HL Deb 03 February 1982 vol 426 cc1305-9

3.40 p.m.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne)

My Lords, with your Lordships' permission, I shall now repeat a Statement being made in another place by my right honourable friend the Lord Privy Seal. The Statement is as follows: " With permission, I shall make a Statement about the problem which has arisen because of the difference of view between the Council and the European Parliament on the adoption of the 1982 Community budget. When I reported to the House on 27th January about the meeting of the Council of Ministers on 26th January, I said that the Council had taken no final decisions on this matter. I am now glad to be able to report to the House that the Council has subsequently decided that it should institute proceedings before the European Court of Justice concerning this budget; that meanwhile member states will pay in full the sums resulting from the budget as adopted; and that the Council will open discussions with the Parliament and the Commission as soon as possible to resolve the problem.

" We hope that these discussions will succeed. At the same time, we have to protect our legal position, and ensure that, if an answer is not found by discussion, we shall have a ruling of the court. By far the best way of doing this is through an action by the Council as a whole. As some other member states were in fact willing to accept the budget as adopted, and were reluctant to go to the court, the presidency proposed, as a compromise, that the Council should take the matter to the court but that all member states should pay their contributions on the basis of the budget as adopted. We accepted this.

" Because, in our view, that part of the budget added by the Parliament after the second Budget Council on the 24th November was not legally adopted, we cannot treat it, as we do the rest of the budget, as a direct charge on the Consolidated Fund on the basis of Section 2(3) of the European Communities Act 1972. We shall therefore make a separate payment of our part of this extra sum (about £2.5 million per month). The authority of Parliament will be sought for this payment in a supplementary Estimate for the current financial year and in a main Estimate for 1982–83. Meanwhile the payment will be met by means of repayable advances from the Contingencies Fund. Once the issue has been resolved, preferably through discussions between the Community institutions, but, if not, through a judgment of the European Court, we shall know the amount which we are obliged to pay. We shall then either receive a repayment or be under a firm Community obligation to pay the full amount ".

My Lords, that is the Statement.

Lord Bruce of Donington

My Lords, we on this side of the House would like to thank the noble Lord for repeating that Statement so far as it goes. The Statement, of course, makes no mention of the principal points at issue. We do not know the full extent of the difference of view between the Council as a whole and the European Assembly and/or the European Commission other than through the reports, which may or may not be authentic, that have been put out in the national press.

As I understand the position—and I speak subject to correction by the noble Lord—the origin of this dispute between the Assembly and the European Council occurred principally because of the Parliament's insistence, in agreement with the Commission, on the non-obligatory nature of certain expenditure under Title No. 9 of the Commission's budget, as a consequence of which the total volume of what is called non-obligatory or non-compulsory expenditure in the year has been enlarged, and thus the application of the maximum rate of increase under Article 203 of the treaty has been correspondingly enlarged. I also understand that there is some dispute as to the amount of the Regional Fund.

I would therefore be grateful if the noble Lord could explain a little further what is the nature of the dispute. If it is over the question of the designation of food aid under certain items of Title No. 9 of the Commission's budget, I am bound to point out that under Article 155 of the treaty, the Commission is the custodian of the treaty itself and is required to ensure its compliance. I should have thought that it is not without significance that under Title No. 9 the various subsections that I think are in dispute have been stated quite clearly in the Commission's budget and in the explanatory documents and in the annexes to it over the last five years, as being non-compulsory without any query from the Council at all. So we are a little in the dark as to real nature and significance of the dispute.

In the meantime, I hope that the noble Lord will take into account that one of the basic reasons why members of his party—and, indeed, many of my own—advocated direct elections to the European Assembly was so that the powers of the European Assembly could in that way be legitimised. I sincerely trust—as, indeed, many of us do in this House—that no action will be taken that will diminish that particular sentiment which is held, I believe, very widely in the House.

Lord Gladwyn

My Lords, we, too, would like to thank the Minister for repeating the Statement. I should like to ask him three questions. In the first place, are the Government fully satisfied that it is legally in order for one institution of the Community to take another institution to the court? If it is in order, then can the noble Lord say or confirm that it would be in order, for instance, for the Parliament or indeed the Commission to take the Council to the court for not abiding by the terms of the Treaty of Rome? And if that happens, as I imagine it might happen, would the Government please tell us whether they would accept the verdict of the court? In any case, could we be told how many, and preferably which, members of the Council were prepared to accept the EEC budget as adopted by the Parliament?

Lord Trefgarne

My Lords, first let me say to the noble Lord, Lord Bruce of Donnigton, in thanking him for his acceptance of the Statement, that this matter is a very complicated one legally. As I understand it, in essence—and I confess that I come as something of a novice in these matters—the budget is proposed by the Council and may then be rejected in toto by the Parliament if they think fit; indeed, on one occasion a year or so ago the Parliament did reject the budget. In addition, at first sight of the budget the Parliament are entitled to propose, but not to insist upon, increases, and then in the last resort they are entitled to insist upon certain modest increases to the non-obligatory side of the budget itself. What has happened on this occasion is that the Parliament chose to propose an increase—a small increase over and above what is provided for in the treaty—to the non-obligatory side, and that was what caused the Council to take the view that they did.

In reply to the noble Lord, Lord Gladwyn, I would like to say that the purpose of the legal action is not to punish or pillory anyone, but to seek a declaration of the legal position with regard to the determination of the budget so that the Commission, whose job it is, of course, to implement the budget, can be properly advised.

Lord Taylor of Gryfe

My Lords, the Statement makes provision for the Government paying £2.5 million per month. The proceedings of the European Court have frequently taken a very long time. Can the Minister give us any indication of the time scale of these proceedings and what the total commitment is likely to be until the proceedings are resolved?

Lord Trefgarne

My Lords, as the noble Lord says, it is, of course, the case that the proceedings before the European Court are likely to take a very long time. I would not want to put a figure on it in terms of months or years, but certainly it will be a long time. The figure of £2.5 million per month equals, if my mental arithmetic is right, £30 million a year but, of course, each of the payments will have to be authorised by an appropriate estimate approved by the other place. However, I want to say that the Government very much hope that the matter can be resolved by discussion between the institutions before it comes to the European Court, and in which case, of course, the financial implications would be much less important.

Lord Shinwell

My Lords, can the noble Lord explain why this matter has been referred to the European Court? I was under the impression that the function of the European Court was to deal with the legal aspects. Is the European Court dealing with legal aspects, if there are any, or is it a court of arbitration? Is it to arbitrate as between the members of the EEC who are in dispute about the budget and about what each should contribute to the budget? Is it to act as an arbiter in the matter?

I should like to ask one further question. After all these years, we discover that they cannot settle a matter of this kind, about which the public must be wondering and, indeed, must be bewildered. Is it not about time that we were furnished with some information about the excessive expenditure of the EEC on the Commission, on those employed by the Commission, on all the directives that are undertaken and on the vast amount of paperwork in which it is engaged? Ought we not to have a little more information about that? Could not the Court of Justice deal with this question of excessive expenditure?

Lord Trefgarne

My Lords, may I deal with the first point raised by the noble Lord. As regards the matter on which the court will be asked to adjudicate in due course—if that is what happens, because, as I said, we hope that it can be resolved by negotiation before then—it will not adjudicate on the merits of the proposals within the budget, but upon the legality of them. The question that the court will be asked to decide is whether the Parliament is empowered, under the Treaty of Rome, to make the increase in the budget provisions which it made when the matter was before it recently.

As for the wider matter which the noble Lord, Lord Shinwell, raised about the budgetary dispositions of the European Community, I suggest that that is a matter for another day.

Lord Bruce of Donington

My Lords, in that connection, will the noble Lord confirm that all the documents enabling Members of Parliament—either in this House or in another place—to consider this matter are freely available by application to the Printed Paper Office on the various yellow forms that are sent out to every Member; and that the particulars in support of the items in the budget of the European Community are revealed on a far more significant scale and in much more detail than even our own supplementary estimates in the Parliament at Westminster?

Lord Trefgarne

My Lords, I am not aware of any problem in connection with the distribution of documents through the Printed Paper Office. If there is any difficulty, I shall certainly look into it. As for the difference between the detail put forward by the Commission and the detail put forward by successive Governments in respect of budgetary and other considerations in another place, that is perhaps another issue.

Lord Gladwyn

My Lords, perhaps I may repeat the question that I asked, to which the noble Lord, Lord Trefgarne, did not reply. In the Government's view, would it be legally possible for the Parliament to take the Council to the court for not abiding by the terms of the Treaty of Rome? If it did so, would the Government be prepared to accept the verdict of the court?

Lord Trefgarne

My Lords, with respect, that is a hypothetical question, and I think that it would be a mistake for me to offer a definitive legal view on a rather knotty legal point of that nature.

Lord Taylor of Gryfe

My Lords, I apologise for delaying the House, but I did not hear the reply to the point raised by the noble Lord, Lord Bruce of Donington, as to the difference between the budget as established and the budget of the Parliament. Is that quantified? What is the difference between the budgets, and will the payments of £2.5 million per month be limited to that particular amount?

Lord Trefgarne

My Lords, it is, I think, a fairly simple mental arithmetic exercise to arrive at the answer for which the noble Lord is looking. Despite that, I am afraid that it is beyond me, on my feet at this moment, but I shall ascertain the total figure involved and convey it to the noble Lord, if he will allow me to do so.

However, the point at issue—if I may amplify what I said to the noble Lord, Lord Bruce—is that the Parliament, I think in conjunction with the Council, is allowed to increase the non-obligatory part of the budget by a total of just over 20 per cent. It has chosen to do it by a fraction more than that, at least in our view. It would naturally disagree with that, because I think there has been some discussion as to quite what constitutes a " non-obligatory " item in this context.