HL Deb 14 November 1983 vol 444 cc1070-3

3.40 p.m.

Lord Trefgarne

My Lords, with your Lordships' permission, I should now like to intervene to repeat a Statement that is being made by my right honourable friend the Foreign and Commonwealth Secretary in the other place. The Statement is as follows:

"I attended the Special Council in Athens on 9th to 11th November, accompanied by my right honourable friend the Minister of Agriculture and my honourable friend the Economic Secretary to the Treasury.

"This was the sixth meeting of the Special Council set up by the European Heads of Government to carry forward the work agreed upon in Stuttgart in June. The Special Councils have concentrated on three main topics: measures to ensure greater budgetary discipline and effective control of agricultural and other Community expenditure; measures to ensure more equitable sharing of the burden of financing the Community budget: and the establishment and implementation of new Community policies.

"As honourable members know, Community spending is now up against its revenue ceiling. A number of member states are pressing for an immediate increase in own resources. My right honourable friend the Prime Minister made clear at Stuttgart, and I stated again at Athens last week, that we would be prepared to consider this provided that two very important conditions are met: first, that agreement is reached on an effective control of the rate of increase of agricultural and other expenditure; and second, that it is accompanied by an arrangement to ensure a fair sharing of the financial burden.

"As far as the first condition is concerned, there is agreement within the Community that the present rate of growth of expenditure on the common agricultural policy cannot be allowed to continue. Early in the negotiation we put forward a proposal for a strict financial guideline which, as part of the Community's budgetary procedure, would ensure that agricultural spending was rigorously controlled. Some of our partners are not yet willing to go nearly far enough to secure effective control of such expenditure, but others are now pressing as strongly as we are for an effective mechanism across the board. Even those who have so far resisted a legally binding guideline, such as the Commission themselves, have tightened up their proposals considerably in response to our ideas.

"At an equally early stage we tabled a proposal for a safety net which would limit a member state's contribution to the budget in accordance with its relative prosperity and its ability to pay, and so meet our second condition. Here, too, a number of other proposals have been tabled, including the ill-advised ideas put forward by the Commission last week, which sought to reduce the problem by redefining it in a wholly arbitrary way. Other proposals also fail to measure adequately the true budget burden borne by the United Kingdom. But some of them represent significant movement towards our thinking about the essential elements of an agreement on the budgetary arrangements.

"I again emphasised in Athens last week that, if there is to be agreement at the Athens European Council in December, our two conditions must be met.

"Last week's Special Council also took forward discussion of the future development of the Community in other fields. Here, too, we have tabled important proposals for the council's consideration.

"The Special Council will meet again in Brussels on 28th November. It is generally agreed that decisions will only be taken at the European Council on 4th to 6th December and that individual questions will only be resolved as part of an overall agreement."

My Lords, that concludes the Statement.

Lord Bruce of Donington

My Lords, the House will be grateful to the noble Lord for having repeated the Statement made in another place. We should like to assure the Government of our complete support of the rejection of what the Government politely describe as a "wholly arbitrary" method of determining the United Kingdom contribution to the European budget. It is quite clear, as Commissioner Tugendhat has made out, that there is not even the remotest justification for the Commission's plan to whittle away in mathematical terms the financial deficit which this country still incurs by virtue of its membership of the Community; and we hope that the Government will not in any way waver in their complete rejection of the plan that has been put forward by the Commission.

I was a little worried by the conditions contained in the Statement for the Government agreeing to the raise in the Community's own resources. Among others, I have warned Her Majesty's Government over the last four years of the undoubted fact that the 1 per cent. VAT limit on the Community budget would soon be passed due to the yearly increase in agricultural expenditure. The Government have been warned about this repeatedly.

I gather from the Statement that the Government are prepared to consider an extension of the Community's own resources on the basis of the rate of growth of agriculture expenditure being brought under control, or under stricter control. That is not the position of the Government that they have put forward to the country every time there has been an annual price review. I remember the Government having stated on at least three occasions that they would resist any price increase on items of agriculture in structural surplus. Every year there has been the brave statement that they are going to resist increases. Yet every year the Minister of Agriculture has come back with a new triumph—that the rate of increase has been contained within 4 or 7 per cent. I should much prefer it, and we on this side of the House should much prefer it, if the Government stuck to their guns and said that agricultural expenditure must be contained within its present levels. Many methods are available for this to be done. The Government can transfer expenditure from the guarantee section of the fund to another section of the fund which is concerned with providing more direct aid to farmers; and I hope that we may have an assurance from the Government on that point.

As regards the other matters that are to be raised at the next summit, I should like to express the hope that after a period of eight years and five separate assurances given by the Government on the subject, some positive decision may at last emerge on the proposal that British insurance companies, other than those dealing with life assurance, should be allowed to function on the Continent. This question has now been under discussion for some time, and it would be refreshing if at last the insurance community received some redress in this matter, which is fundamental to the free provision of services in the EEC.

Lord Kennet

My Lords, this is an interim report and we are very glad to see that it does in fact report signs of movement towards our point of view in these important matters—and about time too, given that it is the report of the sixth of only seven meetings that are to be held by the Special Council before the Athens summit itself. Now that the Prime Minister and the British Government have begun to treat the United States Administration as one group of friendly adults in charge of a modern nation state should treat another, would it not be very fitting to make use of the Athens summit to begin to use a corresponding (if I may say so) change of tone there? The only favourable result which can emerge from the Athens summit will be the highest common denominator of what is insisted upon by all the member states. It cannot be anything else, and we cannot forever conceal this fact from ourselves by using the language of exasperated crusaders. Will the Government agree that the Athens summit provides an opportunity for the other half of the beneficial change in emphasis in foreign affairs which was inaugurated by the Government a couple of weeks ago?

Lord Trefgarne

My Lords, I am grateful to both noble Lords for their response to the Statement. The noble Lord, Lord Bruce of Donington, thought that he apprehended some change in our approach to the revision of the budgetary arrangements generally. I can assure the noble Lord that that is not so. We have consistently argued, as the noble Lord knows, for thoroughgoing reform of the common agricultural policy which we are certain will bring in its train at least a containment and perhaps a reduction of the amount of money spent in that particular area.

The essence of the problem of the common agricultural policy—is it not?—is the difficulty in its continuing to subsidise the production of various things which are already in surplus and of which we subsequently have great difficulty in disposing. But there are certain other spending policies within the Community that perhaps do not deserve the same critical scrutiny as the common agricultural policy. We would certainly be willing to contemplate an appropriate growth in those areas. That was the meaning of the words repeated in the Statement.

The noble Lord, Lord Bruce, also asked me about the progress of various directives relating to the operation of insurance companies. I am sorry to tell him that I do not have immediate information about them. It was not, I think, one of the subjects discussed at the recent meeting. I shall find out what I can and write to the noble Lord.

The noble Lord, Lord Kennet, asked me about the prospects for the Athens summit. Of course, this Statement only foreshadows certain items at the Brussels summit. I would not want to be dragged, at this stage, into discussion of what other matters might be raised at the Athens summit but the matter of political co-operation within Europe, which has given us so much more of an effective voice in the councils of the world, will doubtless be discussed at Athens in December.