HL Deb 01 February 1984 vol 447 cc684-725

4.53 p.m.

Debate resumed.

Lord Bruce of Donington

My Lords, we on this side of the House are most grateful to the noble Lord, Lord Ezra, for having given us the opportunity to discuss a very limited aspect of EEC affairs to which he has ventured to draw the attention of the House in his Motion. We also look forward with very keen interest to listening to the maiden contribution of the noble Lord, Lord Fanshawe of Richmond, whose reputation in another place, not always of a non-controversial character, has reached us here. We welcome his presence here and we wish him every success in the endeavours that he makes to contribute to the deliberations of your Lordships.

When I read the Motion standing in the name of the noble Lord, Lord Ezra, I looked forward to receiving his suggestions, and presumably the suggestions of his party and the Alliance, as to exactly in what way, in what manner, could Her Majesty's Government adopt, a more constructive attitude at the forthcoming meeting of the European Council". I was looking forward to a whole series of suggestions as to exactly what changes in this regard the noble Lord had in mind. The noble Lord will forgive me if I say that he was very modest on that account, and that really what his suggestions amounted to was that we should somehow try to dispel the very widespread impression in Europe, which seemed to lay heavily upon his soul, that we were being obstructive in some way and that in general our efforts as a nation within the European Community were not very highly regarded throughout the Community. He referred to the distinct impression that he had and he referred to it as an impression abroad of the United Kingdom.

Instead of making any specific suggestions as to how the Government might be more constructive, the noble Lord proceeded to address himself—as, indeed, is very appropriate in your Lordships' House—to what the Council of Ministers and the European Council should do. However, what we are very interested in is what the Government are going to do. I do not think that the noble Lord, Lord Ezra, helped us very much as regards what he thought the Government ought to do, save perhaps in two respects. He made some expression of dismay that the Government had not taken a more active part in the ESPRIT project, whereas it is well-known that the reasons for the Government not arriving at agreement with their colleagues in the other member states was particularly that this is what is termed "non-obligatory expenditure" corresponding very much to what we have in the United Kingdom, corresponding to expenditure subject to cash limits. Her Majesty's Government had already laid down, and I think very correctly, that they were not prepared to discuss increases in non-obligatory expenditure outside the context of the financial settlement that they had already requested, and sometimes even requested in most temperate terms, from their colleagues in the Community.

So I do not think that the Government—and I am sorry to embarrass the noble Lord with my support in this regard—can be accused of being non-communautaire or anti-Community, in declining to give assent to embark upon this non-obligatory expenditure until the settlement, which they quite legitimately required, had been reached.

Lord Mackie of Benshie

My Lords, would the noble Lord not agree that a non-obligatory expenditure might well be a very wise investment?

Lord Bruce of Donington

My Lords, certainly; I entirely agree. But as the noble Lord will be aware if he has studied the treaty—and he most certainly has done so—we are required to keep the contributions within a 1 per cent. VAT limit. We are now nearly up to that limit and Her Majesty's Government have quite correctly insisted that, before they give their assent to exceeding that limit, whether or not it be by obligatory expenditure—which we in this country in our own budget call "demand expenditure"—they want an overall settlement.

The noble Lord did begin to mention the common agricultural policy, and I thought for one moment that he was going to give some support to the very widely held view throughout your Lordships' House, and I think throughout the country, that the common agricultural policy has got to be drastically reformed. At that point I thought the noble Lord rather stopped short and said that the common agricultural policy needed reform but we had to proceed very slowly. I await with interest to hear what other members of the Alliance have to say on this matter but at no point did I gather that, under the existing arrangements, the noble Lord wanted any limitation on agricultural expenditure. If I am wrong in that, the noble Lord will clarify it.

Lord Ezra

My Lords, perhaps I can clarify that point. I said that it had been generally recognised that we must have modification of the common agricultural policy. I said that the problem we now face has been exacerbated by the fact that we have allowed it to run on for as long as we have. But, on the other hand, in seeking any solution I said that if we were too drastic we could undo the benefits which we had achieved for the farming community over past years. Those were the remarks I made.

Lord Bruce of Donington

My Lords, I am obliged to the noble Lord. Those are precisely the remarks I recollected. But, of course, in political terms they have the advantage of being completely non-committal. They express a pious sentiment, with which I do not disagree, but they lack the cutting edge which one rather expects from those who apparently desire to break the mould of British politics.

My criticism of the Government is, in fact, that they are being rather too co-operative. Perhaps I could express it in this way. Your Lordships will remember that the Prime Minister is very definite in her statements. With some justification, she is reputed to be inflexible; once she makes up her mind, that is the end of the matter, and she will not be shifted. I mention that within the context of the increase in the Community's own resources. In this regard I think that the Government are being a little too constructive or too co-operative within the context referred to by the noble Lord, Lord Ezra, because on 11th June 1980, at column 178 in another place, Austin Mitchell asked whether the Prime Minister would give an undertaking, that Her Majesty's Government have not and will not agree to lift the present ceiling on revenue for value added tax under the own resources formula of the European Economic Community". The Prime Minister replied in these terms: We are determined to ensure that the 1 per cent. ceiling is not breached. The Foreign Affairs Council recently reaffirmed the conclusion, adopted by Community Finance Ministers in February, that the growth of agricultural expenditure should be considerably reduced so as to keep total spending within the ceiling". We have now departed rather significantly from that. The Prime Minister has departed to a point where she is prepared to consider an increase in the VAT ceiling, provided that the budgetary matters affecting the United Kingdom are dealt with. I should have thought that that is being very conciliatory. What more does the noble Lord require? Does he require that Her Majesty's Government turn over like a spaniel waiting for its tummy to be rubbed, or something of that kind? What more can the Government do in that respect? Indeed, they have gone too far.

It is quite clear from what the noble Lord, Lord Ezra, has said that he and those for whom he speaks regard the national interest as something which should be volunteered from time to time by the United Kingdom, but not by the other member states of the EEC, as evidence of goodwill towards the Community, and that the Community will not progress unless the United Kingdom is prepared to regard its national interest with rather less intensity than that of the other member states.

Lord Ezra

My Lords, I do not wish to interrupt again, but I really must correct that impression. I do not recall having said anything of the sort. The line I was taking was that I believed that, by coming forward with positive proposals to resolve these very real problems of the Community, we could serve both our own interests as a nation and the interests of the Community.

Lord Bruce of Donington

My Lords, the noble Lord protests too much, because he will recall saying a little later in his remarks that, in relation to the other great powers of the world, we, as a nation, were relatively unimportant; that the voice of the United Kingdom, speaking as the United Kingdom, is of little consequence as compared with the combined voice—if it ever is a combined voice—of Europe. I venture to dispute this.

I do not take the view that, because the United Kingdom can no longer send gunboats up the Yangtze or fly Tiger Moths over the North-West Frontier, that because it cannot display the military might which at one time passed for its greatness, and that because it can no longer assert itself in the same military sense, it is not capable—on its own if necessary; in collaboration with its Commonwealth if possible, and indeed if desirable, which I believe it is—of playing an effective part in world affairs. I do not think that the interests of the United Kingdom need necessarily be polarised round the limited land mass occupied by members of the EEC. I do not consider that all the time we must take the posture that, if we are not in Europe, where else should we go? Why do we have to go any place else? We are here, exactly, now; and the Continent, on its part, is quite privileged to be as close to us as it is. Certainly!

I well remember an occasion at one of the committee meetings of the European Community, which I had the honour to attend, when a Luxembourger, who shall be nameless, looked rather superciliously across at the benches occupied by the British members of the European Assembly and said somewhat sneeringly "Well, of course, you British are the other side of the Channel. You would not understand how things go on here", to which I replied—rather quietly for me—"if it had not been for that Channel, you would not be sitting round this table now". There was a deathly hush after that.

I do not wish to beat the jingo drum in this House. It is a very dangerous thing to beat, as we well know from some of the media exposure of the recent Falklands campaign. But there is such a thing as pride in one's own country that need not in any way be jingoistic. There can be the pride of our country in probably having given a number of countries in the world their legal systems which otherwise would not have them. We have had the opportunity in our history—and this is history, not nostalgia—of influencing world events in the cultural and legal sense, and in a whole series of other ways. We have done it more recently by the exercise of our moral example. Therefore, I do not think that the United Kingdom needs to contort itself at every turn in order to gain the pleasurable comment of other countries in Europe.

So far as we are concerned we should like to be friendly with everybody. We do not wish to behave with arrogance against any other nation or any other people. We do not see, either, why we should behave with puppy-like subservience to a Community which exists at the moment only in the form of a common agricultural policy which brings very little benefit to the country as a whole, whatever benefits it may bring to the farming community and to the shires of the United Kingdom. This is our view. We want co-operation.

We think that after taking the common agricultural policy out of the EEC—and everybody for the past 10 years has been agreeing every year that it has been in crisis and needs to be reformed—we would have nothing left that could not be easily accomplished by the Council of Europe to which this country still belongs, and in which it started off by indicating its desire and its purpose to participate in the affairs of Europe.

In regard to the Motion put forward by the noble Lord, Lord Ezra, I would say this: the Government have so far been much too soft with their opposite numbers in the European Community. One does not want to evoke too much emotion in this matter, but we are not far away from the day when British lorry drivers were hijacked by the French who did not like the way in which we were apparently interpreting EEC rules. Only this morning we were supposed to lie down under a proposal presumably emanating from that well-known Anglophobe M. Gaston Thorn for the recovery of some £450 million which we are alleged to have been overpaid through some fault in the way that we deal with our own milk marketing here.

These are facts, and they cannot be wished away. If people are going to co-operate with the United Kingdom, and nations are going to co-operate with the United Kingdom, believe me, my Lords, I am all for it, and so are those for whom I venture to speak in this House. We want the area of world co-operation extending far wider than it is. But what we feel on this side of the House—and I must repudiate the suggestion made by the noble Lord that Mr. Neil Kinnock considers on balance that we are better in than out of the Common Market; he must find his own documentation for that—is that our association with our Commonwealth is of far greater importance, and should take a far greater priority, than participating in what, aside from the common agricultural policy, has been a miserable charade.

5.14 p.m.

Lord Fanshawe of Richmond

My Lords, I have listened with great fascination to the not uncontroversial remarks of the noble Lord, Lord Bruce of Donington! I can assure noble Lords that I shall endeavour to keep to the tradition and be as uncontroversial as I possibly can. Your Lordships will also be aware, as many of your Lordships have served in the other place, that some of us who have arrived here from that other place have gone through the experience of making a maiden speech before. By a coincidence, I made my first maiden speech in the Palace of Westminster exactly 24 years ago tonight.

As your Lordships who have served in that House will know, it was a somewhat daunting experience, in that maiden speeches on major debates tend to take place to a fairly empty House after a long series of perhaps controversial parliamentary Questions. On my day it was a day when the Prime Minister was answering Questions, and I rose to my feet and nervously launched into my maiden speech. I was delighted to see a few Benches below me the right honourable gentleman the Member for Woodford, Sir Winston Churchill, sitting listening to me with rapt attention. I was deeply flattered, but totally lost my nerve when three minutes later he wisely decided that I was talking a lot of nonsense, rose to his feet, and walked out of the Chamber for some refreshments. Your Lordships' House has a more traditional and sensible arrangement whereby you inflict on yourselves the necessity, I understand, of remaining in your seats throughout a maiden speech. This is comforting to this new Lordship here this evening.

It is a great pleasure for me to have the chance of making my maiden speech on this particular subject of Europe. I congratulate the noble Lord, Lord Ezra, on coming forward with this important debate at this time. I had the privilege of spending nearly four years as one of the Ministers of my noble friend Lord Home in the Foreign Office between 1970 and 1974, and as such helped him and Geoffrey Rippon in the negotiations which came to a successful conclusion in 1972. That breakthrough was caused, in my view, by the distinguished contribution made by my noble friend Lord Soames, sitting in front of me, who at that time was ambassador for Britain in Paris when he made the major breakthrough in the Elysée which enabled the British Government of that day to make the final decision. This achieved agreement with our friends in Europe and we entered the Community.

I also had the experience of working with my noble friend Lord Whitelaw on the all-party Executive Committee of Britain in Europe as one of the three Conservative representatives on that all-party operation, which I think had a triumphant success in that the referendum proved that the British people were wholeheartedly in favour of this country's joining the European Community.

It is therefore, with that background, perhaps surprising that I should say this evening that I am delighted about the somewhat abrasive quarrelling which is going on in the Community today about how we deal with the financial arrangements for the European Community. It is time that a dose of realism was felt within Europe. The arguments and the discussions about the method of running the Community, which have reached a high pitch, certainly, of publicity over the past few months and culminated in the failure of the summit meeting in Athens, have brought home to all the countries of the Community the real need to get the system right, and get it right quickly.

My noble friend Lord Trefgarne, in a speech which I welcomed as setting out Government policy, underlined the importance that the Government attach to trying to get some sort of solution which will, and must, include some rearrangement of the common agricultural policy, and will, and must, include some rearrangements of the own resources policy. It is clear to all of us that the CAP must now be changed. This is the view of most countries in the Community. I think it is even the view of France. It is certainly the view of Germany, the Low Countries, and Britain. I think it will be changed.

There is also the need to tackle the problem of the 1 per cent. VAT contribution. I was glad to hear my noble friend Lord Trefgarne say from the Dispatch Box this afternoon that the Government do not dismiss the possibility of making changes here, if of course we reach agreement first on the overall budget position. I believe that while waiting for the budgetary position to be dealt with the Community will continue to function. We have the income coming in at 1 per cent. VAT and that will enable the bills to be met.

Then we come to the question of the wider world outside. Most of us must have been disappointed and unhappy that the Athens Conference did not reach any agreement or discuss and have clear decisions on issues such as Spain and Portugal, which the noble Lord, Lord Ezra, mentioned in his speech. I would add the problems of the Lebanon and Cyprus, and East-West relations. If there was anywhere that the Community, if it were working together as a unit, should be bringing its views to bear it is in the possible rôle of European countries in Cyprus, the rôle of the various European countries standing beside our American allies in the Lebanon and the even more important area of East-West relations.

Will the Community survive all these quarrels and difficulties? I do not take quite the gloomy view which the noble Lord, Lord Ezra, takes although I realise that he was producing encouraging and important suggestions for us to consider this afternoon. I believe that the Community will survive. It is in nobody's interests that it should disintegrate. I think agreements will be reached because the governments and the heads of state and government are determined that they will be reached and that they will be reached this year.

The second area of concern that I should like to mention to your Lordships has not been raised by any of the noble Lords who have spoken so far in this debate; namely, that of the relationship between Europe and the United States of America. The noble Lord, Lord Ezra, and the noble Lord, Lord Bruce of Donington, in his robust remarks, made it plain that there was a world outside Europe. All of us realise this. It is important that Europe as a whole operates within that world and brings its influence to bear; the influence of the whole of Europe being so much more than the influence of the various parts that make it up. There is building up in America at present a dangerous wave of isolationist pressure upon the American Administration which we should not ignore. Many of your Lordships might have read a interesting article last week in the Economist on this subject.

Europe sees the United States of America as trigger happy, protectionist, inward-looking and perhaps simplistic. How does the United States see Europe: protectionist, inward-looking, squabbling and quarrelling—the noble Lord, Lord Ezra, mentioned that in his remarks—and the feeble will among Europeans in dealing with both East-West relations and defence?

Your Lordships know, we all know, that that is not true and that these are extremist attitudes on both sides of the Atlantic. But, at the same time, there are real problems. Governments must deal with these problems which face us at this time. How will they do it? Governments are cautious. They always have been and I know, having been a Minister, that Governments do not take decisions until they no longer can avoid taking them. This applies to Governments in Europe and across the Atlantic, including of course the Government in the United Kingdom. The United States is pre-occupied with a very important presidential election which will increasingly concern them during the forthcoming months ahead. All of us who have spoken so far in this debate have said that Europe is pre-occupied in studying its own navel and trying to make sure it sorts out its own problems during the forthcoming meetings. But both Europe as a whole and the United States of America are inextricably locked together. We are locked together in defence, through the world economy and economic policies and through history. I do not believe that either the Americans or ourselves—I talk as a European—will allow this close link between our two nations to split.

So where does this leave us now? Europe will recognise the situation by the United Kingdom continuing to provide the leadership which the Prime Minister and Foreign Secretary have provided in a series of meetings with their determination to get the financial and structural arrangements of the Community right and to get them right quickly. Thereby we shall have a stronger and united Europe which will prove a more influential and respected friend with the United States Administration and which will have its effect on the United States electorate, which is about to embark on electing a new president.

A debate like this can be immensely useful in achieving these objects. I am glad to have had the opportunity to make my maiden speech in it.

5.26 p.m.

Lord Walston

My Lords, it is not a duty, it is a genuine pleasure to congratulate and thank the noble Lord, Lord Fanshawe of Richmond, for the speech to which we have just listened. I can assure him that even if there were no such convention in this House as that to which he has referred concerning maiden speeches, not a single noble Lord who was listening to him at the beginning of his speech would have had any temptation or inclination to leave. We listened with rapt attention and, so far as I am concerned, with almost entire approval and agreement with what he has said. We are fortunate to have his very great experience both ministerially and in another place to help us in this Chamber.

I am also most grateful to my noble friend Lord Ezra both for giving us the opportunity of debating this highly important and topical subject and also for the content of his speech, for raising our eyes above the narrow horizons, to which most people who address themselves to the Common Market confine themselves, and to pointing us in a much more exciting direction.

I must confess I was slightly disappointed that the noble Lord, Lord Trefgarne, did not respond in a similar manner, but I understand the constraints to which he is subjected and I am sure his heart is in the right place even though his tongue did not always mouth the right words.

I am grateful to the noble Lord, Lord Bruce of Donington, because he has answered a question which a long time ago puzzled me, though I must confess I had forgotten it until I listened to his speech. Some of your Lordships may remember that many years ago, in the days when we were still subjected to fogs, there was a headline in the Evening Standard which read, "Fog in the Channel. Europe cut off". I often wondered who could have written that. Clearly it must have been Lord Bruce of Donington, or at least it was inspired by him.

I shall ask your Lordships to bear with me if I start my speech by referring to a subject which may seem rather wide of the subject we are discussing, but I am encouraged to do so by some remarks of my noble friend Lord Ezra and also by the fact that I believe it illustrates a point which is of considerable importance.

We are fortunate in this country in that, quite apart from the Channel which surrounds us, we are surrounded by neighbours of more or less like mind, with similar forms of government, similar attitudes, similar histories and similar traditions. Other countries are not all so fortunate. The Soviet Union is not fortunate in that way at all and it has had to take certain steps in order to safeguard, as it sees best, its own frontiers. We know how it has done so—by military occupation and domination from the Baltic to the Black Sea, and more recently extending into Afghanistan. That is a policy we certainly do not approve of in this country, but we could or should understand it. Whatever one's feelings about it may be, it is a policy which can hardly be said to have succeeded because the countries in question are no more well disposed to the Soviet Union now than they were when the Soviet tanks first rolled in. In fact, one can say that the opposite is true. It is entailing for the Soviet Union a great deal of expenditure, both military and economic, and has earned for the Soviet Union a very large degree of ill will in the uncommitted world.

The United States is in a similar position, or in a position which at least bears some similarity to that of the Soviet Union. It has on its southern borders a large series of countries whose governments are not similar to its own and whose attitudes in very many cases are different. But when events have taken place in those countries—the first of them being Cuba—where a government is overthrown, the United States has reacted, and is still reacting—we see it in Nicaragua, El Salvador and Grenada—in a way (and I take no pleasure in saying this) which is more reminiscent of the actions of the Soviet Union than of a civilised European country.

It has reacted with force. It did not say to Castro, when he first came there—and this goes through a whole range of American Administrations—quietly, "Well done; you have overthrown an oppressive, undemocratic and unjust régime, You have introduced, in a country where there are enormous extremes of wealth and poverty, an administration which is pledged to bringing about greater equality, increasing education and health services and so on. We shall help you. We demand from you, to the best of your ability, proper restitution for the property you hake taken from American citizens, but what you are aiming at is in line with what we citizens of the United States stand for".

It has not said that. It has reacted with fear and horror and has said, "Here is the first outpost of the Soviet Union, our enemies, right on our doorstep, within a few hundred miles of our borders". It first reacted with some form of military attempt, which failed, and then with an economic boycott. And so this has continued all the way through in the whole of its relationships with Latin America and particularly with Central America. Wherever governments have appeared which have attempted to bring about a more just form of régime—maybe too Left-wing for the desires of many of us and in many cases certainly not democratic, but also in many cases replacing governments which were not democratic—and a rather more equitable distribution of wealth and a rather better life slightly closer to American ideals, the American reaction has invariably been one of fear, horror, opposition, and of support for the original régime or for those who are trying to overthrow the new one. It has not worked, and it is not working in the Caribbean area. It is not working in Central America——

Lord Soames

My Lords, it has nothing to do with the subject at all.

Lord Walston

——and I do suggest that it would have been of enormous value to the United States through this whole period if there had been not simply the voice of the United Kingdom (a little whispering voice, if indeed there ever was one) but the strong voice representing 270 million people with the whole European tradition behind them, friendly towards the United States and sharing all the basic values. And if that voice had said to them, and were to say to them now, what our views are here, what we believe is the right attitude to take—we cannot impose our will on them; of course not—as other noble Lords have said, as a group of European Foreign Ministers or as the European Council, speaking with one voice, whether it be about Southern Africa, Central America, the Middle East or South-East Asia, there is the weight and the influence which we should be able to exert.

After all, it was—was it not?—the intention of the founding fathers of the European Economic Community that it should not remain purely an economic community the whole time, but that it should build up in this great economic and industrial complex a super-power, if one wishes to use that word, which would be neither the super-power of the Soviet Union, with its very manifest faults, nor the superpower of the United States, with its very manifest virtues but also, one has to admit, with certain views based largely on the lack of experience that we in Europe have—to build up just such an organisation and an agglomeration of like-minded countries, that would contribute substantially to world peace and would not simply contract out and become a little Scandinavia, leaving the great powers to decide the fate of he world.

But we have to admit that during these last years, having got over the initial teething troubles of the Community and having set it on the right course, increasingly all the meetings of the Community, whether in the Council of Ministers or in the European Council or wherever it might be, have been taken up with haggles over the £400 million, who owes whom what, what is more just for the poor, what is my money, and things of that kind. Therefore, other and far wider and more vital issues have been neglected. Those of us who, like the noble Lord, Lord Fanshawe, and the noble Lord, Lord Soames—and we are looking forward very much to hearing what he says—earlier worked for Europe and for our accession to Europe did not work solely in order to have an organisation which devoted its time to discussing surpluses of butter or olive oil; we worked for something very much more important than that.

The Community can still be that, but leads have to come from all the countries concerned and they are regrettably absent. Above all, I believe—I hope this is not unduly chauvinistic—leads should come from this country. The noble Lord, Lord Bruce, reminded us (in rather less temporate terms than my own) of the contribution it made to the saving of Europe between 1939 and 1945. This is a country, with a huge industrial base, with great wealth from oil and other resources, but above all with long traditions of parliamentary democracy and peace-keeping throughout the world. Surely it is for us to take the lead now, make the Community into what the founders wished it to be, and not let it deteriorate into what it is in danger of becoming.

5.40 p.m.

Lord Soames

My Lords, it gives me infinite pleasure to be the first speaker on this side of the House to whom it falls to congratulate my noble friend Lord Fanshawe on what was, without any doubt, an excellent and refreshing speech on this tricky subject of Europe. It gives me such pleasure for a number of reasons. First, he and I have been friends, not only politically but in the holidays as well, for some 20 years or more; and, secondly, he and I have been involved closely together in this European saga before, during and after British entry, and I have the greatest respect for the part that he played therein. He has ministerial experience in the Foreign Office, and he knows a great deal not only about Europe but also about other parts of the world; and, of course, he has considerably more general political experience as well. So I believe that the speech was an outstanding example of what speeches should be on a subject such as this—unlike every speech that has been made during this debate—and I am sure your Lordships will join me in hoping that we shall hear frequently from him. Though it is a formality to say that, in some ways, on this occasion I personally feel it most deeply.

I fear that I cannot be so complimentary about the noble Lord, Lord Bruce of Donington. He said that he thought the Prime Minister had gone too far in telling our partners that she could envisage a situation where the United Kingdom Government could agree to an increase in national contributions to the Community. He also said that, anyway, our partners are very lucky to be so close to us geographically. If that is the view of the party for which he is the spokesman on these matters, it is rather a shame that they have changed their minds and now say that they are in favour of the Community, because I promise your Lordships that that is no way to run that railroad. If he thinks that that is the way in which a future Labour Government will treat the Community, then I trust, when the next election comes around, that that is the sort of stuff that we shall hear, because the people will have none of it.

Having got that off my chest—I am sorry that the noble Lord is still smiling; I hoped that he would look sad—I must add my gratitude to the noble Lord, Lord Ezra, for promoting this timely debate. I agreed very much with the thrust of his Motion. But I did not agree with everything he said and I rather shared the feeling of my noble friend Lord Trefgarne, when he replied to him, that there was an inference that, perhaps, we need not push too hard here and there over certain issues which are more vital to this country than to others. The test here should be whether or not it is vital in the Community's interest to press on these matters—I shall come to them later in my speech.

There is no doubt that, before the Community can play any role in the world for which its history and its economic and political strength have fitted it, it has to resolve these major internal problems which have bedevilled it for so long. Until those are solved, the Community will not be taken seriously elsewhere as a major force in world affairs, and neither will it deserve to be.

The solution to these problems has been so long postponed—at best, they have been patched up on a year to year basis—that the moment of truth has arrived. The bad news is that, as a result, these problems have now grown to such vast proportions as to create very major political difficulties for all individual member states. The noble Lord, Lord Ezra, referred to agriculture, and he was quite right. The problems of the CAP have been allowed to dribble on for much too long. I remember when I was at the Commission pressing very hard and asking, "Should not finance Ministers be involved in the price fixing, as well as agricultural Ministers?" But it never happened; it has been only agricultural Ministers. Each one has scratched the other's back. One wanted an increase in the price of wheat, another wanted an increase in the price of milk and another wanted an increase in the price of tomatoes or whatever it was, and they said, "Look, old boy. I'll not get in your way if you don't get in mine". That piled Pelion on Ossa year after year. That is the bad news.

Ironically the good news is, as I said, that the moment of truth is arriving with the Community's impending bankruptcy, so that a failure to agree on a major package of change during the course of the next few months would put at risk and imperil the Community's very existence. As I firmly believe that there is not one member of the European Community who wants it to disappear, I, like my noble friend Lord Fanshawe, have a certain degree of confidence, for I believe that this will concentrate wonderfully the minds of member governments.

My noble friend Lord Trefgarne said that this is a crisis which the founding fathers of the Community could not have foreseen. Let me suggest to him that the reason they did not foresee it is that they always believed that the Community's interest would be properly served by the member states. They never foresaw the situation where every member state would think in a totally selfish and nationalistic manner, and they believed that the Community's interest would get its fair share of attention. That is what has not happened and that is why they could not have foreseen it.

I think there is now general agreement on the importance to each country of its membership of the Community, and also appreciation that the Community is stronger than the sum of its parts in both economic and political terms, in spite of what the noble Lord, Lord Bruce, told us. I could give him a number of examples where member states of the Community have benefited in international negotiations—I was lucky enough to have experienced some of them myself—from being a Community, instead of negotiating as individual countries of 50 million or so people. So I think that that can be taken as read and understood.

Yet, in the Council of Ministers, the Community's interest is given but scant attention, and those meetings have consistently been portrayed by the national press in all our member countries as gladiatorial contests between different national interests, with winners and with losers. This time round, with the threat of bankruptcy hanging over the Community's head, I hope that more regard will be paid to the general interests of all members and to those of the Community itself.

How would an independent observer view the problems which are facing the Community? First, he would be struck by the fact that it is about to go broke. He would be amazed to see that, despite this, the cost of the common agricultural policy had been allowed to increase by no less than 30 per cent. in the last year, at a time of very great financial stringency in all member states, and that it now represents some 65 per cent., or more, of the total Community budget. This figure might be appropriate for a community of developing nations where about 80 per cent. of the people work on the land, but it is certainly not appropriate for a community of advanced European nations where, on average, about 8 per cent. of the people work on the land. That would, I believe, astonish him somewhat.

This observer would also be astonished that the arrangements for national contributions to the Community have become so ill-balanced that year after year the Community's further development is shelved while member states, and their Ministers, spend months arguing about how the burden of costs for a particular year should be more equitably shared.

Common sense, and the Community interest, would surely prompt our observer friend to demand that governments should agree during the next few months to create, first, new and effective machinery to limit the rate of increase of agricultural spending in relation to the Community's total expenditure and, secondly, a more equitable long-term financing arrangement which takes some account at least of the relative prosperity of different member states. Common sense and Community interest would also demand that solutions must be found to all those problems before governments agree to increase national contributions to the Community.

As one who has, I hope, shown a keen awareness of the Community interest during the past 20 years or so, I do not believe that these issues to which I have just referred should on this occasion be either burked or ducked. They must be faced up to. If they are not faced up to and resolved now, they never will be. I say this, not because I believe that if those issues are resolved it will benefit this country but because the Community interest demands it.

Having said that, I would make two pleas to the Government through my noble friend Lord Trefgarne. First, such solutions may be fine and dandy for us, but because they have been allowed to grow so large they will create very considerable political difficulties for some of our partners. Although I do not believe that the objectives of obtaining modifications to the common agricultural policy and a long-term financial agreement should in any way be jeopardised, we must be aware of other nations' difficulties, which also have Parliaments like ours and which also have public opinion to think about and elections to face.

So while, as I say, Community interest demands that these problems should be resolved on a long-term basis, we must show understanding and goodwill towards the needs of our partners, provided that those needs can be shown by them to be in the interests of the Community as a whole and are not just mere national interest—in the same way as I honestly and earnestly believe, with the experience I have behind me of these matters, that what Her Majesty's Government are asking for here is genuinely in the Community's interest.

Secondly, I would ask Her Majesty's Government to consider how we are going to arrive at such a package. May I call in aid the experience which I had during the course of the enlargement negotiations, when my noble friend Lord Home of the Hirsel was Foreign Secretary? The preparations were laid by long, serious and private diplomacy with a number of countries. Comparatively few ministerial meetings were held. Their object was largely to tie up the ends which diplomacy had left untied. So far as I remember, there was one heads of government meeting on a bilateral basis. It took place when Mr. Heath went to see President Pompidou. But it was only a brief meeting. Everything had been agreed, to a very large extent at least, before that meeting took place. That is what heads of government and heads of state meetings ought to be about. They ought to put their imprimatur on agreements arrived at by those whose job it is to make those agreements—that is, the Foreign Secretary and diplomats. It was not until the entry negotiations were completed that there was a general meeting of heads of government and heads of state.

We seem now to have arrived at a somewhat different situation. Heads of government, who are extremely busy people and who have lots of things to worry about, visit one another. They spend one day doing it because they cannot afford any more time. The impression is given that it is for heads of government to decide these matters. Of course it is for heads of government to lay down the guidelines and to keep an eye on these matters. The March meeting is only a couple of months away. If it fails, as I fear it will, because I do not believe that the preparations have been adequate——

Lord Bruce of Donington

My Lords, can the noble Lord describe to the House what role he thinks COREPER should undertake in the next six weeks or so?

Lord Soames

My Lords, undoubtedly it plays its part. It is a meeting of the permanent representatives of all the member states meeting in Brussels. It always has played its part, it always will and, if anything, it should, in my view, play more rather than less a part. But there has got to be proper preparation. If the March meeting fails, the next meeting will be in June. With France having the presidency and being intent upon having a successful presidency—as is every country when it has it—and with France having particular problems, I believe it to be vitally important that during its presidency, France, which did so much to create Europe, should succeed in saving the Community from its own destruction.

Lord Gladwyn

My Lords, would the noble Lord give way?

Lord Soames

No, please, I must go on; I have been talking for too long as it is.

I think heads of government should encourage those in more lowly stations of life to get on with the work, give them broad instructions and tell them they have to find a way. It is no use leaving a lot of unresolved matters to summit meetings.

It is just possible that the next few months may prove to be a watershed in the Community's history. It may just be, as Lord Fanshawe thought, that the impending financial crisis will prove to be the catalyst—given the political will—for what are generally acknowledged to be much-needed internal reforms of the Community, leading to a stronger Community, more relaxed with its internal relationships, and more self-confident abroad.

We will soon see, and it is my hope that Her Majesty's Government will play a leading part in that development, showing a good and proper mixture of determination on the one hand, and understanding and flexibility on the other.

6.1 p.m.

Lord Mackie of Benshie

My Lords, I, too, should very much like to congratulate the maiden speaker: a curious tone for noble Lords who have spent years in the other place, but I greatly enjoyed his speech and look forward to hearing him many times again.

I also greatly enjoyed the speech of the noble Lord, Lord Soames, and agreed with practically every word he said. I always find it interesting to hear him giving tongue in a bluff and forthright manner, and then to reflect that this bluff and forthright manner must conceal considerable cunning as he has been so successful in negotiations and diplomacy in the past. I wholly approved of his remarks about the speech of the noble Lord, Lord Bruce of Donington, which I also greatly enjoyed. Really, it revealed once again that the basic contradictions of the Labour Party are still there and are still being expressed openly to the confusion of the rest of the party, and I must say rather to the delight of the Liberal Party and their allies on these Benches.

In his speech the noble Lord, Lord Ezra, put the main points, or the broad point about agriculture, but I should like to develop that matter a little because we are having a tremendous amount of nonsense talked about agriculture at the present time. There is a sort of campaign against it on the ITV and the BBC, all having distorted programmes on what is actually happening in agriculture.

I have been a member of your Lordships' EEC Scrutiny Committee, Sub-committee D, for about eight or nine years, and in the whole of that time the farmers on that committee have been saying that what is wrong with the policy is that we are not tuning it properly. People are talking about the reform of the CAP. In fact, the CAP in its present form is here to stay. What is wrong is that there has not been the political will to look into the future. As the noble Lord said, at every meeting of agricultural Ministers ridiculous bargains were struck and no council ever had the collective sense to see that the CAP for the long-term interests of the farming community really could not go on ignoring the laws of supply and demand in the way that it had done. All the sensible farmers in this country are perfectly well aware that because of this the cutbacks must be a great deal more stringent and the financial loss they will suffer must be greater because of the lack of foresight in the past, but they are prepared to take it if it is fairly done across the Community.

I think we really must watch, as my noble friend Lord Ezra said, that we do not throw the baby out with the bathwater, because the CAP has been most enormously successful. When, for example, people talk of being able to buy grain in the world at far lower prices than the CAP prices, the fact is that 10 years ago we were, in Europe, an importing nation to a considerable degree. We are now responsible for 25 per cent. of the world trade in grain. If that 25 per cent. were not going onto the world market, I leave your Lordships to imagine what the world price of grain would be; it would be a great deal higher than it is now.

When the noble Lord, Lord Bruce of Donington, says that the support for farming in this country has been a disaster for us, he really ought to look at the actual facts. I have some of them here. I will not bore your Lordships with many figures, but it is a fact that, if you take it two ways, in 1973—and I am now moving the prices up to present-day prices—the total import of food, feed and live animals into this country was something like £8,500 million. By 1982 that had dropped by £2,000 million to £6,440 million. If you take it the other way and multiply up the food production figures in this country in the same way, in 1973 the value of gross agricultural output was something like £5,000 million, and in 1982 it had gone up £5,900 million. The actual rise was about £700 million, and when you multiply that by three you again get £2,000 million which agriculture has saved importing into this country.

That is a great deal of money, and when you also consider that for the first time in history our manufacturing imports are greater than our manufacturing exports, it would be very foolish to endanger this contribution which agriculture is making to our financial well-being. I therefore think that the Government are going the right way about it, as far as we can see from the excellent session we had in Sub-Committee D this morning with the Minister of Agriculture. They are prepared to look at the views of the rest of Europe, and they are prepared to adopt some of their methods so long as they are fairly applied across the Community.

In this country we keep forgetting that because we grew only half of our food and we bought half from abroad, it was much cheaper for us to finance the farming community in this country by deficiency payments, whereas on the Continent the original Six had always kept up agriculture by a simple method of protection. Who is to say that ours was a better method, really? In fact, their industrial output and their industrial prices certainly did not seem to suffer because the price of food was higher there than it was here.

So I think we have got to consider their attitudes as well as our own. That we have got to cut the cost, there is no shadow of doubt, but I think it has got to be done fairly gradually. The cuts this year have got to be hard; but more than anything I think the farming community all over Europe needs to know where they are going. They need to know that they are going to have a consistent policy; that they can look forward for five years, and that for five years, for example, the price of grain will not go up. One of the worst things that happened—and the Commission were to blame here, too—was that in 1982 they raised the price by a substantial amount, having said for the previous two years they were all for a prudent pricing policy. So, consistency is one of the things that we must go for.

I will not go into detail, but I want to say something about the bargaining which is going on. Both the noble Lord, Lord Bruce of Donington, and the Minister rather chided my noble friend Lord Ezra for saying that we should perhaps be a little less pushy in our bargaining. My noble friend did say that, but just because you bargain in a more reasonable way it does not mean that you will get any less out of it than if you bargain in a particularly strident way. For example, I know as a result of the weather we have been having in Scotland recently that if one gets into a motor car and puts one's foot hard down on the accelerator in snow, one will get nowhere. But if one takes it gently, one is apt to get somewhere. My noble friend Lord Ezra had a great deal of experience in bargaining with a very skilled bargainer—the noble Lord, Lord Gormley, who appeared to get far more for his members by that method than his successor appears to be getting by his.

I therefore think that the Government should heed my noble friend's advice and try to improve our image. If you go into negotiations with people knowing that you want to make a success of the partnership, then they will be more reasonable. But if you holler and shout all the time that Britain is what you are fighting for, then they will say that it is not a real partnership. That was very good advice from my noble friend, and I was glad to hear it echoed by the noble Lord, Lord Soames.

I repeat that we are in Europe for very much more than simply our economic advantage. We are in Europe also for our very survival in a strange and difficult world. I believe that most noble Lords who are at the kind of age at which most of us are, and who know about the last war, acknowledge that the main purpose is for us to knit, together, all Christendom, instead of warring, to make Europe into a really cohesive unit which can do something for the peace of the world as well as for the prosperity of its citizens. That is the tone and the object of my noble friend's Motion, and I have much pleasure in supporting it.

6.12 p.m.

Lord Hatch of Lusby

My Lords, the noble Lord, Lord Mackie of Benshie, and other previous speakers, mentioned that there are members of the Labour Party who think differently from others. That is not altogether extraordinary. If he has to comfort himself with pleasure for the Liberal Party because there are people in the Labour Party who hold different views, then the fortunes of the Liberal Party must be even lower than those indicated by the opinion polls.

There are members of all parties who hold different views about the EEC, and indeed about most international policies. I make no bones about the fact that I was always opposed to British entry into the EEC. I was opposed not on the traditional ground of extreme nationalism, which I regret—but on the exact opposite ground; I considered that joining the EEC was joining a rich man's club, whereas true internationalism would have spread our influence a great deal wider. It is being spread wider and will, I hope, continue to be spread through such organisations as the Commonwealth and the United Nations.

I wish particulary to thank the noble Lord, Lord Ezra, for introducing this debate and for the remarkable speech he made at the beginning of it. But perhaps I may draw his attention to one point which, I believe he would agree, should be corrected right from the start. The noble Lord gave a list of manufacturing commodities produced by the newly-industrialised countries, which might be considered as competitors in the industrialised world. He included in that list textiles. I have made this point before in your Lordships' House and I want to keep emphasising it. The import of textiles into this country from the developing countries has been steadily declining, whereas the import of textiles into this country from the industrialised world has been continually increasing.

If one looks at the percentages, one can see that is so. I am sure that the noble Lord, Lord Ezra, would not wish to deceive not only this House but, far more important, the workers in the textile industry, because that argument is often used in the trade union movement as a canard for import control on that precise commodity which always starts an industrial revolution. It should be clearly known that the rapid increase in textile imports into this country has come increasingly from the developed world—from America and Western Europe—and not from the developing world. The proportions will show that.

Having said that, I should like to take up the most imaginative and constructive point made in the noble Lord's speech, when he mentioned the necessity to raise the level of the European debate and to face fundamental issues. I want to face simply one issue this evening; the relationship and responsibility of the European Community for the developing world. I will take just one example to show the significance of this aspect. It is the best example for those who believe that the European Community has been promoting the economic development of developing countries. It is the case of the Ivory Coast, which has been known as the economic miracle of Africa and which, during its first 10 years of independence, had an annual growth rate of 10½ per cent. and a per capita growth rate of 5 per cent; achieving what is, for Africa, the remarkable figure of an average income per head of 286 dollars.

This is the economic miracle. It was of course the relic of French colonial rule. During the period of French rule, the economy of the Ivory Coast depended almost entirely on the export of cocoa, coffee and timber, although there was some diversification upon independence. But the important issue, whether the Ivory Coast was under French rule or independent, was that the plantations which produced those crops were owned almost entirely by foreigners. When, after independence, economic advisers persuaded the Government that the objective should be to increase exports of agricultural products, it was exports produced on those foreign-owned plantations which almost entirely dominated the Ivory Coast's economy.

Agriculture did increase. It increased by about 5 per cent. in the first 10 years. Industry increased by a great deal more; by more than 18 per cent., mainly as import substitutions—but note that no major industrial plant was ever installed on the Ivory Coast. It was the use of local materials as import substitution, rather than the growth of an industrial base, which formed the economic policy of the government. That led, as we have seen all over the world, to a rapid increase in urban populations. The population in the capital of the Ivory Coast, Abidjan, increased from 125,000 to more than half a million. Again, this is typical of the third world as a whole.

It is also interesting to note that it was during this period—at the height of French influence in the EEC in the post-colonial period—that French investors saw the opportunities of places such as the Ivory Coast, and particularly the Ivory Coast, for investing capital, securing privileged French trade concessions (inevitably, the French Government secured almost unanimous support for their foreign policy from the ex-French colonies), and now becoming the associated states of the EEC and able to use development funds and capital drawn from the whole of the EEC.

What was the result? The first result was a tremendous increase in the European population of the Ivory Coast itself; it trebled its numbers during the first 10 years after independence and reached a figure of 35,000. But what were they doing? They were in charge of banking, they were in charge of industry, they were in charge of commerce, they were in charge of technological developments, they owned the plantations and they were advisers to the government. In fact, well after independence, five years after, there were more private funds being sent overseas from the Ivory Coast—not just more, but twice as many private funds—than all the foreign aid and private capital combined. There was in fact a drain of capital from the Ivory Coast. Where did the drain go? It went to France and via France to the EEC.

In other words, it was countries like the Ivory Coast that were subsidising the EEC. They were subsidising it by the creaming off of their surplus capital, transformed into francs, expatriated from Africa and other developing countries to Western Europe, and they were subsidising the growth of the EEC economy. This was directly subsidised by the activities of the European capitalist combines, plus a large number of multinational companies, operating in the developing world and exporting their capital in this case to the European Community.

But what was happening to the people themselves? What was the economic miracle so far as the Ivory Coast themselves were concerned? Well, again typical figures: the contrast in living standards between the urban and the rural populations in the Ivory Coast was calculated to be one to 12; townsmen bought eight times more consumer goods than the typical average rural dweller. Only about half of the increased export earnings actually went to the peasants, and over 2 million people in the Ivory Coast alone, that is 85 per cent. of the people, remained as subsistence peasants.

Of course, the theory was, the theory often still is, that if you create a self-sustaining economy that will then be inherited by the Africans. It has not been inherited by the Africans in the Ivory Coast. It is still owned by the Europeans, and it is still exporting its capital to develop Western Europe. Then there is the theory of the "trickle down", that Africans will become middle class, that they will be able to increase their living standards as a result of the European activities in these countries. It has not happened. It did not happen in the ill-fated Central African Federation; it is not happening in the ex-French colonies that are now associate members of the EEC.

Yes, agriculture has been expanded; yes, more is being produced and a great deal more is being exported, but the Ivory Coast is still a net importer of food. It has not been an effort and a policy designed to increase the food production of the country itself; it has been an effort to increase the export of cash crops, thus again subsidising the economy of the already developed European countries. And, as we have heard this afternoon, there is the surplus of European agricultural produce. Where does it go? A great deal of it goes to third world countries. And what does it do there? It undercuts the local farmers; in many cases it actually handicaps the growth of indigenous agriculture.

Again, the government's resources, which are very largely dependent on commodity prices, are dependent on what is decided in London metal markets, in the commodity markets, or in Washington or in New York, but not in the countries themselves. In this case, in the case of the Ivory Coast, the Government's revenues depend almost entirely on the price of cocoa. When there was a slump in the price of cocoa in 1971 there was an immediate financial crisis, leading on to that debt burden we have heard mentioned, and rightly mentioned, so often in this House in various debates, the debt burden which is threatening not just the developing countries but the whole financial structure and stability of the world.

The debt burden of the Ivory Coast increased by 30 per cent. in the first 10 years of independence. It was the IMF that pointed out that, whereas 75 per cent. of public investment could be guaranteed from internal sources at the beginning of independence, that figure had fallen to 60 per cent., and this was during a period of comparatively high export prices.

So what happens? The government has to impose austerity with all the political pressures that a policy of austerity is bound to bring, and with the additional burden—as I think most noble Lords, even those who are firm supporters of the EEC, would agree—of the degree of protectionism which is a constant feature of the policy of the European Economic Community. And, of course., so far as our Government is concerned, when they removed exchange controls in 1979 what happened? That new capital did not go to the developing countries either directly or through Europe. It went into the developed countries. The investment from this country in Western Europe from 1979 to 1982 rose by 700 per cent.; the investment in North America rose by 40 per cent.; investment in this country rose by under 15 per cent. That is a measure of the investment which was going into the already developed world, indeed going into the countries where we find our major competitors.

We are approaching the time for renegotiation of the Lomé Convention. I have a great deal of admiration for what has been done at Lomé; although I do not think it is enough; I think it often takes wrong directions. I think there is a great deal too much charity and not enough solid hard digging work in giving the technological advice to newly developing countries to enable them to produce more themselves, to become more self-sufficient, to produce more food, to develop their own manufacturers.

I hope that the Government will have something to say tonight about their plans for the new Lomé Convention because, quite frankly, many of us who were originally opposed to British membership of the EC recognised that the EC is there to stay for the time being. Just as we disapproved of the structure of the House of Lords but recognised that it was going to exist and should be used, so in the same way we believe that as the EC exists it should be used for constructive purposes so long as it remains an international institution.

Surely the whole theme of the opening speech of the noble Lord, Lord Ezra, and the theme I would support 100 per cent., is that the European Community and all its institutions are on trial. Unless they can face, meet and solve the fundamental challenges of the human race, of human kind, and make a significant contribution to these fundamental human issues, the EC will go down into the dustbin of history. The EC is on trial. If it succeeds it will survive. If it does not succeed in facing these basic issues and, above all, the issue that divides the world into rich and poor—and it has the opportunity to do so—and build bridges instead of using the developing world to subsidise the industrialised West; unless it recognises that the survival of the West depends upon the revival of the developing world; unless the EC takes that view it has no chance of surviving. If it does take that view it will have the support of those of us who were originally opposed to British membership.

6.32 p.m.

Lord Banks

My Lords, I hope the noble Lord, Lord Hatch of Lusby, will forgive me if I do not follow him into the interesting territory he has just been exploring. My noble friend Lord Ezra performed a valuable service today by raising this important matter and I should like to underline the case he has made in support of the Motion. That case is based on the assumption that we want to see the European Community play a significant role in the world and that we want to see Britain play a significant role in the European Community. The noble Lord, Lord Bruce of Donington, has never wanted that and has always made that very clear in this House. He did so again today. But we are not discussing whether Britain should be in the Community. We are looking to a future in which we assume that that will be the case.

The Athens summit, as many noble Lords said, was a failure. At its conclusion it was not possible for the heads of government to agree on a common communiqué and we may well ask who or what was to blame. Much of the European press judged that national sovereignty was the culprit. One Luxembourg paper said: We all seem to have forgotten that Europe has become an absolute necessity". It went on to criticise the bickering which took place in Athens as "pathetic". It condemned the inefficiency of the European Council. But if national sovereignty is rightly blamed in general, the British Government in particular came in for considerable criticism. One Danish paper described the summit as, Thatcher versus the rest". The word "intransigent" was much in use. My view is that, while it would be absurd to try to lay all the blame at the door of the British Government, they can be criticised, as my noble friend Lord Ezra said, on account of the image which the Government have managed to create and also for a reluctance to make concessions.

I am convinced of two things. First, that while it is right to seek reform of the common agricultural policy; right to seek to reduce over-production; right to seek to help the poorest rather than the rich, and right to seek to eliminate waste, it is perhaps unrealistic to suppose that a significant reduction can be obtained in the total at present spent on agriculture. It may well be spent differently. We were told earlier this afternoon by the noble Lord, Lord Trefgarne, that the amount of the Community budget which is now taken by the common agricultural policy is 65 per cent. If one refers back to 1974 one sees that at that time it was 75 per cent. That is contrary to the general impression. Most newspaper reports suggest that there has been a steady increase in the percentage taken by the common agricultural policy, and use such phrases as, "the policy which now takes two-thirds", as if that is a peak which has just been reached whereas, although there have been fluctuations from year to year, the general trend over the past 10 years has been for the percentage to decline. The population involved in agriculture in the Community in the past 20 years has halved and there has been a steady decline from 1958 onwards.

We must bear in mind that a freeze in farm prices overall, such as the Commission is now very understandably recommending, does mean a reduction in real income. It means a reduction in real income for all farmers, including British farmers. When we reflect on the militancy which we have seen among farmers on the Continent recently we must realise the importance of what the noble Lord, Lord Soames, said. We must realise the difficulty in which the governments of our partner countries are placed in this matter.

I wonder whether in these circumstances it is sensible to argue, as I understand the British Government argue, that savings must be made in the common agricultural policy to finance other expenditure within a total budget not significantly increased. I understand that the Government are prepared to consider the possibility of increasing the resources and the expenditure of the Community but not until this first exercise has been carried out. I shall be most grateful if the noble Lord, Lord Trefgarne, can tell me whether that is the position which the Government take and whether they feel, in view of the situation I have described, that that position is tenable. Surely we can only expect a substantial reduction in the percentage taken by the common agricultural policy if the total EC budget is itself substantially increased.

Lord Bruce of Donington

My Lords, I am most grateful to the noble Lord for giving way. Will the noble Lord consider the possibility of transferring substantial sums from the "guarantee" section of the EC budget to the "guidance" section? That would accomplish a limitation to the unrestricted nature of the obligatory expenditure under the guarantee section and a reinforcement under the guidance section for the assistance of small farmers, and would in fact accomplish the purpose of limiting agricultural expenditure.

Lord Banks

My Lords, I certainly would be prepared to consider that, but within the limitations that I set out earlier that affect the agricultural position generally and the political difficulties relating to that.

My second conviction is that the problem of the British contribution will not be solved until the budget of the EC is substantially increased through spending on other common policies from which we shall gain more than we do from the CAP. I think it is important to realise that the figures that we are discussing are relatively small. The EEC budget takes rather less than 1 per cent. of the gross domestic product of the EEC, or about 2 per cent. of the expenditure of national governments. As the noble Lord, Lord Trefgarne, earlier told us, the British Government have secured rebates which I think have averaged about £800 million over the past three years. But, of course, when compared with £125,000 million, which is the total Government expenditure, £800 million is not so large as may at first be suggested. So we see that the figures on which the whole argument is based are comparatively small.

We must remember that the contribution from the United Kingdom is not "our money", as it has I think been described by the Prime Minister, for it has been agreed by the member governments that it comprises part of the resources of the Community. When we ask for a rebate, however justified we may be, we are asking that the Community should return money which is its money; which has been collected in our country, but which is part of the resources of the Community.

I know that the British Government are not seeking a juste retour—a return equal to the national contribution. They have made that plain. To insist on that would be to undermine the basis of the Community. Nevertheless, a continual battle for refunds of Community money as the way to correct the imbalance—and I fully recognise that there is an imbalance—fosters ill-feeling.

As we have heard, next month the leaders will try again, and I should like to suggest that at the meeting the British Government put forward a package under five heads. The first is that there should be an immediate increase in the percentage of VAT available to the Community, from 1 per cent. to the 1.4 per cent. which is generally recognised to be necessary; and I would regard that as an interim measure. Secondly, plans should be prepared immediately for a progressive expansion over a fixed period of time of the Community budget, and personally, as I have said before in this House, I should like to see it increased to the 2½ per cent. which was recommended some years ago by the McDougall Committee.

Thirdly, I should like to see a link established between the rate of VAT paid by each country and the ratio between net contribution to the EEC and national gross domestic product. Thus the rate of VAT would vary from the norm for particular countries in accordance with changes in that ratio, and that would prevent any country suffering a severe imbalance. It would also end refunds, since any correction would take place in the contribution in the following year. Fourthly, I should like to see a reform of the CAP broadly on the lines which have been put forward by the Commission. Fifthly, I should like to see a simultaneous advance on these fronts which would be fully monitored by the Commission, the Council of Ministers, the European Council and the Parliament.

An agreement of such a kind would enable the EEC to concentrate on other matters—on improving the structure to be built on this financial base. I have in mind, for example, as part of that plan, increasing the regional and social funds; eliminating the non-tariff barriers, which according to Guido Carli, the president of the EEC industry unions, are losing the Community a sum equal to twice the Community budget; and improving the decision-making machinery by using majority voting wherever possible.

In conclusion, I should like to remind the House that the European Economic Community has a higher population than the United States, Japan or the Soviet Union. It has a higher gross domestic product than any of those countries; and it has a higher share in world trade than any of them. If the financial basis can be firmly established, and if these other reforms can be carried through, then, as other noble Lords have said, we can give to the Community the political coherence and the influence in the world which the facts I have just enumerated would justify.

6.45 p.m.

Lord Bruce-Gardyne

My Lords, I should like to join with other noble Lords who have thanked the noble Lord, Lord Ezra, for introducing this debate this afternoon. Obviously the timing is admirable, as we still have a few moments to look forward to the March summit. Certainly the debate has produced a number of varied and important comments for the Government to take account of, including those made in the admirable maiden speech of the noble Lord, Lord Fanshawe of Richmond, and, if I may say so, the particularly magisterial contribution from my noble friend Lord Soames.

The robust independence advocated by the noble Lord, Lord Bruce of Donington, has been much admired on various sides of the House. However, I must confess that occasionally it occurred to me to reflect on the contrast with what actually happened when the last two Labour Governments were in power. I should not have thought that robust independence was precisely the attitude that those two Governments adopted to the brokers' man from the International Monetary Fund, though perhaps they did not have very much choice.

The noble Lord, Lord Ezra, expressed some anxieties about the prospects for the Community and the summit which lies ahead, and these have been echoed on both sides of the House. I certainly share those anxieties. I confess that I am perhaps almost more worried than are some other noble Lords who have spoken, because it seems to me that there is a substantial prospect of two possible outcomes. One is the outcome which the noble Lord, Lord Ezra, called a "botched compromise" and my noble friend Lord Trefgarne I think referred to as "the easy way out"; in other words, an agreement to increase the resources of the Community, coupled with what I believe used to be called "solemn and binding undertakings" about the restraint of agricultural expenditure, and a few douceurs on the budget.

I think that there is possibly an even more serious hazard than that, though I agree with both my noble friend and the noble Lord that that would be a profoundly unsatisfactory outcome. What worries me is that I think there is another possibility, which is that the summit will end in profound disagreement. It seems to me that if that were to happen, it would be very unlikely that the £450 million rebate which was provisionally pledged to Her Majesty's Government at the time of the Stuttgart summit last summer would actually be paid.

There appears to be some considerable prospect that if it were not paid it would be decided to withhold it from the contributions which we are due to make to the Community thereafter. I am sure that that would be a popular course. However, I confess that I wonder about its wisdom. I say that because, as I understand it—and I am sure that other noble Lords who are yet to speak in the debate will correct me if I am wrong—if, for whatever reasons, we were to withhold our contributions, the Commission would have very little choice but to arraign us before the European Court. In turn, the European Court, as I understand it, would have very little choice but to pronounce that we were actually in breach of our treaty obligations, and that other member countries were therefore entitled to erect trade barriers against us. For myself, I must admit that I would not lay overwhelming odds against some such eventuality occurring.

Comparisons have been made with the empty seat attitude taken by de Gaulle in the 1960s. But there is a difference between telling the club you will not attend any meetings and telling the club that you are not paying half your sub. In the latter eventuality the committee is, I suggest, liable to feel it necessary to take action against you. That would be a hazardous course for us to embark upon.

What are the alternatives? The noble Lord, Lord Ezra, and the noble Lord, Lord Banks, were in favour, I think, of achieving a better financial balance in the Community by expanding the resources available to the Community. We have had suggestions in the past of an energy levy, or some such. I must confess that I do not find the common agricultural policy such a beautiful animal that it invites cloning. I believe that if we went that way we would not find that our budgetary problems were particularly eased. We might be liable to find that while there would be some more cash, perhaps, for questionable causes at home, there would be still more cash available for the expansion of agricultural expenditure.

I have always felt—at least, I have always wondered—whether we have not perhaps conceivably been pursuing the wrong target. Much has been said on both sides of the House tonight about the manifest unfairness of the present budget distribution. I have to say that I wonder whether that is really the way that it is universally seen in the capitals of Europe, and not only in Paris. Surely, the fact is that as we entered the Community a country with a small and efficient agricultural sector which had committed itself and maintained a commitment to import a significant proportion of its food from third countries, notably in the Commonwealth, the likelihood that we would face substantial budget contributions—disproportionate contributions, if you like—was there from the start. Our partners might be inclined to say that if there is a disproportion between the contribution we make to the budget and our low standing in the prosperity of the Community, we have perhaps but ourselves to blame.

I must honestly say that I cannot see that we can ever expect to have many friends in the pursuit of budgetary redistribution. On the other hand, I have often suspected that our ability to achieve significant reforms in the common agricultural policy and particularly in the pricing structure of the common agricultural policy, which is the essence of it, might be rather greater than we usually allow for.

Lord Soames

My Lords, on my noble friend's last point about the budget contribution, I am sure that he will remember that during the entry negotiations we made a good deal of fuss, saying that we were sure that if the arrangements as they then were continued, as we were prepared to let them continue, we were pretty sure in our own minds that they would lead to an inequitable situation. A statement was made by M. Jean Francois Deniau on behalf of the Commission saying that, if that occurred, then evidently a solution would have to be found and new arrangements would have to be made. I go along with much of what my noble friend says about our imports from the Commonwealth, and having to pay for them across the exchanges. On the other hand, I believe that in effect this was bound to be inequitable, and I believe it still is.

Lord Bruce-Gardyne

My Lords, I entirely take my noble friend's point. All that I would say on the other side is that to our partners we, as possessors of North Sea oil—an asset that they do not possess—and hence running for the most part a substantial balance of payments surplus, do not strike them as most obviously in need of special treatment. That is the trouble.

I was about to refer to my noble friend's speech. If we are to go baldheaded for change in the pricing structure of the common agricultural policy, as I believe we should, then we have to make some changes in the arrangements. One important point made by my noble friend is that we have to get the agriculture negotiations out of the monopoly hands of the Ministers of Agriculture. It seems to me like asking the National Union of Burglars to take care of the plate. You are liable to get unsatisfactory results that way. Secondly, I believe—and it is, I know, more of a minority point——

Lord Mackie of Benshie

My Lords, would the noble Lord not agree that the panacea of getting the finance Ministers to sit in on the negotiations might result in exactly the same outcome because certain countries gain financially from a rise in prices and others do not? The finance Ministers, in my view, would take much the same view as the agricultural Ministers according to which country they came from.

Lord Bruce-Gardyne

My Lords, I would only say to the noble Lord, for whom I have the greatest respect, that he must know different finance Ministers from those I know. I believe that they have rather different priorities.

The second change we have to make is I accept, a somewhat heterodox view. I have always believed that if we want to achieve reform of the common agricultural policy it is to the French that we must look. It is essentially the Germans, with their need to preserve the weekend farmers of Bavaria in hopelessly uneconomic operations, who are the prime movers in seeking, for instance, ultra-high cereal prices. This is not to the benefit of the French, who, I believe, are increasingly coming to see it. Unfortunately, it has always seemed to me that the Foreign Office is obsessed with the notion that it is to the Germans that we must look although, time and again, it has been proved that this has been a hopeless support to lean upon. Of course, the Quai d'Orsay and the Foreign Office have always regarded each other with the profoundest antipathy, and that is an attitude that we have also to overcome.

I believe that if we could get alongside the French there might be a chance of moving in that direction. On one matter, however, I submit that we should be very cautious. There have been a number of references this evening, naturally, to the proposal for an increase in own resources. It has been widely agreed that we should not concede this unless our other requirements are met, but that if we do then this obviously must follow. I submit to your Lordships that if we get the fundamental changes in the agricultural structure, the pricing structure, that we need, then the increase in own resources may not be required. But if we grant the increase in own resources, I see no chance whatever of getting the sort of reform of the common agricultural system that we need. I hope that we shall be very cautious indeed about moving on that position. Unlike the budget, we have a cast-iron right to insist that the own resources of the Community cannot be increased without our sanction. I suggest to my noble friend who is replying to the debate that we would be well advised to yield that sanction only with the greatest caution and the greatest care.

6.59 p.m.

Baroness Seear

My Lords, Liberals backed the idea of the European Community right from its earliest inception. We backed it because we believed that it matched the economic, social and political realities of the second half of the twentieth century. When we backed it, we knew that it involved some sacrifice of sovereignty, or rather a recognition of the diminution of sovereignty, which was in any case taking place. We certainly did not back it to create a union des patries, to create the Gaullist conception of the nations of Europe coming together but each trying to get the most that it could for itself out of something which was then misnamed a community. I would argue, as the noble Lord, Lord Soames, has argued far more eloquently than I can, that unless the idea of community is recaptured in reality, and unless people are prepared to work to that idea, what will happen to this so-called European Community will be the creation of an entity—if, indeed, entity it is—which is scarcely worth preserving and as regards which the community idea will be practically buried.

What in fact is going on? We all pay a certain amount of money into the European Community. We grumble about the amount we pay in; and we grumble about the amount we do not get out. We then, both as governments and as individual pressure groups, do our damnedest to get as much money back from Brussels as we possibly can. I will spend two days this week in Brussels doing just that, and I will be surrounded by people who are trying to do exactly the same thing.

But what an extraordinary way to behave—to think only in terms of national interest! After all, if we are only concerned to pay money in and then get it back again, it would be rather more sensible—would it not?—to keep the money in the country in the first place. It seems to me that there is very little point in sending it to Brussels in order to be able to recover it again with considerable loss en route, which is inevitably the case when it is being handled by bureaucrats, however incorruptible. There is a very great delay, the money is sterilised for a considerable period of time when it could be put to use, and the costs of administration reduce the amount of money which can in fact be spent.

Yet, in reality, that to a considerable extent is what is going on at present. All the cries of, "Our own money" and, "We want our money back" which are understandable in some cases—and I am not denying that there are things that are very considerably wrong with the way in which the money is distributed—all emphasise the protectionist, nationalistic approach to the Community, which is the very opposite of the idea of the unity of the European Community which was put forward by Monnet and Schuman and which we supported back in those early days.

I shall not speak for long, because most of the points have been made, and made far better than I can make them. However, the point I want to make is that we have to look again at what we are really trying to do in the development of a European Community and to capture something of that idea of unity which was behind it in the first place and which, if it is lost, means that the whole exercise becomes increasingly futile. Of course, we must ensure that the important issues of the CAP and the amount that the country pays are dealt with. But they are really very small issues compared with what one is trying to do in the development of the European Community. At least can we not begin by trying to ensure that that big market of Europe really is the free trade market which it was intended to be, and which today it most certainly is not. The type of tit-for-tat approach which is growing up does no credit to us or to any of the other members, and certainly gets us nowhere as a community.

Of course, it is monstrous that French farmers in Brittany attack and knock about the drivers of British lorries taking in what they so inelegantly call "sheepmeat". But it does not make it any better when we do precisely the same thing with poultry and disguise what we are doing with all sorts of high sounding speeches about the protection of health in this country, when what we are undoubtedly really doing is protecting the poultry farmers in the United Kingdom. That is repeated over and over again. It is trivialising and debasing the whole idea upon which the Community was founded.

So, first, I would urge Her Majesty's Government not to be party to these protectionist attempts to allow vested interests to get away with phoney excuses for not allowing goods to come into this country within what is meant to be a free trade market, a free market for all the member countries of the European Community. I urge them to oppose it, to fight it and to make clear to public opinion that that is not what the European Community is all about. Secondly, I would urge Her Majesty's Government to pursue far more vigorously, as a major objective of the European Community, those activities which can so much better be done on a European scale than they can be done by member countries, or indeed which cannot be done by member countries at all.

It is now two and a half years since we had a superb debate in your Lordships' House on the European Community and information technology. Yet what do we find today? As my noble friend Lord Ezra pointed out, the ESPRIT experiment and plan is an attempt to develop on a European-scale information technology, but it is the British Government who are holding up the development of that plan in order to get small-scale advantages, although a number of British companies, among others, would stand to gain very considerably if the full go-ahead were given to the ESPRIT project. Again, there are other ways in which the European Community can further our interest if we are prepared to work on a Community scale and to recognise that the Community is a reality and that it is the best hope for a country such as ours which, on its own, can do so very little.

Thirdly, there is the political aspect about which others have spoken, but which I would underline as being one of the major reasons why in the early days the Community was backed in your Lordships' House, although it is not of course in the country as a whole today. People will remember why it was that so many of us at the end of the war were determined to see a politically united Europe, a political community; and we are prepared to press forward with that today. They have forgotten what a miracle it is that nobody now ever believes that France and Germany will be at war. These very real achievements which have come from the development of the Community are now taken for granted and discounted. But if the idea of the Community completely fades away, those political gains may at some time in the future be lost.

As my noble friend Lord Ezra has said, it is only by standing together as a European Community that we can hope to make the voice of Europe heard in the councils of the world where, as individual nations—although we do not like to face this—we count for very little today, where the balance of political power and of economic power is shifting not only away from this country but indeed away from Europe, and will do so unless we can stand as a group and make our voice heard and have some muscle in arguing with the other countries of the world.

I suppose it was 20 years ago that I listened to Paul Spaak, a great European if ever there was one, giving the Stevenson Lecture at Chatham House, in which he said: When the war ended you in the United Kingdom could have persuaded Europe to do whatever you wanted. We expected you all to come. We waited for you, and you didn't come. So we went on alone". There was a sense of betrayal. We went in having failed to shape the Community as we could have done if we had gone in at the right time. The Community is now at a point where it must either go back and collapse, or go forward. We failed to take the lead 25 years ago. Let us take it now.

7.9 p.m.

Lord Gladwyn

My Lords, in the immortal words of Karl Marx, "a spectre is haunting Europe". That spectre is the possible collapse of the European Economic Community. I have not heard all the speeches in this debate which was so admirably introduced by my noble friend Lord Ezra, but I think that I have heard most of them. My impression throughout the debate has been that a note of anxiety or even alarm has been sounded by many speakers, perhaps the majority. It was not even totally absent from the speech of the noble Lord, Lord Trefgarne. I shall reserve to the end of my few remarks some thoughts as to what might actually happen if the Community really did break up, or at least became virtually inoperative.

However, first, I shall merely repeat what I think most speakers tonight have said. It is obvious—namely, that, unless, before the end of June or, at any rate, in June, we can arrive at some agreement on what I shall not call the "reform" of the CAP but what, to please my noble friend Lord Mackie of Benshie, I shall refer to as the "reorganisation" of the CAP, and on the problem of the United Kingdom's contribution to the Common Fund, we must contemplate the worst. For, if there is no Community agreement by then, the Community will simply run out of funds, and it is quite possible, as the noble Lord, Lord Bruce-Gardyne, said in an admirable speech, that, in spite of the reasons he gave, the United Kingdom would then be sorely tempted to withhold funds, notwithstanding a clear breach of its treaty obligations.

What fundamentally is the prerequisite of any agreement which will avoid collapse? It is simply that everyone concerned must agree to compromises or, in other words, must make sacrifices. M. Mitterrand gave some signs of moving in that direction before the Athens Summit. For even the French agree that there must be some change in the present system of the application of the common agricultural policy, whereby surpluses are produced in enormous quantities, with, as we know, terrible results. If they do so agree, it must be expected that they will have to make certain sacrifices, though it will indeed be difficult for them to do anything of the sort. We all know that Brittany is almost in a state of revolt and farmers in other parts of France are also on their hind legs. So any government in Paris would find it hard to make the necessary concessions, or sacrifices, in order to reach general agreement on some way of reducing surplus products, notably dairy products.

Again, it will not be easy for the Germans. They have a wonderful system of monetary compensation amounts for protecting their small farmers in Bavaria. Can they give that up? I think they should. Of course, if they did, it would help the French to a considerable extent. Will the Germans do that? Will they have a majority in the Bundestag to do that? I do not know. All these matters must go through national parliaments, and it will not be easy.

It will not of course be easy for us either. Most of us here would probably agree, although perhaps the Government will not, that, to some extent, we must moderate our present policy in regard to our contribution to the Common Fund. The case for doing so was made very eloquently by the noble Lord, Lord Bruce-Gardyne. In practice, I think that we shall have to do that if we are to reach general agreement, and I do not believe that, in the last resort, it would prove to be a great sacrifice on our part. On the other hand, if we are to get it through the British House of Commons, it will not be easy in the circumstances. Again, I think that any British Government would have difficulty in doing that.

For the reasons already given, I think that we ought also to accept certain sacrifices from the point of view of our own agricultural community. For instance, we should accept the proposals of the Community for the reform of the CAP. Again, that will not be easy, but we shall have to do it if there is to be agreement. Everybody will have to make concessions. Ireland, for instance, is now intent on producing every gallon of milk it possibly can and, as I understand it, is also in a desperate economic position. Can we really imagine that Ireland will give her agreement to a reform or reorganisation of the CAP as proposed by the Commission? I fear that that is very difficult to imagine.

Therefore, if there is general agreement with the sole exception of Ireland, what happens? Does Ireland have the power of veto on any proposal for reform of the CAP? Under the Luxembourg compromise, if Ireland does not agree, does it mean that there can be no agreement on a reform? Is that our position, or do we take the view that, in the last resort, the Treaty of Rome should apply and everybody should conform to some qualified majority vote? Alternatively, is it possible to imagine that there might be general agreement on some exemption for this little state, and perhaps even for Denmark? Who knows? I should like the Government's views on all these possibilities, if the noble Lord, Lord Trefgarne, can answer them.

Let us be optimistic. I believe that there is still reason for optimism. The reason is surely fear. Let us consider what is likely to happen politically if by any chance the Community breaks up in the sense that all the members revert to protectionism; that is to say, there is the reinstallation of tariff barriers and the disappearance of the existing Common Market, imperfect though we all know that may be. As the French say, "Il fault envisager le pire"ߞsometimes it is useful to contemplate the worst possibility. If the Common Market breaks up, I think there is considerable reason to supposeߞmore especially if the world recession and mass unemployment continue and there is no very significant revival of international tradeߞthat fairly shortly (as the result of new elections in a few years' time) we shall see the installation in Western Europe of "directed" economiesߞwar-time economiesߞno doubt operated by Left-wing governments of what one might without disrespect call a "Bennite" nature, which will not be at all well disposed towards America and probably more favourably disposed towards the Soviet Union. Politically speaking, it is not difficult to see what the result of such tendencies is likely to be.

All this makes it rather difficult to understand why there should be any tendency on the part of any "anti-Benn" elements in this country to insist on our withdrawal from the Community come what may, or even violently to oppose any concessions that the present Government may feel able to make in order for us to maintain the Market in being. In other words, the "ultra" patriotsߞand we have quite a number hereߞare always among the most shortsighted of our countrymen, and I am afraid that I must number among those to some extent infected by such myopia all politicians who are concerned to get back what is always called "our money" from the Common Fund, irrespective of any other consideration.

That is however a major heresy and I hope that in all circumstances the Government will be able to combat it. We have, of course, a strong case for a reasonable settlement of the vexed question of our contribution, but for pity's sake let us not overdo it or break over an odd £100 million or so. It seems to me insane to do so. The noble Lord, Lord Ezra, said that, in order to avoid deadlock, it was important not to have all decisions left to two or three days' debate in the European Council. Certainly, but let us hope that even now devoted officials of all the countries concerned are working night and day in Brussels to reach some kind of compromise behind the scenes. Surely also the Council of Ministers will have something to say on the subject and presumably will go on meeting as arranged? But the fact remains that, important though advance in other directions isߞit is essential if you likeߞin practice, it cannot happen until we have arrived at agreement on the two major outstanding issues to which I have already referred and which noble Lords have already mentioned. Once that hurdle is surmounted, we can get on, and we shall get on, to all kinds of useful reforms based, no doubt, on some increase in the Common Fund. Here, I do not altogether share the apprehensions of the noble Lord, Lord Bruce-Gardyne, as to the evil effects of increasing this by another 0.2 per cent. on VAT, or whatever it may be. However, that is a point that one can argue about.

Once set on this path, however, once the great hurdles have been overcome, we can then get on to consider such proposals as those recently agreed, temporarily, by the European Parliament for constitutional reform, which are by no means federalistic. The federal schemes put forward by the Popular Party, the Christian Democrats, were turned down. The actual scheme put forward by the Parliament now is essentially reasonable. It provides, for instance, for new means of forming the Commission; for ways of moderating the veto, having a suspensory veto, and so on; and of course for legislation being approved and ratified by the Parliament, and therefore giving it more power, and so on.

These are just sensible and good reforms which, if appliedߞand they could be applied if we get over the two major hurdlesߞcould in the next two or three years realise the dreams of many of the original Europeans and put us on the way to forming, not a federation of course, but a new kind of Community which would be a great service to the whole world. In order to achieve this, however, within the next few months all the politicians, all the heads of Government concerned, must have the will to take a political plunge. Let us hope they do so.

7.22 p.m.

Lord Bishopston

My Lords, we are all indebted of course to the noble Lord, Lord Ezra, for giving the House the opportunity to discuss and debate a matter of timely importance, because in more recent times even the most ardent pro-marketeer has seen the Community leaders lose the sense of fellowship and community, the idealism, and the vision which it once attracted, turning it into an institution where, as the noble Baroness, Lady Seear, said, among others, each member has to fight for his own corner, losing sight of the whole.

I felt that the Minister's opening speech was rather pedestrian because he seemed to lack the kind of vision and idealism to which we have been accustomed from people like Sir Winston Churchill, who spoke about marching onwards, the broad uplands, and going on to better days. The speech of the noble Lord, Lord Fanshawe—a speech which we welcome; and we are pleased to see him in this House—was one where he called for a dose of realism. That surely is the message which others have also given the House and the country tonight.

I was pleased that the noble Lord, Lord Ezra, has introduced the subject of the EEC realising its full potential, particularly in international affairs. That is most important now that our relationships both within the Community and outside, and with our allies the United States and beyond, have reached a very low ebb indeed. There have been numerous quotations which one could have taken from the press in recent days. Indeed, in Lombard in the Financial Times of 19th January, there is the following quotation: The European Community is in serious decline, stalled by bureaucratic inertia and national selfishness. It lacks a sense of direction, ambitious goals and, as a result, the capacity to avoid further decay. Its political leadership is weak and its priorities fatally distorted by an obsession with budgetary limits and balances, for which British diplomacy must carry a lot of the blame". Of course, we all know others have spoken in similar vein.

It is important when discussing the Community to realise what it is all about. The Treaty of Rome, Article 2, says: by setting up a common market and progressively approximating the economic policies of member states, to promote throughout the community an harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between member states belonging to it". Those are words which seem rather strange in the present situation we face and which causes us so much concern.

Looking at the present situation against that idealistic criteria none can appear optimistic. As the noble Baroness, Lady Seear, said, in effect there is bickering about who pays, and who gets what. There is the acrimony; the lack of balance; the surpluses; costs have all increased. These complaints have increased in the last four years.

I recall the time when we in the Ministry of Agriculture went to Brussels. We were told by the present Government, the then Opposition, that if we were nice to the Community and said, "We want Community membership and we are going to co-operate" we should get what we wanted. There is no evidence of that in recent days. Even today on the tapes there is the argument about whether the Milk Marketing Board money was legally paid to it or not, and whether it should be repaid. This is the situation.

I was glad to see the noble Lord, Lord Soames, in good form tonight. This House abounds in former Ministers of Agriculture. He referred to the gladiatorial role of those who went to Brussels. We have all done that. We know what he meant when he said that one country's Minister said: "If you scratch my back, I'll scratch yours". This is not the way in which a community of goodwill among equals should react. As the noble Lord, Lord Soames, said, there have been selfish, nationalistic procedures going ahead. Concern about the way things are going in the EEC has been voiced not only among leaders of all parties and organisations, trade and industry, and other bodies, but among world leaders.

I was pleased to hear the noble Lord, Lord Fanshawe, in his delightful maiden speech, mention the United States leader who this morning expressed the widespread exasperation of many Americans with their Western allies for not pulling their weight in the battle for world stability. He said that we are accused of contemplating our own navel, as the noble Lord, Lord Fanshawe, quoted. We were warned that the Americans alone should not be expected to bear the burden of containing the Soviets. This is not a defence debate, but we all recognise that it is the day-to-day economic and other difficulties which tend to make us lose sight of the more important things, and to lose our perspective.

May I mention one situation? If the Government had paid as much attention to the difficulties of the EEC, which have led to militant French farmers demonstrating in their French berets in Paris, as to the demonstrations of British women wearing woolly hats at Greenham Common fighting for Britain's interests, the CAP problems would be well on the way to solution. Now we are well into the second decade of EEC membership, and recent articles have expressed differing views—even from those in the Tory party—about conclusions.

There is nothing wrong with that, except that people look at the situation from various viewpoints as the noble Lord, Lord Soames, mentioned. As I said just before he returned to the Chamber, those of us who have been Ministers of Agriculture in Brussels have all had to behave like gladiators fighting for our national interest in order to protect those we represent, while sometimes forgetting the interests of the whole. This is not an easy situation to overcome.

Lord Soames

My Lords, first may I apologise most profusely to the noble Lord for not having been in my place when he began his speech. I was with Hansard and did not notice the switch over. If he was inferring that I was Minister of Agriculture at the time in Brussels, I am afraid I never had the opportunity to play this game. I had got that over before, so I could reserve the right to criticise.

Lord Bishopston

My Lords, I do not criticise the noble Lord for not being in the Chamber. The echoes of his stirring speech are still going round the walls. He was Minister of Agriculture and he was in Brussels, perhaps at two different periods. I am sure he has seen the gladiators bearing their lances and that must have been as plain as a pikestaff.

Our Government, like other members' governments have been looking for short-term solutions to long-term problems—this point has been made by others—by putting off urgently-needed changes. Let us take the common fisheries policy. Today the Minister has welcomed the catch settlement. I will not say what catch conclusion it is, but we can now catch such a percentage of fish in what used to be our own waters and are now within EC limits. It is noticeable that the EC states which produce wine do not consider sharing that in the same way as they want to share our fish. It is a point to remember when we are discussing catch settlements of fish that 60 per cent. of all the fish caught in EC waters is in what used to be United Kingdom limits, so it is really our fish. We say, "Aren't we lucky to receive a percentage of our fish back?" There must be a catch in it somewhere.

It is noticeable with both the CFP and the CAP that, when we go to Brussels, we come back happy even though with short-term and inadequate settlements, Indeed the announcement today on the CFP is an interim settlement which will have to be finalised later.

As the Minister says, the CAP represents 66 per cent. of the overall budget. The EEC is so unpopular with many people because they see the inadequacies of the CAP as being representative of the Community as a whole. This is something we should be changing. One of the reasons for the discontent, not to say the hostility, is due to that. Even ordinary people who only want ensured supplies of food at reasonable prices can see the foolishness of the régime which produces it.

It is timely to look at the Treaty of Rome and the objectives of the CAP. It talks about increased agricultural productivity, assurance of a fair standard of living for farmers, stabilisation of agricultural markets, guarantees for regular supplies of food and the maintenance of reasonable food prices. One needs to consider those criteria to see how far we have gone from the objectives of the treaty. The problem yet to be resolved, as many noble Lords have said, is how to balance sometimes conflicting objectives and what policies should be pursued to achieve them.

Most farmers and those concerned with food production in the United Kingdom look back to the good old days when British farmers knew who to go to for the policies they wanted—as former Ministers of Agriculture will know from the annual price review and the rounds of discussions with the NFU and other interests. They had security. They knew what and how much they could grow. They were assured of a fair return. They had a Labour Government to thank for that, because it was Tom Williams, of noble memory, who provided the floor of confidence that will be long remembered and the monthly cheque from the MMB, now at risk from UHT and other changes, gave a security which is fading fast.

British agriculture and food production has always been of a high standard because of that magic word "confidence". But the confidence is not always there when the control passes beyond the British Parliament to Brussels. That is one of the problems we have to tackle.

The Milk Marketing Board, to which I referred, has a great record of over half a century of service. As we know, the daily calls on our housewives by the milkmen have been greatly welcomed over the years. The Minister put up a token fight against milk imports. He bottled up some of his concern, but he has not been able to stop the imports. If we had been using such methods as the French have used on meat and other imports, he could have ordered that all milk imports coming in to this country went through one port for inspection. That might have held up the proceedings. It might have been appropriate if it had gone through a port near the French coast—say, in the Isle of Wight. Cowes would be an appropriate place in which to inspect it.

This is a serious matter because now, with the Community's demands about our importing meat and poultry, we risk the danger of animal diseases which could seriously affect our own disease-free herds and so affect our export trade as well. The noble Lord, Lord Soames, who nods his head, knows this very well.

Lord Soames

My Lords, he shakes his head, not nods it.

Lord Bishopston

My Lords, he is shaking his head and, unless he would like to intervene, I take it that he agrees with what I was saying. He knows only too well that this is one of the main factors.

Agriculture and food are tied up with Euro-jargon. We have intervention, when food it is taken off the market until the price rises. We have to pay for storage and transport running into enormous sums of money. Sometimes we have food being destroyed or being sold cheaply to foreign countries which can buy it cheaper than our own consumers. We have the import levies to keep out cheaper food which should be available to us here. We have the sluice gate prices, guide prices, farm gate prices, the green pound and the ECU. The least efficient farmers in the Community, as we all know, are allowed to go on producing with a good profit while the more efficient British farmers, who can produce more cheaply, are accused of adding to the surplus produced by their less efficient neighbours over the Channel. They are being punished for so-called over-production by the co-responsibility levy and other means.

I am sure no noble Lord here tonight will disagree with what I have been saying, but the fact that our industry has been so good should have been taken into account. The Community would have done better with CAP if it had recognised that the efficient producers should be encouraged and the less efficient not encouraged or even put out of business and helped by social and regional funds from the country concerned. I am sure there is no disagreement on that. There is no reason why the British housewife should pay for the economic policies of some of our fellow member states.

Lord Bruce-Gardyne

My Lords, I am most grateful to the noble Lord for giving way. I am not sure that I entirely follow his argument, if he will forgive me. If I understand him correctly, he seems to be saying that of course we should exclude foodstuffs if they happen to come from France, but at the same time we are mad to deny ourselves access to foodstuffs which come from third countries. There seems to be a conflict there and I wonder whether he can resolve it.

Lord Bishopston

My Lords, I am grateful to the noble Lord, but there is no conflict at all, because he knows that when we have butter surpluses, the butter is sold abroad and the foreign housewife buys it at cheaper prices than we can get it here. There is a levy to protect the European economy. I was referring to the situation facing agriculture in this country, where we are forced to import meat and poultry from places where the standards of hygiene and animal health may not be as high as ours. As the noble Lord knows, it has taken us years to get rid of foot and mouth disease, swine vesicular disease, and so on. Those who have been abroad on agricultural exports know very well that farms with SVD or foot and mouth cannot export cattle to those countries for at least a year. This is one of the problems. I am not suggesting that we should be awkward by limiting imports. I am merely saying—I am sure the NFU and others agree with this—that we want to make sure that there are adequate controls to protect our own industry. That is not really a surprise to anyone.

The Labour Party says that there is a great deal to be done to improve the EEC. The international aspect of the speech of the noble Lord, Lord Ezra, is most important. There must be a wider, looser grouping of European states, greater co-operation inside and outside Europe, radical reform of the CAP, changes in industrial, energy and trade policy. There must be efforts to ensure that the needs of our hard-pressed people are considered and acted upon, with special mention being made of the unemployed and families. There should be a shift in the use of Community resources away from agricultural support and towards regional and social policies, especially in the less efficient producer countries. There should be changes to ensure that, while the unity and interest of the whole are safeguarded, the sovereignty of member states is not overlooked. There should be a reform of the European Communities Act 1972, which transferred to various community bodies considerable power over internal British legislation, especially concerning directives.

I was tempted tonight to go into some of the limitations concerning the survey and scrutiny of directives that come from Europe. They are often inadequate and not always debated, and when they come into effect it sometimes seems that the directives have been exchanged with new ones that have not been inspected. So there is not the adequate Parliamentary scrutiny which we surely deserve.

The House will be indebted, I am sure, to my noble friend Lord Hatch for his mention of the third world, because we are so concerned with our own problems that we do not lift our eyes beyond our own boundaries to see two-thirds of the world's population who do not have enough to eat, while we are wondering how to get rid of our surpluses.

The noble Lord, Lord Mackie of Benshie, following my noble friend's speech, spoke about the contradictions in Labour Party policy and said it was to the delight of his friends. If there were a vote tonight at the end of this debate, one wonders what the response would be. Perhaps I may remind the House that in another place this week there was a debate to take note of the Report on Developments in the European Community (Cmnd. 9043). The Government Motion was subject to an amendment by the Opposition and the amendment regretted that within the period under review (January to June of last year) the Government had continued to pursue in the institutions of the EEC the same negative and destructive policies in industry and the economy which have caused so much damage in the United Kingdom and the same regressive and divisive social policies which have widened inequality and injustice in the United Kingdom.

Let us see what happened at the end of the debate. The reactions of the Liberal and Social Democratic Parties are interesting, for four Social Democrat MPs voted for Labour's amendment and two voted against. Of the Liberals—here, thankfully, in force tonight—none voted for the amendment and five voted against. None of the other 12 Liberals voted at all. Presumably they abstained, were absent or were unable to make up their minds on a Motion on which I feel sure in other situations noble Lords present here tonight would have expressed views which might have been in support. So the SDP were split, and all the Liberals who did vote voted against an amendment criticising the economic and social policy of the Government of the party opposite. Therefore I am very pleased to have been reminded tonight of the need for unity.

Finally, may I say to the noble Lord the Minister, who referred to what he thought was a change of stance in Labour's EEC policy, that Labour is realistic facing the present situation. They are wanting to protect and advance Britain's interest in the Community and will be pressing constructively for such changes as will ensure that it works in the interest of all the people here and in Europe. I have already given some indications of how that may be done. Our policy, as we go towards the Euro-elections in June, is to stress that we are committed to seeking a new deal for Europe and a square deal for Britain. That is a job that must be done by our European MPs. We must raise our perspectives, lifting our eyes beyond the butter mountains and wine lakes in order to recapture the vision that once inspired us. I believe there is a dangerous vacuum now in Europe and, with the pre-election period in the United States, there is a great need for Britain to provide initiatives and actions which will ensure not only a peaceful but a more prosperous Europe.

7.45 p.m.

Lord Trefgarne

My Lords, I am conscious that in rising to speak a second time in this debate I may do so only with your Lordships' permission, and I hope I have it. If I have, may I start by saying how grateful we all are to the noble Lord, Lord Ezra, for initiating what has been a most useful and timely debate on the European Community as we embark upon a new phase of the negotiations on the future under the new presidency. May I also say how much I enjoyed the maiden speech of my noble friend Lord Fanshawe. It was, I believe, a particularly remarkable maiden speech, and I hope that we hear my noble friend again very soon and often thereafter.

The failure to reach agreement at Athens should not overshadow the extent of the progress that has already been made. It is the very essence of the importance of the policies of the European Community that underlies the difficulty of the decision-making process. If agreements had little value, no doubt they could be reached with little trouble; but the policies of the Community affect every man, woman and child, not only in this country but in every member state. Decision-making is therefore both difficult and crucial.

We must not make light of the present crisis or of the proposal that it should be dealt with by means of an increase in own resources. Neither must we be hesitant in participating in the decision-making in which all member states are trying to ensure that decisions are taken in accordance both with their own interests and with their conception of the role of the Community.

If I may, I will turn now to some of the specific points that have been made. The noble Lord, Lord Ezra, the noble Baroness, Lady Seear, and I think at least one other speaker have referred to the British position with regard to the ESPRIT programme. In short, we support it; but the Community does not have unlimited cash available, and before we embark on a major programme costing up to £400 million over five years we must be certain that we know where the money is going to come from. I understand that the German Government, who have a parallel interest in ESPRIT, have taken a similar view; but we hope that the programme can go ahead soon. I think that I may have enjoyed the support of the noble Lord, Lord Bruce, in that sentiment——

Baroness Seear

My Lords, is it correct, as I understand, that the Germans have withdrawn their opposition and that we remain the only people who are holding the programme up?

Lord Trefgarne

My Lords, I am advised that the Germans still have some reservations about the programme and that we are not alone in wishing to see a source for the money required before the go-ahead is given.

I will not dwell upon the position of the Labour Party and how it has changed in recent months on this matter. If I may say so, I think that the speech of the noble Lord, Lord Bishopston, represented a valiant effort to square a round circle but did not really, I think, convince anyone. The noble Lord complained that my own speech earlier was pedestrian compared with those of the late right honourable gentleman Sir Winston Churchill. No doubt it was; but so, I fear, was his.

The noble Lord, Lord Hatch, referred to the position of the European Community in the granting of aid to third world countries. Of course, I agree that the Community has a major role to play in the development programme, through arrangements for both aid and trade. I think I mentioned in my opening remarks the position of the European Community in terms of the percentage of total aid to developing countries that comes from the Community and Community countries. I will not repeat that now. Britain contributes 20 per cent. of the Community's total aid effort. We are working to improve the quality of Community aid by ensuring that it is spent where it is most needed and spent in the most cost-effective way.

The noble Lord also referred to the renegotiation of the Lomé Convention. That, too, I touched on briefly in my opening remarks. The negotiations, which opened formally on the 6th and 7th October 1983, have made only slow progress, I am afraid, and they will not be easy. Economic constraints and the demands of our bilateral and other multilateral aid programmes mean that we must be realistic about the financial resources that can be made available. But we are determined that the negotiations will be brought to a successful conclusion. One of our main objectives will be to ensure that the funds allocated under the convention, including those for STABEX, are spent as effectively as possible.

The noble Lord, Lord Banks, and several other noble Lords again asked me about the Government's position with regard to an increase in the 1 per cent. VAT ceiling. I think that I can do no better than repeat the words that I used in my opening speech. We have not dismissed that case out of hand. We have made it clear to our partners that we are ready to consider such an increase, subject to the two conditions of effective control of existing Community expenditure, particularly on the CAP, and a lasting solution being found to the problem of budgetary inequities.

The noble Lord, Lord Gladwyn, particularly asked me about the position of Ireland. I believe he was thinking about the CAP renegotiation procedures, as and when we come to them. I think our position is that we would certainly wish to see the provisions of the Luxembourg compromise maintained in such negotiations. So the essence of our position is: yes, the Irish will indeed have to form a consensus view when the decision on that matter comes to be taken.

Lord Gladwyn

My Lords, does that mean that the Irish effectively hold a veto on any reform of the CAP?

Lord Trefgarne

My Lords, I suppose it does, if you put it in those words. But we hope very much that it will not come to that and that it will be possible to persuade the Irish if they take some different view as to the merits of whatever proposals are then for discussion.

The noble Lord, Lord Banks, also asked about the safety net scheme, which is one of the principal proposals that we have made in this regard. It is now generally recognised by our partners that the Community budget has operated in a way which was clearly unfair to us, and which has made it harder to make progress towards the basic objectives of the Community. It is also recognised by a majority of member states that a lasting solution must be found that will put limits on the budgetary burdens of member states related to ability to pay, and that the ad hoc arrangements that we have had in recent years are unsatisfactory for all concerned. I hope that other member states will accept that it is only by establishing an equitable system for the future that a solution will be found, and that is what our safety net does. Incidentally, a number of other ideas have pointed in the same direction, and we shall continue to work for a settlement on the lines that we have suggested.

My noble friend Lord Bruce-Gardyne suggested—I think I understood him aright—that maybe there would be no need for new own resources if the CAP was adequately reformed. There would certainly be scope for substantial savings if CAP expenditure was brought under effective control, but even a strict financial guideline for the CAP would take a little time to bite. It would be a question of ratcheting the percentage down, year by year. We must also recognise that the accession of two relatively poor countries will be a net charge on the Community's finances.

Funds will also be needed if the Community is to develop new policies which are of real value to the United Kingdom, as well as to the whole Community. Moreover, provided that we secure an effective financial mechanism to correct budget imbalances, we should be paying substantially less to the Community, even with an increase in own resources, than we are now, without one.

The European Community faces grave challenges. There is, however, general determination among member states to work to reach agreement by the end of March. We shall not be inflexible. But our basic conditions—the control of agricultural and other expenditure and equitable sharing of budget burdens—must be satisfied. Agreement on these matters will put the Community on a sound footing and enable it to play a fuller role in international affairs, commensurate with its size and economic strength, reinforcing the traditional influence of its members. The time has come for a fair and lasting settlement, and this Government will grasp the opportunity to reach agreement on an overall package which will meet our essential national interests and, at the same time, strengthen the Community.

Lord Ezra

My Lords, I should like to express my appreciation to all who have spoken in this debate. It would have given me very great pleasure to identify a number of the points that have been made, and to underline them or comment on them. But we are at an advanced hour, there is other business to be transacted, so I shall limit myself to expressing my appreciation.

I mentioned that I thought it was time that the level of the European debate was raised. There is no doubt about the level of the debate in this House today, and I hope very much that the noble Lord, Lord Trefgarne, and his colleagues on the Government Bench will have noted—as I am sure they have, very closely—all the many views expressed, and will have deduced from them a number of helpful suggestions, which they will certainly need, to bring these very difficult negotiations to a satisfactory conclusion. My Lords, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.