HL Deb 31 March 1982 vol 428 cc1397-405

3.35 p.m.

Lord Trefgarne

My Lords, with your permission, I will repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows: "With permission, Mr. Speaker, I will make a Statement on the meeting of the European Council in Brussels on 29th and 30th March which I attended with my noble friend the Foreign and Commonwealth Secretary.

"At the end of the meeting the President of the Council issued a statement of his conclusions on the economic and social situation and the 30th May Mandate. Agreed texts on political co-operation were also released. I have placed copies of these documents in the Library.

"The Council devoted most of its meeting on this occasion to the economic and social situation, both within the Community and in the world at large. We agreed that, although the specific characteristics of the situation in each member state might call for varying policies, all the member states had the same interest in combating unemployment and restoring economic growth, while preserving monetary stability and ensuring the competitiveness of their economies. The Council expressed its concern at the level of productive investment in Europe, especially in the industries of the future, and agreed that the Community and the member states would take whatever steps were open to them to improve that level, while recognising that an increase in investment would mean a reduction in consumption.

"During our discussions I laid particular stress on the need to complete the Common Market in the services sector. We have made disappointingly little headway with the liberalisation of services such as insurance and air transport.

"We also discussed the role that the Community can play in the development of information technology and the vital contribution that small businesses can make to the provision of new jobs.

"On youth unemployment, which is a matter of special concern, we agreed that each member state would strive to ensure over the next five years that all young persons entering the labour market for the first time would receive vocational training or initial work experience.

"In our discussion of external policies, the Council looked forward to the Versailles Economic Summit in June. We agreed that our aim at that summit should be to encourage increased co-operation between the major industrialised countries. In particular, we agreed that the persistence of high real interest rates in the international markets, combined with inadequate economic activity, was leading to a significant reduction in productive investment and made unemployment worse because of the squeeze on company liquidity and profits.

"The Council urged Japan to open its market so as to integrate it more fully into international bade. We also urged Japan to follow an economic, commercial monetary and exchange rate policy which was more compatible with the balance of responsibilities to be borne by the whole of the industrialised world, thereby contributing to economic recovery.

"On the mandate, we had a relatively brief discussion in the light of the recent suggestions put forward by M. Tindemans and M. Thorn. We and most other member states were prepared to accept these proposals as a basis for negotiation. I emphasised the need for a solution to the United Kingdom budget problem which gave us a fair scale of compensation, which was sufficiently flexible to take account of either an improvement or a deterioration in the underlying situation and which would last for substantial period.

"I underlined the conclusion we had all reached in London in November that decisions on all aspects of the mandate must be taken together, that is to say decisions on the budget, the common agricultural policy and the industrial and social affairs of the Community. At this point the President of France stated that he would not accept the Thorn/Tindemans proposals as a basis for discussion.

"As the presidential conclusions indicate, foreign affairs Ministers have been asked to do all in their power to secure early decisions. The Ministers will meet in Luxembourg on 3rd April.

"The Council also had a very full political agenda.

"We spoke about transatlantic relations and welcomed the very warm message sent by President Reagan on the 25th anniversary of the European Community.

"We discussed the economic and commercial state of East/West relations in the light of the significant role played by Community trade with the Soviet Union and Eastern Europe. We agreed that these matters, including the related credit problems, should be studied further by the European Community and member states in close consultation with other members of OECD.

"We also discussed the situation in Poland, where martial law continues in force, many thousands of persons are detained, and a dialogue with the Church and with Solidarity is still suspended.

"We agreed that it was essential not to lose sight of the tragic sufferings of Afghanistan. There can be no solution except on the basis which two-thirds of the United Nations have endorsed, and which the Soviet Union alone has so far frustrated.

"On Central America, our main conclusion was the need to support any initiative that could bring an end to the violence, and we noted proposals by Mexico and Honduras among others. We agreed that economic aid given to Central America and the Caribbean should be co-ordinated and, where possible, increased.

"This was not the moment for a major statement of policy on the Middle East. We expressed grave concern about the situation in the area, especially on the West Bank, The Council welcomed, as a contribution to the achievement of a just and lasting peace in the Middle East, the participation of four member states in the Sinai multinational force. My noble friend the Foreign and Commonwealth Secretary is paying an official visit to Israel today and tomorrow.

"Mr. Speaker, this was a very busy Council in its discussion both of Community affairs and of international problems. While we were all both disappointed and surprised at the attitude of the French Government on the mandate, the same realism will have to be applied to decisions on those problems as was applied in the wider discussions during this European Council."

My Lords, that concludes the Statement.

3.43 p.m.

Lord Bruce of Donington

My Lords, the House will be grateful to the noble Lord for having repeated the Statement being made in another place by his right honourable friend the Prime Minister. The Statement itself deals with so many topics and covers so wide a canvas that we on this side of the House will not proceed to question it save in its important detail. We shall prefer to have the chance of seeing the items that have been placed in the Library and read them in association with the Statement. It might also be helpful if we can also have the Tindemans' proposals. I shall be questioning the noble Lord about these presently.

In general, this Statement follows very largely its predecessors to which we have become accustomed these past few years. It is full of generalities. It is full of general aspirations, but it is very short on concrete information as to any firm and agreed decisions that have been made. One cannot blame the right honourable lady the Prime Minister for that, but we on this side of the House think that it is a reflection of the way in which business is being conducted at the present time and the atmosphere which obtains still in the Council of Ministers—one of continued inability to arrive at any unanimous decision on any important aspect of European affairs. We note from the Statement that the Prime Minister is still insisting that the whole question of the United Kingdom's budgetary contribution to the European Community must be firmly linked with the price review. The Statement did not say price review, it said the common agricultural policy. So the first question that I have to ask the noble Lord is: Will he state unequivocally that the Government's position remains, as it was stated to be a few months ago, that the agreement on farm prices is conditional upon a satisfactory solution to the United Kingdom's budgetary problems with the Community? May I remind the noble Lord that we on this side of the House still consider that the Government are bound by the mandate given to them by another place on 15th July 1979 to press for a zero contribution situation? May we have his observations as to whether that is still the Government's aim?

Arising from that—particularly in the light of the Statement reported to have been made by the President of the Commission concerning the possible abandonment of the unanimity rule established at the Luxembourg Convention in 1975 at the insistence of the Government of France—may we have an assurance that the United Kingdom will insist on the maintenance of the unaminity rule? We note from the Statement that all of the members of the Community deplored the lack of investment in Europe at the present time. One observes that the right honourable lady the Prime Minister has indicated that increased investment can only come at the expense of consumption. We on this side of the House would keenly contest that point of view because it is quite clear that one of the reasons for the lack of investment at the present time is falling demand and continuing falling demand or lack of demand in this country.

To end my questioning on a more favourable note, may I express our agreement with the Prime Minister's insistence that further progress should be made in the freedom of services in the EEC. The noble Lord will recall that many governments other than our own in the EEC have been busily trying to avoid freedom of services being given in the field of insurance other than life insurance. This has been pressed for now for about seven years inside and outside the European Parliament. Will the noble Lord give an undertaking that these matters will be pressed for with even greater vigour than they have been in the past?

Lord Banks

My Lords. I should like to join in thanking the noble Lord, Lord Trefgarne, for repeating the Statement made by the Prime Minister in another place. It is clear, as has already been said, that the European Council had a very comprehensive agenda, and I must restrict myself to one or two points only. The question of unemployment, quite rightly, was an important matter under discussion and we welcome the decision of the Community and member states to take whatever steps are open to them to improve the level of investment of the Community, but I wonder just what that will amount to in practice. Can the noble Lord give us any idea what plans the Community might have in that respect and what plans the United Kingdom Government might have in that respect?

Is it correct that there was a division of opinion over the need for a co-ordinated reflation of the economy on a European basis, with France, Denmark. Ireland and Greece being in favour of it and the United Kingdom being among those who were opposed? We would regret such a situation. We are glad that emphasis was placed on the serious effect of high interest rates and we of course share the general regret that there seems to be no sign as yet of the settlement of the United Kingdom's contribution to the budget. We regret that the French Government have turned down the Thorn-Tindemans proposals as a basis of discussion, but we hope that perhaps they will have second thoughts about that. I wonder whether the noble Lord would agree that in the long run the only lasting solution must be one that involves an increase in the budget of the Community, with money being spent on policies more beneficial to this country than the common agricultural policy. Finally, I should like to ask the noble Lord whether he can tell us the position with regard to the Genscher Colombo plan. Is there to be any further discussion of that in the European Council or is it before the Council of Ministers? What exactly is its status at the moment?

Lord Trefgarne

My Lords, I am obliged to both noble Lords for their interventions following this Statement. If I may first respond to the noble Lord, Lord Bruce, on the detail of the Tindemans-Thorn proposals, these have so far been made only on an informal and personal basis by the Presidents of the Council and the Commission simply in the nature of a framework for the negotiations. There is no formal proposal yet, and I have no doubt that when one is made its details will be made available. Therefore, I cannot go into more detail than is contained in the Statement. In any event there was only the briefest discussion on this matter in the Council—substantive discussion awaits the meeting of the Foreign Ministers which will take place later this week.

Regarding the other matters raised by the noble Lord, Lord Bruce, particularly on the linkage with negotiations on the agricultural prices which are going on this very day and in regard to the Budget generally, I must confess that it seems to me it would be very difficult for the agriculture Ministers to reach a conclusion today in the light of the position which the United Kingdom Government have often stated about the contribution within the total budget to the agricultural policy itself. Regarding our contribution to the budget, the noble Lord asked me to confirm that a zero contribution was still our aim. I would confirm that is still our aim, but I think we would be able to accept some less ambitious proposal, for example, for a very modest contribution by the United Kingdom. I think that would be acceptable in the context of an overall settlement, but if a substantial increase in agricultural prices were to be agreed by the agriculture Ministers in Brussels today, then I fear that would not be attainable because the additional contribution to the budget would come in a large measure from the United Kingdom.

The noble Lord, Lord Bruce, also raised the question of freedom of services and particularly asked about the non-life insurance matter—a matter which we have discussed before in your Lordships' House. I certainly confirm that the Government remain most anxious to secure an agreement on this matter, but I fear I have nothing to report on progress since the noble Lord questioned me on this matter a few months ago.

The noble Lord, Lord Banks, asked me in particular about the economic conclusions and decisions taken by the Council. A number of detailed observations were made by them in this context, which are contained in the document which I have referred to and which is to be placed in the Library. I hope the noble Lord will find the information that he wants in that document.

Lord Walston

My Lords, we too on these Benches are grateful to the Minister for repeating the Statement —a long one and full of many pious hopes with which I do not think many of your Lordships, if any, would disagree. One question I should like to put to the Minister refers simply to one of those more or less at random. The hopes are very good but the implementation is a far more important matter. Could the noble Lord give us any indication as to how it is expected and intended that one of the hopes expressed on Central America will in fact be carried out and what initiative Her Majesty's Government will be taking? It states: We agreed that economic aid given to Central America and the Caribbean should be co-ordinated and, where possible, increased". Perhaps the noble Lord could expand a little on that. With regard to the vitally important matter of the mandate, it is implicit in the Statement that Her Majesty's Government agree in general principle with the proposals put forward by M. Tindemans and M. Thorn and find nothing in them antagonistic to our own desires and demands within the mandate. Could the noble Lord categorically confirm that that is so and that we are prepared to enter into negotiations within the guidelines set out by M. Tindemans and M. Thorn?

Lord Trefgarne

My Lords, I cannot go as far as the noble Lord asks me to go with regard to the Thorn-Tindemans proposals. They are only a framework for discussion at the present time and the United Kingdom has accepted then as such; but of course the French President dismissed them out of hand, it seems. On the questions about Central America, and particularly the point about aid referred to in the Statement, individual member states and the Community will doubtless be considering this in the context of their own financial constraints. On the political aspect of affairs in Central America, I think that a European Community initiative at this moment would unduly complicate the issue in that part of the world, but we broadly welcome the Mexican initiative which is to help to bring the parties together.

Lord Mayhew

My Lords, would the noble Lord say what procedural or institutional reforms in the Community the Government are supporting in order to put an end to these repeated nationalistic dogfights which bring no credit to any country, and certainly none at all to the EEC?

Lord Trefgarne

My Lords, the Government share the desire, inherent in the noble Lord's question, that the negotiations currently going on with regard to the mandate should be conclusive and not just a short-term thing, which would lead, as the noble Lord rightly points out, to another discussion and further disagreement in a short time to come. This negotiation is now renewing the arrangements which were agreed rather less than three years ago. We certainly think that the negotiations now being conducted should reach a conclusion which should last longer than that.

Lord Cledwyn of Penrhos

My Lords, on the international section of the Statement, while I welcome the general remarks about Poland, Afghanistan and the Middle East, can the noble Lord confirm that the Government are now firmly associated with other Community Governments in supporting negotiation on El Salvador? One had the feeling that there was a certain amount of tepidness before, but one is now confirmed in the belief that the Government are rather more anxious to co-operate and accept the offer of mediation by the Mexican President. I wonder whether the noble Lord can say a word about that possibility.

On the price proposal side, I think the noble Lord said a moment ago that there was some difficulty about Ministers reaching a conclusion in the talks which are taking place now and tomorrow, and I would not dissent from that. But would he say, if the French Government succeed in securing the increased prices for which they are obviously fighting, but which are totally unacceptable to this country and to Her Majesty's Government, what steps Her Majesty's Government will then take if there is a breakdown in the agricultural talks? Can he also say a further word about the mandate? Can he tell us what is the implication of the French President's stated attitude on this, because it certainly seems to me to be the cause of what might be a longstanding difficulty. Finally, does he accept generally that failure to achieve agreement will adversely affect the prospects of the world economic summit at Versailles in June?

Lord Trefgarne

My Lords, first on the question of Central America, as I said in answer to the noble Lord, Lord Walston, a moment ago, I do not think that a European Community initiative with regard to El Salvador, or any other country in that region, would be appropriate at the present time. But we broadly welcome the Mexican initiative, which is to help to bring the parties together. The Mexican concept of a regional approach has some merit in this situation, but I think it would be a fallacy to imagine that agreement will be soon or easily reached in that area.

On the question of what would happen if agreement was reached in Brussels today and tomorrow on a substantial increase in agricultural prices, the noble Lord is putting to me what I must regard as a hypothetical question at the present time. We have made very clear where we stand with regard to agricultural prices. It is a fact that the agricultural policy already absorbs 65 per cent. or thereabouts of the budget as a whole, and we think that if that percentage were to increase, or if the policy were to develop the further production of surpluses, that would be very unsatisfactory indeed. But I hope that the noble Lord will excuse me from answering what is, for today at least, a hypothetical question with regard to the outcome of the negotiations in Brussels.

Lord Bruce of Donington

My Lords, will the noble Lord forgive me if I press on him one question which he did not answer? I asked specifically for an assurance that any endeavour to dispense with the Luxembourg convention of unanimity among members—the unanimity rule—would be resisted by Her Majesty's Government. Can he give a specific assurance on that?

Lord Trefgarne

My Lords, I apologise for not answering that point, which the noble Lord did indeed put to me earlier. I can assure the noble Lord that the Government attach the greatest importance to the understanding that decisions on matters of major national interest are taken by unanimity, and there is no question of our accepting any erosion of this principle.

Lord Banks

My Lords, may I ask whether the noble Lord is in a position to answer the question which put to him on the Genscher Colombo Plan?

Lord Trefgarne

My Lords, that was again touched on during the discussion and I think it is referred to in the document which I am placing in the Library. I hope that the noble Lord will find that helpful.

Lord Hunt

My Lords, I apologise for prolonging the questions arising out of the Statement, but I should like to put a question connected with the discussions which took place on youth unemployment. In view of the very grave importance of this subject, and the fact that it is a European problem and not only a United Kingdom one, may I ask the noble Lord for an assurance that, particularly during the early stages of the steps being contemplated and implemented by different states, there will be the very closest exchange of views and opinions about the measures that are necessary to tackle the problem, so that the maximum benefit may be obtained by each from the other?

Lord Trefgarne

My Lords, the major responsibility for unemployment must, of course, lie with member states. But there is, however, an important complementary role for Community action; for example, in improving the co-ordination of member states' economic policies—in particular, fighting inflation through the operation of the social and regional fund. The social fund, in fact, provides significant assistance for training and employment schemes to help the unemployed and those threatened by unemployment, particularly through an increase in the capital of the European Investment Bank. But with regard to youth unemployment specifically, which I think is uppermost in the noble Lord's mind, my right honourable friend the Secretary of State for Employment announced on 15th December 1981 the Government's plan to help the young unemployed in 1982–83 and beyond. Essentially the Youth Opportunities Programme will be expanded to cover 630,000 entrants next year, with 100,000 new style one-year training places. In 1982–83, therefore, the YOP will be developing towards the new youth training schemes, which will provide for 300,000 young people at any one time, mainly through new one-year training courses in industry and commerce.