Lords Sitting of 27 November 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 Worcester.

CONSTITUENCY BOUNDARIES AND REPRESENTATION
Lord ELLENBOROUGH: 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 how many constituencies in England, Scotland and Wales have electorates of (a) less than 50,000 and (b) more than 80,000; how the representation of the constituencies in each category is distributed among the political parties; and whether it is anticipated that the final recommendations of the Boundary Commission will be received and implemented before 1984.>
The PARLIAMENTARY UNDER-SECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, I am sending my noble friend a table containing the information requested in the first part of his Question, together with a copy of an OPCS Monitor issued in April which gives figures for the electorate of every parliamentary constituency. For the convenience of your Lordships, I will summarise the position as follows. There are 90 parliamentary constituencies in Great Britain with less than 50,000 electors; 58 are Labour, 25 Conservative, 4 Liberal, 2 Plaid Cymru and 1 Scottish National Party. There are 102 constituencies with more than 80,000 electors; 79 are Conservative, 22 Labour and 1 Liberal.
I understand that the reports of the parliamentary Boundary Commissions for England and Scotland are likely to be received by mid-1982 and that for the Welsh Commission a little later. The Government intend to implement the recommendations of the Commissions, with or without modifications, as soon as
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practicable after having received their reports.
Lord ELLENBOROUGH: My Lords, I thank my noble friend for that detailed Answer. Nevertheless, as one who myself is a supporter of the first-past-the-post system, may I ask whether he agrees that as something approaching one-third of the parliamentary constituencies in England, Scotland and Wales are either substantially or, in many cases grossly under- or over-represented, and have been for some time, this has only the gravest implications for the health of the first-past-the-post system? Furthermore, while appreciating what my noble friend said about how the Boundary Commissions are getting on, may I ask him whether he agrees that it is a fact that the Boundary Commissions are not renowned for their speed, and will he and his right honourable friend in another place do all they possibly can to see to it that they are galvanised into action, so that their reports are received in plenty of time and implemented before the next general election, which I sincerely trust will be taking place some time around 1984?
Lord BELSTEAD: My Lords, the review of constituencies has, I think, everything to do with population change—either to do with the fall or the increase in population because of births and deaths, or because of movements in population—not with methods of voting. So far as the present interval of 10 to 15 years between general reviews is concerned, this was introduced in 1958. The previous interval was three to seven years and it was found to be too short, in view of the disturbance that it caused. It is on those rules that the Boundary Commissions are now in the middle of undertaking their reviews, and they are up-to-date in the work that they are doing.
Lord LEATHERLAND: My Lords, does the Minister not feel that it is rather impertinent for this unelected House to criticise the way in which the elected House is elected?
Lord BELSTEAD: My Lords, I was not aware that there was any particular criticism.
Lord TRANMIRE: My Lords, can my noble friend say whether any use has ever been made of subsection (3) of Section 2 of the 1949 Act, which provides for a special review in cases of glaring inconsistency? This was recommended by a Speaker's Conference in 1944 of which I was a member, and so far as I know it has never been used. I am sure that the time has come to review the whole of this system, in order to get a fair and more democratic system of electing our Members.
Lord BELSTEAD: My Lords, if my noble friend is referring to the interim reviews, I am not aware that whenever an interim review has been undertaken any constituency has, as a result of that, been created, nor has any constituency ever been extinguished.
Lord UNDERHILL: My Lords, may I ask the noble Lord whether it is not a fact that past parliamentary Boundary Commissions have exercised a toleration limit both above and below the electoral quota, and that although the Commissions act non-politically it so happens that in many of the large county constituencies the recommendations of the Commissions have had a tendency to favour the Conservative Party? Also, is it not a fact that some of the small electorate constituencies are in areas of inner city decay and acute deprivation, which means that Members of Parliament for those constituencies have a high intensity of problems with which to deal? Finally, has the noble Lord any information at all on the work of the local government Boundary Commissions, as the progress of their work will depend upon the speed of the parliamentary Commissions?
Lord BELSTEAD: My Lords, I am not trying to be flippant, but the answer to the noble Lord's questions are, Yes; I am not sure; I do not know; and, No.
Lord BOYD-CARPENTER: My Lords, can my noble friend, with equal succinctness, tell me whether the Boundary Commission is free to consider, and is considering, the disparity at present between the size of constituencies in England and Northern Ireland on the one hand and Scotland and Wales on the other?
Lord BELSTEAD: No, my Lords; I shall have to write to the noble Lord if I have got this wrong, but, as I understand it, the Commissions are dealing with the countries that they are statutorily charged with dealing with. In other words, there are separate Commissions for Scotland, Wales, England and Northern Ireland.
Lord SHINWELL: My Lords, may I ask the noble Lord whether the interest displayed in this matter is because some day we hope to be an elected Chamber? If that is not the reason for the interest, what is it?
Lord BELSTEAD: My Lords, the noble Lord has got rather longer—not much, but rather longer experience than I. Perhaps he had better answer the question himself.
The Earl of LAUDERDALE: My Lords, would not the noble Lord agree that there is a certain reason why this House should interest itself in the constitution of the other place, inasmuch as the sole remaining veto power relates to our capacity to block any attempt to tamper with the quinquennial Act?
Lord BELSTEAD: My Lords, I agree with the first part of my noble friend's supplementary question, but I should like to think about the second part.
Lord BANKS: My Lords, would the noble Lord agree that if multi-Member constituencies were in use it would be possible to adjust the number of Members in order to take account of the electorate in each constituency and thus avoid the unfairness to which the Question refers?
Lord BELSTEAD: My Lords, this is a hypothesis, of course, because it would need a change in the rules. I shall look forward to legislation from the Liberal Party on that particular subject.

FISHING LIMITS: JURISDICTION ON CONTRAVENTION
2.45 p.m.
Lord BALFOUR of INCHRYE: 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 event of a fishing vessel belonging to an EEC country contravening United Kingdom fishing limits, any subsequent court proceedings would be in British courts or whether, at the behest of the Government of the offending vessel's country, the case could be transferred to the European Court.
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): My Lords, where a fishing vessel of a Member State of the EEC is accused of contravening fisheries legislation in force within British fishing limits, subsequent court proceedings will take place in United Kingdom courts. The case cannot be transferred to the European Court, which has no criminal jurisdiction; but if the case raises a question of Community law and a decision on that question is necessary to enable the United Kingdom court to give judgment, it may (and in the case of a tribunal from which no further appeal is possible, it must) refer that question to the European Court for a preliminary ruling. The proceedings in the United Kingdom court will then be stayed until the ruling of the European Court has been obtained.
Lord BALFOUR of INCHRYE: My Lords, I thank the noble and learned Lord the Lord Chancellor for his comprehensive reply, but may I ask him one question? Could a vessel from an EEC country accused of transgressing the United Kingdom fishing regulations and laws claim that, in view of the disputed position of the whole fishing policy within the EEC, the offence would have to be dealt with under Community law and therefore be referred to the European Court for that preliminary hearing which the noble and learned Lord mentioned in his reply, rather than be dealt with by a British court?
The LORD CHANCELLOR: My Lords, I am most grateful to my noble friend for his gratitude, but my reply was not quite so comprehensive as it ought to have been. There was a second page, and I shall now give the last part of my original Answer and then answer, if I
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may, with the leave of the House, my noble friend's supplementary.
This is what I omitted to say. The Government of the offending vessel's country plays no part in the proceedings before the United Kingdom court and cannot influence its decision to refer a question of Community law to the European Court. If however such a question is referred, the Government of any Member State may submit written observations to the European Court and may appear in the oral proceedings before that court.
I now turn to my noble friend's supplementary. I think that the answer is comprehended in my original Answer. If a question of Community law occurs during the hearing of a case, whether civil or criminal, before a United Kingdom court, the United Kingdom court may refer that question of Community law for a Community court ruling. It is not bound to do so; it is a matter of discretion, unless the court is one from which no further appeal is possible. In that case, European law compels the reference to be made.
Lord HARMAR-NICHOLLS: My Lords, is my noble friend aware that his reply, which is explicit, is rather puzzling in the light of what has happened recently? It was suggested, when the French did not obey the European Court decision on sheepmeat, that the reason they took the action they did was because there was no appeal from the European Court, and therefore they could not pursue it on the normal legal lines. Now the noble and learned Lord is telling us that a matter which comes clearly within the purview of the British court can be sent to the European Court and they give their decision afterwards, which I should have thought would put the British court in the position of being to some extent a court of appeal from the European Court's decision. It is all rather puzzling.
The LORD CHANCELLOR: My Lords, this is the fish course. I think I had better not, without breach of table manners, pursue the matter into the roast lamb, but I think my noble friend has got it wrong. I think I am right in saying that there already is a ruling against the French Government when we come to roast lamb.
Lord PAGET of NORTHAMPTON: My Lords, I wonder whether the noble and learned Lord the Lord Chancellor can assist me. I have always understood that the European courts had no criminal jurisdiction. They are criminal courts. In that case, how can a European ruling affect a trial for a crime committed within British jurisdiction and within British territorial waters?
The LORD CHANCELLOR: My Lords, I do not think the noble Lord has actually followed my original Answer. In that Answer I expressly explained that the European Court has no criminal jurisdiction and therefore a case cannot be referred to it, but a question of law can be referred to it. That can happen in any case, whether criminal or civil, because they give a preliminary opinion on the question of law which may arise during the course of criminal proceedings.

AGRICULTURAL PROGRAMMES: EEC REGULATION 355/77
2.51 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that satisfactory progress has been achieved in submitting United Kingdom programmes for EEC approval under Regulation 355/77, and what programmes have been or are being so submitted.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, eight programmes have been submitted. One is a regional programme for Northern Ireland. Then there is a programme covering crops, another for livestock and another for fisheries, all of which are for Scotland. Then there is a programme for milk, another for potatoes and another for horticulture, all of which are for England and Wales. There is also a redmeat slaughterhouse programme which covers the whole of the United Kingdom.
Of the eight programmes which have been submitted, three have received approval in Brussels. These are the
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programmes for crops and livestock in Scotland and the United Kingdom red-meat slaughterhouse programme. Five further programmes are in the course of preparation, of which four relate to England and Wales and cover pigmeat, fisheries, cereals and seeds. The fifth is a livestock programme and relates to Wales.
Baroness ELLIOT of HARWOOD: My Lords, I should like to thank the noble Earl very much for his most encouraging Answer. As this is one of the ways in which we can get some money back from the EEC, I hope the Government will encourage as many people as possible to use this money in order to improve their equipment and so on, with a view to selling more of our produce abroad.
Earl FERRERS: My Lords, I am grateful to the noble Baroness for that observation. She may like to know that in fact, of all the Members of the European Economic Community, the United Kingdom has submitted more projects than anyone else and has received more approvals than any other Member State.

ZIMBABWE-RHODESIA: COMMONWEALTH OBSERVER FORCE
2.53 p.m.
Lord HATCH of LUSBY: 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 Commonwealth countries have been asked to provide contingents for the observer force in Zimbabwe-Rhodesia and how many have agreed.
Lord TREFGARNE: My Lords, we have asked all Commonwealth countries to say whether they wish to send observers. Replies are still being received.
Lord HATCH of LUSBY: My Lords, on Friday the Prime Minister stated that the Lancaster House Conference was within an ace—
Several noble Lords: Question!
Lord HATCH of LUSBY:—was within an ace of success. May I ask the

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noble Lord whether he would agree that the missing ace may very well be the Commonwealth force? Would he further agree that if, in either the pre-electoral period or the post-electoral period, the Patriotic Front guerrillas at their collection points are to feel safe from attack by the present security forces, possibly backed by South Africa, then a substantial Commonwealth force as a third force in that situation is essential to the success of negotiations?
Lord TREFGARNE: My Lords, I am not sure that there is not a confusion in the mind of the noble Lord. His Question refers to an observer force, but the noble Lord's supplementary question led me to wonder whether he was not referring to the cease-fire monitoring force, which is something quite separate. The noble Lord then referred to the question of a Commonwealth force and I presume he was meaning a Commonwealth cease-fire monitoring force and not Commonwealth observers. We are fully cognisant of the Commonwealth position on this matter, which was clearly laid down at the Commonwealth Heads of Government meeting at Lusaka. None the less it is a British responsibility and we intend to meet our responsibilities to the full.
Lord GORONWY-ROBERTS: My Lords, I should like to offer general support for what my noble friend Lord Hatch of Lusby has said as to the great advantage of emphasising as much as possible the Commonwealth's presence during the monitoring procedures as well as the observing procedures, which of course, as the noble Lord, Lord Trefgarne, has reminded us, are quite distinct. Is he in a position to tell us how many (so far) of the Commonwealth countries that have been asked whether they would be ready to make commitments to the observer force, have in fact replied favourably? He said that he was still awaiting replies, but it would be encouraging to know whether some have answered favourably. Secondly, is he at the moment in a position to tell the House how he thinks the talks are going today in Lancaster House?
Lord TREFGARNE: My Lords, with regard to the replies to invitations to be observers of the electoral procedure I do not have in front of me the names of
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those who have so far accepted. However I will say that four of our Commonwealth countries have agreed to participate in the monitoring force: they are Australia, Fiji, Kenya and New Zealand. I am afraid I am not yet in a position to make a statement on what has happened today at Lancaster House.
Lord HATCH of LUSBY: My Lords, will the noble Lord now answer my first question? Does he agree that this is the missing ace and that it would be a tragic disaster if, after all the exceptionally tough and skilful negotiations that have taken place by all sides in Lancaster House, the negotiations were to founder on this one central issue as to whether there should be a third force during the pre-electoral period and, if asked, during the post-electoral period?
Lord TREFGARNE: My Lords, I am not sure that that is the missing ace. The missing ace is simpler than that: it is the question of whether or not the Patriotic Front will now agree to a cease-fire broadly in accordance with the terms put forward by my noble friend at the conference. As your Lordships will know, the Salisbury parties have agreed to the Government proposals.
The Earl of ONSLOW: My Lords, let us assume for the sake of argument that everything goes wrong and that the Commonwealth force mentioned by the noble Lord, Lord Hatch of Lusby, is imposed between the Patriotic Front guerrillas and the Salisbury Government's forces: who will then command it, how will it get involved and will this in fact not be a further recipe for total disaster?
Lord TREFGARNE: My Lords, my noble friend is asking me to comment upon a wholly hypothetical situation. We are working towards a comprehensve settlement and a cease-fire.

SLAUGHTER OF ANIMALS (SCOTLAND) BILL [H.L.]
The LORD ADVOCATE (Lord Mackay of Clashfern): My Lords, I beg to introduce a Bill to consolidate certain enactments relating to slaughterhouses, knackers' yards and the slaughter of

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animals in Scotland. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read la.—(Lord Mackay of Clashfern.)
On Question, Bill read 1a, and to be printed.

REPRESENTATION OF THE PEOPLE BILL
Brought from the Commons, read 1a, and to be printed.
GREATER LONDON COUNCIL (GENERAL POWERS) BILL
Read 3a, with the amendments, and passed, and returned to the Commons.
GREATER LONDON COUNCIL (MONEY) BILL
Read 3a, and passed.

COMMITTEE OF SELECTION
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, on behalf of the Committee of Selection, That the Lord Wolfenden be added to the Select Committee on the European Communities in place of the Lord Goronwy-Roberts resigned.—(Lord Aberdare.)
On Question, Motion agreed to.

RESIDENTIAL HOMES BILL [H.L.]
The LORD CHANCELLOR: My Lords, I understand that no amendment has been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to Speak in Committee. Unless, therefore, any noble Lord objects, I propose to move that the Order of Recommitment be discharged. I beg to move.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

CHARGING ORDERS BILL [H.L.]
The LORD CHANCELLOR: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 1 to 3]
Clause 2, page 2, leave out lines 28 and 29 and insert—
(b) any interest held by a person as trustee of a trust ("the trust"), if the interest is in such an asset or is an interest under another trust and—
Clause 7, page 6, leave out lines 21 to 24 and insert 'by inserting, at the end, the following paragraph—
(e) section 1(2)(c) of the Charging Orders Act 1979".'

Page 6, line 27, at end insert '; and in section 36(2) and (3) of the Act of 1956 and section 142(2) and (3) of the Act of 1959 for the words "the last preceding section" (in section 36) and "the last foregoing section" (in section 142) there are substituted, in each case, the words "section 1 of the Charging Orders Act 1979".'
The LORD CHANCELLOR: My Lords, these three amendments are highly technical and excited no controversy, and were Government amendments. I am advised that it is proper for me to move the three en bloc. I beg to move that this House doth agree with the Commons in the said three amendments.
Moved, That the House doth agree with the Commons in the said amendments.—(The Lord Chancellor.)
Lord ELWYN-JONES: My Lords, I am sure the House will be very happy to accept the assurance of the noble and learned Lord that these are mere technicalities. Like so many technicalities they appear to be quite incomprehensible, but I am sure noble Lords will accept the assurance of the noble and learned Lord.
The LORD CHANCELLOR: My Lords, I am much obliged to the noble and learned Lord.
On Question, Motion agreed to.

EUROPEAN COMMUNITIES (GREEK ACCESSION) BILL
3.5 p.m.
Lord TREFGARNE: My Lords, on behalf of my noble friend Lord Carrington, I beg to move that the European Communities (Greek Accession) Bill be now read a second time. My noble friend had intended to open this debate himself, but, because of his preoccupation with other pressing matters, well known to your Lordships, he has regretfully had to withdraw. It therefore falls to me to move this Second Reading.
Your Lordships will have seen that the Bill is very short. Clause 1, the sole operative clause, simply amends the European Communities Act 1972 to provide that the Greek Treaties of Accession to the European Economic Community, Euratom and the Coal and Steel Community are included among the so-called basic "Community Treaties" referred to in Section 1 of the 1972 Act. This will ensure, once Greece enters the Community on 1st January 1981, that the United Kingdom is able to give effect to the obligations incumbent upon it as a result of the Treaties of Greek Accession.
The accession of Greece to the European Communities is one of the most encouraging developments on the European scene in recent years, encouraging both for the Community and for Greece itself. To appreciate the significance of Greek accession we need to consider the historical perspective of relations between the Community and Greece. Greece was the first country to enter into an accord with the Community; namely, the Treaty of Athens, signed in 1962. This treaty established the Association between the Community and Greece and looked forward to eventual Greek membership of the Community. Greece's accession now is therefore the fruit of a long period of close association. This progress was however interrupted during the Colonels' régime, when the development of relations between the Community and Greece was arrested. Emerging from that period of dictatorship Greece, under the wise leadership of Mr. Karamanlis, soon concluded that an essential buttress for the restoration of its democracy was emphasis upon Greece's European vocation. Accordingly Greece applied for membership of the Community in 1975.
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Doubts about the application were expressed at the time, mainly by those who wished to see the Community consolidate its achievements after the first enlargement before embarking upon a second. But clearly the Community could not rebuff Greece. How could the Community, founded as it was upon the post-war ideals of liberty, peace and European unification, turn its back upon a country moving steadily towards a new democracy, a country moreover with a profound European cultural tradition? The Community had to, and did, extend a warm welcome to Greece. I have mentioned that there were doubts about whether the Community could accommodate a further enlargement. These doubts were understandable, especially since Portugal and Spain were waiting in the wings. It will not be easy for the Community to absorb three new relatively less developed economies, each with a much larger agricultural sector than is the case for the existing Community of Nine. We in this country are already only too painfully aware of the extravagance of agricultural spending in the Community (which accounts for about three-quarters of the budget) and the need for reform of the Common Agricultural Policy. Other Community policies and institutions will also come under strain as a result of enlargement. The regional and social funds, which already in our view account for too small a slice of Community expenditure, will need to be spread even more thinly among the Member States. And the decision-making capacity of the Community, already the target of much criticism, will hardly be improved by an increase in the number of points of view which will need to be reconciled. Adding three new languages, moreover, could cause serious practical difficulties. These, and other problems, were identified in your Lordship's Select Committee's admirably comprehensive report on enlargement of March 1978.
The Government have no doubt that considerable reform of Community policies and institutions will be required over the coming years, but not only because of additional membership. Enlargement will in most cases only aggravate problems which are already there, making solutions more urgent but not necessarily making new difficulties. Let us in any case not exaggerate the extent of these problems.

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To take an example: Greece does indeed have a relatively large agricultural sector. But its accession will only lead to an increase of something like 5 per cent. in the Community's agricultural budget. This is not a meagre amount, but neither does it represent a dramatic change in the pattern of Community spending.
So far as the institutional aspects are concerned the Community has decided not to try to solve all the problems at the same time as Greek accession. Instead, the Community intends to take a careful long-term view, on the basis of a report by three experts on Community affairs, including Mr. Edmund Dell, known as the "Three Wise Men". This will be presented very shortly. The Government will study the report carefully, with a particular view to the implications of enlargement as a whole for the effective functioning of the Community's institutions.
We must guard, however, against assuming that there are easy answers. On languages, for example, the logical solution might be to make more use of one or two working languages. But in practice one could hardly deny a Greek Minister, say, the right to express himself in his own tongue on a topic important to his country. And documents which are to have the force of law in all Member States must clearly be translated into the languages of those States.
My Lords, I turn now to the implications of Greek accession for the United Kingdom. On balance I expect the economic effects to be favourable. With the lowering of Greek tariffs and removal of other Greek import restrictions our exporters will be afforded increased opportunities in an economy with one of the fastest growth rates in Europe. And Greek agricultural products, which do not compete with our domestic agricultural production, will enjoy slightly improved access to this country.
On the other hand, fears have been expressed about the possibility of increased exports to the United Kingdom of Greek textiles. These fears are not to be disregarded. The Government are well aware of the problems facing the United Kingdom textile industry as a result of low cost competition. But we have to accept that there will be some increase
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in the exports of Greek textiles to this country. It is not unreasonable for the Greeks to seek such an increase when we export to them about twice as much as we import from them. We should, at the same time, remember that the Greek Accession Treaty contains a safeguard clause which enables action to be taken in the event of serious disruption in the textile or other sectors.
Concern has also been expressed about the budgetary cost to the United Kingdom of Greek accession. According to our calculations that cost might be of the order of £65 million a year (at 1979 prices) at the end of the transitional period, assuming policies remain constant. I hope that your Lordships will agree, however, that this question is best looked at in the context of the budgetary arrangements as a whole. Our position on this matter is well known. We are determined to obtain more equitable arrangements and will press this point very firmly indeed at the European Council in Dublin later this week. The cost to the United Kingdom, therefore, of Greek accession will be significantly less than £65 million when we achieve satisfaction on the general budgetary question.
My Lords, in welcoming Greece to the Community we must not forget Turkey. The Community attaches great importance to its relations with countries of the Eastern Mediterranean and is determined that Greek accession should not lead to any estrangement between itself and Turkey. The Community has for some months been trying to come to a closer understanding with that country, on the basis of the present Association Agreement. I hope that, following the recent formation of a new Government in Turkey, fresh impetus will be given to these efforts.
In conclusion I should like to reiterate the wholehearted welcome which this Government extend to Greece. We look forward to working together with them inside the Community of Ten. We also look forward eventually to a Community of Twelve. As I have indicated there will, of course, be problems of adjustment. And, in our enthusiasm to assist the revival of democracy in Southern Europe, we must not close our eyes to those problems. But I believe that enlargement is a worthy undertaking, fully justifying

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the effort that will be required to make a success of it. My Lords, I beg to move.
Moved, That the Bill be read 2a—(Lord Trefgarne.)
3.16 p.m.
Lord GORONWY-ROBERTS: My Lords, the House will be grateful to the noble Lord for so clearly setting out the pros and cons of this new accession to the European Community. As he quite rightly said, there is a general welcome for the Bill which will, of course, also have to be considered in relation to the Treaty of Rome and the Treaty of Accession—a much more extensive document, for which this Bill is the providing instrument.
I repeat that there is all-party support for this accession in Parliament and in the country, and not unreasonably because our own ties with Greece have been, for many centuries, very close and very warm and they continue to be so despite the temporary misunderstanding that supervened during the repressive regime of the Colonels.
Politically it is of course imperative that Greece should join the Community. It should join its natural family of European democratic countries. Democratic Greece is perhaps doubly welcome because it has so effectively emerged in recent years from a period of dictatorial repression. From 1st January 1981 it will be a full member of the European Community adding greatly not only to the strength of democracy in the Community but to the strength and future health of democracy in Greece itself. Moreover, I think that by some time in 1983 two other countries lately emerged from periods of internal tyranny—Portugal and Spain—will adhere in full membership to the Community.
So, democracy in Europe, contrary to the impression that some people have from time to time, is on the advance. From the Atlantic to the Aegean we can see a strengthening, a consolidation, indeed an expansion of the democratic system on the Continent. It is of great importance to the survival and spread of freedom not only in Europe, but in other parts of the world, notably perhaps Africa. So to paraphrase a famous remark: Europe, by its democratic ex-
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ample, may encourage other parts of the world to find their way to effective democracy.
May I in passing, speaking as we are of our friends the Greeks who have taught us so much in the arts of democracy, offer the House the following thought. While democracy means popular sovereignty by the elective process, it does not stop there—it also entails genuine observance of basic human rights. It is our hope that the 12 member-countries of Europe—as there will be from about 1983 onwards—will not only conform generally in regard to their techniques of elective democracy but also increasingly conform with each other in the application of basic human rights.
Therefore, between 1973 and 1983, the Community will have doubled its membership from six to 12. That is a political gain of immense importance and therefore all the more reason why the Community should examine its economic and financial basis with a view to swift, necessary reform. The undoubted political advantages which we all expect from these new adherences to the Community must not be imperilled by persistence in economic arrangements which are demonstrably inequitable and unworkable. We shall not long sustain political unity if, at the same time, we are not working out acceptable economic and financial policies in the Community.
In Europe today politically it is a moment of opportunity; economically, it is the moment of truth. It is in the interests of European unity, for which so many of us have worked all our lives and for which many of us have fought, that the efforts of the present Administration and those of the Prime Minister in Dublin and elsewhere to convince our partners in Europe of the need for radical adjustments in the Common Agricultural Policy and in the European budgetary system should succeed.
We on this side of the House of course find it agreeable to offer our full support to the efforts which the Prime Minister and others are making in these directions these days. It was our policy; we exerted ourselves in the last Government on exactly these lines—I might add not always with the support of the then Opposition, which, from time to time,

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instead of backing the British case for justice and fair play, constantly accused us of being poor Europeans. I would not for a moment accuse the present Prime Minister or any one of her colleagues in this or in any other place of being poor Europeans because they are advancing the unanswerable case, which we put together two or three years ago and persisted in, for a proper reappraisal of the budgetary and other arrangements which are now part of the Community.
There will, of course, be problems and difficulties arising from the accession of Greece, and certainly from the accession a little later of Portugal and Spain. Greece itself must decide the balance of advantage to itself and has certainly, through its Parliament, if not through a referendum, decided that it is a good thing for it to join. But, as old friends of Greece, we may be permitted to take sympathetic note of one or two outstanding problems which will face the Greeks when they become full members. For instance, Greece has a developing industry, but it is relatively new and small-scale. It is now being aided quite substantially by the Greek Government, but that kind of aid will have to be phased out fairly rapidly. No doubt the Greek authorities have considered whether the curve of accession will match the curve of repudiation of its present internal policies. We have had the same difficulties.
However, although its industry may face certain difficulties arising from full membership—particularly the full force of competition from stronger industrial countries within the Market itself—it will, in fact, offer increased competition in the British market to some British industries. The noble Lord, Lord Trefgarne, instanced in particular our textile industry, which many of us would describe as a strategic industry in Britian. Very great concern has been voiced, and continues to be expressed, by management and unions about the possible effects of Greek membership on our textile and clothing industry in the next few years. I am hopeful that this new threat will be marginal.
At the same time I welcome the tone in which the noble Lord referred to the general safeguards clause which—and it is
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always a common form clause—attends these instruments of membership. I take it that if there is a serious danger of this new situation fundamentally threatening, for instance, our textile industry, we shall have recourse to this general safeguards clause; otherwise why include it at all? I believe that it is Article or Clause 130. Certainly in a period when some of our closest friends in the Community go far beyond the general safeguards clause in defence of what they consider to be their vital interests—for instance, in unilaterally forbidding the import, of British lamb—I would not think that a British Government would be chary, if necessary, of using this clause to protect their truly vital interests and those of their people.
The Greeks will also need to take part completely in the budgetary system. One wonders what the impact of their participation in the "own resource" system will be, particularly of their having to adopt a VAT system which hitherto—I think I am right in saying this—they have not had. But these difficulties and problems are perhaps counterparted by the advantageous situation which a very largely agricultural country will enjoy on accession to membership. I am told that about a third of the Greek population is engaged on the land in agricultural activity. The Community percentage is 9 per cent. When we consider that a so largely agricultural country will be joining in 1981, followed closely by Spain and Portugal—which, if not quite so agricultural in preoccupation, nevertheless have very substantial proportions of their populations engaged on the land (Spain has 22 per cent. of its people wedded to agriculture and Portugal has 28 per cent.)—the effect will be to enlarge the Common Agricultural Fund and also to constitute new and substantial claimants upon it and upon the resources of the Community.
The British position, already difficult to the point of vigorous protest, may conceivably—unless we make progress this week and in the next few weeks—find itself infinitely worsened because of this most welcome addition of three congenial countries to the Community. That is the paradox and the challenge of the Community at present. I return to the point. Those of us who have worked hard to achieve political unity in Europe, and who will continue to do so, are justified

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in saying here at home and indeed to our partners in the Community that that major objective—so essential to peace and to the survival of democracy in Europe—cannot be guaranteed unless our economic and financial policies are such as to sustain rather than to threaten joint political action and a common political purpose.
I say this at a time when I and others have been glad to experience a growth in political co-operation—and I use it as a term of art—in the Community. The Community, acting through the five, came very close indeed to a solution of the Namibian question, on which the solution of the Zimbabwe question may well turn, and one has not given up hope that the European initiative, which glowed so promisingly last year, may be revived in this connection. All the more reason, I repeat, why we and our partners, not in an adversary situation but truly in a partnership situation, should radically reappraise economic and financial policies so that the major objective of political unity should be achieved.
Another consequence of the accession of Greece and of Spain and Portugal will be that the regional and social funds, already inadequate, will be stretched even further. The additions to the kitty will not of course make up for the increased demands on the kitty. Here again one must note that, against a norm of 100, the GDP per capita figure for Greece is 50, so its claim on the regional and social fund is obviously a strong one; that of Spain is 60; of Portugal 34. Therefore here again there is a need to look at the resources available from the joint wealth of the Community for the subvention of the poorest and weakest of its members.
However small in population, each member of the Community has equal rights as well as obligations. Greece will be represented in the European Parliament in proportion to its population of about 99 million; which of course has an inbuilt basic element which applies to all members, large or small. It will have 24 members compared with 81 for the United Kingdom, Germany, France and Italy. It is not, in the aggregate, a very large addition, but it is the addition of one extra attitude—national and, I very much hope, temperamental—which will necessarily change the tone and tempo of
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debate there. Here is a new interest represented in the Parliament, and it will be the duty of everybody to give the most sympathetic attention to what our new Greek colleagues will be saying in that assembly.
Even more so it means that Greece, and later Spain and Portugal, will be entitled to a commissioner equal in rank and inlluence—I almost said "power" but I am told that I should not use that word about commissioners—so that side by side with the commissioner who happens to be British, and the commissioner who happens to be Irish, French, or German—and sometimes two from the larger countries—there will be a Greek commissioner. The Commission, therefore, in enlarging itself will perhaps be diversifying the elements of argument and decision within it. This is a matter for study, hard work, and accommodation. It is right to mention these matters.
Then again in the Council of Ministers where each Minister—Foreign Minister, or his appointed deputy for specific purposes—has in effect the right of veto, you are adding to the wealth of advice and argument, but also to the potentiality for disagreement and possibly veto. This is inescapable, and I would not have it otherwise. But we must not take all these things for granted, and think that they will resolve themselves. They will not. They all need constant attention and study, and particularly so perhaps in the work of the Commission.
On the question of decision by the Council, I should like to repeat what my right honourable friend said in another place when they discussed this matter. He said that the abandonment of the principle of unanimity in the decisions of the Council of Ministers is totally unacceptable, at least to Her Majesty's Opposition. It is essential that there should be, at the very top in the Council of Ministers, this instrument of rejection which any country can, in the last resort, use in order to defend what it considers to be its truly vital interests. There is room—I agree with the noble Lord, Lord Banks, who on many occasions has spoken constructively about this aspect of the matter, and it is already part of our experience in Brussels—for accommodation, and indeed certain decisions are already taken by majority vote.

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But nothing should be done to erode the capacity of any one of the member nations, through its appointed Minister, to say "no", if in fact the real, the vital national interest of that country is deemed to be in peril.
The thing will not work or survive unless the participants feel this ground of certainty about their own interests to be a firm one. We can argue academically as to whether this is right or not, but the reality of it is that the Community will only survive if a sufficiency of regard for the fundamental feeling of the peoples of the countries taking part in the Community is always observed.
I conclude by once more joining the Minister in a warm welcome to Greece on joining the league of democratic nations in Europe, mindful of the Greeks' immense contribution as a people for so many centuries to the culture not only of Europe but of the world. This country is perhaps pre-eminently the product of the Judaeo-Christian classical tradition, and one looks forward beyond Europe, certainly into the Mediterranean and possibly to some regions of the Middle East, to the cultural unity which extends from Scotland to the edge of Asia, and which traditionally has been a source of strength and inspiration to us in this country as well as to our partners, being placed increasingly on a firmer basis politically, economically and financially.
3.40 p.m.
Lord BANKS: My Lords, I too am grateful to the noble Lord, Lord Trefgarne, for his clear exposition of both the purpose behind the Bill and the background to it. The sentiments which he expressed and those expressed by the noble Lord, Lord Goronwy-Roberts, about Greek accession will, I am sure, find an echo throughout the whole House. As we welcome the Bill, we naturally recall the links over the years between the British and Greek people, for example the part played by Byron in the struggle for Greek independence. And perhaps it is appropriate that someone from these Benches should say a word of welcome for the Bill because in this month of November 1979 we celebrate the one hundredth anniversary of Gladstone's great Midlothian campaign, and Glad-
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stone was a British statesman who was highly regarded in Greece and whose policies were well applauded in that country. On the occasion of his political jubilee in 1882 he received a message of congratulation from Greece and he replied in these terms:
"To have laboured within the measure of justice for the Greece of the future is one of my happiest political recollections, and to have been trained in a partial knowledge of the Greece of the past has largely contributed to whatever slender faculties I possess for serving my country or my kind".
Today we think of that great Greek past during which democracy was born, and we think too of what we hope will be the great Greek future within the Community of democratic nations in Europe.
The Bill is, as Lord Trefgarne said, short, but behind it lies a complex treaty and we can touch on only one or two of the main issues today which that treaty raises. It is, as the noble Lord pointed out, the culmination of the association agreement concluded in 1961 and which always had as its eventual aim Greek membership. It is of course difficult to separate the accession of Greece from the accession of Spain and Portugal, to which the two noble Lords who have spoken have already referred. Although these matters are not dependent on each other, we are obliged to relate them in our consideration of the overall impact.
The European Economic Community at the moment covers 75 per cent. of the population of Western Europe. Once Greece, Spain and Portugal have joined it will cover 91 per cent. of the population of Western Europe, and I am sure it is right that all free and democratic countries in Europe should be able to join. The three applicant countries have recently emerged from varying periods of totalitarian rule and they believe, and we believe, that by being linked closely with the other democratic nations in the European Community, a repetition of that experience is less likely.
The overwhelming reason for the accession of the three new members to the Community is a political reason. Without that overwhelming reason—for I believe it is overwhelming—there would be hesitation because, as the two noble Lords have pointed out, enlargement raises considerable problems—economic,

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political, administrative and institutional. The three new members add 21 per cent. to the population of the Community, but they add 57 per cent. to those working in agriculture; that is another aspect of the problem which the noble Lord, Lord Goronwy-Roberts, outlined to us. The whole question of the application of the Common Agricultural Policy to Mediterranean produce—again touched on by Lord Goronwy-Roberts—and the relations of the Community with the rest of the Mediterranean area (with other countries in the Mediterranean area with whom we have association agreements) is all problematical; we cannot see exactly how it will develop and what the impact of the one on the other will be.
Then again, how will Greek industry stand up to the increasing competition during the transitional period? And how will the balance-of-payments position of the applicant countries be affected? Posting these questions brings me to the question of aid. We are bringing into the Community, as has been pointed out, three countries whose standards of living for the moment are, generally speaking, lower than the rest of the Community's. This would seem to call for a considerable redistribution of resources; and what will be the impact of that on the United Kingdom, Ireland and Italy if the social and regional funds are, as Lord Trefgarne said, spread more thinly over the Community as a whole? The case for a substantial increase in regional and social funds is greatly strengthened by enlargement.
The British Council of the European Movement approved on Saturday a policy statement which calls for a Community budget enlarged to 2½ per cent. of gross national product along the lines recommended by the MacDougall Committee as a means of transferring to the Community certain national responsibilities, thus increasing the Community share of public expenditure and achieving greater equity in the use of Community resources. That statement also calls for adequate increases in the Community budget to meet the requirements of new members without major loss to existing recipients of regional aid and development finance, and today I urge the Government to endorse that policy.
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The political problems raised by our relationship with Turkey were referred to by the noble Lord, Lord Goronwy-Roberts, and it is clear that it is in the interests of the Community to secure at the earliest possible time the maximum degree of reconciliation between Greece and Turkey, which would include dealing with the very difficult problem of Cyprus. But it may be that our relations with Turkey are at a critical point and Turkey may feel that she must decide whether her long-term future is with the West or whether she must look Eastwards. Considerable statesmanship on the part of the West will be required to deal with this situation, but I was glad that Lord Trefgarne spoke about the possibility of a fresh impetus in the efforts to take our relations with Turkey a stage further.
Finally a comment about the institutional problems. We on these Benches are very concerned about the effect of enlargement on the decision-making process. We have seen enlargement welcomed by some as a means of securing a looser association of States weakening the community nature of the present structure. We hope that will not come about. It seems to us that a decision-making process which allows more scope to national Governments is likely to be even less satisfactory than the present practice. We complain in this country, and rightly, about food surpluses, but it was the Commission which wanted to freeze prices and the national governments which would not let them, and last week it was the European Parliament which wanted to reduce subsidies to milk producers and the national Governments in the Council of Ministers which rejected that.
I was particularly interested in what Lord Goronwy-Roberts said about this subject today and welcome the fact that he gave support for a greater use of majority voting even while, in the ultimate, for matters of really vital national concern the veto is still retained. We on these Benches very much hope that the Government will not allow enlargement to become an excuse for a looser and less effective Community where coherent and sustained communitarian policies will have less chance of acceptance. The future with a Community of 12 will not be easy, but the task of linking 12 demo-

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cratic nations ever more closely together is a vitally important one, and an important point will have been reached in that process on 1st January 1981 with the welcome accession of Greece.
3.49 p.m.
Lord BETHELL: My Lords, the last occasion on which we in this House held a debate exclusively devoted to Greece was, I believe, on 15th February 1973, more than six and a half years ago, when we discussed the fact that Greece was in the hands of a military junta, and those of us who spoke expressed the hope, first put into words by the then Minister, Lady Tweedsmuir, that Greece would very soon be restored to democracy. At that time we could not know how soon that happy event would come to pass. Little more than a year later Greece was again a democratic State, and it was no coincidence that it was Europe that put perhaps the greatest pressure on Greece to bring her institutions back to democratic process. It was the European Community, by freezing her relations with Greece, and the Council of Europe, by suspending Greece's membership, that made many thinking Greeks on the fringe of junta circles realise that without this link Greece really had no way forward in the international arena.
Again, it was no coincidence that as soon as Greece once more became democratic almost her first international act was to apply for membership of the Community. It was with great happiness and pride that early in 1975 I was able to become a member of the Joint European Parliament/Greek Parliament Committee that advised on negotiations for Greek entry. Therefore I give a particular welcome now to the fact that in the six and a half years from the time that we debated Greece's continued retention in the hands of a military junta to her forthcoming accession we have made this particular very gratifying and happy step.
I am not of course minimising the problems that will be faced by Greece's entry and by enlargement in general. They have been pointed out by the noble Lord, Lord Goronwy-Roberts, and by other noble Lords who have spoken. Enlargement will, I think, make it fairly
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clear that in the long-term at least the great problems that beset this country in Europe are not to be solved by expansion of the Regional and Social Fund. Also, the expansion of agriculture and the Common Agricultural Policy to include Mediterranean products will put added strains on the Common Agricultural Policy; but perhaps this will be a good thing. Perhaps the fact that we have to turn our minds to a total reappraisal of the CAP, through enlargement, will enable some of those very necessary reforms to be considered. At least enlargement enables us, forces us, to concentrate our minds on the CAP and to consider how it must be changed.
There are of course many reasons why one could pick holes in the whole idea of Greece's accession. Many of them were mentioned in another place a few days ago. But I have always felt that these arguments are very small compared with the overriding political imperative of allowing Greece, Spain, and Portugal to join the Community in order to consolidate the recently established democracies in those countries. There really seems to me to be no political alternative to enlargement, to the accession of these three new democracies. One might just as well let them go as refuse them entry into the Community. I therefore believe that there will be a unanimous approval by your Lordships of a Second Reading for the Bill, and I very much hope that it will become law in the very near future.
Of course the short-term effects of it will by no means all be on the negative side. I must say that I look forward to the entry of another new Member into the Community, because in the European Parliament, and in your Lordships' House, I find that more and more it is the new Members of the Community who find that they have matters and interests in common, and I predict that we shall be working very closely with our Greek colleagues after the beginning of 1981 to secure necessary reforms in the way the treaty is being implemented at the moment.
The arrival of Greece will strengthen those of us who challenge the idea that the treaty, and the way that it has been implemented, is Holy Writ and not to be in any way challenged or amended. It will support those of us who believe that the Community is in a continuing state

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of evolution, that its written constitution is there as a guide and not as a law of the Medes and the Persians. I believe that the arrival of Greece will make this argument all the stronger and will help those of us in the European Parliament who, by making amendments in the budget, are trying to rectify the absurd imbalance in favour of agricultural products and milk products in particular. I trust that when we come to attempt to rectify some of these imbalances in the Parliament we shall have the support of the British Government, the British element in the Council of Ministers on those occasions when the merits of the case demand it, and not, as seems to have happened a few days ago, have our recommendations, indeed our amendments, turned down purely as a matter of principle.
Another area where I hope we shall find common interest with Greece is that we, Britain, and Greece will be on the periphery of the Community and we will have certain common interests in developing an imaginative transport policy. Of course we in Britain are anxious to develop through Europe a Channel link. In Greece, I know, they are concerned through Europe to improve communications by sea and overland by an arrangement with Yugoslavia to help them to transport their goods to the centre of the Community. I believe that it is in the spirit of Europe that special facilities—funding—should be available to areas on the periphery of the Community to enable them to compete effectively and fairly in a Common Market. This is something that we in Britain and in other peripheral countries—Ireland, Denmark, which also, incidentally, happen to be new Member States—will be discussing with our new Greek colleagues when they join us.
I should like to end on a note of a certain emotion. Greece is the cradle of democracy, the inventor of the word "democracy". We in this House are part of the Mother of Parliaments. I very much hope that this Parliament, the British Parliament, will be the first to ratify the Greek Accession Bill. It has already been passed by the Greek Parliament. So far as I know no other Member State has passed it, and I believe that it would be extremely appropriate if
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we, our Parliament, were the first to ratify the accession Bill and to establish the idea that Greece should join in making our Ten. It would be an extremely desirable, appropriate act, and one which I very much hope will come about.
3.59 p.m.
Lord MONSON: My Lords, we have heard speeches of great optimism and idealism both in this House today and in the other place earlier this month on the subject of this Bill; though I was pleased to hear the noble Lord, Lord Trefgarne, sound a note of caution. When idealism is in the air one is always highly reluctant to break the spell; indeed, one is highly reluctant at any time to belittle idealism. After all, my own continuing opposition to Britain's membership of the EEC was, and is, based first and foremost on idealism, notwithstanding that it is reinforced and boosted by what I believe to be hard, practical considerations.
Having made that qualification, some of the enthusiasm that we see for enlargement of the EEC reminds me of nothing so much as the single-minded faith of the clean-limbed, fresh-faced young subaltern going over the top in 1914, armed with nothing more lethal than a riding crop against the German machine-guns. Wholly admirable though the faith of such men must have seemed at the time, by all accounts it had generally turned to cynicism and bitter disillusionment among those few who survived by 1918. I do not suppose this bitter disillusionment would have been so profound if someone had stuck his neck out at the time and tried to sound a more sceptical, or even cynical, note. I see it as my function this afternoon to try to put, however imperfectly and clumsily, the case for a more sceptical approach. Incidentally, I believe that the British people as a whole have mentally reached the late 1915 stage, or even the early 1916 stage, in their attitudes to the Common Market, in terms of my analogy; but there are still many at the pinnacles of power in this country who seem to retain the unsullied enthusiasm of 1914; though how they can do so after witnessing the distasteful horse-trading, the pork-barrel and gravy-train politics, and the bureaucratic nit-picking over petty harmonisation, and so on, I find hard to understand.
My Lords, I am not nearly as familiar with Greece as are other noble Lords.

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The fact is that I know Turkey and the Turks very much better than I know Greece and the Greeks; but that is not to say that I lack sympathy for Greece—far from it. In fact, I am just as lukewarm about the idea of Turkey, and, indeed, Spain and Portugal, entering the EEC in the foreseeable future as I am about Greek accession. The reason for my disquiet is fairly simple, and I should add that my apprehensions seem to be shared by a number of honourable Members on both the Labour and the Conservative Benches in another place. Accession may possibly do Greece some good, though many Greeks, including some distinguished economists, think otherwise, and oppose membership. What seems certain is that it is most unlikely to do the industrialised countries of Northern Europe any good, or at any rate those of them which are within the EEC.
An honourable Member in another place who was an enthusiast for this Bill, an enthusiast for Greek membership, had to concede in another place that we shall have to face adverse economic consequence as a result of Greek entry; and, referring to Spain and Portugal as well as to Greece, he said that the accession of these countries whose economies are less powerful than our own will have a further de-stabilising influence on Community development. He added that accession will probably have major effects which have not yet been fully thought through by this country or the Community.
Lord TREFGARNE: My Lords, I think the noble Lord is referring to Hansard. Can he indicate the column?
Lord MONSON: My Lords, I think I am not permitted to quote directly from Hansard when referring to a Back-Bencher's speech. I believe that is so. My Lords, as one of the EEC Commissioners pointed out recently, enlargement of the Community will increase its population by 20 per cent. and the number of farmers by fully 50 per cent., but the gross national product will rise by only 10 per cent. The burden will fall particularly heavily on countries like Britain. It is too readily assumed, I think, that Western Germany will shoulder most of the burden. It is true that Western Germany's economic performance
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continues to be remarkable. They have recently predicted a real increase in their gross national product for 1980 of 2.75 per cent., as opposed to 4 per cent. this year, which is truly astounding in view of the pending world economic recession. But, given their relative lack of self-sufficiency in energy, I wonder whether this can continue for ever. Furthermore, I have always believed that lingering German war guilt has induced the Germans to shoulder rather more of the burden of the EEC than might otherwise be the case. We cannot count on this residual guilt continuing for ever.
One rather sanguine retort to this is that enlargement of the Community will help to bring things to a head so that the CAP will collapse under the weight of its own inherent contradictions, and I think the noble Lord, Lord Bethell, touched upon this. I simply do not believe that that would happen. There are too many votes, and particularly too many domestic votes, that would be at stake. Again, one has only to look at West Germany, where recently Chancellor Schmidt was prevented from taking any action on the CAP because his Free Democrat coalition partners were terrified of losing the farmers' vote. And it is worth noting that if enlargement had already taken place Mrs. Thatcher would have 11 rather than 8 countries ranged against her at Dublin.
My Lords, a number of honourable Members on the Labour Benches in another place mentioned the threat to our textile industry. I should also like to suggest that to give free and unhibited access to Britain to a greater and greater number of people makes an absolute nonsense of Mr. Whitelaw's proposals for restricting immigration, well-intentioned as these proposals are in terms of fulfilling Conservative election promises. It has also been suggested that democracy in the respective member countries will be strengthened in some undefined way by joining the EEC. I find this unconvincing, and I would submit that it is far more important and urgent to strengthen NATO than to enlarge the EEC, because unless NATO is sufficiently strong there will soon be no chance for democracy anywhere in Europe.
One honourable Member in another place gave as one reason for his passionate support for Greek accession the prediction

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that this will lead to a new atmosphere of deepening friendship between ourselves and Greece. My Lords, I do not see the logic of that. Do the British people actually like our EEC partners, the West Germans, better than they like the Austrians? Do they like the Danes better than the Norwegians, the Italians better than the Spaniards? I see no evidence for this. Can we really put our hands on our hearts and say that the British and the French like each other better than they did 20 years ago? I would have thought that possibly the reverse was the case. It is my view that friendship between peoples has nothing to do with common membership of institutions such as the EEC. Indeed, in my view common membership can militate against friendship, given the national rivalries, the jealousies and the squabbling inherent in any such organisation.
Leading on from this, I wish to say that my reservations about this Bill—I will not say my opposition, because I certainly do not intend to oppose it, but my reservations about it—do not imply, and certainly are not meant to imply, that I have any less esteem for the Greek people than do those noble Lords who take the opposite view from myself about the merits of the Bill. I should like to conclude by saying that I shall be delighted if my pessimism turns out to be misplaced, but I fear that it probably will not be.
4.9 p.m.
Lord CAMPBELL of CROY: My Lords, I thank my noble friend for introducing this Bill, and I warmly welcome the accession of Greece to the EEC. I applaud the conclusion of the accession agreement. I feel a sense of history, not only because Greece was the source of European civilisation over 2,000 years ago, but also because of very recent history. Greece was the first European country to become an associate member of the EEC through the agreement of 1962, though that was suspended, as my noble friend reminded us, between 1967 and 1974. Then, it was a year after that that the Greeks applied for full membership.
It is clear that Greece will value her membership as a buttress for political stability. For example, the Greeks believe that there could not be a coup setting up a totalitarian régime if they are members
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of the EEC. Membership is not a guarantee against that kind of thing happening: none the less, it is clear that the Greeks themselves believe that membership will make it very much less likely and it is also clear to me that such an event will be very much less likely. We must consider, too, as some speakers already have considered, the proposed and impending membership of Spain and Portugal. Similar situations will arise. They, too, have fragile democratic systems of fairly recent birth. I believe that they, too, will be strengthened by membership. In these circumstances, the response from the members of the EEC to the applications could not be anything hut, "Yes, in principle". That could be described as a political decision subject to practical arrangements on trade, agriculture, and special problems.
There are serious problems for both Greece and the existing members of the EEC arising from Greece's proposed membership. Similar problems there will be also when the other two applicant countries become members. I understand (in the same way as my noble friend Lord Bethell understands) that the United Kingdom has been the first of the Nine to be ratifying the Greek Treaty of Accession. I should like my noble friend in his reply to confirm, if he can, whether we are still on course to being the first. I believe that that would be significant and, as he indicated, I should like, too, to feel that we were the first of the Nine to ratify.
The problems of the accession of Greece to the EEC are likely to be repeated to a greater or lesser extent by the other two countries when they come to be considered. This House's Select Committee on Europe produced in March last year the report on enlargement. Everything in that report still applies, I believe, to the situations of the three applicant countries. I had the privilege of serving on the sub-committee which prepared that report under the able and invigorating chairmanship of the noble Lord, Lord Trevelyan. He cannot be with us today because he is still recovering from illness, but I am sure that noble Lords will join me in hoping that he will be restored to full health and with us again soon. That report mentions various changes required in the institutions of the EEC. I shall not dilate upon that.

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More recently the Spierenberg report on institutional adjustments has been published—for example, the question whether in future, with 12 members, the Commissioner system should be changed so that each country simply has one. I draw attention to the need for careful consideration of these matters and decisions in due course.
My Lords, I should like to turn to the practical effects of the membership of Greece upon the economy of this country and to divide those effects into two parts. First, there is the general one concerning the budget, with which must be linked agriculture; and, secondly, trade in certain goods, particularly textiles. The United Kingdom will be paying a certain price in return for the political benefits which I have outlined. This price should be examined and made known. I suggest that we as a country ought to be accorded the credit for what we are accepting in the interests of democratic government in Europe. The agreement with Greece provides for a five-year transitional period and for a seven-year period for certain sensitive subjects. There is also a special mechanism incorporated to ensure that during the transitional periods Greece is a beneficiary and not a net contributor to the EEC budget.
I understand these problems particularly well because I happened to be a member of the British Cabinet during the 1970–72 negotiations and was myself involved with some of the most sensitive subjects. I can understand completely the position of Ministers in the applicant countries who have had to ask for transitional arrangements over a period and, naturally, have been very concerned about the effects upon their domestic industries. I was glad to hear the estimate which has been made of £65 million a year cost to the United Kingdom at the end of the transitional period repeated again today by my noble friend as the Government's estimate. It is clear that we shall be contributing that amount of money annually at that time, on present assumptions, to the membership of Greece; and undoubtedly there will be similar contributions for Spain and Portugal in due course. It is important that this should be borne in mind in Dublin later this week when the United Kingdom will be engaged in trying
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to reduce the excessive and disproportionate contribution that the United Kingdom is already making as a whole to the EEC budget.
I turn to agriculture. The Common Agricultural Policy means that the United Kingdom makes a heavy net contribution. This is largely because the proportion of the budget devoted to agriculture has increased to about 70 per cent. whereas some years ago it was expected to remain at about 40 per cent. Secondly, it is caused because in Britain we have a mechanised, up-to-date farming industry and we have been having to support small, part-time, uneconomic farming within the EEC. A small percentage of our work force is involved nowadays in agriculture and that is because agriculture in Britain is a modern industry. Where Greece is concerned, I think that the latest count was taken in 1975, when 35 per cent. of the workforce was in agriculture. And there are high percentages too for Portugal and Spain, as the noble Lord, Lord Goronwy-Roberts, indicated. Italy and Southern France will feel the direct competition in Mediterranean agricultural produce. We shall not feel that, but we shall feel the budgetary effects of these rural economies, less advanced than ours, being added to the EEC.
These three new countries will also undoubtedly have first-priority calls on the regional fund and the social fund. Hitherto, the United Kingdom has sought to set off what we lost on the agricultural swings by gains on the social and regional funds roundabouts. In a few years' time, after the addition of the three new countries the United Kingdom could well be a net contributor rather than a beneficiary (as we now are) where these two funds together are concerned.
My Lords, we are willing to contribute in help to additional membership. Considering the finances of the EEC as a whole, however, there is a limit to our ability to be altruistic both towards the present Members of the EEC and the three prospective Members. I am sure that my right honourable friend the Prime Minister will leave the Dublin conference in absolutely no doubt about that.
I should like to draw attention to some of the effects on trade and the difficulties for certain of our industries. Under

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the agreement on associate membership, Greece had certain reciprocal duty-free arrangements within the Community. The transitional periods, now to start at the beginning of 1981, will seek to reduce the customs barriers by stages and also to align Greece's arrangements with the common external tariff. One industry which will be highly vulnerable is the United Kingdom textile industry. A rapid rise in imports of cotton yarn from Greece into the EEC could cause very serious problems. There is the safeguard clause in the Treaty of Accession to which my noble friend has referred. Another remedy is that special arrangements should be negotiated with Greece. The safeguard clause may be necessary in an emergency; but I suggest that the second remedy—arrangements to be negotiated—would be helpful in any event to be available to protect our textile and clothing industry.
There was a debate on this subject in this House on 12th July. The basis of that was another report, on textiles, from the Lord's Select Committee on Europe. Red books in recent years have become quite well known on various subjects, though not without controversy. Your Lordships' House introducing these red books since we became members of the EEC in 1973, has produced a very high quality series of documents.
The dangers for the textile industry where Greece is concerned also apply particularly in the case of Portugal. Fair competition is what the United Kingdom industry hopes will come about. We should not allow a distortion of normal competition by retention of special aids from the State—aids which are not normally accepted within the EEC. Further, I would draw attention to Protocol 7 in the Treaty of Accession. It is similar to a provision in the Treaty for the Republic of Ireland, when Ireland joined the EEC. In the Irish case, very generous investment incentives and tax concessions were made available to third parties—that is to say, nationals from countries which were not members of the EEC, who were then able to establish new industrial capacity in Ireland. With this special aid, that new industry was able to compete—we thought unfairly—and cause serious damage to the United Kingdom textile industry. I hope that my noble
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friend today can give an assurance that the United Kingdom will intervene to ensure that this will not be allowed to happen in the case of Greece, Portugal or Spain.
As for trade in each direction, my noble friend Lord Trefgarne was optimistic. He spoke of the opportunities available in the Greek market; he thought that the balance would be favourable. I hope that he will be right and I would certainly urge British industry to adapt as required and to lose no time in exploring the Greek market's opportunities. I have frankly stated some of the difficulties; they must be identified and tackled. I end as I started, by giving a warm welcome to Greece as a closer partner with us in Europe.
4.23 p.m.
Lord TREFGARNE: My Lords, with but one exception I find heartening support in the House this evening for the Greek accession which we have been discussing. We are all generally agreed that while we must not underestimate the economic and technical difficulties, these are outweighed by the powerful political case in favour of Greek accession, and indeed enlargement as a whole. May I try to deal as best I can with some of the many points that have been raised this evening. I apologise to noble Lords in advance if some contribution fails to attract my attention; but I promise to study Hansard with care and take up any other points in correspondence later.
The noble Lord, Lord Goronwy-Roberts, speaking from the Opposition Dispatch Box, welcomed politically this Bill, as almost all noble Lords have done, and referred to Greece's significant progress in terms of democracy and human rights. It might be helpful if I commented further on that by saying that it is stipulated in the Treaty of Accession in Article 3 that Greece will be bound by declarations concerning the Communities adopted by the Member States. I refer to their declarations on democracy and other matters. These include the declaration on democracy of December 1977 which affirms the Member States' determination:
"to safeguard the principles of representative democracy, of the rule of law, of social justice and of respect for human rights".
Speaking of human rights, I must confess that I was expecting noble Lords opposite to raise the question of trade

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unions' rights. That would be very proper. It is of course the case that there is no comprehensive Community legislation on labour relations and trade unions. I am aware that Greek law is, in a few respects, out of line with general practice in the countries of the Nine. Your Lordships will wish to know that Greece has accepted the key ILO Conventions, and has agreed to be bound by Community legislation, such as it is.
I should also like to thank the noble Lord, Lord Goronwy-Roberts, for his very clear support of the stand which my right honourable friend the Prime Minister and my noble friend the Foreign Secretary will be taking at Dublin at the end of this week on the vexed question of the British contribution to the EEC budget. We very much welcome that support, and I hope and believe that my right honourable and noble friends will be successful.
May I now come to the question of textiles, a matter which has been raised by almost every noble Lord who has spoken this evening. As I said in my opening remarks, there is no doubt that competition from Greek textiles will increase. I am afraid that this is an inevitable result of Greek accession. But as I also said, the Treaty of Accession contains a safeguard clause which will operate during the transitional period and this will permit the Commission to authorise a Member State to take protective measures in cases of serious difficulty which arise not only in textiles but in any other sector. The article in question, as the noble Lord, Lord Goronwy-Roberts, pointed out is Article 130 of the treaty.
Lord GORONWY-ROBERTS: My Lords, I hesitate to interfere with a very good speech, but I am encouraged to do so by what the noble Lord has just said. I join with the noble Lord, Lord Campbell of Croy, in once more hoping that the application of the general safeguards article will be made if the situation warrants it. In the meantime, my understanding is that it has up to now been possible for us to have a voluntary bilateral arrangement for the restriction of exports from Greece to this country. Am I right in assuming that, on the assumption of full membership, that will
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no longer be permitted? I hope that I am wrong. The noble Lord may perhaps be able to answer now, or he may prefer to take the question to his colleagues. I put the question for this reason: If it is found that we do not wish or do not need to have recourse to Article 130 on general safeguards, is it possible for us to continue what I understand to be now possible—namely, to have an arrangement for voluntary restriction of exports of certain sensitive goods to this country?
Lord TREFGARNE: My Lords, it is always possible for Greece to enter into a voluntary arrangement on their own, bilaterally I suppose. However, the present position is that there is indeed a voluntary restraint agreement in force. This agreement will not continue beyond Greek accession on 1st January, 1981. After that time, we shall be obliged to rely upon the safeguard provision of Article 130. I am not sure whether that satisfies the noble Lord, but I think that is the position.
Lord GORONWY-ROBERTS: My Lords, it makes my point that if the present possibility of voluntary restriction falls away after 1st January, 1981, therefore the point so powerfully made by the noble Lord, Lord Campbell of Croy, and others, about this Government and successive Governments really having recourse to Article 130 is so much more strengthened as the only alternative.
Lord TREFGARNE: My Lords, I think the noble Lord is right when he says that thus far Article 130, or its equivalent in other treaties, and certainly in the Irish treaty, to which the noble Lord, Lord Campbell of Croy, referred, has been used only rarely, if at all. But it is there in the treaty for Greece, and we shall use it if we have to.
The noble Lords, Lord Goronwy-Roberts, and Lord Banks, referred to the question of reforms of the voting procedure in the Council of Ministers. There has been a suggestion that decisions might be reached on a majority basis rather than providing for a virtually unanimous system, as is at present the case. But where a Member State has very important interests at stake, we believe these must be safeguarded. Subject to that qualification, we are prepared

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to consider ideas, whether put forward by the "Three Wise Men" to whom I referred, or others, to facilitate decision-making in the Council. The same procedures would not necessarily be suitable for all subjects in the Council. If a Member State has particular difficulties because of political parliamentary sensitivities, then these should be accepted.
The noble Lord, Lord Banks, and others referred to the need to consider the size of the regional and social funds. We certainly note the imbalance between the size of the agricultural budget, for example, and these funds. We certainly think that imbalance ought to be corrected. We would not want to be more specific at this point, because we are of course talking about the reform of the budgetary procedures in general in the Community and these matters will no doubt come up in those discussions.
Again, several noble Lords referred to possible Greek benefit from membership. The noble Lord, Lord Monson, was particularly sceptical about the advantages to Greece of joining the Community; but I think we must do the Greek Government the courtesy at least of assuming that they have done their sums. I suspect that in any case the fears of Greece being harmed by membership are misplaced. Greece will benefit considerably from the CAP and the regional fund and will probably attract a good deal of investment. Greek food prices are in many instances already close to Community levels and others will only be increased gradually over the transitional period. As for industry, about two-thirds of the Community exports to Greece already enter duty free. I referred in the same vein during my original speech to the benefits to the United Kingdom economy of Greek accession to the Community.
The noble Lord, Lord Bethell, and also the noble Lord, Lord Campbell of Croy, asked me to give an assurance that the British Government would be the first to ratify this treaty. This is not, I think, a political race, but I can say that we are keen to ratify as soon as possible and we shall do so as soon as we have completed all the parliamentary procedures. We imagine this will be early in the new year. I believe there are other members of the Community who may be in a position to ratify at about the same time, so I cannot
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promise that we shall be precisely the first, but I hope we shall be among the first.
In conclusion, I think there is little doubt that your Lordships warmly welcome the prospect of Greek entry into the Community. Absorption of the new 10th member and later of the 11th and 12th members will not be easy and there are bound to be some strains of adjustment. Care will be needed to ensure that enlargement does not weaken the institutional foundations of the Community, but the political justification for Greek entry into the Community, and also for that of Portugal and Spain, is truly overwhelming.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

UNFAIR DISMISSAL (INCREASE OF COMPENSATION LIMIT) ORDER 1979
4.35 p.m.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, I beg to move that the draft Unfair Dismissal (Increase of Compensation Limit) Order 1979, which was laid before this House on 20th November be approved. I shall speak to the draft Employment Protection (Variation of Limits) Order 1979, which was also laid before the House on 20th November.
I am grateful to the House for allowing me to take both these orders at the same time. Perhaps it will be for the convenience of the House if we take the debate on both orders together, although I shall move them separately at the end. I should like to speak first to the draft Employment Protection (Variation of Limits) Order 1979. This order has been laid before you in accordance with Section 148 of the Employment Protection (Consolidation) Act 1978, which requires the Secretary of State to carry out each year a review of the limits to certain payments made under the Employment Protection (Consolidation) Act 1978. This is the third review since the legislation was introduced in 1975. The limits relate to guarantee payments to workers on short-time and temporary lay-off; and to the weekly earnings limit laid down for the purpose of calculating redundancy

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payments, unfair dismissal awards and certain debts in relation to the insolvency provisions of the Employment Protection (Consolidation) Act.
The Secretary of State for Employment under the Employment Protection Act has to take account of three factors in carrying out this review and in reaching a decision. They are: first, the general level of earnings obtaining in Great Britain at the time of the review; secondly, the national economic situation as a whole; and, thirdly, such other matters as he thinks relevant. If, as a result of the review, the Secretary of State considers that any of the limits should be changed he must lay before each House the draft of an order giving effect to his decisions, and where he decides that a limit should not be varied, he must lay before each House a report giving his reasons for not varying those limits, and this report is laid simultaneiously with the orders.
As part of the review, the Government consulted a wide range of organisations for their views of the limits. In the light of these consultations we have decided that all the limits of payment covered by the review ought to be increased, and the proposed changes are set out in the order. If the order is approved in both Houses the changes to the limits will come into effect on 1st February 1980. This follows the established pattern. As I have just mentioned, in reaching decisions on the limits, the Secretary of State has to take into account the general level of earnings obtaining in Great Britain at the time of the review. The August figure for this, which has now been confirmed, showed an increase of 16.4 per cent. over the previous 12 months. The provisional figure for September has been set at 14.4 per cent. The Government also have to take into account the national economic situation as a whole and we would wish to strike a fair balance between the interests of employees and the ability of employers to pay.
Accordingly we propose to increase the daily limit on guarantee pay from £7·25 to £8 (an increase of 10·34 per cent.) and to increase the limit on weekly payments from £110 to £120. For redundancy payments, this means that the new
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maximum redundancy payment under the statutory provisions will be £3,600, that is 30 weeks at £120, which will be the amount due to a man of 61 or over who has served 20 years and is entitled to 1½ weeks' pay for each year of service.
The increase in weekly limits also applies to the basic award of compensation for unfair dismissal. This part of an unfair dismissal award is intended to reflect broadly the amount of redundancy payment which would have been received by an employee if he had been made redundant instead of being unfairly dismissed, and it follows, therefore, that the limit should remain in line with the redundancy payments earnings limit. The new maximum in the basic award therefore remains exactly the same as the maximum redundancy payment of £3,600. The additional award which a tribunal may award where an employer has refused to comply with an order for reinstatement or re-engagement is also currently subject to a £110 weekly earnings limit, and that, too, is increased to £120. We have decided not to increase two of the limits on guarantee pay; namely, the specified number of days in any relevant period, and the length of that relevant period. The reasons for this decision are given in the report which is laid at the same time. To sum up, the increases take account of the increase in average earnings, but moderate those increases to take account of the overall economic situation. I trust that they commend themselves to the House.
I now turn to the other order for which I seek your Lordships' approval, the draft Unfair Dismissal (Increase of Compensation Limit) Order 1979. This has been laid before the House in accordance with Section 75(2) of the Employment Protection (Consolidation) Act 1978. It revokes the Unfair Dismissal (Increase of Compensation Limit) Order 1978, which set the limit on the compensatory award for unfair dismissal at £5,750 and raises that limit from £5,750 to £6,250. The limit is not subject to annual review, but it may be raised from time to time, and the Secretary of State judged it right at this time also to increase this upper limit by a modest amount to take some account of the effects of inflation since it was last revised.

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I should remind the House that the compensatory award is given in addition to the basic award for unfair dismissal, and is tailored to the individual employee's loss. The limit will apply not only to unfair dismissal compensatory awards but also to compensation which may be awarded by industrial tribunals in cases where complaints of discrimination in employment under the Sex Discrimination or Race Relations Acts have been upheld. I likewise hope that this modest increase will be acceptable to the House. My Lords, I beg to move the order standing in my name on the Order Paper.
Moved, That the draft order laid before the House on 20th November, be approved. —(The Earl of Gowrie.)
4.43 p.m.
Lord WALLACE of COSLANY: My Lords, first may I thank the noble Earl, Lord Gowrie, for his detailed explanation of both orders. Of course, it is extremely convenient to deal with them together. My position tonight is different from that of this time last year, because 12 months ago I introduced similar orders showing a 10 per cent. increase based on the average increase of some 15 per cent. in the level of earnings, but also taking into account, as the noble Earl and his Government have done, the national economic situation as a whole.
Speaking then for the Opposition, the noble Earl was very critical of both orders. He did not like them and wanted them taken back, and he made great play over the Labour Government's pay policy being 5 per cent., whereas the increase was 10 per cent. He also referred to inflation, which was then running at 7·8 per cent. and was forecast by the Treasury experts to rise to just under 10 per cent. Great play was also made by the noble Earl, and many other noble Lords on the Opposition Benches, about the so-called "sleeping worker" and the need for a review of the Employment Protection Act. Altogether on that occasion they had a great field day. Maybe there was the scent of blood in the air, because of a possible general election.
Since then, things have altered for the worse; at least, that is the view on these Benches. We have a different Government, there is now no outwardly visible pay policy, large pay claims are now
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emerging and inflation has more than doubled and is set to increase further. The responsibility of office, facing facts and making decisions have a chastening effect. I must, however, be fair to the noble Earl, who, after all, has announced with his usual efficiency and dignity the decision of his right honourable friend the Secretary of State. I make the increases to be in the region of 9 per cent.—not overgenerous but, in the circumstances, reasonable. The increases can be drastically affected by inflation and the worsening of the serious economic situation by February next, when they come into operation. Quite naturally, I hope that this will not be the case, and I therefore accept the orders as being reasonable, bearing in mind all the unfortunate circumstances prevailing.
I have just a couple of slightly probing questions, in view of the previous debate last year. Can the noble Earl say whether any review of the Employment Protection Act is likely to take place and, if so, what form of consultation with unions and management is contemplated? On another point, is there any possibility that legislation on short-time working will be introduced and, if so, when? Apart from that, I give my paternal blessing to these orders and see no objection to their being carried into effect.
4.47 p.m.
Lord ROCHESTER: My Lords, we on these Benches should like to join in thanking the noble Earl, Lord Gowrie, for his clear explanation of these two orders. I do not propose to revert to the situation a year ago, when I seem to recall playing some small and, I am sure, wholly emollient part in the proceedings. Nor, I think, is it appropriate to revert to the debate that we had more recently last July on two other orders concerning employment protection and unfair dismissal and affecting small employers; one increasing the qualifying period for unfair dismissal, and the other reducing the compulsory period for consultation with trade unions in the case of certain redundancies. On that occasion, on balance, my noble friends and I supported the Government, because of our over-riding concern for the welfare of small businesses.

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There are, however, as I understand it—and this has a bearing on what the noble Lord, Lord Wallace of Coslany, has just put in the form of a question—other proposals for amending employment protection legislation on which the Government are still consulting with interested parties, among them some having specifically to do with cases of unfair dismissal in small firms. Speaking at this stage only for myself and not really looking to the noble Earl to make any immediate response—for I have given him no notice of this and it is not strictly relevant to this discussion—I should like to take this opportunity to say that, if more favourable treatment is accorded to certain firms simply because they employ fewer people than other firms, then I see certain difficulties arising including, even, potential disincentives to growth beyond the point at which the numerical cut-off applies.
Having said that as to these two orders, like the noble Lord, Lord Wallace of Coslany, I find them altogether unexceptionable. That being so, I am glad on behalf of my noble friends to support them from these Benches.
4.50 p.m.
The Earl of GOWRIE: My Lords, I am grateful for the comments of both the noble Lord, Lord Wallace of Coslany, and the noble Lord, Lord Rochester, and for the relatively uncontentious way in which these innocent orders have been achieved.
The noble Lord pointed out that last year I had teased the Government that they were increasing payments by 10 per cent. at a time when they were sternly going round and urging people to settle at 5 per cent. I think that was a legitimate tease. The noble Lord's point—namely, that these increases are not out of line with the present Government's pay policy—is true because their pay policy does not make any statistical or other norms for levels of payment. It is simply concerned that people should suffer the consequences of making irresponsible, excessive or unrealistic pay claims.
It is true, however, that in setting these orders my right honourable friend has been, consistent with our policy, squeezing inflation out of the system. Although they
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are in aggregate a little more generous than 9 per cent. they are rather less than the "going" wage round at the moment.
Both noble Lords mentioned reviews of the Employment Protection Act—in the case of the noble Lord, Lord Rochester, specifically in relation to small businesses which, as he very reasonably conceded, are not directly affected by these present orders. It is no secret to the House that the Government have recently been engaged in very extensive consultations about amendments to the employment protection legislation, and included in the Government's proposals, which were published in a working paper on 25th September, is a proposal aimed at rationalising the basis for the payment of guarantee pay by substituting a rolling three-month period for the present fixed three-month period. Since again it is no secret that that proposed legislation is now, or very shortly will be, in a form in which it will be laid before another place, it would not be right for me to take up the noble Lord's invitation to comment today on other amendments to the employment protection legislation. That said, I should like to repeat my thanks for the uncontentious way in which this modest measure, to try to protect to some degree from inflation some of these financial limits, has been received.
On Question, Motion agreed to.

EMPLOYMENT PROTECTION (VARIATION OF LIMITS) ORDER 1979
The Earl of GOWRIE: My Lords, I beg to move.
Moved, That the draft Order laid before the House on 20th November, be approved. —(The Earl of Gowrie.)
On Question, Motion agreed to.

COMMITTEE OF SELECTION
Second report from the Select Committee made and to be printed.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Maybray-King): Building Societies (Special Advances) Order 1979—the Question is that this Motion be agreed to. As many as—
The Earl of GOWRIE: My Lords, with the leave of the House, the Building Societies (Special Advances) Order has not yet been moved. It was the first two orders on the Order Paper which were moved.

BUILDING SOCIETIES (SPECIAL ADVANCES) ORDER 1979
4.54 p.m.
The Earl of GOWRIE: My Lords, this is one of those rather comatose afternoons in which one could get away with moving the most horrendous measures in an uncontentious way! I beg to move that the Building Societies (Special Advances) draft Order which was laid before this House on 14th November be approved. This order increases from £20,000 to £25,000 the limit above which a sum lent to a person by a building society is treated as a special advance. Under the Building Societies Act 1962, special advances, which also include all loans to companies, are limited to a certain proportion of all loans made in a year. This proportion is normally 10 per cent. The special advances limit was originally set at £5,000 in the Building Societies Act 1960 and has been increased four times since then. The present limit of £20,000 was set in 1975. Since then inflation in general and the increase in house prices in particular have made it desirable that the figure should be increased. The Act prescribes that the limit may be increased by order of the Chief Registrar of Friendly Societies with the consent of the Treasury. An increase to £25,000 will restore a reasonable freedom of action to building societies.
This does not mean that societies will immediately make many more loans of over £20,000 at the expense of lending to first-time buyers. In fact, very few societies have been making special advances up to anywhere near the permitted 10 per cent. of total advances. The average building society advance in the United Kingdom in the third quarter of 1979 was less than £13,000, and it is reasonable to expect that the vast majority of advances will continue to be well below the limit. But raising the limits will help some societies, particularly those operating in the South-East where high house prices have led to
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a demand for larger loans which has made the special advance limit a real constraint. Increasing the limit will also save a certain amount of administrative inconvenience for building society branches which have to go through a special procedure for each loan which is treated as a special advance.
Under the terms of the Building Societies Act, societies may work to the new limits in the financial year which begins after the date on which the order comes into operation. Since most societies' financial years begin on 1st January, the new limit will affect them almost immediately. Other societies will be able to take advantage of the new limit at their current financial year's end. An increase in the limit is justified on the grounds of the recent increase in house prices and in the average mortgage advance. The increase proposed will restore some freedom of action to those societies which need to make loans of over £20,000 because of higher prices in some areas, but will not remove the distinction which the limit provides between normal loans to finance owner occupation and larger loans which may be more akin to general business transactions. I invite the House to approve this order.
Moved, that the draft order laid before the House on 14th November be approved. (The Earl of Gowrie.)
4.58 p.m.
Baroness BIRK: My Lords, obviously, with the rise in house prices which has been so dramatic in the last few years, it would be quite unrealistic to oppose this unfortunate increase. I must warn the noble Earl that I am feeling neither comatose nor particularly uncontentious this afternoon. This highlights the Government's catastrophic economic and financial policy. If people can borrow more, then they will be enabled to pay more for their houses. All the measures which we have seen over the last few weeks the Government have been very anxious to say are in order to bring down inflation, but this means that inflation is going to go up again in a further spiral. The increase is to keep pace with inflation, but one has to be earning in excess of £10,000 a year to be able to pay interest on a £25,000 advance. The effect of this order is to help people with higher incomes but not those with lower incomes.

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I listened very carefully to what the noble Earl said and I have looked into the background to these orders. I am quite aware that there were increases in 1967, 1971 and 1975 and this increase now proposed. However, one of the big differences now is that there is to be a further increase against the background of the Government's monetarist policies which appear to be in a considerable muddle. With mortgage rates at a height at which they have never been before; namely at 15 per cent. and possibly going even higher, this means that first time and other buyers who want a £25,000 special advance will have to pay £3,750 a year in interest, which works at out £312.50 monthly.
When my noble friend Lord Jacques moved the order in 1975, the noble Lord, Lord Sandys, from the Opposition made the only comment which I think has been made on this; namely, whether the proposal would have an inflationary effect on house prices. With inflation now running at over 17 per cent. and with all the other measures, such as VAT at 15 per cent., which are increasing inflation, it seems to me that this must have an even greater inflationary effect than it has had in the past.
I should like to ask the noble Earl about the period of repayment. It seems to me that, unless the repayment period is increased, there will be very great hardship. It is true that most building societies charge more interest on special advances, but the institution of building societies has really now become a tool for Government because they are operating on such an immense scale. Therefore, their influence on the rate of inflation and consequently on the whole cost of living is extremely great.
There is another question which I should like to ask the noble Earl. At the moment, the mortgage is usually worked out on whether a person can undertake it at 2½ times his annual salary, but—with the special advances put up, together with all the other inflationary factors—the Government might consider asking the building societies to make it twice the annual salary rather than 2½ times. In my view, the Government would be justified in pressing the building societies on this point.
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The minimum lending rate is now so great that obviously the mortgage rate had to be forced up, although the building societies are unhappy about it. This comes from a Government which denounced, in the strongest terms, high mortgage rates in their election manifesto which said they were a deterrent to those wanting to buy their homes and would cause acute difficulties for those who had already done so. I entirely endorse that view, but now we have mortgage rates so high that it will be even more difficult to persuade people to moderate wage demands.
I do not know whether the noble Earl saw the programme" Weekend World "on the Sunday before last in which a factory in Wolverhampton was taken as an example, and where the workers had in fact moderated their demands on one occasion in recent years in order to try to keep the works going and to prevent unemployment. When they were asked on this occasion, they said that they were concerned about unemployment, but they were very much more concerned about inflation; in particular, one worker said that he just did not know how he was going to pay his mortgage—and that was before it had risen to 15 per cent.
It is an extraordinary policy that while at one and the same time the Government are stressing—and quite rightly—the need to bring down inflation, on the other hand they are enacting a whole series of measures that not only add to inflation but also must cause increasing wage demands. As with so many of the present Government's measures, I am afraid that this is again preferential treatment for the "well-heeled" and the others will again go to the hardship wall. The hardship which will be suffered by people who are trying to buy their own houses, or trying their best to stay in them, will be very considerable. It will be a bleak winter—and there will be many bleak years for a great many people. Obviously I cannot oppose this order, but I think it is really another stone in what is becoming an almost unbearable burden of hardship for so many people in this country to endure.
5.5 p.m.
The Earl of SELKIRK: My Lords, I do not want to be contentious but I should like to make one or two remarks on what

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has come before us today. When I speak on housing I always declare that I am President of the Building Societies Association, although I do not normally speak for them. I speak for myself. However on this occasion I have to express a regret on their part. The regret is this: they suggested to the Government last January (so in fact it was another Government) that the special advance rate should be not £25,000 but £35,000 and they believe that the reason why it has been kept at £25,000 is not a practical one but is the very reason that the noble Baroness, Lady Birk, (who was formerly at the Department of Environment) has stated—namely, a misconceived idea that this keeps down the price of houses. Perhaps I may say with respect to the noble Baroness that she should know that it does not really have that effect.
The building societies put it to the Government that the figure should rise from £20,000 to £30,000; nine months went by and the first intimation they had came from reading a newspaper. That is regrettable, because there is ample opportunity to talk to them and to tell them about the problems. In 1960 the figure was £5,000. In fact I believe it was £5,000 in 1894 and I do not know what £5,000 in 1894 would be today. It would be a considerable sum, probably in six figures, but, if we take it at the 1960 value, the equivalent value today of £5,000 would be about £45,000. I think that is the way it should be looked at.
The problem with regard to the housing market is this: there are about a million people every year who change their houses. It is extremely important that we should make the fullest use of the houses available in this country and that people should be able to change their houses as easily as possible. Some people want bigger houses, some want smaller houses; some people want houses in different places. If they cannot get the money to change houses, this has a log-jamming effect on the whole housing market and that is why changing houses is a difficult and always anxious job, because a person has to sell one house and buy another and if he does not get an easy changeover it will cost him a lot of money, not only in mortgage money but probably in other expenses which arise.
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The building societies consider that it would be much easier if the rate at which they could change houses without reference to the registrar were £30,000 instead of £25,000. I know the point made by the noble Baroness, that the prices are high, is very disturbing but the average price of a new house in the month of August this year was £23,900. Of course some houses have one bedroom, some have two, some have three, some have four, and some have five, and it may be taken that some new houses cost considerably more than that. There are parts of London which are considered to be reasonable areas in which one would probably not get a house under £40,000. If you stop people at the top changing their houses you affect people right down the line. If houses can change hands easily and quickly, it makes it easier and cheaper for everyone to get into the type of house that they want.
We regret very much that the Government should not have discussed the problem with the building societies: I believe this may have the effect of making houses more expensive and it will certainly be more difficult for people to change from house to house. This is very important because at the present time rented houses are difficult to get and council houses are impossible to get unless you live in the area.
Probably the easiest way and the quickest way to move from one place to another is to buy a new house. To put it bluntly, that is a fairly cumbersome business. It is important that these changes of houses should be as easily accomplished as possible, and if more than a certain number of special requests have to be made that is going to make it marginally more difficult. The great majority of houses, 90 per cent. of them, will be within the limits set. But the number which require special advances will inevitably be quite a few, and it does release the log-jam for some of the bigger houses to change hands. It is just as bad to live in a house which is too big for you as to live in a house which is too small for you. I express these views because I think it is really quite a false assumption to think that this is going to have a restricting effect on the price of houses. I do hope the Government will think carefully about this, because I think it helps

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the whole housing market to be able to have as free an exchange of houses as possible.
The Earl of GOWRIE: My Lords, we went a little bit wide of the order, as I shall try to show, but I feel that is legitimate because housing finance policy is a very problematical and controversial area, not only problematical and controversial as between the political parties but also in terms of British economic history and counter-inflation and pretty well everything else. There was one thing which the noble Baroness said with which I entirely agree and which really would be my text for a brief wind-up—that the issue here is inflation.
It would seem to me to be perfectly legitimate for us all, in Government or in Opposition, to be against high mortgage rates, but we would surely not wish to use the mortgage system as a way of beating inflation and therefore as an immense venue for funds. For instance, it would be quite wrong in a counter-inflation policy to isolate 5 million or so households in this country from monetary policy, and if you did so you would certainly undermine that policy. If you were running a pay policy you would not say "Everybody's wages are frozen except those who happen to be householders ". Already in the current climate, even at the highly-to-be-regretted 15 per cent. rate of mortgage interest—which does not, of course, come into effect until next year—mortgages are a highly desirable version of credit; you save rent as you pay your mortgage; the 15 per cent. is gross rather than net of tax, which brings the rate very considerably down, and you are able to borrow that way at much less than the going rate of credit which can operate in a counter-inflation policy which is based on tight money policies.
We all know how painful and how politically unpopular inflation is and also how painful and how politically unpopular counter-inflation is. Whether you decide to try to squeeze inflation out of the system by operating wage and price controls or decide to do it by tight money policies you are not going to insulate yourself as a Government, or the electorate generally, from the consequences of these policies. They are not particularly popular. But we are determined to squeeze
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inflation down, and I am sure the last Government were sincere in their desire to squeeze inflation down, but they were not very successful and we are determined to be more successful than they were.
Baroness BIRK: My Lords, I wanted to intervene at the point where the noble Earl was talking about exempting householders from the effects of inflation by making them a special class. I entirely agree with him. I was not arguing that, nor would I. What I was saying was that if the minimum lending rate had not been put up to 17 per cent. recently the mortgage rates would not have gone up as well. I am not asking that mortgages should be exempt; this would make nonsense. It is the whole way the financial policy is being carried out that I disagree with so fundamentally and which I think is causing this hardship and chaos.
The Earl of GOWRIE: Yes, my Lords, I agree with that, but the noble Baroness did say in her initial remarks that she was against inflation. High rates of interest are inevitably a consequence of inflation. You cannot protect the price of credit or the price of money from price rises which are occurring elsewhere. That is simple cause and effect in the economy. What we are concerned to do is to get Government spending down, because with high Government spending high interest rates are absolutely inevitable. But the noble Baroness and her friends have never ceased to ask for more Government spending or to criticise us in our attempts to stabilise Government spending. I realise that all counter-inflationary policies, as I said in a conciliatory way, are fairly contentious, and none of us can be protected politically or otherwise from the consequences of counter-inflation policies. If you do it through the wage control route it is quite unpopular, and if you do it by squeezing inflation through monetary measures you are fairly unpopular.
A noble Lord: But you cut income tax.
The Earl of GOWRIE: Well, to my mind that is quite consistent with a counter-inflationary policy. You must judge cuts in rates of income tax over a much longer period than one financial year. The rates of income tax operate over the life of a five-year Parliament,

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and, if you like, it makes it very difficult for any successor Government to put them up again. So we would hope that lowish rates of standard tax—and we would hope to take this even further—would be with us for a very long time; and if the noble Baroness and her friends wish to put up the rates of income tax I hope they will tell people fairly early on.
To return to housing finance, I think we would all be agreed that it would be impossible to protect housing finance from the inflation in the rest of the system or to make that area of credit so attractive—it is already substantially more attractive than other forms of credit—as to create an enormous price inflation and the rest in that direction. If I may come back to the order, as I said in my earlier remarks, the average building society advance in this country in the third quarter of 1979 was still less than £13,000. I think it is reasonable to expect that the vast majority of advances will continue to be well below the limit. Indeed, as I must point out in coming to the remarks of my noble friend Lord Selkirk, we are engaged in squeezing the inflation out of the system by bringing up this increase only in special advances to £25,000. There has been considerable pressure, and very understandable pressure, for us to go higher than that. I understand the GLC average price is £28,000. I believe my noble friend mentioned a figure of £23,000 as the average price for a house in the country as a whole.
The Earl of SELKIRK: My Lords, I said the average price for new houses in August 1979.
The Earl of GOWRIE: My Lords, I am most grateful for that correction. My information is that the average price in the GLC area is £28,000 and therefore, by raising the special advance limit to £25,000, we get a bit nearer to the average; but we are still aware that only 10 per cent. or less of all mortgage loans will be in this special advance region. The majority will be spreading the butter thinly over the population as a whole, and not, particularly in a time of high inflation, preferring the richer customer or the more expensive house over the needs of the poorer one. I think that is not so much Government policy as the friendly or mutual aid
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tradition of the building societies themselves.
If I may come finally and quickly to the points made by my noble friend, when he asked why the limit was not raised to £30,000, I gave the general policy, the counter-inflationary aspect. But, as I said, the building societies generally are not making many loans over £20,000 and very few societies are anywhere near the limit of 10 per cent, in relation to total advances. Indeed, I have been privately informed—I do not know whether there is a statistical basis for this and I say it with care—that the average of special advances is much nearer to 5 per cent.
The proposed increase will give the societies for whom the £20,000 limit is a constraint some room for manoeuvre, although it is room for manoeuvre still below the going rate of house price inflation. There is, of course, excess demand for mortgage funds at present and the societies are trying to spread what funds there are as widely as possible, often by lending a smaller proportion of the price of property. The limit may be increased again if that figure becomes difficult for the building societies to work to.
The noble Baroness asked me a number of questions and I have slightly to beg the indulgence of the House. Her questions were fair questions on the issue of mortgages and housing finance generally, but they did not really pertain to this order, which is connected with special advances rather than with the general level of mortgages. It is certainly true that increases in prices of any kind, including housing, have a direct connection with increased wage demands. However, the idea that one can, as it were, reduce wage demands by freezing prices, has been thoroughly discredited in the experience not merely of the last Government, but also of the previous Conservative Government. We should create in the housing field a massive set of bottlenecks or interventions if we tried to contain wage demands by freezing house prices or keeping mortgage rates artificially low. There would be an explosion of demand and no possibility of supply.
However, I agree with the noble Baroness that increases in house prices

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can lead to high wage demands. Therefore, I urge—as all Ministers are urging—those engaged in pay negotiations to measure very carefully the consequences of demands running ahead of productivity or what their companies can afford. The Government certainly mean what they say and have no intention of coming to the rescue governmentally of those firms, local authorities or whoever who grant pay rises in excess of their cash limits or what, individually, they can afford. My own feeling is that this is a very painful and necessary lesson for the British economy. It will be painful and it will be learned in the very near future.
Lord ROCHESTER: My Lords, I thank the noble Earl for giving way. I had not intended to intervene, but I did not realise that the discussion would centre so largely on inflation and counter-inflation. Perhaps I should have foreseen that that would happen. However, would the noble Earl agree that one relatively uncontroversial way of at least seeking to contain the problem would be to go for what I believe the West Germans call "concerted action"—making use perhaps of some such body as the existing National Economic Development Council—seeking to find, by agreement between the Government, employers and trade unions or their representatives, some agreed means by which wage increases could be limited so that they did not exceed, to the very considerable extent that they do now, increases in productivity?
The Earl of GOWRIE: My Lords, I think that that point is indeed rather wide of the Building Societies (Special Advances) Order. However, I agree that at this time of year, particularly when one is raising certain limits which were fixed on previous occasions—and raising them because of inflation, among other issues—it is perhaps fair for general counter-inflationary measures to be discussed. In my debate with the noble Baroness I certainly have not sought to avoid them. So, I would think that any kind of communications system which gets the lesson across is worth considering and is valuable.
My own instincts, perhaps more as an individual than as a Minister at this stage, are that Governments since 1964 have been exhorting and putting this
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message across with increasing frequency. People have a very shrewd idea of where their interests lie and they have tended not to accept the lesson because on the whole there has not been firm intervention or there has been giving in at one stage or other along the line with all Governments. I should have thought that the best way in which the lesson can be learnt is simply for people to run smack into the reality to which, after all, we are all subject.
Baroness BIRK: My Lords, I should like to thank the noble Earl for the polite and nice way in which he has dealt with the matter—although we disagree fundamentally—and for allowing the debate to widen beyond the order. Indeed, my Lords, I appreciate that. I have asked him two questions and I do not expect an answer now. If necessary, perhaps the noble Earl will write to me about the matter.
The first matter concerns the repayment period being increased. I know that there has been some talk of this, but I would like to feel that the Government were strongly urging building societies to increase repayment periods so that more people can take advantage of mortgages or experience less hardship. The other point I also asked him to consider was making the loan twice the annual salary instead of two and a half times. These seem to me to be two ways in which the burden on home owners could be lightened to a small extent.
The Earl of GOWRIE: My Lords, I am grateful to the noble Baroness for reminding me of those two questions. My understanding is that the building societies will allow borrowers to extend repayment periods wherever possible, and that they will also step in to do what they can to help hardship cases. The noble Baroness also asked me whether I would ask the building societies whether they would lend two times rather than two and a half times the salary. That is a matter for the societies themselves. It would be most imprudent, as well as improper, for a Government which are trying to face individuals and individual organisations with the realities of economic life, to give them much in the way of instruction as regards how they should or should not behave. We can all, of course, point to

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good behaviour and make encouraging remarks about it. However, I would not in any way wish to dictate to building societies as to what they should or should not do.
On Question, Motion agreed to.