years. Secondly, we advised that Section 2(2), which limits the power of a judge to grant bail, should not be renewed. Thirdly, we advised that Section 8, which deals with the admissibility of statements made by the accused, and which the Human Rights Commission regards as unsatisfactory in its present form, should be redrafted as soon as possible. Here we have in mind in particular the definition:
" torture, or inhuman, or degrading treatment ".
The Secretary of State and the Minister do not consider that the present security position is such as to warrant relaxation of emergency powers. However, the Secretary of State said that he intended to keep the recommendations in mind against the day when improvements in the security situation would allow him to look more favourably at the commission's proposals. The commission accepts that violence and terrorism have escalated during the past six months and that a new
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Secretary of State needs to act with caution in relation to the advice he has received. While fully accepting the considerations exercising the mind of the Secretary of State, the commission was, and remains, convinced that its advice would by no means exacerbate the position. On the contrary, my belief is that it could well do something to remove sources of public criticism and eliminate suspicion in responsible quarters at home and abroad.
The commission looks forward to the day when it will be possible for its advice to be accepted, but it will, as the Secretary of State has asked, continue to make suggestions to Her Majesty's Government that will in its view provide improvements in the quality of life for all the people in Northern Ireland. Parliament can provide a forum for debate, and my criterion will always be the level of protection of human rights in Northern Ireland. My commission will be looking critically at the remand and detention provisions, at the improvement of Diplock court operations, and at the patterns of use of emergency provisions.
The decision to proscribe the Irish National Liberation Army will be received everywhere with full support. I personally deplore last week's BBC television interview with a leader of the INLA. This did nothing more than give free publicity to a small group of thugs. It is right to accept by and large the Bennett recommendations. Not only does this do something to restore public confidence, but it is also a clear sign of support for and confidence in the RUC. I pay my tribute to this force which is operating under great provocation and difficulty. Two months ago I was the inspecting officer at the passing out parade in Enniskillen of the RUC cadets. There was a fine body of 100 men and women. I spoke to the cadets, telling them that they had a role to play in preserving democracy in the Province. I was somewhat surprised the following day to find that, according to certain sections of the Irish Press, that was quite the wrong thing to have said.
I am glad that the RUC is now getting up to strength. I am also glad that there is to be a complement review and that it is not the Government's intention to prune and slash the security forces. I was a member of the Lord Edmund-Davies'

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committee on the pay of the police, and I take some pleasure at the fact that the report of that committee has done something to bring police figures up to strength not only in Northern Ireland, but also elsewhere in the United Kingdom. Of course the minority have an interest in the RUC. They feel that they have not sufficient representation. Personally, I believe that that is a great tragedy. No one knows how many of the minority population are in the RUC. After all, one is a policeman—not a Protestant or a Roman Catholic policeman—in the same way as one might be, say, a trade unionist—not a Roman Catholic or a Protestant trade unionist. As my noble friend Lord Blease has said, one of the uniting issues in Northern Ireland is the trade union movement, and I believe it can do very much to help overcome more of our problems. Recently I visited the Castlereagh interrogation centre and saw the difficulties under which the RUC are working. Again, I pay tribute to them working in these conditions, suffering some of the criticisms, the unfounded criticisms, which are levelled at them.
In giving support to these orders, I hope that some way can be found to make all the people of Northern Ireland realise that they, and they alone, can solve their problem. We cannot solve it. We cannot act as referees. It is the people of Northern Ireland who must solve this problem so that they can live in peace, in social justice and security.
4.20 p.m.
Lord ELTON: My Lords, may I start by thanking all noble Lords who have been kind enough to congratulate me on my appointment. I think I can confirm to my noble friend Lord Brookeborough that I am in process already of conversion into a true Ulsterman. Indeed, I make the remark only partly in jest because it is one of the most beautiful places in the world and it has a population which, individually, is generous, charitable, open and friendly; and what we are witnessing is war in Paradise. I think that that is the context in which we have to look at the tragic problems which lie behind the necessity of asking for the agreement of your Lordships to the continuation of these two powers.
Today's debate comes just over two months after this Government took office.
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We are not old yet in experience or service; but in these two months my right honourable friend the Secretary of State, my fellow Ministers in another place and I have been busy coming to grips with the extreme complexity of Northern Ireland's many problems. I do not think that any of us would yet claim to have mastered all the matters for which we have responsibility but, equally, I am sure that, at least, we have got to know the problems better even if we are not yet sure of many of the answers. At this stage it has been particularly helpful to have had this debate and to have heard the views of noble Lords with long experience of and long involvement in the affairs of the province.
It is tempting for a new Government to rush into a particular course of action to " solve the Northern Ireland problem " as a sort of gesture of their ability to do things in a hurry. There is an understandable feeling that we should waste no time in taking initiatives. But there is also, I think, a good measure of understanding for our determination not to be over-hasty, not to set out on a path until we can see both the path itself and our objectives with clarity. Of course, that understanding will diminish as time goes by, but eight or nine weeks is not a long time. I hope therefore that your Lordships will be patient in the interim.
When these draft orders were debated in another place, my right honourable friend the Secretary of State outlined some of the areas where we shall be laying particular emphasis and, particularly, in the security field. There can be no doubt as to our objectives there. We shall do everything in our power to eliminate terrorism and to restore to every person, no matter where they are in Northern Ireland, the elementary human right to live in peace and safety. It is clear that if they live near the border, then that right may be interfered with differently than if they live elsewhere. Touching on the border question and the cross-border question, to which I shall return, your Lordships will be aware that negotiations over these matters are of an intense delicacy; because, as I said in opening, there are two interpretations of the history of the situation itself. To assume that the values that we have in raising a matter are the values that will be in the

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minds of those with whom we are discussing them is often misleading. But I shall return to this. However, those who seek to subvert that right of people to live in peace and safety will be pursued and punished. Our aim is a peaceful society, a just society and a prosperous society.
We also recognise that we cannot achieve that aim without political progress. That, and the progress on the security front, must go together in harness. It is here that, as my right honourable friend the Secretary of State has made clear, he will not be rushed. There is no easy answer. He has already met all the leading parties in Northern Ireland. He has heard their views and is aware of their ideals and aspirations. What we now have to do is to seek a means to reconcile their conflicting demands. It will require patience, sensitivity and understanding on our part and it will also require a high degree of leadership and of flexibility on the part of those who represent the people of Northern Ireland. None of that will be easy, but I think that we all recognise that party political progress in Northern Ireland cannot be made without the goodwill and co-operation of the political leaders of Northern Ireland. We, as a Government, are ready to do everything within our power, but only if the political leaders in Northern Ireland respond can our efforts meet with success.
I should like now to deal with some of the specific points raised by noble Lords in the course of the debate. I have attempted to marshal them in intelligible order but, with all these papers, it is rather like having an over-large hand at rummy. If inadvertently, I allow some of the " cards " to escape to the floor or elsewhere, I will endeavour, in going through the record of this debate, to make the omissions good through the normal channels of the post. In that context, several of your Lordships have suggested an early debate on the whole matter. I have two observations on that. One is that we shall have the Appropriations Order to consider later this month and that will be a useful opportunity to deal with matters of economic affairs on which a number of your Lordships have already touched. The other is that it is always open to a noble Lord to put down an Unstarred Question for debate; but I hope that we might do this,
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as it were, in consultation because I think that the timing of such a debate might well have an effect not only on its importance but on its influence.
The noble Lord, Lord Hampton, spoke most helpfully during his introductory speech and the struck a note of optimism which was very agreeable to hear. He produced for us the Liberal proposals which have been in the air for a little while, relating to an advisory council. The suggestion for a small elected advisory council which might in due course develop of its own volition into an executive body may, at first sight, look attractive; but in fact I do not think it has been thought through to the level of practicalities. As a simple advisory council, it would have all the defects of such a body. That is to say, it would not be responsible to anybody; it would be a public platform for criticism of Government which would be difficult to ignore but difficult also to reply to, since one would not be speaking to people with parliamentary authority. I do not see the means by which it would assume the executive powers which I think it is intended should accrue to it without bypassing the people already elected to Parliament or else becoming in itself a re-enactment of the constitution which met so much trouble so few years ago.
I do not want to deploy a great barrage of argument at this stage. I merely wish to leave in the noble Lord's mind the idea that while I shall look in a friendly light at anything that he produces I do not entertain any tremendous optimism about the result of examining this particular point. On the other hand, I follow him entirely in his moving passage about the fact that if we can get the children to live in peace, then the chances of getting the adults, as they become adult, to live in peace are increased. My special responsibility is for education. It is all too clear that the beginning of any stable and happy adult life must be in love, as he put it. I think I will merely make this comment. No pupil taking O-levels this year, to use a yardstick with which your Lordships will be familiar, can remember a time other than the time of " the troubles ". What we are treating as an emergency, they regard as the normal condition of life. That is the tragedy and the peril of the situation.
I have already responded to one of the remarks of my noble friend Lord Brooke-

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borough about my own conversion. I was glad that he approved of my right honourable friend's consultations on co-operation; although I think that perhaps they were fractionally less tentative than he may have thought. I see the pressures under which his opinions are formed. If you live in a Tom Tiddler's ground, as it must appear to some people on some occasions, then it is difficult to see why the full panoply of armed pursuit should not be carried out across the border. I would say simply that consultations are in progress and matters have been raised and discussed already to which the noble Viscount has alluded upon which I should like to make no statement at all which would prejudge the outcome. I cannot satisfy him at this stage; he must merely know that we understand his position and that co-operation in some spheres may improve.
My noble friend Lord Hylton did me the great kindness of giving me notice of some of his points, albeit in a matter of minutes rather than hours. For this I am grateful. He then raised a number of points to which I shall briefly reply. He spoke of a re-organisation of the Emergency Powers Act and the Prevention of Terrorism Act so that they became an integral part of the law of the United Kingdom. A number of the powers that we use are already such an integral part because of the use of the Pevention of Terrorism Act which is a part of the law of the United Kingdom which is put into effect frequently. As to the other points, I believe that there are—
Lord HYLTON: My Lords, may I just interrupt? We know about the Prevention of Terrorism Act being part of United Kingdom law, but will the Government look at this point of having a comprehensive system covering the whole which can be invoked when required anywhere?
Lord ELTON: My Lords, I am sure that can be done and it will certainly be looked at because the noble Lord has asked that it should. However, there is an aspect of this of which we should not lose sight: the noble Lord is asking for powers to be available throughout the United Kingdom which are at present only available in the Province. He must look at this therefore first of all from the point of view of Great Britain to see whether it is desirable that it should be
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extended to Great Britain; and, secondly, he must recognise—as we all do—that anything which appears to savour of what is called integration—that is, making the Province indissolubly part of the United Kingdom—has in itself a political effect on the views that some people have of the negotiations going on. With those matters in mind, I shall certainly ask my right honourable friend to look into this.
As to the liaison between the civil Government, the police and the Army in Northern Ireland, this is a matter which is of course constantly under review. I am not aware of any outstanding cases which suggest that it is not as good as it should be; but as these cases arise, the practice is reviewed on a daily basis. In other words, if the noble Lord is afraid that we are content with any aspect of what is going on and are prepared for things to repeat themselves, he may rest assured that that is not the case. He raised a number of detailed points about conduct of security in the matter of fingerprinting, and so on. I think it best if I reply to detailed points on paper, otherwise I shall be deferring the next business rather too long.
The noble Lord, Lord Plant, made a helpful intervention from his very influential position on the Standing Advisory Commission on Human Rights. Some of the points he made were echoes of what had been said already. I shall wish to read his remarks before replying to the point about dropping certain powers under the Emergency Powers Act, particularly matters of the limitation of a judge's right to grant bail which I think is not absolute but means reference to a judge of a higher court and is not a denial therefore in absolute terms of a liberty. I was glad of the vigour with which he supported the banning of the INLA, and that he shared my own view of the broadcast platform that was given to one of its members.
There was one point which the noble Lord, Lord Blease, raised to which I did not refer as the paper was at the bottom of my notes. I had anticipated that he might raise it. This was with regard to the youth opportunities programme. This consists of a range of training and work experience schemes for unemployed 16 to 19 year-olds and has

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now, as he will know but your Lordships may not, been in operation for some considerable time. The programme provides places for 6,000 unemployed young people. It is not an alternative to work but provides opportunities which are designed to enhance the young people's vocational attributes and to promote entry to employment. It is as good as it is in large measure because of the noble Lord's interest in the past.
The recently-announced public expenditure cuts have had some effect on the programme. It will however continue to provide the same number of places, 6,000, which were available in 1978–79, but the planned expansion of some basic schemes which provide less opportunity for direct placing of trainees in employment or which are consider to be less justified by reason of the quality of training is not to go ahead. The number of places already approved in the new community-based work preparation units will not be affected. That is the matter which the noble Lord had most closely at heart. At present the Government have approved the establishment under the programme of 22 of these units throughout Northern Ireland to provide places for 950 persons. Thus, while the effect of the cuts will be noticeable, they will bear almost exclusively on planned expansions of the programme and not upon the existing level of provision.
My Lords, I fear that I have detained your Lordships too long on a subject which is both complex and of very great importance. Your Lordships have been kind and patient in this debate and indeed in your approach to our policies. I am sure that if I can benefit throughout my tenure of office with such friendly advice and consultation with people of such eminence and experience as your Lordships, it will be the greatest assistance to me in performing my task. I beg to commend both orders to this House.
On Question, Motion agreed to.

NORTHERN IRELAND (EMERGENCY PROVISIONS) ACT 1978 (CONTINUANCE) ORDER 1979
Lord ELTON: My Lords, I beg to move that the draft order laid before the House on 14th June 1979 be approved.
Moved, That the Northern Ireland (Emergency Provisions) Act 1978 (Continuance) Order 1979 be approved.—(Lord Elton.)
On Question, Motion agreed to.

SAINT VINCENT TERMINATION OF ASSOCIATION ORDER 1979
4.37 p.m.
Lord TREFGARNE Lord TREFGARNE rose to move, That the draft order laid before the House on 27th June 1979 be approved. The noble Lord said: My Lords, I beg to move that the draft Saint Vincent Termination of Asssociation Order 1979 which was laid before this House on 27th June be approved. The order will be made under Section 10(2) of the West Indies Act (1967). The West Indies Act requires that any order made under this Section must be laid in draft before Parliament and approved by resolution of both Houses. The effect of the order is to terminate the status of association between the United Kingdom and Saint Vincent. It is proposed that it should come into effect on 27th October 1979. Saint Vincent will then be a fully independent sovereign State.
The link between the United Kingdom and Saint Vincent dates back to 1627 when Saint Vincent was included in a patent given by Charles I to the Earl of Carlisle. During the remainder of the 17th century, and most of the 18th, ownership of the island was the subject of dispute between the British and the French. After the French declared war on Britain during the American War of Independence, Saint Vincent fell into French hands but was restored to Britain by the Treaty of Versailles in 1783. Saint Vincent remained, for most of the time as part of the Windward Islands, a British colony until 1969 when it became one of the six West Indies Associated States. This status gave Saint Vincent full internal self-government while Britain retained responsibility for external affairs and defence. Associated statehood, intended as an interim stage on the path to full independence, has generally worked well. During the past few years there has been a general desire on the part of the States involved to complete the move to independence and three of the six have done so: Grenada in 1974 was followed

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by Dominica in November 1978, and Saint Lucia in February of this year.
Section 10(1) of the West Indies Act 1967 provides for Associated States to terminate the status of association themselves, by resolution at the House of Assembly endorsed by a two-thirds majority in a popular referendum. Each State has, however, preferred to use the procedure under Section 10(2) of the Act, whereby the British Government grants independence by Order in Council. This is also Saint Vincent's request. The House will recall that the British Government have sought in previous cases to satisfy themselves on two main counts before deciding to proceed by Order in Council: first, that the people of the State in question wish to become independent and, secondly, that a satisfactory constitution has been drawn up which safeguards fundamental rights and freedoms. We believe that both criteria have been met for Saint Vincent and that we should therefore accede to their request.
The Saint Vincent Government have an overwhelming parliamentary and popular mandate to ask for independence: at the December 1974 election, on a platform which included independence, they defeated the Government of Mr. Mitchell, securing 10 of the 13 elected seats in the House of Assembly and over 69 per cent. of the popular vote. The Opposition People's Political Party, with two representatives in the Assembly, had previously entered into an electoral pact with the Government, and although the PPP's own Manifesto did not refer to independence they can reasonably be assumed to have supported the Government's policy in this respect. Their party newspaper The Voice in fact declared in an editorial in February, 1975, that,
" this was the very reason why the major parties got together to clear the way for independence ".
The other Opposition member, Mr. Mitchell, (who campaigned at the election as an independent, but who now leads the New Democratic Party) made independence an objective within the lifetime of the present Parliament, although he hoped it could come about through Caribbean unification.
The Premier of Saint Vincent, Mr. Milton Cato, did not seek talks on independence with the British Government immediately after the Saint Vincent 1974 election, because he wished to concentrate
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first on restoring Saint Vincent's economy. Preliminary talks were held in April, 1978, at which he asked the then Minister of State, Mr. Rowlands, to convene a constitutional conference. His action was endorsed by a resolution of the House of Assembly, which was however opposed by the three Opposition Members. A period of public discussion on independence and an independence constitution followed. The public were invited to submit proposals and a privately inspired National Independence Committee was formed which submitted a wide range of suggestions. I should mention that the National Independence Committee included members of a radical party, the Youlou National Liberation Movement, who are as yet unrepresented in Parliament but who support the principle of independence.
Mr. Rowlands invited the Saint Vincent Government and Opposition leaders to a constitutional conference which was held in London in September 1978. Despite their initial acceptance of this invitation, the Opposition leaders did not in the event attend. At the conference, which had therefore to be held without an Opposition presence, the draft independence constitution was considered. This included proposals put forward by the National Independence Committee. Following the conference, a report with proposed amendments to the constitution was published in Saint Vincent and a further period of time was allowed for public discussion of the issues. For virtually all this period, the Opposition Members made no suggestions for constitution changes and on 8th February the House of Assembly held a debate. A few days before the debate, the People's Political Party had published some proposed amendments to the constitution in the party newspaper and during the debate Mr. Mitchell made further suggestions; but the Opposition parties did not take part in the Committee stage where the constitution was considered in detail and were absent when the vote was taken. It was therefore passed by 10 votes with none against. The Opposition parties wrote to the British Government asking for the constitutional conference to be reconvened so that their own proposals could be considered.
While rejecting the request for a second constitutional conference, Mr. Rowlands suggested to Mr. Cato that a compromise between Government and Opposition in

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Saint Vincent could be achieved if he would accept some of the Opposition's proposed amendments to the constitution. Mr. Cato at first took the view that the Opposition should have submitted their proposals at the proper time. My honourable friend Mr. Ridley visited Saint Vincent in May and had talks with Mr. Cato and all the Opposition Leaders (Mr. and Mrs. Joshua and Mr. Mitchell). After these meetings, Mr. Ridley proposed that Mr. Cato should accept three important constitutional amendments and I am glad to say that he agreed to do so. The resulting constitution, based as it is on the 1969 Associated Statehood constitution, which was itself designed for adaptation to the needs of an independent state, is a good one and provides the necessary safeguards for the protection of fundamental rights and freedoms.
There may perhaps be some concern that Saint Vincent should be thinking of independence at a time when it has just experienced an emergency resulting from the volcanic eruption on the island on 13th April. Saint Vincent has indeed been through a difficult period. Twenty thousand people had to be evacuated to the southern part of the island and housed and fed for almost two months. Saint Vincent received generous help from its neighbours and from the Americans and the Canadians. The British Government provided immediate medical supplies, food and financial assistance up to £100,000. In addition, we have sent two ambulances at a cost of £17,000, the Royal Navy frigate HMS " Gurkha " visited the island, to give assistance and British seismologists have been helping local experts to assess the prospects of volcanic activity in the future. I am glad to say that the activity has decreased sufficiently for it to be considered safe for the vast majority of the evacuees to return to their homes.
We have been considering with the Saint Vincent Government the longer-term problems of rehabilitation and have agreed to provide £250,000 rehabilitation aid for the small banana growers on the island. This is being spent on fertilisers and pesticides. Discussions about the levels of British aid to Saint Vincent after independence were held in November, 1978. The British Government offered aid of £10 million, half on grant and half
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on interest-free loan terms, for projects agreed between the two Governments. This is the same development aid package as was agreed for Dominica and St. Lucia when they became independent. In addition, the existing Technical Co-operation Programme will continue, and an offer was made of budgetary aid totalling up to 2·07 million Eastern Caribbean dollars (about £370,000) to be spread over the next two years.
The fact that the eruption did not result in loss of life, injury or outbreak of disease is a tribute to the highly efficient way in which the evacuation of the stricken area was organised under the personal supervision of Premier Cato. The emergency interrupted Saint Vincent's progress to independence, but it also showed dramatically that the people of that island, with the help of their friends, are well able to look after themselves in times of crisis.
I should perhaps say something about the wider aspects of Saint Vincent's independence in the light of the recent events in the Eastern Caribbean, particularly in Grenada. It is understandable that other Island States in the area are concerned about their own vulnerability. They have themselves been considering ways in which regional security can be strengthened and we are ready, together with our friends and allies, to help. However, even before the coup in Grenada, other Commonwealth countries in the Eastern Caribbean had been discussing ways of developing their political and economic co-operation, and have now agreed in principle to establish an organisation of Eastern Caribbean States which would act for the States on a regional and international basis. The organisation will be able to become truly effective only when the present Associated States become independent and the British Government relinquish responsibility for their external affairs. The grant of independence to the Associated States is a way of encouraging further co-operation among the Eastern Caribbean States generally, and thereby contributing towards the overall stability of the area. It is therefore fully in accord with the spirit of one of the objectives of Opposition Member Mr. Mitchell, who is striving for a unified Caribbean.
It is a pity that there is not complete consensus in the island for Saint Vincent's

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passage to full independence. However, the British Government are satisfied that the great majority of the people of Saint Vincent support independence and we consider that there is no justification for delay. I began my remarks by referring to the historical connection between Saint Vincent and the United Kingdom. I wish to stress that this connection can never be erased. But time cannot stand still, and after 10 years as an Associated State it is now right that Saint Vincent should move forward to independent statehood. A constitutional relationship which has become anomalous will then be replaced by a new one more appropriate to their new circumstances. I have no doubt that it will be as close and fruitful a relationship as we have enjoyed since 1627. I am sure the House will join me in wishing the people of Saint Vincent well.
I now ask your Lordships to agree to terminate the association between Saint Vincent and the United Kingdom. I beg to move.
Moved, That the draft Saint Vincent Termination of Association Order 1979 be approved.—(Lord Trefgarne.)
4.50 p.m.
Lord GORONWY-ROBERTS: My Lords, the House will be grateful to the noble Lord for so clearly explaining the purpose of this order, the latest in a series of similar orders in which an outmoded system of association has been replaced by a more modern and effective system. As the noble Lord said, we are conferring independence on Saint Vincent wholly at their request and in the way in which they want it to be conferred upon them; namely, under Section 10(2) of the 1967 Act. This is what they have asked for and this is what we are doing. Their democratically-elected Government has acted throughout on behalf of the people of Saint Vincent and we have responded to that democratic will. Before matters developed to their present position, the relationship between Saint Vincent and, indeed, other islands and this country was hardly colonial, was it? It was described by the Chief Minister of Saint Vincent as one of " amicable dependence ", and it was in that spirit that the necessary movement towards a more modern arrangement with the United Kingdom proceeded.
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Naturally, as is our practice in these matters, we have been concerned to ensure that independence should include the continuation of democracy in the new State. Sometimes Oppositions in such territories—in particular, perhaps, in small islands—wonder whether the democracy that they enjoyed under imperialism will survive into independence. And it has not so survived in some parts of the world. But the Caribbean experience is, I think, generally reassuring. One could point to the recent very encouraging example of Saint Lucia, whose people effected a peaceful democratic change of government in the last few weeks or so—as we did in this country—and we have every confidence that Saint Vincent will follow the same path.
The noble Lord reminded us that the Opposition decided, I think at the very last moment, not to attend the constitutional conference where they could certainly have had a full discussion regarding their points of reservation and the amendment of the new constitution. Nevertheless, it is most encouraging—I think to them as well as to us, as partners in that constitutional conference—that Premier Cato, under the influence of the noble Lord's right honourable friend the Minister of State, has conceded a number of the points, although not all of them, that the Opposition had been anxious about. However, this concession from the Premier, backed as he is by about 70 per cent. of the electorate of the island, should serve to strengthen the confidence of the Opposition that their role in the new, independent Saint Vincent will be fully assured.
Nevertheless, the friends of Saint Vincent and of the Caribbean, both in this country and in that area, must be concerned about recent events in the Caribbean. The takeover in Grenada, followed by the political turmoil in Dominica and reports of mercenery military activity in the area, has undoubtedly unsettled the Caribbeans, because small States—especially, perhaps, islands—are peculiarly vulnerable to coups, internally or externally instigated. So while the future of democracy in the Caribbean is reasonably assured, it must he qualified by concern about certain recent events.
I am sure that the United Kingdom, as it ends one method of association with

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Saint Vincent and other islands in the area, wishes to build up another kind of co-operation with Saint Vincent so that they can feel that they are not being left to cope with these very difficult political as well as economic questions, affecting not only their prosperity but their very security, without a firm friend in the country with which they have been amicably associated for something like three centuries.
There is all the more reason, therefore, for the United Kingdom to regard independence not as the end of our connection with Saint Vincent and the Caribbean but as the beginning of a new period of fruitful co-operation. This policy can be as helpful to the peoples of the Caribbean as undoubtedly it has been to the peoples of the Pacific. Indeed, this is the view of many Caribbean leaders. The fact that association did not prove to be workable need not foreclose the option of very close co-operation between the States within the area.
The noble Lord indicated possible fruitful ways of advance in the future, in the direction of closer regional co-operation. For instance, the Council of Ministers in the Eastern Caribbean can, if they choose—it is not for us to tell them what to do but we shall always be there to advise or to discuss, if they want us to do so as good friends of theirs—develop that arrangement so as to create structurally an ever-stronger regional system.
Analogies can be misleading, of course, but it is a fact that in many parts of the world regional co-operation is being developed and is proving steadily to be more and more successful. An obvious example of this kind of coming together for common purposes in a region is, of course, the European Community. But there are others as well. Technically, Comecon and Eastern Europe are pursuing the same regionalist approach. Then there is the very encouraging progress of ASEAN, the Association of South-East Asian Nations.
So the Caribbeans, in developing regional policies, are, as the noble Lord reminded us, in a mainstream of world tendency, and a very benificent one. How they do this is their own concern. I repeat that they can always turn to their
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friends—they have no better friends than this country—to seek advice. Indeed, they have done so already, and we have offered them advice. We shall continue to give them advice, technical assistance and financial aid—financial aid generally for their development as well as specifically in order to help them to cope with very difficult circumstances, such as those which arose after the eruption of the Soufrière volcano.
So in thanking the noble Lord I am sure I speak for the Opposition when I say that we very warmly support this order, one of a number which is part of the pattern of the British approach to the independent Government of the Caribbean. In supporting the order, we wish to join with the noble Lord and his friends on that side of the House in wishing the Government and the people of Saint Vincent every prosperity in the future, with our added wish that they will remember that they have here in this country consistent and steadfast friends.
5 p.m.
Lord SHEPHERD: My Lords, my noble friend said that the Opposition gave a warm welcome to this order. I share it, with some hesitation, however. I still believe that Section 10(2) of the West Indies Act was not the proper vehicle for sending associated States to independence. But, my Lords, let us forget it: three have already gone that way; but I felt that I should remind my noble friend that I took the Labour Peers into the Division Lobby on the first order. When I look at the circumstances of Grenada I cannot help but feel that perhaps we might have been right. However, it is not a real issue now.
I was involved with Saint Vincent, bringing it to statehood; and it was not easy to bring it to statehood, despite the fact that the West Indies Act was passed and five other of the territories had already gone, because of the conflict that existed then between the Government and the Opposition and the personalities who, I may say to my noble friend Lord Goronwy-Roberts, are still there, Mr. Milton Cato and Mr. Joshua. Saint Vincent is a most wonderful island; it has great potential and it has great problems, despite the present circumstances. But I hope that they will take from all of us in this House and from Parliament as a whole a genuine

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good wish for happiness and I believe above all else, security within their territory.
I welcome very much what the noble Lord, Lord Trefgarne, said in regard to regional developments. I have to say to the noble Lord, however, that there is no way in which the British can bring that about. One reads the history of the Caribbean, the history of the West Indies, the history of the Leewards and the Windwards, and there is no way in which the British can bring it about. I believe it can only be brought about by the will of those who live in those particularly wonderful but rather distant isles. One of the greatest difficulties of those islands is that although they are close together in terms of miles they are distant in terms of communication. They are very different from each other, but the leaders of all six associated States, with leadership, I hope, from the bigger of the Caribbean countries (perhaps Barbados could play a major role if it was so willing) could bring about an association of them with one of the bigger of the Caribbean Islands.
We must, however, look to them to bring about their own sense of security. I spoke with hesitation only because of Section 10(2); I have nothing but the best of goodwill towards the people of Saint Vincent, and while Mr. Milton Cato and Mr. and Mrs. Joshua may long decide to be in political conflict, I hope that, in the end, it will be only with the deepest affection between them.
5.4 p.m.
Lord TREFGARNE: My Lords, I am obliged to both noble Lords. Perhaps in winding up I could respond to the first point made by the noble Lord, Lord Shepherd, when he said that he would have preferred that we should proceed by using the procedure under Section 10(1) of the Act. One of the important differences of the procedure under that subsection of course is that there is a referendum in the islands upon the issue of independence and that is not the case if we follow, as we have decided to do, the procedure in the order before your Lordships today. The referendum procedure is in the West Indies Act for use if an associated State desires to move to independence unilaterally against the wishes of the British Government. So
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far independence has always come about by agreement. It is not the Government's policy to insist on a referendum on the issue of independence in dependent territories. We could hardly insist therefore on a referendum in the case of an associated State which enjoys a more advanced and entirely voluntary form of constitutional relationship with Britain. In practice we think that a referendum on the small island of Saint Vincent might have proved even more divisive than the politics of that island. All noble Lords have wished Saint Vincent well and I hope your Lordships will now agree this Motion.
On Question, Motion agreed to.

EEC BUDGET AND FINANCE PAPERS
5.6 p.m.
Lord COBBOLD Lord COBBOLD rose to call attention to the United Kingdom contribution to the EEC budget, to the recent Commission Papers Financing the Community—the Way Ahead (R/3185/78) and a global appraisal of the Budgetary Problems of the Community (5528/79), and to the first annual report of the Court of Auditors (R/3279/78) with reference to the Second Report of the European Communities Committee (H.L.17); and to move for Papers. The noble Lord said: My Lords, I rise to move the Motion standing in my name on the Order Paper, with particular reference to the Second Report of the Select Committee on the European Communities.
The report has been delayed by the various interruptions in parliamentary time. We started taking evidence in January and should normally have liked to report in April or May; but what with Easter, elections, Whitsun and more elections, it only saw the light of day late in June. This explains why the report does not take account of most recent developments or deal with the draft budget for 1980 which is already under discussion and which will be considered by the committee in due course. These interruptions and delays have put an even heavier burden than usual on parliamentary staff and on their secretaries. The committee are most grateful to them and to the two specialist advisers, Mr. Denton and Dr. Helen Wallace, and to our witnesses. The committee

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also much appreciated the help given informally by Mr. Tugendhat and representatives of the Commission and by Sir Norman Price of the Court of Auditors.
My Lords, this rather long and complicated report is divided into four parts. Part I gives an introduction and a brief summary of the committee's comments and recommendations, avoiding too many figures or details. It first refers to the EEC budget for 1979 which is dealt with In Part II and also, so far as the legal implications of the dispute between Parliament and Council are concerned, in paragraph 11 and in Annex I. Next it welcomes the establishment of the Court of Auditors which is dealt with in Part IV.
We then come to the main conclusion of the report. Although its present size was not unforeseen and does not exceed 1 per cent. of the total United Kingdom public expenditure, it is clear that the net contribution of the United Kingdom to the EEC budget is disproportionately high. We set out the problems needing consideration in coming years, stressing the committee's view that, if the Community is to develop successfully, a more equitable and generally acceptable distribution of benefits and burdens must be achieved. The committee draw particular attention to a paper by Professor Holt of Bradford University which was printed as Appendix 1. They also express appreciation of the two interesting papers produced by the Commission—The Way Ahead and subsequently the Global Appraisement. The committee suggest that the United Kingdom Government will need to be tenacious in putting forward constructive suggestions to reconcile Community and United Kingdom interests, and they go on to indicate five general headings under which progress might be made. These complicated and controversial matters are dealt with in some detail in Part III of the report.
So much for the introduction and summary. Passing on to the more detailed sections, Part II deals with the 1979 budget. It recalls comments made in two earlier reports in 1978 in which the committee called attention, among other things, to the excessive expenditure on Common Agricultural Policy, but concluded that there were not enough novel factors to justify a debate. The
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report goes on to deal in some detail with the confrontation which arose at the end of the year between the two budgetary authorities, the European Parliament and the Council of Ministers, which was not resolved until April this year. The committee stress the importance of ensuring that this sort of impasse does not recur in future years. Last minute differences on so fundamental a matter as approval of the budget must be harmful to relations within the Community and to its public standing. I will leave it to the noble Lord, Lord Fraser of Tullybelton, to explain the legal implications which are discussed in Annex 1. I am certainly not qualified to comment on them myself. I will, if I may, come back later to Part III.
Part IV deals with the first report of the Court of Auditors and with the formation and nature of the court's work. The committee attach great importance to this new institution and believe that it has a very important contribution to make. Although it is early days, the committee have been much impressed by the court's initial activities and by their considerable impact. They have been surprised to note how little attention has been given to this development by commentators in this country. The noble Lord, Lord Plowden, has taken a great interest in this part of the report and I am sure he will refer to it when he comes to speak.
Part III attempts to set out, ambitiously but I hope not too unintelligibly, the present problem of the United Kingdom contribution, and, bearing in mind the Commission's proposals in The Way Ahead, to examine possible ways of improving the position. It must be stressed that it is extremely difficult, for reasons which we have tried to make clear, to estimate contributions and receipts with precision. There is room for argument about very many of the statistics involved. But I repeat that, whatever statistics are used, the contribution, and more particularly the net contribution, of this country to the budget is disproportionately high and that effective action will be needed in coming years to bring it into better balance.
We set out the reasons why this has come about, despite the fact that the present cost was not unforeseen on accession, and despite the hopes that the

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financial mechanism agreed in 1975 during renegotiation would provide a solution. It has come about for a variety of reasons, affecting both the expenditure and the revenue sides of the account. Among the principal reasons are the way in which the Common Agricultural Policy has developed, the slow growth of the United Kingdom economy, and the fact that we are in a less favourable position than most member-States on the three main revenue sources. Our share of levies and duties is comparatively high because of our continuing import from outside the Community of a large proportion of food supplies and a relatively high proportion of dutiable goods generally. And our relatively high proportion of consumer expenditure puts us to disadvantage on value added tax contributions. With the ending of transitional arrangements and the prospect of increase in the Community budget in the early 1980s the real situation has become more obvious and more acute.
The report goes on to deal with comparisons with other member-States. Then in paragraphs 40 to 51 we deal with the various difficulties in estimating the statistics, in areas such as food costs to the United Kingdom in addition to import levies, the treatment of monetary compensatory amounts, an extremely complicated and controversial subject, the " own resources " doctrine, and the use of market exchange rates. I will not endeavour to go into any detail on these subjects, several of which have been covered in earlier reports by the committee. I hope, however, that your Lordships may find that these paragraphs give a reasonably clear exposition of what are admittedly complicated and controversial figures and lines of argument.
We then go on to discuss the proposals in the Commission's paper The Way Ahead, reaching the same conclusion as the Commission that the most probable source of an increase in revenue would be an increase in the rate of VAT. Finally, in paragraphs 54 to 73 the committee put forward five ways in which they think progress might be made towards lightening the disproportionate burden on the United Kingdom. It will perhaps be convenient to the House if I quote these five headings from the report. First, the balance could be altered by a reduction in the proportion of duties and levies in
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the budget. Secondly, the proportion of agricultural spending could be reduced by deliberate policy decisions on common price levels, green rates and agricultural policy generally. Thirdly, the proportion of the budget spent on regional, social and industrial policies could be increased. Fourthly, the suggestion included in The Way Ahead that a " progressive key " to be applied to the VAT contributions could adjust the balance on the revenue side of the budget. Finally, though the financial mechanism may affect the balance only marginally in its present form it could be amended to make it a more effective means of adjusting the final outcome of the budget while leaving the structure of policies unchanged.
The first three of those headings, though complicated in detail, are self-explanatory in principle. The fourth, the Commission's main proposal in their paper The Way Ahead, could help to adjust the balance on the revenue side. Perhaps because of its somewhat obscure title, "A progressive key", which I confess I found it very difficult to understand when I first read it in the paper, this suggestion has received rather scant attention. As explained in paragraphs 69 and 70, this proposal to relate contributions more closely to ability to pay has only as yet been made in broad terms. It would need considerable adjustment to lighten substantially the disproportionate United Kingdom share. Nevertheless, it seems to the committee a proposal which should be actively pursued.
Fifthly, the Committee suggest that a more basic method of offsetting uneven distribution of burdens and benefits might lie in extension and adaptation of the financial mechanism agreed at the Dublin Summit of March 1975, which is described in detail in Annex 3 of the report. Admittedly in its present form the mechanism has not produced the results which were hoped for at that time. Admittedly, too, if it is to make a major contribution to achieving equity it would need fundamental changes, including its application to net and not only to gross contributions. But a revised financial mechanism seems to the committee to offer long-term possibilities of meeting the problems of member-States generally, not only the United Kingdom, according to changes in economic circumstances.
Before closing, my Lords, I should like to digress for a moment and say a word about the European Monetary System, which is at this stage only marginally relevant to this debate. Your Lordships will recall the debate on the Question of the noble Lord, Lord Soames, on 28th November last, shortly before the Council agreement in principle to set up the European Monetary System. The noble Lord, Lord Roberthall, in that debate informed the House of Sub-Committee A's conclusion, which was that no useful purpose would be served by an inquiry at that indefinite stage, though the committee favoured some association with EMS from the outset if acceptable arrangements could be made. It is still the committee's view that any full inquiry would be premature, at least until the anticipated review of the working of the EMS which will take place in September. The committee propose, however, to, make a brief progress report before the Recess to inform the House of developments over the EMS during the past few months. To this end they have recently taken oral evidence from Her Majesty's Treasury and from the Bank of England. A further inquiry, perhaps leading to report and debate, may prove appropriate in the autumn.
It so happens that, from the early 1930s to the early 1960s, I was much engaged in discussion, argument and negotiation on financial and monetary matters with my European opposite numbers. The objective was always to arrive at some solution which, while protecting individual countries and individual currencies, would be generally acceptable.
It is necessary to stress, and to go on stressing, that equity, in the distribution of benefits and burdens in the EEC, is a Community interest and not only an interest of those member-States which at one time or another suffer from imbalance. Whatever the short-term interests of individual member-States, the long-term interest of the Community and therefore of all member-States, must lie in a distribution which is, and which is seen to be, fair. If the Community is to prosper, as we all hope, a reasonable degree of equity must be achieved and must be maintained. When we started the inquiry in January, discussion on this
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subject had, except for Mr. Callaghan's Guildhall speech in the autumn, been in a rather low key, certainly in the rest of the Community outside this country. At the last two Council meetings and in the Community generally it has moved nearer to the centre of the stage. As the Prime Minister stated last week, the Commission has been asked to formulate proposals before the next Council meeting. The Committee naturally welcomes these developments and will follow them with the closest interest. In the first months of our inquiry we had very helpful evidence from the Treasury and the Foreign Office. We await with interest what the noble Lord, Lord Cockfield, can tell us of recent Government thinking when he replies to the debate. My Lords, I beg to move for Papers.
5.22 p.m.
Baroness SEEAR: My Lords, any Member of your Lordships' House who was in any way involved in the recent Euro-elections will, I am sure, agree that, whatever else is known or not known in this country about the European Community, there is widespread conviction held in many quarters on two matters: first, that the British pay far too much to the Community; and secondly, that far too much goes to increasingly wealthy French and German farmers. A number of times I have heard it said that it is now possible to run a Mercedes on two cows!
We on these Benches certainly go along with the general conclusion brought out so clearly by the noble Lord, Lord Cobbold, that it is necessary to recognise that the British contribution is too big and that vigorous action needs to be taken to reduce the size of it. Of course, when one attempts to examine the question in detail, it becomes increasingly clear that the issue is not clear at all, that it is very hard to estimate exactly what the payment is and what the relative payment of this country is in terms of costs and benefits in relation to the contribution made by other countries. There are a variety of ways of doing the sums, but it is fair to say that, however one does the sums, the contribution that we are making is excessive, although it may not be as horrendous as some interpretations of the figures would have us believe.
After so brilliant an exposition of the report by the noble Lord, Lord Cobbold, it is suitable for the rest of us only to pick

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out a few points for particular emphasis. One point that I should very much like to make is that, in pressing the British case, we should be sure that we do not advance arguments which must look less than creditable in the eyes of some of those to whom we shall be speaking. For instance, I cannot think that it is a good argument to say that, of course, our growth rates are so poor in comparison with the growth rates of other members of the Community. They would surely respond, " Whose fault is that ? " It can hardly be blamed on the other members of the Community that our growth rates are inadequate. Moreover, to plead poverty is not necessarily the best way in which to attempt to get a revision of what is an inequitable distribution of costs.
Similarly, it seems a little odd to make too much of the argument that, in this country, a higher percentage of GNP goes on consumption than on investment. Once again, I should think that our partners in the Community might say, " Well, is it not perhaps time that you did something about reversing the emphasis on consumption in relation to the emphasis on investment, rather than expecting that because you tend to consume a perhaps disproportionately high proportion of your GNP that somehow gives you a particular case for arguing that the contribution to the Community is too great ".
I should also like to make the point that we in the Liberal Party do not believe that the objective should be to reduce the size of the total Community budget. Our concern is, first, with that proportion of budget which is contributed by this country and, secondly, how that budget is distributed to the various funds and activities of the Community. In some quarters, no doubt, the feeling is that just too much money is being spent by the Community. Those of us who want to see the Community a really strong force in world affairs and feel ourselves very much part of a Community which we hope will be increasingly influential both in the world and in helping member countries to deal with problems which can only be dealt with on a Community basis, want funds to be adequate.
The plea for a revision of the British contribution is in no way a plea for cutting down expenditure. On the other hand, in
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areas of industrial and social policy we would like to see the Community's expenditure increased rather than reduced. That point needs to be made now because there is no shadow of doubt that, with the enlargement of the Community—as Greece Spain, and Portugal join—the demands or resources for industrial and social policies must grow. Moreover, from the purely British point of view, we shall not be in the position of being one of the least well off of the Community countries, because the countries that will be joining will have, on social and industrial development grounds, a very strong claim on resources. If we are to have the type of continuing and increased assistance for industrial and social matters that we would like to have in competition with these unquestionably much less wealthy countries, then it is extremely important that a move should be made now to ensure that the use of the resources moves in that direction.
When it comes to a revision of the CAP—which of course is very closely linked with the problem of the size of the British contribution, although it is a separate problem—we would strongly favour the approach, which the noble Lord, Lord Cobbold, has also commended, put forward in the brilliantly clear annex written by Professor Holt from Bradford University. He makes the point that the attack on the CAP should not be a root-and-branch attack, but should be an argument for rational reform of the CAP recognising the extremely useful things that have been contributed by the CAP in the long overdue restructuring of agriculture in a number of member countries, and in creating a single agricultural market—a market and an area of production now able virtually to feed the member countries of the Community. This is a very considerable achievement and it fails sometimes to get the appreciation that is due to it because of the other more obvious defects of the CAP.
Can we not stress once again that what is needed is another look at that element of the CAP which deals with the social aspects of the reform of agriculture in the member countries, and ask whether it is time that that part of the burden, which has been the subsidisation of farmers unable to compete—the very small, peasent-type farmer unable to hold his own in any kind of economic

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competition—should not be borne from the CAP; indeed, it seems not unreasonable to suggest that were the French and German peasant farmers to need subsidisation for social reasons, that might well come from their domestic budgets rather than from the CAP.
Finally, in approaching the reform of the CAP, I should like to suggest that we stress, not so much the British interest but the general Community consumer interest to ensure that the balance is adjusted in favour of consumers rather than in favour of agricultural producers. I should have thought that this would strengthen our case considerably, because it is surely in the interests of all consumers in the EEC that the excessive prices of agricultural produce—which are a direct result of the way in which agriculture is being financed—are harmful not just to British consumers (although it affects them in a particular way), but harmful throughout the Community. This is the point which, in speaking for consumers in general and not solely for the British interests, would surely greatly strengthen our case. It would also strengthen the case to make the point that the money should go to the industrial and social policies, which have a general beneficial effect throughout the Community, so that it is not simply a point being made exclusively in favour of British interests.
5.31 p.m.
Lord PLOWDEN: My Lords, first, I begin with an apology to noble Lords and particularly to my former colleague, the noble Lord, Lord Cockfield, for not being able to stay for the end of the debate. This is due to the change in date of our debate and to a long-standing engagement. As the noble Lord, Lord Cobbold, has said, as our deliberations on the United Kingdom's contribution to the budget progressed in the sub-committee, it became increasingly clear that this was a matter of crucial importance, not simply to this country but to the future of the Community itself, and one which calls for a political solution at the highest level.
There are now indications that it is increasingly being recognised, both in the Commission and in the member-States, that our budgetary problem must be taken
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seriously. Indeed, unless that is done, I fear that it could actually put in jeopardy our continued membership of the EEC, because of the objections on the part of the people of this country to the inequitable burden that our net contribution imposes upon us. We must now look to the European Council meeting, which is to be held in Dublin this November, for discussion of specific proposals to lighten this country's burden.
As the noble Lord, Lord Cobbold, pointed out, the sub-committee made five suggestions—to be found in paragraph 54 of its report—as to what might be done It is my intention to concentrate on Part IV of the report: the Court of Auditors. The question of financial control over Community income and expenditure is not, on the surface, a matter of such immediate concern as the other aspects of the Common Market finance mentioned in our report. Nevertheless, the sub-committee believes that the court can play a vital role in improving the Community's accountability. This is particularly necessary if the budget is to expand, as it undoubtedly will, in coming years and because the misuse of funds or even fraud can bring great discredit to the institutions of the Community.
As the noble Lord, Lord Cobbold, pointed out, compared with the European Parliament and the Court of Justice, the Court of Auditors has received surprisingly little attention. It was set up in 1977 following an amending treaty of 1975. It is based in Luxembourg and has nine members, one from each member-State, with each member being responsible for a particular audit function. The United Kingdom's member is Sir Norman Price, who was good enough to come and talk on an informal basis to the sub-committee. At present the court has a staff of some 165 people and over the next few years the intention is to expand that to 250.
It is charged, broadly, with three functions: to examine the Community's accounts; to ensure that money is spent in a lawful and regular manner and to ascertain that income and expenditure are subject to sound financial management. It is required to draw up an annual report on the previous year's budget. But over and above that it has wider powers, including the right to make on-the-spot

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checks in member-States and to submit special reports on its own initiative. We, on the sub-committee, were greatly impressed by the impact of the early work of the court. Its first annual report was a formidable and comprehensive document. As can be expected, a large proportion of it was devoted to the various agricultural funds where, it is clear, there have been loopholes in the law and distortion. Some of these are mentioned in our report and are obviously of the greatest importance.
At a different level, the report comments on the internal administrative budgets of the institutions. The court faces some difficulties. First, it has to work under a very tight and severe timetable. It has only six weeks to make its observations on the accounts and only four weeks, after it has received the replies from the institutions, to produce its annual report. It would favour—and the sub-committee support it here—a more continuous approach to the audit. Secondly, there has been a degree of tension between the court and the Commission, which is described in our report. In brief, the Commission has resented the court commenting on the Commission's replies to the court's observations. In other words, there is a dispute about who should have the last word.
Of course, these are early days, but the sub-committee has suggested that a more continuous approach to the audit might resolve those difficulties. It would be most regrettable if continuing arguments were to direct attention away from more fundamental questions. Thirdly, audit practices vary greatly from one member-State to another. This, of course, causes considerable difficulties for the court, though we understand from the Exchequer and Audit Department, which is responsible in this country for contact with the court, that the court's practices and thoroughness have been welcomed.
Fourthly, it is clear that the establishment of really effective financial control requires active involvement of the European Parliament in pursuing points by the Court of Auditors. It is the Parliament which is finally responsible for discharging the previous year's budgets. To date the Parliament has generally been more concerned with promoting Community expenditure than with financial control.
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That is the habit of most Parliaments everywhere. I can well remember the late Sir Stafford Cripps, when he was Chancellor of the Exchequer, saying to me that he felt he was the only member of another place—including his own junior Ministers—who was not interested in promoting expenditure for some particular project. Thus, though both institutions appear to be willing to co-operate, there is as yet no regular pattern of liaison. We recommend that the newly-elected Parliament should, as a matter of priority, set up a procedure comparable to the Public Accounts Committee of another place. We feel that to a great extent the ultimate success of the court will depend upon the determination and consistency of the support it receives from the European Parliament.
The noble Lord, Lord Cockfield, may in his reply be able to comment on some of these difficulties facing the Court of Auditors. I hope Ministers will, when attending the Council of Ministers, stress the need not just for the forward planning of expenditure but also for retrospective assessment. The Court of Auditors can assist in this process, and its work could well prove in the long run to be just as crucial to the success of the Community as the need to distribute the benefits of Community membership more fairly.
5.41 p.m.
Viscount AMORY: My Lords, this report is primarily an attempt at a description of the current stage of development of the EEC budget, because the truth is that as regards the budget the EEC is learning as it goes along. Perhaps the first thing to be noted is that the budget expenditure is still fairly modest: 2·6 per cent. of the total national budgets of the member-States and 0·81 per cent. of their combined gross national products. I think there is no doubt that there still are serious defects of procedure and also in the results.
From the evidence we received I think it would be fair to say that the committee have some hopes that many of the defects will gradually be reduced, although not perhaps entirely eliminated. On a cheering note, the Court of Auditors seems to have made an encouraging start, as the noble Lord, Lord Plowden, has just so clearly explained. I agree with him that a continuing difficulty is going to be the

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narrowness of the timetable within which the Court of Auditors has to do its work. In this country in commerce and industry we have become accustomed to the report of auditors having to be attended to very seriously. I believe that there is a hope that this will increasingly be the case because we have evidence that already the Court of Auditors is earning the respect of the member nations.
By far the biggest component of expenditure is the CAP. There is something seriously wrong there. Mountains of certain products are still accumulating and proving very difficult and embarrassing to get rid of. Too much of the CAP expenditure is employed in supporting high cost and therefore relatively inefficient production. Then clearly there is also something wrong with the computation of the United Kingdom's share of the expenditure. Our gross contribution, with the ending of the transitional arrangements, is seriously out of line with our share of the combined GNP of the membership. That applies probably even more to our net contribution, as the noble Lord, Lord Cobbold, mentioned. So in the interests of equity this is something that really needs fairly urgent correction.
Noble Lords may find some of the technical terms a little difficult. The precise significance of the green rates is something I was awfully good at lecturing on when we had a debate on this some months ago, but is something on which I find myself much less ready to do so now. The same applies to the " progressive key ". My powers of exposition there seem to be waning day by day as the days elapse since we received the evidence; then there are purchasing power parities, financial mechanisms, MCAs, and all sorts of other terms like that. I believe again there is evidence that some of these may become less complicated as time goes on. I hope that that will apply to the green rates, which one hopes will, sooner or later, fade out altogether.
The persistence of obvious defects at the current stage of development really should be appraised against the immense difficulty of evolving common procedures acceptable to all members with their varying customs and techniques. We do not know what wider powers the European Parliament may claim, or achieve, in the years ahead, but I suppose it is unlikely that it will be for
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ever satisfied with the very limited powers it will have to start with. In the light of all these uncertainties I am sure the House will be glad to accept this report as an attempt to explain the current situation, and to call the House's attention to certain obvious defects.
I should like to join in the congratulations that all members of our sub-committee will wish to pay to the painstaking work and skill of our chairman, the noble Lord, Lord Cobbold, and to the invaluable assistance we received from our advisers and draftsmen. To a general observer the greatest defect of the budget in its present state of development is surely the proportion of its resources spent on the CAP with dubious justification and very dubious economic benefits. In this connection and others, I think noble Lords will find the submission from Professor Holt printed at Appendix 1, and to which the noble Baroness, Lady Seear, referred just now, as well worth reading. I think in its totality this will be found a valuable report and a useful contribution to the problems raised by the current stage of development of the EEC budget.
5.48 p.m.
Lord BRIMELOW: My Lords, in the first place I should like to join in the noble Viscount's tribute to our chairman, the noble Lord, Lord Cobbold, and to the special advisers and the staff who have had a difficult time in preparing this report. The only point where I might dissent a little from the noble Viscount, and from the noble Baroness, Lady Seear, is on the question of the Common Agricultural Policy as it appears in Professor Holt's annexe, but I shall come to that later.
The noble Lord, Lord Butler of Saffron Walden, speaking in a different context, once remarked that those who miss a bus may have to pay a taxi fare. We missed the Community bus. We are paying a taxi fare. The taxi fare, like so many other costs, goes up year by year. We are casting envious sidelong glances at those of our partners in the Community who are enjoying a subsidised ride. We do not like what we pay, or what we see. The question is, what can we do about it?
The noble Lord, Lord Plowden, mentioned the possibility of our leaving the Community. If we were to accept

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the advice of those who think that we should leave the Community we should be entering on a high-risk course, the cost of which, in my opinion, would soon exceed the present and prospective cost of our remaining in the Community. If, as I expect and as I certainly hope, we remain in the Community, it is, I fear, unlikely that any initiative which will meet our requirements in the matter of equity in our contribution to the cost of the Community will come either from the Commission or from our partners in the Community; any initiative will have to come from us.
In my opinion, the best way ahead would be a dual negotiation, a negotiation to eliminate extravagence and waste from the Community budget and a parallel negotiation to secure equity in the distribution of the cost of that budget. But to succeed in such a dual negotiation we should need the goodwill of our partners, and some of them say that we have done little to earn their goodwill. The effectiveness of our persuasion, particularly in the shorter term, may be limited. From the point of view of this country, the 1979 EEC budget was rather had, the 1980 budget may he rather worse and the Commission's prediction of the way ahead, which is reviewed in Part III of the Select Committee's report, is, frankly, disquieting.
The Select Committee's report concedes that there is room for argument about the margin by which the United Kingdom is paying more than its fair share of the cost of the EEC, and I agree with everything the noble Baroness, Lady Seear, said on that subject. Even if every argument which has been advanced to whittle down the significance of this or that part of our contribution to the total cost of the Community were valid, which I would not accept, there would still be left an excess contribution which demands remedial action, and the Select Committee has set out its views on what that remedial action could be in paragraphs 54 to 74 of its report.
If one accepts as right the contention that the best course is to work within the framework of the Community as a whole, which means accepting the totality of the agreements and practices generally referred to in French as the acqui Communotaire, it seems unlikely, I fear, that we shall secure a reduction in our contribution
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under the heading of duties and levies (paragraphs 55 to 57 of the Select Committee's report). Moreover, since the Common Agricultural Policy is regarded as one of the major components of the acqui Communotaire, the difficulty of securing progress under this heading (paragraphs 58 to 63 of the report) should not be underestimated. But in my opinion (this is where I dissent from the noble Baroness, Lady Seear) the concept of a Common Agricultural Policy (based originally on common prices and undistorted competition) has been destroyed—not merely undermined but completely, totally and utterly destroyed—by the development of green currencies and the monetary compensation amounts associated with them.
To speak today of a Common Agricultural Policy is an abuse of language. I think the Select Committee is right to emphasise, in paragraph 63, the importance of reducing the share of agricultural spending in the EEC budget. It is here that the elimination of waste would yield the chief economies. I would only add that the decisions of the agricultural Ministers on 21st June showed just how hard it is to move in the right direction.
It has often been argued that the United Kingdom would benefit by the expansion of the Regional Fund and the Social Fund. The Select Committee, however, point out in paragraphs 65 and 66 that once the Community has been enlarged, this argument may cease to be valid. This points to the need for caution in agreeing to increases in the Community budget, and the point is made with even sharper emphasis in paragraph 68 of the Select Committee's report in the context of spending on energy:
" We should only agree to such budgetary increases as will quite certainly reduce our net budgetary burden ".
The Select Committee was equally sober in its assessment of the value of applying the so-called progressive key to VAT contributions to the EEC budget. The idea of arithmetical manipulation to transform VAT contributions into a progressive tax on the wealthier members of the Community is attractive, but the Select Committee points out that the key would have to be very progressive indeed completely to offset the effects of a system which at present operates so heavily to our disadvantage.

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This consideration has led the Select Committee to conclude that to be effective, the progressive key would have to be applied not merely to VAT but to duties and levies as well. The idea is tempting, but it runs into the doctrinal difficulty that duties and levies are not regarded as national contributions to the EEC budget. The doctrine, however questionable, is strongly entrenched and may prove to be inexpugnable.
Its review of these possibilities and improbabilities has led the Select Committee to recommend a review of the so-called financial mechanism which was one of the fruits of our renegotiation and which is at long last coming into operation, albeit on a disappointingly small scale.
As a matter of abstract mathematics, the financial mechanism could certainly be modified in such a manner and on such a scale as to offset the inequities resulting from the present EEC budget. But why, I ask, should the other members who benefit from the present state of affairs vote for modifications disadvantageous to themselves? I suspect there is a fairly widspread feeling among our partners in the Community that we, who have the benefit of North Sea oil, can and should continue to pay. That as a proposition in economic logic may be weak; as a proposition in human covetousness it may be strong.
I imagine that Her Majesty's Government will have little difficulty in agreeing in principle that the Select Committee's recommendations are desirable, but to persuade our partners in the Community that what this country regards as desirable may also be in the general long-term interest of the Community as a whole may prove to be no easy task. The Select Committee's report in iteslf, I fear, is unlikely to achieve that aim. I wish our negotiators well in any follow-up action to which Her Majesty's Government may be inclined to give their blessing.
6 p.m.
Lord FRASER of TULLYBELTON: My Lords, I wish to make only one brief observation regarding the legal position of the 1979 budget which, as is explained in the report before your Lordships was very unsatisfactory. On 14th
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December 1978 the President of the Community Parliament declared, after various proceedings had been gone through, that the budget for 1979 had been finally adopted. That budget should have come into force on 1st January 1979, but on that date three of the member countries of the Community, including ourselves, took the view that the budget had not been legally adopted at all, that it was invalid, and that there was no obligation upon them to pay their contributions under the budget. Up to the first four months of 1979 they continued to pay one-twelfth of their appropriate contribution for the year 1978 because they said there was no legal budget for 1979.
That was surely a very remarkable and most unsatisfactory state of affairs to arise in a Community such as ours which is regulated very largely by elaborate legal provisions, and it is because of that that I think it right that I should say a few words as to how in the view of the committee that situation arose. I am not going into the details, which are rather complicated and which are set out at some length in the report itself. However, the difficulty arose because of two important provisions in the budgetary procedure, which is laid down in a treaty of 1975 amending the original Treaty. One of the provisions is that under Article 203 of the Treaty the Commission has to fix each year a maximum rate of increase in expenditure over the previous year. That is done after consultation with the appropriate economic bodies. For the year 1979 the Commission fixed a maximum rate which, after various complications (which I need not go into) left the Parliament, when they came to deal with the budget, the right to increase the rate of expenditure by 13·46 per cent. over the 1978 rate of expenditure.
Notwithstanding that the legal maximum increase was 13·46 per cent., Parliament proceeded to approve expenditure which increased the expenditure by no less than 52·44 per cent., which was vastly more than the legal maximum. Parliament took up the line that that was the expenditure which they wished to approve, and they adhered to it, notwithstanding protests from the Council. There is provision in the Treaty for increasing the maximum by agreement between the Parliament and

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the Council, subject not merely to a bare majority but to a particular, specified majority. That procedure was not adopted, and the maximum fixed by the Commission was never increased upwards before the adoption of the budget.
That was one of the two difficulties which in the view of the committee made the budget invalid when it was adopted. The other one was as follows. The budget, to be validly adopted under the Treaty, has to be approved first by the Council and then by Parliament—not by Parliament alone. That was never in fact done. The Council passed the draft budget at First Reading. The proposals for expenditure were much increased by the Parliament—up to the 52·44 per cent. It went back to the Council, and the Council refused to increase the ceiling to meet the Parliament's wishes. It went back to the Parliament for the Second Reading and Parliament then adhered to their previous decision.
There was no possible doubt that there was a disagreement between the Council and the Parliament because when the Council had dealt with the Second Reading of the budget the President wrote to the Parliament and pointed out that the Council had not agreed to increase the ceiling to provide for the increase over the previous year's expenditure. Then when the matter came before the Parliament in December 1978 for the final approval the President of the Council said to the Parliament in terms that if they proceeded to adopt the budget with a 52 per cent. increase, they would not be validly approving the budget. He said, as is quoted in the report on page xlii, that
" any attempt to go beyond this percentage increase"—
that is the 13 per cent. increase—
"requires the top rate to be raised by agreement between the Council and Parliament in accordance with Article 203 [of the Treaty]. Until such agreement has been reached between the Council and the Parliament, we regard the budgetary procedure as not having been completed and the President of Parliament cannot therefore declare the Budget to be final".
Notwithstanding that statement by the President of the Council, on the following day the President of the Parliament proceeded to declare that the budget had been finally adopted by the Parliament.
So we are left with a budget which the President of the Parliament declared to be
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finally adopted. It was in excess of the legally permissible maximum and it had not attained the agreement of the Council. There are some doubts and room for argument as to whether the budget was then in a position that is called "being in existence," I understand; that is to say, whether it is a budget that should be treated as valid until it has been annulled by the court, or whether it was fundamentally null. The latter is the view that commends itself to the Select Committee, or at any rate to the legal sub-committee of the Select Committee. But whichever it is, I submit that it is intolerably unsatisfactory that this kind of situation should ever have arisen.
I note with interest that a compromise was made in, I think, March or April of this year, and I see from the report that it is thought that it will prevent any future collision of this kind occurring. However, the practical matters which I suggest have to be recorded are these. A budget cannot be regarded as finally adopted in terms of the Treaty if the Treaty procedure has not been followed out in the two respects that I have mentioned. It may be said that this is all water under the bridge now, that the budget has now been regularised—and I think that is so—and that it may never arise again. Well, it may not, and I would hope that it will not. But I suggest that we ought to record our regret at what happened, as set out in the report; and I consider that it is very clearly set out.
There is a further point. This situation may be taken as being one more example of a tendency which seems to exist to disregard the rather elaborate rules that are set out in the Treaty when they operate inconveniently. I would express the view, which I hope is not old fashioned or particularly absurd, that if one agrees to a Treaty, and agrees to have a joint budget, provided certain procedure is followed, one cannot really expect to be bound to pay on a budget which is not adopted by the procedure that has been agreed upon; and that is what happened at the beginning of this year. I would commend the report as a very clear statement in fuller terms of what I have tried, briefly, to say.
6.8 p.m.
Lord MORRIS: My Lords, someone might have written that fairy stories are stories written by adults for children and

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are designed so that the children fall asleep quickly and happily. Someone else might have observed that writings on economics are more often than not fairy stories written by adults for adults, which send them to sleep both quickly and in a most unhappy state of mind. It is very much to the credit of the committee, of which I am proud to serve as a very junior and minor Member, and particularly to the credit of the noble Lord, Lord Cobbold, that a mass of none too digestible material should have been transformed, as if by magic, into what is by comparison a delicate literary soufflé. Much is owed to the expert advice given to the committee and to those who gave evidence to the committee. Similarly, my conviction that your Lordships' House benefits from the help and advice of the best secretariat to any House in any Parliament is constantly being reaffirmed. I commend this report most highly. Indeed. I believe that anyone interested in Europe—in particular, those serving in the European Parliament—should carry a copy of this report in their understanding, for it is worth reminding oneself that the power to amend the EEC budget, albeit marginally, is one of only two formal powers enjoyed by the European Parliament.
I wish to restrict my very brief remarks to what I believe to be one of the two most important means of creating equity in the EEC budget; namely, by amending the financial mechanism for adjusting the final outcome of the budget, referred to in subparagraph (e) of paragraph 54 and developed in paragraphs 71 to 74 as well as in Appendix 3 to the report. I believe that this restructuring of the financial mechanism deserves very close attention indeed, for it could provide in great measure the means of ensuring that the present inequitable effect of the budget could be righted without having to tamper with the existing structure of the budget. As the report states in the fourth line of paragraph 72:
" If a well constructed financial mechanism automatically corrected any disproportionate burdens, the United Kingdom would be able to discuss agricultural prices and Community spending on other programmes without such an overriding concern for their budgetary effects ".
Any means which can assist the United Kingdom's negotiating position, particularly in view of the Dublin meeting in November, is worthy of consideration.
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As your Lordships are aware, the lines upon which the existing financial mechanism could be revised are set out in paragraph 73. Serious consideration of these means, together with a change in the proportion of agricultural spending in the budget, takes on an even greater significance when one bears in mind the probable economic and budgetary effect of the future enlargement of the EEC.
Finally, I wish to draw your Lordships' attention to a newspaper article on this report which was published in the Guardian on 29th June. It referred to the Select Committee on the European Communities, with a capital " E ", as
" … the Lords Elect Committee ".
In the light of this report, I believe that the implication has certain merit.
6.13 p.m.
Lord ROBERTHALL: My Lords, I should like to begin by associating myself with the tributes paid, particularly to our chairman. Most of us, I suppose, have had a good deal of committee experience, and all are aware how essential it is that the chairman should have a thorough grasp of the agenda. In the case of Sub-Committee A, of which I have the honour to be a member, the subject matter is extremely complex and difficult, as anyone who cares to read this report will see. This is only a sample of the kind of thing we have to deal with; and the fact that we are steered so well, with that sense of timing, the ability to say " Snap! ", which is so important to a committee and which requires this complete understanding, is a great tribute to the ability with which our chairman has had to do his very excessive homework.
My Lords, I hope to follow the very good example of all the other speakers and keep this debate so agreeably short. Compared with most of our economic debates, it has been a great pleasure to be here this afternoon. I want to confine my remarks to a subject already touched on by the noble Baroness, Lady Seear, by the noble Viscount, Lord Amory, and by the noble Lord, Lord Brimelow, in different ways, and that is the Common Agricultural Policy. It is crucial to the central problem touched on in this report; that is, the excessive contribution of the United Kingdom. Behind that, I think it is crucial in a

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much more important and basic way; that is, that, as everyone knows, the feeling in this country at present against the Common Market is much stronger than it was at the time of the referendum, and in my view the development of the Common Agricultural Policy is making it much more difficult for people like myself, who were strong advocates of the Community, to go on supporting it.
I think there are three points that have to be looked at here. The Common Agricultural Policy is, of course, a system for the protection of agriculture, and almost all advanced countries have had to protect their agriculture in one way or another. We did it before we joined the Community. We did it in a very economical way, by subsidising our own producers but letting the consumer have the advantage of world prices, so that we got cheap food though we had to pay taxes. When we joined the Community we shifted over to the present system. We did it with our eyes open. There is something to be said for being reasonably self-supporting in agriculture; and, with a larger Community, the argument for doing that is stronger. But the fact is that, as almost all consumers in this country know, it has meant that food prices have gone up considerably. They have gone up because, instead of paying world prices and paying through taxes, we now have to pay the producers' prices, and the levies that bring up world prices to EEC prices constitute a tax paid by the consumer on food imported from other places. The advantage of that is that these levies provide part of the income of the Community, and we could argue that, as long as the system was an economical one, that it was not doing more than it needed to do, the benefit that came to us from belonging to the Community was a greater offset than the cost that it inflicted on us of having to pay for dearer food.
My next point is that that is no longer a defensible position. One cannot argue today that the Common Agricultural Policy is run in an economical manner; and this is a point of great political importance, because everyone knows that the housewife is sensitive to claims that food is getting dearer. So anybody who wants to attack the Community now starts off from a good point—" It has made your food dearer "—and it is
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difficult to argue that the benefits accruing are worth having. Why is that so? The reason, already referred to by the noble Baroness and by the noble Viscount, Lord Amory, is that the Common Agricultural Policy is generating large surpluses which have to be stored at great expense and often have to he sold off to other countries at low prices. That, too, is an easy argument to get across to people when you are attacking the Community, and it is a very difficult one to refute. You can see the surpluses; and, although there is a strong argument—at least, I and many economists would be prepared to make an argument—for being self-supporting, it is much more difficult to make an argument for supporting agriculture in a way which generates these surpluses.
The third point is: Why are these surpluses generated? Clearly it is because the prices which are offered by the Community, the guaranteed prices, are too high to produce only the amount that you need for yourself. The remedy for that ought to be to lower the prices: that is to say, not to give more protection than you need to achieve your objective of a flourishing agricultural industry. But set out extremely clearly in the appendix by Professor Stephen Holt, which has already been referred to and which I recommend that your Lordships read—if you read no other part of the report, I recommend that your Lordships read that appendix—you see what a political problem we in this country are going to run into simply because of the way the CAP works. The Community fixes prices at a point that will give a reasonable living to the marginal producers of countries which have found themselves to be very efficient manufacturing countries; so that raises the standard of living and raises costs of everything and therefore raises the cost of inefficient producers. I agree with what lay behind the remarks of the noble Lord, Lord Brimelow.
We are often told that we must not criticise the CAP because it is the one thing that works in the Community; it shows we can get together on something. But one may be forced to argue, as I feel I shall he forced to argue, that the CAP, so far from being a creditable achievement, is in some respects very far from being that. I do not dispute that it has

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had its achievements. As the noble Baroness said, it is doing a great deal in restructuring, but it is going to take a long time before the effects of that come through. Meanwhile, if we go on in the way we have gone on, the costs of the inefficient marginal producers will rise, and prices will rise; and that will stimulate output among efficient producers and increase surpluses. It seems to me, therefore, that if the Community is to continue to flourish, and especially if we are to defend our membership of it, it is necessary to overhaul the CAP.
I know that this will be difficult, but I think there is a good deal to be said for the view that if we approach it as a Community problem and not as a problem for ourselves we are more likely to get a hearing. Also, I think that there is something in the remedy, which has been suggested by a number of people, that these high costs of marginal producers in countries like Germany should be regarded as a social problem. You cannot let an important section of the Community have its people out of work at a time when there is a great deal of unemployment—but do so at the cost of supporting these excessive prices which produce so many of the problems to which I have been referring, especially the problem of high food prices and surpluses. The country that has this problem should treat it as a social problem and should be responsible for dealing with it with such help as the Community affords for social problems.
If we could do that—and Germany presents the worst problem because it is the most prosperous country, but also has the most inefficient farmers—if we could say to Germany, for instance, " You look after your own people and pay what you think; but do not let us do that by fixing these fantastic prices and by this complication of green money which is making a farce of the objectives of the Community ", then that would help. It is not a common market, as Lord Brimelow has said, as far as the one thing that works; it is a system which is trying to immobilise the whole structure of production; whereas you would think, when a lot of countries get together in a common market, there would be more free trade.
If we could say that, for instance, to Germany, and get a more reasonable, less emotional background for discussion of the
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whole problem of the Common Market and the prices, we might be able to make some progress. It would certainly be much easier for people like me who have been strong advocates of the Common Market ever since it was put forward, to be able to continue to be such an advocate. For an economist, it is very difficult to say that the CAP is a desirable thing.
Viscount AMORY: My Lords, would the noble Lord agree that the most recent meeting of the Ministers of Agriculture gives very small comfort to hopes that this will be an easy problem to deal with? That meeting seems to me to be the most disappointing performance.
Lord ROBERTHALL: My Lords, I very much agree with the noble Viscount. I am not trying to underestimate the difficulty of the task. I have sat down, but I cannot resist quoting another example which was part of the EMS negotiations. The French stuck out and wanted to have the monetary compensation amounts eliminated. The Germans did not want that, but said, " We will agree to eliminate them, so long as you agree that the amount received by the farmers will never be any less." It is a difficult problem. If we want to carry this country with us and stay in the Common Market, we must face that there are good arguments now against being in the Community, arguments of a kind that you could refute at one time but you cannot refute so easily today.
Lord BRIMELOW: My Lords, before the noble Lord sits down, and following what was said by the noble Viscount, may I ask whether he noticed in the Financial Times this morning that the German Minister for Agriculture has made a speech to the assembled German farmers which indicates a rather important development in at least his thinking, although what he said was not welcomed by the farmers.
Lord ROBERTHALL: My Lords, I read that. The assembled farmers, 8,000 of them, unanimously disagreed with him.
6.26 p.m.
Lord BRUCE of DONINGTON: My Lords, the House would wish to thank the noble Lord, Lord Cobbold, and his committee for having produced such an excellent report. The reports of the Select Committee of this House, your

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Lordships will not be surprised to know, are extremely well regarded in Europe. I speak as one who has had the honour to serve in the European Parliament for the past four years and I assure your Lordships that the reports of the Select Committee of this House are most eagerly read by European Members of Parliament of all countries and of all political parties. This latest report from the committee is no exception to the excellence of the previous ones. There may be occasionally points on which I shall venture to differ, but we on this side of the House would like to join in the congratulations which have been accorded to the committee.
Before I pass on to the main substance of the report, the 1979 budget, I should like, first, to associate myself with the remarks of the noble Lord, Lord Plowden, concerning the Court of Auditors. There can be no doubt that the Court of Auditors, provided that its authority and independence are maintained—and that will need continued efforts by the new European Parliament—will prove to be an invaluable institution for the purpose of allaying those very natural suspicions of people when they see reports in the Press of widespread fraud and so on, but also of the efficiency of the financial control within the Community institutions themselves.
I should like to assure the House that the discharge of the Commission budget is now no longer something that goes through " on the nod ". I was personally instrumental as a Member of the European Parliament Budget Committee for preparing the discharge report for the Commission's 1977 budget; and I succeeded in persuading my colleagues in the European Parliament Budget Committee to postpone consideration of it until the new directly-elected Parliament had had an opportunity to consider it. It is, I hope, a very thorough report, and I should like to assure the House that it is not the habit of the European Parliament now to allow these things to go through " on the nod ".
I should now like to pass to the main subject matter of the report itself, which is of course the 1979 budget. There can be no doubt—and I do not want to burden the House with too many figures—that this really is not a Community budget in the
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proper sense, that one has a comprehensive budget covering all forms of Community activity on anything like a significant scale. It is essentially a budget over two-thirds of which is devoted to agriculture. The House may wish to know that the total amount spent by the Community in the social sector, the whole of its regional fund allocations, the whole of its regional expenditure and expenditure on energy, industry and transport—in other words, in those spheres where it is deemed activity is together more economic than individual national activity—is approximately the same as the Commission spends in storage costs of surplus foods. A very large proportion—some two-thirds—of that storage cost, which is over 1,500 million units of account for the year under review, or approximately £1,000 million, is spent on losses on disposal. So that gives some indication of the general essence of the budget.
It is for consideration whether this can continue because when one thinks with the broad view of Europe, we are here to promote international co-operation; we are here to work together for common aims, we are here to achieve a mutual degree of prosperity, of cultural changes and the like; we are here to make a co-ordinated effort to aid developing countries and we are here in order that we might negotiate as one bloc with other great continents. The expenditure on these things in cash terms is petty cash—it is barely postage book cash—and everything is subordinated to the Common Agricultural Policy. There is this appalling sum of £1,000 million which is spent in connection with storage and disposal. This is the essence of the budget and one need not go into very great detail about it.
As to its legal validity, I am very tempted indeed to cross swords with the noble and learned Lord, Lord Fraser of Tullybelton, on the contents of his Sub-Committee's observations as to the legal interpretation of the budget proceedings. I take it that he must have read the evidence which was given by myself and my colleague, Mr. Michael Shaw, before the Select Committee, and I hope that he has read the publication which appears under our name called the Purse Strings of Europe. This is a joint cross-party effort which gives the budget procedure in some detail. I am well aware that everything depends on the construction of Article 203 as

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amended by the Treaty of 22nd July, 1975; but I shall not enter into an argument with the noble and learned Lord. All I shall say is that the European Parliament, comprised of Members of Parliament from all nations and from all political parties, came to the virtually unanimous view that Parliament had acted strictly within its rights.
From my own standpoint, I do not propose to depart from the observations that I made in the European Parliament. Since I personally and my committee were part of the cause of the dispute, I should like to reiterate my view here, as I reiterated it in the European Parliament: that Parliament acted strictly within its powers in adopting the budget that was handed to it in draft and amended form without any amendment. I am well aware that the matter has since been satisfactorily resolved, but I have every reason to believe that if the case did go before the European Court the verdict would come down in favour of Parliament.
So much for the validity of it. There have been certain consequences of this budget for the United Kingdom. The amounts may vary, but on listening to the contributions which have been made this afternoon by the noble Baroness, Lady Seear, and noble Lords, there seemed to be a broad consensus of view that no matter how one tries to calculate it, nevertheless the United Kingdom are bearing an unacceptable proportion of the total burden.
My Lords, I pause here, if you will forgive me, to make a personal observation. When I said this some two years ago in this House, it did not exactly find favour and I was regarded at the time as being mildly eccentric. I am now reassured to find that there is agreement among all parties that the observations I then made, that there was a deficit for that year of £562 million, proved in the event to be a slight under-estimate. There is this potential net deficit of somewhere around £1,000 million—some may put it less, some may put it more. But everybody is sure that for 1980, unless something is done, it is going to get worse.
There are two consequences that flow from this: the first of course are the consequences for the Community itself.
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These can be best expressed in the White Paper that was issued by Mr. Heath's Government in 1971. Paragraph 96 puts forward the observation quite clearly:
" Thus in the Government's view neither our contribution to nor our receipts from the Community budget in the 1980s are susceptible of valid estimation at this stage ".
They can say that again! It continues:
" And it is for this reason that the Community declared to us during the course of the negotiations that if unacceptable situations should arise the very survival of the Community would demand that the institutions find equitable solutions '."
I trust that our negotiators in Brussels, or wherever the negotiations take place, for some effort to be made to redress our contribution position, will remind them of that undertaking given by the Community to the Heath Administration at that time and reproduced in the White Paper.
So there is the consequence for the Community as a whole; there is the fact that should this persist it will strike at the very vitals of the Community itself. Then there are the consequences at home. It is conventional to say—and I see that the Select Committee reproduced the point—that after all it represents only 1 per cent. of public expenditure. That may have been so in 1978. It may represent slightly more now, because the figure was given for 1978. But it is of the order of £1,000 million out of the British taxpayers' pocket direct.
It is, of course, an item which operates to increase the public sector borrowing requirement by precisely that amount, and there is very great sensitivity at this time—and quite rightly so—about the public sector borrowing requirement. When the British people see the cuts in public expenditure, which have recently been adumbrated in the budget, which are now well-advertised—meaning cuts in educational services, cuts in housing services and cuts in social services—and which are so necessary because, so it is said, we must restrict the public sector borrowing requirement, they will ask—Why? Indeed, the point was half posed by the noble Lord, Lord Roberthall, who struck a note of scepticism which would find a fairly wide echo throughout the United Kingdom at this time. So it is extremely important that the Government negotiate speedily.

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It is now a matter only of the financial mechanism. I observe from the Statement which the noble Lord, Lord Soames, the Leader of the House made on this question on the return of the Prime Minister from the European Council meeting at Strasbourg. He said that:
" The European Council called for action by the Commission to assess the facts about how the Budget transfers are likely to affect each Member State in 1979 and 1980 and whether and how the 1975 Financial Mechanism, intended to reduce our contribution, will work ".—[Official Report, 26/6/79; cols. 1349–50.]
This exhibits an astonishing complacency. The Council had no need to ask the Commission how it will work, because if the Council had perused the 1980 Budget, which was published by the time they met and ought to have been in the possession of their advisers—I refer to vol. 7A of the Commission's Preliminary Draft Budget for 1980—they would have found at pages 513 to 517 the precise calculations as to how the mechanism will work. Indeed, it shows that for the year 1980 the amount of refund due from the Community to the United Kingdom by the use of the financial mechanism will be 68 million units of account, or some £44 million—a mere drop in the ocean against the £1,000 million deficit. So I hope that these figures may be in the Government's mind—I have given them the reference—so that they will know how it works in advance of their European colleagues.
Numerous remedies have been suggested in the Select Committee's report as to how the balance may be redressed. There is the financial mechanism that I have just dealt with, there are certain adjustments in connection with VAT and there are certain adjustments that can be made in connection with Customs duties and agricultural levies. But as the noble Lord, Lord Brimelow, pointed out, in what many noble Lords would think was a very comprehensive speech indeed, it all depends on the willingness of our colleagues to part up with something out of their own national Exchequers in order to meet what we consider to be a reasonable position. It must be clear—and I venture to dissent slightly from the noble Baroness, Lady Seear, who seemed to attribute to the Common Agricultural Policy virtues which it does not possess—that radical reform of the Common Agricultural Policy is the only way of
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redressing Britain's financial position. The amounts of benefit received by the United Kingdom from the Common Agricultural Policy are so small in relation to our effective contributions that it is here that the problem lies.
I am very glad to be non-controversial about it, because I find that my views are shared by none other than the Prime Minister herself. The right honourable lady was speaking, as reported in the Observer of 3rd June last, at a meeting for Young Conservatives at the National Exhibition Centre. She said that the Common Agricultural Policy was " collapsing under the weight of its own surpluses " and that the Tories would require a price freeze on products now in surplus. Those are the views of the right honourable lady. Then we have the views of Mr. Douglas Hurd, the Minister of State at the Foreign Office, in a speech at Rossendale on 29th May. He said:
" It is not commonsense that three-quarters of the Community budget should go on agriculture. It is not commonsense that farm prices across Europe should be fixed at the level required to give the inefficient farmer a decent living when the result is a growth of surpluses at a cost which will prove deeply damaging not just to Britain but to taxpayers throughout the Community ".
Those are respectable words from Government Ministers from which I find it impossible to dissent.
All that we now require is some action in that regard, and that is why I was very disappointed indeed that, notwithstanding those sentiments, it did not prove possible at the meeting in Strasbourg to insist on what the Government had previously promised and to fight for a price freeze. Instead they concluded a series of agreements for which their own officials were unprepared, so that they could not even provide them with the calculations of the profit or loss at the time of the meeting, but which in the event will increase Britain's burden by a further £85 million during the Market year 1979–80. That is the Commission's estimate. To that estimate I would add a further one, because the price increases concerned in so far as they affect butter, will enlarge the butter mountain by such an amount that the extra storage costs over the year will probably amount to another 500 million units of account. Those are matters that can be checked with the Commission. I suggest that when they have future negotiations they ought I to be a little more consistent.

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Finally, our attention has been drawn to the report made by Professor Holt. This I find to be a most excellent report and I should like to join noble Lords who have advised that we study it. Its mention in the Select Committee's report is very significant and its conclusions are all the more significant. I make no apology for reading them to the House:
" In the event that no significant progress is made along any of these lines "—
and the lines are enumerated in the document itself—
"… I believe any British Government in power at that time will have no alternative but to take some unilateral action. It should only do this, in my view, after it has made a series of constructive suggestions which make sense from the point of view of the interests of the Community as a whole. If these go unheeded, we should fix an internationally defensible ceiling to our budget contribution ourselves and refuse to pay any excess, pending a new agreement. This ceiling could be related either to our share of the Community's GDP or to the contribution of the wealthier large States, Germany and France ".
That is unilateral action. Finally, the paragraph mentions the unilateral action which has been taken by another country. It says:
" Such a form of national action would be nothing like as drastic as that taken by France in the form of the boycott of 1965–66 ".
That is quite right. Since we are supposed, very often, not to be entirely communitaire, I would suggest that the course of action recommended in those circumstances by Professor Holt ought to be adopted.
The House hopes that the negotiations for the redistribution of the budget burden will be successful and wishes Her Majesty's Government, provided that they pursue them determinedly, every possible success in their negotiations. If, however, these negotiations fail, the United Kingdom should not refrain from taking action, not necessarily on the lines which France took, but, if necessary, by way of withholding, contributions.
6.52 p.m.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, these are difficult and complex matters, and we are singularly fortunate in having the Select Committee of your Lordships' House to examine them and report upon them with such clarity in the report which is before us. We were also singularly
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fortunate in having the noble Lord, Lord Cobbold, the chairman of that committee, to introduce the report in a speech which showed a great understanding of the problems, not only from the point of view of the United Kingdom but also from the point of view of the greater good of the European Community as a whole. It is in that spirit that an answer to the present difficulties can best be found.
I have listened—as, indeed, all noble Lords will have done—to a number of speakers who have made points of great importance. We do not have to agree or disagree with what has been said to recognise the importance of those contributions. I shall be replying, so far as possible, during the course of my remarks to the individual points which have been raised, but perhaps it would be appropriate to say right away that it is a matter of encouragement to find almost universal support for our membership of the Community, coupled with a determination to ensure that our position is protected and that fairness and equity prevail. In that regard, the views expressed by your Lordships mirror very much the views expressed by the Select Committee in their report.
The main issue considered in the committee's report relates to the Community budget and in particular to the United Kingdom's contribution to that budget. But before I come to that central issue, there are two peripheral matters with which I should like to deal. They are important issues, even though they are peripheral to the main subject. They are, first, the question of the legality of the 1979 budget and, second, the establishment of the Court of Auditors.
So far as the legality of the 1979 budget is concerned, the noble and learned Lord, Lord Fraser of Tullybelton, dealt with this matter in his speech in detail, and with authority. The noble Lord, Lord Bruce of Donington, expressed a contrary view. This is, of course, essentially a legal issue, and I would suggest that in matters of law we should be wiser to be guided by the opinion of the lawyers, of great distinction in this field, even if we happen to disagree with the law that they are expounding. Fortunately, the point is academic, in the sense that the problem was ultimately resolved by agreement

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between the Council of Ministers and the European Parliament, and one hopes that this will avoid future conflict.
So far as the Court of Auditors is concerned, the Government regard this as a valuable development in the Community's institutions. Like your Lordships' committee, we have been impressed by the start which the court has made and we believe that it can make an increasingly valuable contribution to the management of the Community's finances. The noble Lord, Lord Plowden, referred to the need for the development of close links between the Court of Auditors and the Council and the European Parliament. The Government fully endorse this view. It was never the intention that the court should be merely an ornament, however distinguished, but that it should be an integral part of the process of financial control, the importance of which we entirely recognise. The Treaty established the court and it provides, in particular, for the Council and the Parliament to consider the court's annual report before granting the Commission its discharge. Article 85 of the Financial Regulation of 31st December 1977 also provides for the institutions to submit reports of their action on any points arising out of this consideration.
Perhaps I may now come to the main issue, which is the size of Britain's net contribution to the Community's budget. In the course of his Budget speech, my right honourable friend the Chancellor of the Exchequer referred to the present unfavourable international economic climate, and he said this:
" In this disturbed situation, the European Community can, and should, be a source of stability and strength for its members. In one important area, however, present EEC policies are seriously hindering our efforts to help ourselves ".—[Official Report, Commons; 12/6/79; col. 238.]
The United Kingdom and Italy, which are among the poorer members of the Community, are transferring substantial resources to richer member-States, chiefly through the Community budget.
There may be difficulties in determining exactly the scale of the transfer of resources, to which my right honourable friend referred, but there can be no doubt that it is very substantial and that it is imposing a significant drain on the United Kingdom economy. Table 2 of the committee's
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report shows just how quickly the United Kingdom's net contribution has grown and how big it now is. By 1980, it will be of the order of £1 billion, unless something is done to reduce it. This is a major sacrifice of resources, at a time when the Government are having to make large cuts in their own public expenditure programme. It is also quite out of line with the United Kingdom's relative wealth.
The committee have included in their report figures for gross national product per head, which provide as good a guide as any to the relative prosperity of different countries. But whichever way one looks at the figures, it is plain that the United Kingdom is subsidising, through the Community budget, countries with a standard of living well above its own. That alone is surely enough to justify the committee in their conclusion, which is fully shared by the Government, that the United Kingdom's contribution to the Community budget is disproportionately high. As my right honourable friend the Chancellor of the Exchequer said in his Budget speech:
" It "—
that is, the situation—
" is plainly unfair ".—[Official Report, Commons; 12/6/79; col. 238.]
The Select Committee's report, as the noble Lord, Lord Cobbold, has said, lists five ways in which the disproportionate burden of the existing budget structure on the United Kingdom could be lightened. They also make a number of specific suggestions which are both interesting and valuable, but I have considerable doubts—and I suspect that the Committee may well think the same—whether the measures proposed by the Committee would, by themselves, offer the prospect of relief on the scale required within a time-scale which would be acceptable.
Like the committee, we should have been glad to see the Commission's suggestions adopted that there should be an element of progressivity in the VAT component of own resources, but not all of our Community partners feel the same. I must stress also that the question of the manner in which more resources might be provided is distinct from the prior question whether it would be right for own resources to be increased at all. On this the Government's present view is that it would

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be wrong to think in terms simply of more money for the Community. There should be a better use of the money already available.
On the expenditure side also we have to be cautious. Although the recent settlement has marked a considerable improvement over previous years, recent events have shown how difficult it is to stop the CAP juggernaut from rolling. There is no sign of a reduction in the absolute level of CAP spending in the immediate future and we should be unwise to pretend otherwise. It is tempting to think in terms of achieving a better balanced budget by increasing expenditure on policies within the Community other than those devoted to agriculture, but I believe other member-States would share the view that massive increases in Community expenditure do not provide a satisfactory answer. I agree, of course, that there is some scope for worthwhile Community expenditure on regional policy, industrial policy and social policy, but all of us know that the difficult problems in those areas cannot be solved simply by massive injections of Government money, whether it be national Government money or that of the Community.
I do not propose to follow in detail the very powerful attack made by the noble Lord, Lord Bruce of Donington, on the failure of the Labour Government to take any effective action to deal with these problems in the last five years, and their failure had undoubtedly exacerbated the problems we now face. I propose instead to say what the Government have done since they came into office. The Government's views can be inferred first from the Budget statement of my right honourable friend the Chancellor of the Exchequer in another place. He said in that speech that we had already made it very clear to our partners that the excessive net contribution by the United Kingdom could not be allowed to continue because it was against the interests of the Community itself, a point which has been made and emphasised by a number of noble Lords in the debate this evening. He said that we would continue to press for an agreement which would meet our case. That is what the Government have
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done and will continue to do but it is not for the United Kingdom to make specific proposals. That is a matter for the Community as a whole.
What my right honourable friend the Prime Minister achieved at the European Council in Strasbourg on 21st and 22nd June was an agreement among her colleagues that the Commission of the European Community should study the effect of present budgetary transfers and should bring forward proposals for solving the problem. As she reported to the other place on her return, this means that at last we have agreement to tackle the inequitably high contribution that Britain makes at present to the European budget. The Prime Minister's direct and open approach, which has been linked to a strong affirmation of our belief in the Community and our commitment to its future development is, I believe, having its effect.
The Commission has been asked to present proposals in time for decision at the next European Council which will take place in Dublin on 29th and 30th November. Meanwhile the Government will continue to take every available opportunity to press home to our Community partners the seriousness of the problem and the need for substantial, rapid and lasting relief. The thoughtful and valuable report which we have been discussing this evening and the debate we have had on it offers most welcome support to Her Majesty's Government's endeavours in this field.
7.7 p.m.
Lord COBBOLD: My Lords, I will not detain the House for more than a minute. I should like just to say " Thank you " to those who have spoken. I rather wish that, except for the last two speakers, there had been one or two who were not either members of the Select Committee or of Sub-Committee A. It was really the " home team " in one guise or another speaking, but still they made very helpful contributions. It is extremely difficult to get people from outside to speak in these debates. I made very serious attempts, but the four or five distinguished characters whom I tried to persuade had very good excuses for not coming this afternoon.

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Passing to the last two speakers, I should just like to say that a compliment from the noble Lord, Lord Bruce of Donington, on the quality of a report on the EEC budget is something that is really worth having. Nobody has done more work on these budget matters in the European Parliament in the last four years and nobody has had a better grasp of the details than the noble Lord.
I also thank the noble Lord, Lord Cockfield, for the helpful speech which he made. I am extremely glad to know that he regards Her Majesty's Government as being more or less in agreement with the conclusions of the report, and one can only wish Her Majesty's Government all possible success in the very long and difficult negotiations which lie ahead of them. My Lords, I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.