§ 3.54 p.m.
§ Lord SOAMESMy Lords, with the leave of the House, I will repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With my noble friend the Foreign and Commonwealth Secretary, I attended the European Council in Strasbourg at the end of last week. Among the matters we discussed were:—
"First, contributions to the Community Budget. I made our dissatisfaction with the results of the present system very plain. The European Council called for action by the Commission to assess the facts about how 1350 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. That report will go first to the Finance Council of Ministers who will have the opportunity to put forward practical ideas to solve the problem. Taking those views into account, the Commission have been asked to formulate proposals in time for decisions to be taken at the next meeting of the European Council in November in Dublin. At last, therefore, we have agreement to tackle the inequitably high contribution that Britain at present makes to the European Budget. The time for decisions will be at the next Council.
"Second, on energy and the oil shortage, we agreed to reinforce our efforts to reduce consumption of oil and to achieve the objectives the Community has set itself. We also emphasised the part which alternative sources of energy must play—nuclear power and coal in particular. We recognised the need for consumer and producer countries to work together to reduce demand and increase supply and made clear the readiness of the Community and Member States to establish contacts with producer countries to that end. We had in mind the Tokyo Economic Summit meeting this week and that by showing the Community was ready to shoulder its own responsibilities we should be in a good position to call on other industrialised countries to make comparable efforts to reduce oil consumption and imports. We agreed that higher oil prices will adversely affect the outlook for growth, though prices will only steady if demand and supply balance.
"Third, the Council reviewed the early operations of the European monetary system. I also told them of the Government's intention, about which the House has already been informed, to deposit part of our reserves against ECUs.
"Fourth, the Council were anxious to help refugees from Vietnam and supported the proposals for an international conference.
"Finally, we noted with satisfaction the first direct elections to the European 1351 Assembly and welcomed the intention of the Irish Prime Minister to represent the Council at the inaugural meeting of the new Assembly on 18th July."
My Lords, that concludes the Statement.
§ 3.58 p.m.
§ Lord GORONWY-ROBERTSMy Lords, I am sure that I shall echo the feelings of everybody in the House this afternoon when I say how grateful we are to the noble Lord the Leader of the House for so clearly presenting this Statement to us. It is not a tremendous breakthrough in any sense of the word. It makes no reference to what happened about the CAP on the margin of this meeting, but I will not go into that at the moment. It is a Statement in which the sentiments are generally impeccable even though its proposals are somewhat imprecise. May I put one or two points to the noble Lord?
Will the assessment of facts about the budget transfers referred to in the first paragraph—that is, the assessment which the Commission is instructed to prepare—include anything like a fundamental analysis of the financial mechanism and a basic review of the methods of realising own resources? Many feel that simply to examine how the financial mechanism now existing operates will not take us very far in the solution of our particular problem in Britain and that we need to look more radically at the mechanism itself. Secondly, on that paragraph, will this country like other member States be in a position to put forward its own concrete proposals before the Commission finalises its own proposals in November for the consideration of the Council? I put these points in no hostile way. I think there is a substantial body of opinion that would favour the two courses that are implicit in what I have said.
As to the second paragraph on energy and the oil shortage, we welcome the statement contained in this paper of a policy which for some time now has been generally agreed, certainly in this country, and, latterly, in Europe as a whole. In particular, we welcome the reference to the need to develop alternative sources of energy and especially coal, and in no way detracting from the importance of nuclear power and its promotion in the future. 1352 After all, with the reduction in demand, there must necessarily be an increase in supply. Nevertheless, in view of the somewhat alarming incidents in this field recently in Harrisburg, Virginia, for instance, I take it that the Government will place the assurance of safety in nuclear development even above the exigencies of economics. It would be self-defeating if, alarmed by the potential shortage of energy, we pushed along on the nuclear road without due regard—and I am not suggesting for a moment that this Government, or any Government, would do this—for the fundamental need for safety in this field.
Before I leave that point, may I also say that we are very glad to see a reference—we wish it had been stronger—to the intention of the European Community to do its utmost in Tokyo to persuade other industrialised countries—in particular America and Japan—to join in with Europe on a practical scheme of reducing demand as well as of increasing supply. It would seem to us, as no doubt to the noble Lord, that unless these two great giants in consumption, as well as in other fields of economic activity, co-operate fully in this very sensible European policy in regard to oil conservation and usage, then our policy will not succeed; it will not get off the ground.
On the third point relating to the European monetary system, I recall the day when the present Prime Minister denounced the Leader of my Party, who was then the Prime Minister, for producing a sad day for Europe because he said what was perfectly obvious to everybody: that this country was not in a position to join in EMS. I take the rather short reference to the European monetary system in this Statement as an indication that the Government have had second thoughts, that they are not all that enthusiastic to plunge into the unknown depths of the EMS—not quite yet. We shall support them in all caution in that regard.
Fourthly, I strongly welcome the reference to the tragedy of the refugees who suffer from the deliberate policy of the Vietnamese Government. The Statement gives a further proof that the Community, joined by other countries we hope, will press forward on an international basis to produce a solution for this tragedy that is continuing in South- 1353 East Asia. We shall support the Government in everything that they try to do to secure international action to solve this tragedy among the refugees of Vietnam.
§ 4.3 p.m.
§ Lord GLADWYNMy Lords, we too on these Benches would like to welcome the Statement which, so far as it goes, as the noble Lord who has spoken has said, is impeccable. But would the Government not recognise that our efforts to get our contributions to the central budget reduced are slightly impeded by the fact that in 1975, as I understand it, we entered into a financial mechanism which was based on the balance of payments of the various countries. Of course, our own balance of payments now, thanks to North Sea oil—which perhaps was not appreciated in 1975—makes it difficult for us to use that particular argument. So I suppose our argument must be based simply on equity, and I imagine that is what the Government are now going to do.
On energy, we equally congratulate the Government and indeed the Ministers on the line that they have taken. As the noble Lord, Lord Goronwy-Roberts, has said, it depends far more on a sensible policy being pursued by America than it does on a sensible policy being pursued—as it already is—in Europe. Account has been taken of this fact in the second paragraph of the Statement.
On the European monetary system, the Liberal Party has always been in favour of our taking the plunge and joining this system. I gather that the Government have not yet brought themselves up to that point. But so far as we are concerned, we hope that they will do so. We also very much welcome the statement regarding action to help the refugees from Vietnam and we support the proposed international conference. On direct elections, naturally we welcome them. At the same time, I should like to point out that the Conservative Party, with probably not much more than half the votes of the Liberals in Europe as a whole, are going to have 61 as opposed to the Liberals' 43 seats, which is grotesquely unfair and represents something which should certainly be rectified as soon as possible.
§ 4.5 p.m.
§ Lord SOAMESMy Lords, may I thank the noble Lord, Lord Goronwy-Roberts, 1354 and the noble Lord, Lord Gladwyn, for their general welcome of the Statement. As to the points they made—if I may take some of them together—both noble Lords referred to the financial mechanism. Before I get to that, I must touch on what the noble Lord, Lord Goronwy-Roberts, said: that there was no break-through here; that there was not anything very new in this Statement. I hope that he will not underestimate the success that the Government think that we have had in persuading our partners that there is a case to be looked at as to the equity of the British contribution to the budget. This has not happened up to now. If it had, it would have been looked at by the Commission and reported on. It has not been agreed on before in the European Council. This is the first European Council which has agreed that there is here a prima facie case which ought to be examined; and it is to be examined by the Commission.
As to the financial mechanism, one of the points to be examined is whether the financial mechanism is working as it was designed to work. I agree with what the noble Lord, Lord Gladwyn, said: there was in the financial mechanism, which was agreed to by the last Government, a trigger clause; that it could only be triggered if the balance of payments reached a certain adverse point. It is my belief that when the Commission come to look at this, they will see that the financial mechanism then introduced is not man enough, is not sufficient, to ensure the equity that we want to see. Therefore, it will be for the Commission to come up with some ideas which will be considered by the Finance Ministers, and then it will go hack to the Commission to put up a proposal to the next European Council in Dublin. That is something on which I should like—if nobody else would—to congratulate my right honourable friend the Prime Minister for having achieved.
As to the oil imports, how right both noble Lords are that of course the secret of this is that all great industrial nations have to agree on how they are going to handle this situation if it is going to be done successfully. It was thought necessary by the European Council that, if they are going to have a chance in Tokyo of carrying the United States and Japan with them on this, it was for them at least to agree among themselves. That they have agreed as to what they intend 1355 to do as a contribution has been no mean success; and if the same is done by Japan and the United States then there is some hope that the very grave difficulties over energy which are likely to face the world will not be as bad as they look as if they could be at the present time.
§ 4.8 p.m.
§ Lord HARMAR-NICHOLLSMy Lords, may I ask—
§ Lord SHINWELLMy Lords, may I—
§ Several Noble Lords: Order!
§ Lord SHINWELLGive an ordinary Back-Bencher a chance! My Lords, may I ask the noble Lord a simple question which I am quite sure will not embarrass him?—that is the last thing I want to do. I address my question not only to the noble Lord the Leader of the House, but to your Lordships. Do you not think that it is remarkable that any criticism of what the Prime Minister was unable to do when she was at Strasbourg happens to come from the most enthusiastic pro-Common Marketeers? They are the people now complaining in spite of a decision taken democratically in the United Kingdom. Would not the noble Lord agree that it will be better to leave the questions to those people who are against the Common Market and not to those who were so enthusiastic about it who have now discovered their mistake?
§ Lord SOAMESMy Lords, the noble Lord referred to himself as an ordinary Back-Bencher. I do not think that any-body would share that view of him. As to whom it should be left to, it is in very good hands at the present time.
§ Lord HARMAR-NICHOLLSMy Lords, first of all, if I could make a comment to my noble friend the Leader of the House: I hope that the practice of the opposite sides of the House being given their chance in rotation is not going to be altered because there is a new Government. The question I wanted to put to my noble friend was as follows: While not overlooking the hopeful tone of the Statement, how well-based is the report on the front page of today's Daily Telegraph that the Council of 1356 Ministers in deviating from the Commission's recommendation has put £1,000 million on the farm bill, a big proportion of which the United Kingdom will have to pay? Is that true and how well based is it?—because if it is true it is not as hopeful a statement as I would have expected.
§ Lord SOAMESMy Lords, I am grateful to my noble friend for raising that point. What Commissioner Gundelach was saying was that, had his proposals got through the Council of Ministers as put to them in toto, notably with a 5 per cent. producers' levy on milk and a notable reduction in the sugar quota—neither of which was acceptable to the Council of Ministers as a whole—then the difference would have been £900 million. But I do not believe it was ever really "a starter" that either of those could have got through. So far as the United Kingdom is concerned, the net outcome of the settlement on agricultural prices this year is that there will be a gross increase in expenditure of £49 million and a gross increase of receipts, largely from the butter subsidy, of £78 million. That will mean that we shall be contributing, if my arithmetic is right, about £29 million less than we would otherwise have been doing.
Lord BRUCE of DONINGTONMy Lords, in connection with the reply the noble Lord has just given to his noble friend, is he aware that the result of Mr. Walker's abandonment of his previous stance of no increase in price in respect of items in structural surplus will be, when the co-responsibility levy is taken into account, in fact to increase the total Community budget by some £900 million, out of which the United Kingdom share will be something like £170 million, after taking into account the butter subsidy to which the noble Lord referred? Is he further aware that the whole question of the study of the nature of individual contributions by member-States to the Community budget has already been the subject of a study by the Commission for the year 1978? Is he also aware that if he got on the telephone now to Mr. Christopher Tugendhat he would be able to give him the approximate figures for 1979 and 1980?—which in any event are already in the possession of the Committee of Permanent Representatives 1357 in Brussels. Our own Minister representative is already in possession of the facts, and this mere application by the Council for the Commission to study the position is in fact a bromide. All the facts are known and indeed were published in substantial form in the Economist last week. The net result of the whole business is that the Retail Prices Index in the United Kingdom will increase by three points in the current year.
§ Lord SOAMESNo, my Lords: it is not the case that the increase as a result of the settlement on agriculture will be £900 million extra to last year. That is not the case. The fact is that it is going to be £900 million more than if the Commission's proposals had been accepted in toto. I have given the figures: in effect it will mean less for the United Kingdom next year, as opposed to last year. It is not an increase of £900 million; that is not right. Where the £900 million comes in is that, had the proposals of the Commission been accepted in toto as they stood, it would have been a settlement of £900 million less than the figure of the actual settlement. As to the question of what Mr. Walker has done, all I can say to the noble Lord is that this settlement is a lower settlement of price rises than there has been over the last six years.
§ The Earl of ONSLOWMy Lords, is it not the case that my right honourable friend the Prime Minister ought to be congratulated on being able to go to the Council of Ministers with good manners and good taste and to get something out of it?—which is virtually the first time there has been a nil increase in the butter and milk payments in the whole history of the Common Market. Members of the previous Administration, with one or two notable exceptions in the form of the noble Lord, Lord Peart, were so ill-mannered in respect of the Community that they got nothing which they wanted at all.
§ Lord SOAMESMy Lords, I think there is something in what the noble Earl said. It is not only what you say but also how you say it. We all know that the noble Lord, Lord Peart, used to say things extremely well.