HL Deb 27 January 1982 vol 426 cc953-62

2.54 p.m.

The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington)

My Lords, with your Lordships' permission, I shall take the opportunity to bring the House up to date on the discussions on the 30th May Mandate, which have been continuing in informal meetings of Foreign Ministers in fulfilment of the request of the last European Council. I shall also make a Statement on the Foreign Affairs Council which took place in Brussels on 25th and 26th January.

On 25th January, the Foreign Ministers had a lengthy discussion on the four key issues in the negotiations over the mandate which were remitted to them by the European Council. This was the third such discussion, and I regret to say that it was not possible to reach agreement. The main issue preventing agreement was the view of a number of other member states that the refunds to the United Kingdom should be arbitrarily and automatically reduced over time, regardless of the scale of the problem. I made it clear that we could not accept this. In the longer term, we hope that the development of Community policies, including the reform of the common agricultural policy, will lead to a reduction in the size of our budget problem, and we fully accept that, as this happens, our refunds should be reduced. What we cannot accept is a reduction totally unrelated to the underlying cause of our budgetary imbalance.

That was not the only difficulty. In addition, one or more of our partners had reserves on other aspects of the matters under discussion. For example, there was disagreement as to whether the duration of our budget refunds should be four or five years, with a review. There are also problems on agriculture, where the formula proposed for controlling the milk surplus was very weak, and a number of countries, but not the United Kingdom, have reservations about the proposal that agricultural spending should grow less rapidly than own resources.

It is disappointing that after so many rounds of negotiations we have still not been able to reach agreement on the four key issues identified by the European Council, and therefore on the guidelines which were discussed there. But these are complex questions in which major national interests are involved, and we never thought it would be easy to find solutions that would enable each country to feel that it had a reasonable deal.

I welcome the intentions of the President of the Council and the President of the Commission to try to find solutions to these problems, and we hope that they will be able to do so quickly.

To turn to the Foreign Affairs Council, I would say that it was decided not to make further sales of food to Poland at specially subsidised prices and to use the funds originally earmarked for such sales for humanitarian aid, including food through non-governmental organisations. There was a wide measure of support in the Council for the proposal that the USSR should be upgraded from the "intermediate" to the "relatively rich" category in the OECD export credit consensus. The matter is to be considered further by the Committee of Permanent Representatives tomorrow, when I hope it will be agreed that the Community should propose such an upgrading to its OECD partners. The Council also instructed Permanent Representatives, in conjunction with the Commission, to study the trade policy measures which the Community might take against Soviet exports to the Community, and to study the implications of the undertaking of 4th January of the Ten not to undermine measures taken by the United States.

The Council considered the problem which has arisen over the adoption of the 1982 budget. In the view of member states, the European Parliament had not acted correctly over classification of expenditure and the maximum rate of increase. No final decisions were taken, but it appears to be the view of most member states that, as well as opening a dialogue with the European Parliament with a view to resolving the problem by mutual agreement, they should, as a precautionary measure, take legal action to ensure that the problem is resolved.

I am glad to say that the Council agreed that the storage levy and refund scheme applicable to ACP sugar should be suspended for three years, to the benefit of the cane refining industry. In those circumstances I was able to agree to a revised Commission negotiating mandate on the price to be paid for ACP sugar for 1981–82. This will, I hope, enable the present disagreement between the Community and the ACP to be resolved.

My honourable and learned friend the Minister for Trade represented the United Kingdom for discussion by the Council of policy on imports of low-cost textiles. It was agreed that in order to allow time for work to be completed on calculating the global ceilings, decisions on the various outstanding issues, including the terms for Community participation in the new Multi-Fibre Agreement, should be held over until 11th February, when there will be a further special meeting of the Council.

Lord Bruce of Donington

My Lords, the House will wish to thank the noble Lord for the Statement that he has just made. I should like, with respect, to point out to him that we on this side of the House received a copy of the Statement only five minutes before he rose to his feet, which has not given us very much time to study it. I willingly acquit the noble Lord of any responsibility in this regard, but I hope that he will make arrangements through his own usual channels to make quite sure that this does not occur again.

We on this side of the House should like initially to say, in response to the noble Lord's Statement, that we of course support the very considerable efforts he has made in the Council in order to obtain a more equitable contribution by the United Kingdom to the budget of the Community. This has been a running sore for many years, and your Lordships may recall that I have myself repeatedly raised the matter in the House over the last four years.

The Statement mystifies me a little because, although the noble Lord has indicated that he regrets to say it was not possible to reach an agreement, and that he could not accept the proposals that were put forward, he does not go anywhere as far as he apparently intended to go prior to the Council meeting itself. He was quoted in the Financial Times of 26th January—and I quote from the Financial Times report, which has been widely, I will not say copied but versions of which appeared in other parts of the press, too—as saying: At the end of a fruitless day-long negotiating session Lord Carrington, the British Foreign Secretary, said that Britain would prevent any agreement on the annual price increases for Community farmers envisaged for the end of March until it had secured a satisfactory budget deal. Without a budget statement, he said, ' the guidelines for the Community reform already agreed were frozen and as a result farm price rises could not yet be concluded '". My Lords, as the Statement that the noble Lord has made today does not go half as far as that, I want to ask: What is the position of Her Majesty's Government on the matter? Is it now the position that not only has the noble Lord refused to accept the proposals put forward in regard to the budget but, also, that he has declined to agree to any increases in farm prices until a satisfactory agreement has been reached? I should be very glad if he would confirm that.

In another part of his Statement the noble Lord refers to the position of the European Parliament over the Community budget. The construction of the appropriate budget articles in the Treaty of Rome are subject to some ambiguity, but from my reading of what has transpired in Strasbourg and elsewhere I feel that the differences expressed in terms of money between the Council of Ministers and the Parliament are very small. All they in fact cover is a definition of compulsory and non-compulsory expenditure, and also the amount of the maximum increase which is permissible in the terms of the treaty.

I ask the noble Lord this question: Is it wise, even as a precautionary measure, to take the Parliament before the European Court? Would it not be far better to see whether an agreement could be arrived at between the Council and the Parliament? Because, my Lords, many of us feel that in the progress that has been made in Europe over the last six years the Parliament has in fact shown a far greater trend towards progress than has so far been visible from the Council.

As I say, we received this Statement only some five minutes before the noble Lord rose to his feet. There are other questions that will undoubtedly arise, and would have arisen if we had had more time to study the noble Lord's Statement in detail, but it would help if, in the meantime, he could answer the questions that have been put to him.

3.4 p.m.

Lord Gladwyn

My Lords, we, too, should like to thank the Foreign Secretary for making this important Statement, but on these Benches, at any rate, we would regard the outcome of the meeting of the Council of Ministers as, on the whole, with certain exceptions to which I might make a reference, pretty lamentable. I would ask: Is no proposal for limiting our contribution to the budget (including, perhaps, some extension of the present system, which, after all, has not worked out so unfavourably from our point of view, as I understand it) acceptable before total agreement on the reform of the CAP? What happens if, in the long run, our partners just do not agree? What happens then? Does the Community just break up, or what is the result anticipated?

Anyhow, must we really break with them on the question of the duration of the agreement? Would not four years be acceptable? I do not quite understand this enormous distinction between five years and four years. On the face of it, I would have thought that four years would be something that we could accept, anyhow as part of a compromise deal.

More generally, may I ask: Were we in a minority of one in contesting the various proposals put forward by the Commission or by our colleagues? In which cases were we not in a minority of one? If we were in a minority of one, is it possible that we may be able to arrive at some compromise in order to get agreement in the general interest? As regards the Parliament and the budget aspect, I must say that I agree with the noble Lord, Lord Bruce of Donington. What he said was sensible, and I hope that on reflection the Government will agree. On Poland, as regards food exports, may I ask whether we can be assured that humanitarian aid (food aid, presumably) is in fact likely to get through to those who are chiefly affected—namely, the suffering Polish people—and, if so, why we are so confident?

Finally, I am glad to see that there was agreement on a tougher policy as regards credit in respect of trade with the Soviet Union. I think that is a very good thing. But I noticed in the press, either yesterday or today, I think, some suggestion that the French, having agreed there, might not agree in the event to any such policy.

3.6 p.m.

Lord Carrington

My Lords, I must apologise if the noble Lord opposite did not get the Statement early. It was actually handed in to the Opposition Whips' Office 20 minutes before; but I think we shall have to see why the noble Lord did not get it. If, perhaps, 20 minutes is not enough, or something went wrong—I think the noble Lord, Lord Gladwyn, got it—then perhaps we shall look at it. But I do apologise if the noble Lord did not get it. I apologise if it is my fault, or my side's fault: if it is his fault, that will be different.

On the two subjects that both he and the noble Lord, Lord Gladwyn, have raised, perhaps I could take the parliamentary budget first. No final decision has been reached about taking the European Parliament to the European Court, but the general feeling in the Council yesterday, I think, was that that might be a wise thing to do because, although it is the intention of the Council to talk to the Parliament and try to get an agreement which is satisfactory to both, there is rather an important issue of principle here. Even though the sums of money are small, it is an important issue of principle and I think there is something to be said for getting it cleared up so that it does not happen again. But I, of course, will certainly take into account what the noble Lord opposite and the noble Lord, Lord Gladwyn, have said.

On the specific question which Lord Bruce asked me, the position is that at the beginning of this exercise all ten members of the Community linked the three chapters which we were discussing—which were, if the noble Lord will recall, regional and other Community policies, agricultural policy and the budget—and it was agreed by all of us that progress on all three of these chapters had to proceed at the same time. Consequently, I cannot myself see either that the regional policies or that the agricultural policy, on which the prices depend, can go forward independently; all these things must be done together.

The noble Lord, Lord Gladwyn, asked me about food for Poland. Before that he asked whether the Community was going to break up. There have been a good many of these setbacks before. I think it would be very premature to say that the Community is going to break up. When we all get down to it, we usually find a solution. The difficulty with the Community is that whereas most people decide at the 59th minute of the 11th hour, the Community is in the habit of deciding about three o'clock the next morning. This makes it a very lengthy and tedious business, but nobody with the noble Lord's outlook on the Community, I know, will be more patient or try harder to support the search for a solution than he himself.

With regard to food aid to Poland, there are, as of now, over 35 million ECUs—and I think that there are 60 ECUs to the pound—which were to be used for a 15 per cent. discount on food to be sold to Poland. The decision taken yesterday means that that 35 million Ecus will be available to give humanitarian food to the Poles but given through non-governmental organisations such as Caritas which we can monitor and see that the food gets to the people we wish it to reach. There is a limit to the amount of food that can be sent in this way. We must see how we get on.

With regard to credit policies, the noble Lord is right. The French put a reservation on this yesterday but I hope very much that at the COREPA meeting tomorrow they will lift it.

Lord Gladwyn

My Lords, by a minority of one!

Lord Carrington

My Lords, not on everything. There were a number of issues on the guidelines which were not agreed. For example, the growth of the agricultural budget in relation to the rest of the budget. There were reservations about how our refunds were going to be financed. There were other things than degressivity which were not agreed; but, from the point of view of the Government, it is not possible for us to agree to a scheme in which we get less and less money every year regardless of whether our problem is solved.

Lord Kennet

My Lords, I have two questions on the CAP. Can the noble Lord say what would be the size of our deficit in three or four years' time if the refund was phased out—as we are trying to avoid? Is it still of the same order of magnitude as when the trouble started? Would it not be possible to cast these differences between ourselves and the others less in terms of " Britain versus the Rest " and more in terms of the difficulties which are bound to be suffered by whichever member state has the smallest and most efficient agricultural sector—and if it is not us, it will be somebody else—and to point out to the world that that is the structural defect which always penalises that country?

On Poland and the Soviet Union, although the Statement was not very exciting, I think it was right. Would the Foreign Secretary agree that there is not much point in penalising the Soviet Union for not intervening with military force, and not much point in penalising the Polish military régime for not retreating when, in its words, it has nowhere to retreat to? Lastly, on the question of taking the Parliament to court, I should like to join those noble Lords who ask that the Council of Ministers should think once, twice—

Lord Shinwell

My Lords, this is a speech.

Lord Kennet

—once, thrice and nine times before doing that.

Lord Shinwell

My Lords, I thought that this was question time, and not a time for making speeches. I ask the noble Baroness the Leader of the House to intervene.

Lord Kennet

My Lords, it is a Statement.

The Chancellor of the Duchy of Lancaster (Baroness Young)

My Lords, we have had a Statement and the noble Lord, Lord Kennet, is putting a series of questions. Perhaps he will make this his final question on the Statement.

Lord Kennet

My Lords, I am grateful to the noble Baroness the Leader of the House. My last question was about the Council taking Parliament to court within the first two years of its directly-elected life. It would be worth going a long way to avoid that if it can be avoided.

Lord Carrington

My Lords, I think that our unadjusted net contribution is speculative in some sense because of the world price of food, which has an enormous effect on our contribution for the reasons which noble Lords have stated. I think our estimate would be that the situation would be rather worse if we had no adjusted contribution than it was at the time when we were having our negotiations in 1979–80. This makes it very important that we should get an adequate refund. What we have been doing is exactly what the noble Lord has suggested. It is because agriculture is a small part of our economy that the imbalance in the budget exists. The fear we have is that the guidelines which have been produced by the Council—which have not been agreed; but which are agreed except, generally speaking, for us—are very weak in that they will not mean that less money will be spent on agriculture and more money on other things. Consequently, if that is so and we are right, it means that the underlying British problem will not be solved—which makes degressivity all the more unacceptable.

With regard to what the noble Lord said about Russia and Poland, there are three things which the Polish Government could do: they could do away with martial law; release the detainees; and, talk to Solidarity and the Church.

Lord Harmar-Nicholls

My Lords, is my noble friend aware that people who have studied the actual mechanics of the Community will support his view that, on the question of contributions and agriculture, it means a long-term solution rather than a piecemeal and temporary one? Otherwise the general unity of the spirit of the Community will suffer from time to time when it is considered. Is my noble friend aware that the agricultural policy, the contribution and the regions are agreements that should run together and that to try to separate them would only bring confusion—such as we are suffering in this country at the moment where we have two agreements which are apparently in conflict and which have brought the railways to a standstill? Is my noble friend aware that the people who have studied it agree that those decisions must be taken together and that, although it may take another week or two weeks to get agreement, it is worthwhile hanging on to get it?

Lord Carrington

My Lords, I agree entirely with my noble friend that these things hang together. The guidelines on agriculture are of absolutely vital importance if we are to get an adequate solution to our problem. The noble Lord, Lord Gladwyn, asked what was so special about five years compared with four years. The more often you have this dispute, then the worse it is for the Community and for the cohesion of the Community; and incidentally, the worse it is for all of us who have to negotiate this over God knows how many hours and days. I think that if we can get a solution which will last as long as possible it would be sensible for everybody.

Lord Mackie of Benshie

My Lords, will the noble Lord not agree that what he has said means that the agricultural community will have to wait for the settlement of the whole of the problem before they know what the prices will be for the produce in the next year? May I ask whether the very sensible Commission plan for a super-levy on surplus milk has now been dropped, or whether there is any possibility of success?

Lord Carrington

My Lords, the agricultural prices, by and large, never get settled until April and I hope we shall get this out of the way before April. We have all got to do the best we can. The super-levy (which in my judgment is an excellent way of reducing the surplus on milk) is one of the issues on which we are in a 9 to 1 minority.

Lord Molloy

My Lords, will the noble Lord not agree that, in so far as the CAP covers 60 per cent. to 70 per cent. of the EEC budget, this is vital and that incidents of the kind that he has reported this afternoon have been going on ever since we joined the EEC; and moreover that it is almost a classic example of a self-inflicted wound? Is he not aware that, notwithstanding that hitherto we seem to have put up very little resistance, his stance on this occasion would receive the congratulations of every sane person in the country who is interested in British agriculture? Will he not continue to do so in the knowledge that people who are now criticising this matter regarded those of us who made these criticisms in the past as treating the matter with some form of lèse majesté? Will the noble Lord the Foreign Secretary stick to his guns and make sure that there is no surrender, as has happened in the past, since this might bring in a new era for Great Britain as regards the EEC?

Lord Carrington

My Lords, there were so many parts to that question, to some of which the answer was, Yes, and to some of which the answer was, No, that perhaps the noble Lord will accept from me the answer that we intend to get a good result.

Lord Stewart of Fulham

My Lords, regarding the arrangements made at the Foreign Affairs Council about food aid to Poland, is it possible to say whether the net effect of those changes will be to increase or decrease the amount of help going to the people in that unfortunate country? Will the Foreign Secretary agree that, when one considers any kind of sanctions in this context, it is sometimes difficult to say what wisdom or effectiveness there can be? There can be no doubt at all about the wisdom and need for assisting food aid to Polish people.

Lord Carrington

My Lords, perhaps I may explain—it is a little complicated—the question of food aid to Poland. What was happening before 13th December was that the Community was selling food at a discount of 15 per cent. to Poland, and the other 85 per cent. was a matter for the country concerned which was selling the food. As the Poles did not have any foreign exchange, it was in fact an 85 per cent. credit from the country concerned. Therefore, if we as a country had gone on as we were before 13th December last year we would actually have been giving the food free to Poland—15 per cent. Community money and 85 per cent. British taxpayers' money. What we have decided to do is to use the money which the Community has set aside—35 million ECU—for humanitarian aid; that is, aid in the form of food to the non-government agencies in Poland, where we know it will get to the right people. But we do not intend to give credit for food at the moment to the Polish Government at the expense of the British taxpayer.

Lord Cledwyn of Penrhos

My Lords, will the noble Lord the Foreign Secretary be kind enough to clarify the reply that he gave to the noble Lord, Lord Mackie of Benshie, about the annual agricultural price proposals? He said that a settlement takes place about April. As he well knows, the proposals are made just about now and will be conveyed to Her Majesty's Government and specifically to the Ministry of Agriculture now. Later they will be considered by them and by this House, among others. Can he say whether there is likely to be a delay in the proposals, not in the final settlement?

Lord Carrington

My Lords, the Commission will produce the proposals in the normal time scale. They will be discussed in the normal way by the Agricultural Council. I have no evidence of it but I imagine that the Commission will base their proposals on much of the guidelines on agriculture as has so far been agreed.

Baroness Llewelyn-Davies of Hastoe

My Lords, before we leave the Statement, with the leave of the House may I ask the noble Lord the Chief Whip whether he could consider reviewing the procedure by which Front Bench spokesmen get Statements of this kind? With great respect to the noble Lord the Foreign Secretary, the difficulty is always particularly serious with the Foreign Office. As those Statements are of great importance and are usually complicated, even 20 minutes is not enough time to consider them properly. I think that I am right in saying that the Liberal Front Bench received the Statement only 10 minutes before it was made to the House. I know how difficult these matters are, but may I ask the noble Lord to reconsider the situation? It would be helpful to the House—and indeed the Government—if there could be a considered response to Statements.

Lord Carrington

My Lords, may I answer that question in some of my old capacities as well as my present one? I am sorry if the Foreign Office is at fault. These Statements, as the noble Baroness knows, are prepared at very short notice in a considerable hurry. As we know, they have to be looked at and passed by all those concerned. Sometimes it is impossible to get them to noble Lords in time for noble Lords to have a long period to look at them. It is a courtesy to send them. However, what we ought to do is to give as much notice as we possibly can—and I have in the past been in the same position myself—and we will look to see what we can do.

Baroness Llewelyn-Davies of Hastoe

My Lords, I am most grateful to the noble Lord for saying that. Perhaps we could have an indication on a subject like this whether it is on the whole of the two-day summit, a review of the summit, or is confined to specific aspects only.