HL Deb 21 October 1985 vol 467 cc827-47

3 p.m.

Lord Kearton rose to move, That this House takes note of the Report of the European Communities Committee on European Union (14th Report, 1984–85, H.L. 226).

The noble Lord said: My Lords, in moving, That this House takes note of the Report of the European Communities Committee on European Union, I ask the permission of the House to give a little of the background. It is now 28 years since the Treaty of Rome established the European Economic Community with six original participants. The attractiveness of greater European integration, both economic and political, had been widely discussed and canvassed in the preceding postwar years.

The treaty itself had a long gestation. Although it concentrated on establishing closer economic ties, its existence helped to satisfy political needs—notably the rapprochement between France and Germany. The preamble to the treaty described it as a step towards closer union among the peoples of Europe. What was meant and covered by the word "union" was never closely defined. It was an aspiration and there was no detailed programme to reach an agreed goal.

The treaty, as the various transitional arrangements fell away and the details of policy were settled, was a great success. Its provisions undoubtedly played a major part in the great surge forward of European economic growth and prosperity of the 1960s and early 1970s. In 1963, Britain indicated its wish to join the Community. This approach was rebuffed, and it was further rebuffed in the following years. It was not until 1972 that Britain, after lengthy negotiations, finally signed the treaty and in 1973 became a full member of the Community. Ireland and Denmark became members at the same time.

It is worth recording that at a summit meeting in Paris in the autumn of 1972, the original Six and the three acceding members affirmed their commitment to full European union by the end of the decade, but without defining what they meant by union. Such a timetable was always unrealistic and there were no serious negotiations. But various initiatives in the 1970s kept the concept of union alive and there were, notably, the Genscher-Colombo proposals in 1981.

Meanwhile, a significant stage in the development of the Community was reached with the establishment in 1979 of the first directly elected European Parliament, replacing a parliament of nominees. The 1980s saw the enlarged Community—now numbering 10 members—facing many problems not envisaged by the founding fathers. The world and Europe had moved on and had greatly changed both economically and politically. Moreover, it was only too apparent that the institutions of the Community itself were no longer working in the way that the founders had intended.

As to Community problems, the common agricultural policy had more than achieved its original aims and had gone on to become over-dominant in the Community's budgetary disbursements—wastefully so. The internal market, although tariff-free, was beset by numerous other barriers and in many respects remained nationally fragmented. The harmonisation in the provision of services and in other matters was not carried forward. The arrangements called for in the treaty did not take place. It was a major worry that in technology Europe was not keeping up with America and Japan. It was a cause for grave concern that unemployment in the Community was so high and rising.

As to the working of Community institutions, the balance of powers and duties set out in the treaty was in disarray. Decision making had become slow and laboured, with items held over for years and years. A major new factor had been the emergence of a European Council made up of heads of government which had become the de facto ultimate authority in Community affairs. The council, nonetheless, had no formal legal basis.

In the situation the European Parliament, which under the Treaty of Rome has a largely consultative and advisory role, became increasingly unhappy. It was alarmed by the lack of impetus and the disunity in Community affairs. It was also frustrated by its own comparative impotence, and so it set up a committee on institutional affairs which reported at the end of 1983.

That committee recommended that the existing Treaty of Rome be subsumed in a new and considerably more far-reaching treaty establishing a European union. A comprehensive and detailed draft of the proposed new treaty was worked out. In the preamble attention was drawn to the declarations in favour of European union by the heads of government at their 1972 meeting and to the reafirmation at the Stuttgart summit meeting in 1983 by the heads of government of the need for, as they put it, broad action to ensure the re-launch of the European Community".

The European Parliament approved the preliminary draft treaty in February 1984. It is generally known as the Spinelli Treaty because Signor Spinelli took a major part in inspiring its formulation and was indeed the co-ordinating rapporteur. The European Parliament asked that the treaty be submitted to the parliaments and governments of member states with a view to ultimate approval after taking account of opinions and comments.

The draft Spinelli Treaty, backed by the European Parliament's endorsement, helped to put reconsideration of the nature of the institutions, and the aims and workings of the Community, very much at the top of the European political agenda. Support for the treaty in all its detail rapidly came from Italy. Warm support for its thrust was expressed by Chancellor Kohl of Germany and President Mitterrand of France. The European Council at its Dublin meeting that year responded by setting up its own committee for institutional affairs. It was composed of personal representatives of the heads of government under the chairmanship of Senator Dooge of Ireland, and reported at the end of last year.

Its conclusions were not unanimous, but the general feeling was that a new approach to Community affairs was indeed urgently necessary. The Dooge Committee as a whole considered that a qualitative leap forward should be taken with particular regard being paid to the long-term objective of establishing a genuine political entity; that is, a European union. After discussing the scope of the matters to be covered—very much wider than in the Treaty of Rome—the Dooge Committee recommended that a new draft European union treaty should be negotiated, and that it should be based on the acquis communataire and on the new needs as the committee saw them. Significantly, the committee said that the negotiations should be guided also by the spirit and measure of the Spinelli Treaty.

The Milan summit conference of June this year broadly accepted the Dooge recommendations. It was decided—although Britain in particular had reservations—to set up an inter-governmental conference to arrive at some preliminary consensus on the future shape and direction of the enlarged Community of 12. Those discussions are currently taking place.

It was in the spring of this year, in the light of those events, that your Lordships' own Select Committee set up an ad hoc sub-committee with the following terms of reference: To consider the implications for the institutional structure of the European Community and for the United Kingdom of proposals for European union, taking particular account of the draft treaty establishing the European Union adopted by the European Parliament on 14th February 1984".

The first meeting of the ad hoc committee was held on 26th March and the report was published on 31st July. The committee held 11 witness sessions in this country and also had the opportunity of visiting the Commission in Brussels and the European Court of Justice in Luxembourg. It received written evidence from several sources. The committee was most grateful to all those who gave evidence and who provided information. The committee is particularly indebted to Professor David Edward of the University of Edinburgh who acted as expert adviser throughout the inquiry. The committee specially wishes to record its appreciation for the services of Mr. Brendan Keith, the clerk of the committee, and Mr. Karl Newman its legal adviser. My personal thanks go to the members of the committee themselves who had to meet on an irregular schedule and who worked so hard on the committee's remit.

In writing the report the committee had to bear in mind the political dimension of its investigation and the subjective nature of much of the evidence it received—evidence which was sometimes contradictory and inconsistent. The conclusions of the report are the result of the committee's own analysis of the issues using the evidence, both oral and written, as background.

It is common to all consideration of the Community and its future that the present system is working badly and it is common ground that a rapid realisation of a true internal market is a vital necessity. There is less agreement that the right way forward is to formulate the new treaty which, while a long way from creating a federal Europe, would amount to a step in that direction. While nothing in the nature of the Anglo-Scottish Act of Union is under discussion, the advocates of a new treaty certainly contemplate member states ceding more powers to the European Parliament and to the new central authority; and they advocate that the present informal political co- operation between member states should be formalised and become part of the new arrangements.

But why is the present system working badly? Essentially it is because member states have taken back to themselves powers they had ceded to Community institutions. The Treaty of Rome provided for a Council of Ministers drawn from member states to be the decision-making authority. In certain areas set out in various articles decisions had to be unanimous. Other decisions—in areas again set out in appropriate articles—could be taken by majority vote. The votes were weighted as to members and on substantive matters a majority vote is 45 out of a maximum of 63.

The Council appointed a Commission and a president of this Commission. This body was entrusted with the executive action required by the Council decisions and it also had, most importantly, the power of initiative with regard to proposals for action. The European Parliament did not have a legislative role but had advisory and consultative functions as regards the Commissions' proposed actions and the Commissions' dealings with the Council of Ministers. Parliament also had certain budgetary powers in relation to the spending of the budget agreed by the Council.

A Court of Justice ruled on questions of the competence of the Commission and ensured that treaty law was interpreted and observed, and thus gave practical effect to the obligations undertaken by member states.

Under the Rome Treaty the Commission had the key role both of initiation and in the execution of decisions. It was a very positive role. It was never intended that the Commission should be merely a bureaucracy. It was not envisaged that the Council of Ministers would spawn 20 or so subject councils with attendant national experts to discuss and consider Community activities in the greatest detail. It was not foreseen that the power of ultimate decision would pass to a European Council formed by heads of government and meeting briefly only three times a year.

The sea-change however, which in time undermined the working of the Community, was the introduction of the co-called Luxembourg Compromise in 1956. This meant that any state could hold up a Council decision if it felt that a very important national interest was at stake. This interest did not have to be spelled out or justified in any detail. In effect, majority voting in those areas provided for in the Treaty of Rome was virtually eliminated. Decisions were simply not taken. Numerous Commission recommendations were left in limbo. Even in discussions at official level within Council advisory bodies the implied threat of veto action was used to block compromise proposals. By degrees, progress in Community matters slowed to a crawl.

The directly elected parliament also had its grievances. It felt that its role in consultation and advice was not working satisfactorily and that its treaty obligations were not being properly fulfilled. The sense of the treaty, it considered, was that parliament should be taken into the confidence of the Commission and of the various Councils of Ministers on a much more intimate basis than was actually happening; and the blocking of agreed recommendations by the Council of Ministers caused great dissatisfaction.

It seemed to Signor Spinelli and his colleagues that a re-launch of the Community was the way to overcome all the various difficulties and the way to recapture the impetus towards a closer European union, political as well as economic. The text of the Spinelli draft treaty is given in our report, as is the text of the Dooge submission. In brief, Spinelli proposed giving clear institutional status to the European Council which would be the senior body of the union. He stipulated that the Council of Ministers, once subordinate to the European Council, would be the decision-making body in the carrying on of Community affairs and would generally decide matters by a majority vote. He proposed a new system for appointing the commissioners who would be the executive arm of the union—a system in which the Parliament would have a major voice. He gave to the European Parliament a central role in the union's legislative process.

The draft treaty makes a distinction between two methods of action by the union: common action and co-operation. Within the field of common action the union would have law-making powers. This field would cover competences already existing under the Treaty of Rome and could be extended by union legislation. The European Council would be responsible for the initiation of action to extend that competence. It is provided that union legislation would restrict itself to determining the fundamental principles covering common action and entrust that the responsible authority of the union or member states was setting out in detail the procedures for implementation. Provision is made in the treaty for differential application of laws where union application would create special difficulties for individual member states. This position could conceivably lead to a two-tier system of states within the union, with some more integrated with the union than others.

The second method of action—co-operation—would cover all commitments which member states undertake within the European Council. For instance, it would be expected to lead to a steady convergence on matters of foreign policy.

Our report attempts to set out the various arguments and considerations relating to a proposed new treaty of union. I will not rehearse them in this introduction to your Lordships' debate but will confine myself to the committee's conclusions. In arriving at these conclusions the committee was more and more convinced that making a reality of the Common Market was a matter of the greatest priority and urgency. It very much welcomed the commission's recent initiative in this regard, set out in a comprehensive White Paper. It noted that even with priority and urgency the completion of all the measures needed was estimated to require some seven years.

The key conclusion of your Lordships' committee was that the Treaty of Rome could and should be restored to its original intentions. Some amendments would be required: in particular, to recognise the role of the European Council and to give the Commission authority to deal with new problems which had emerged. However, the committee did not support a major rewriting of the Treaty of Rome or a new treaty of union. When the institutions of the Community are again working properly and the internal market in goods and services is truly established, that might be the time to take further political steps towards European union. It would then be a case of building on success and on the knowledge that member states would indeed cede powers to a European authority.

To restore the vitality of the Community within the Treaty of Rome, the committee's view is that there should be strict limits on the use of a national veto. It accepts that sovereign states are unlikely to renounce completely the use of the veto but it considers that such use should be a last resort. It should only be used in the case of a vital national interest—not just important but vital—which the head of government concerned will have to explain and justify to his colleagues in the European Council. Making the veto a rare event will greatly speed decision-making. Decisions should in general be decided by weighted majority vote, if a vote is necessary.

The Council of Ministers, in its various manifestations, should primarily concern itself with taking decisions of principle and laying down policy guidelines. There must be more self-discipline on the part of member states, with fewer subject-matter councils, themselves with fewer subordinate committees and working parties with their accompanying national experts.

The Commission, which your committee found to be hardworking but understaffed, should be restored to the role which was envisaged for it in the Treaty of Rome and it should have the necessary staff resources to perform this role. However, in the committee's view the number of actual commissioners is already too large at 14. With the accession of Spain and Portugal the proposed increase to 17 would make it still more cumbersome. For rational working and an effective distribution of duties and responsibilities, the committee considers the right number of commissioners to be nine, but it is recognised that immediate political considerations might limit this reform to the appointment of 12, one for each member state.

Your committee considered that the time for an extension of the powers of the European Parliament had not yet arrived, particularly in the legislative field, but it was felt that a return to the relative powers and duties of the Commission and the Council of Ministers, as set out in the Treaty of Rome, would give the elected parliament more effective powers of advice, consultation, and—importantly—of scrutiny. The committee share Parliament's view that commissioners who are appointed and not elected should pay great attention to the views of Europe's elected representatives and work closely with them.

Your committee has been impressed by the devotion of Her Majesty's Government to Community ideals and by its desire to make the Community more effective. In implementing Community law and decisions, in many respects Britain has been more communautaire than some of her more vocal partners, yet there seems to be some residual doubt by these partners as to how deeply the United Kingdom is committed to the Community.

One signal of deep commitment, which was recommended in an earlier report of the Select Committee, would be Britain's full participation in the European Monetary System.

Finally, your committee considered whether there was a real risk of a two-tier Europe developing, with some member states, notably France, Italy and Germany, moving towards a closely integrated group of which Britain was not a full member. Such a development is not seen as being very likely but if it happened it would not be in the interests of the United Kingdom. The committee therefore welcomed the Government's close involvement in the post-Milan inter-governmental discussions which are currently taking place.

My Lords, the subject that we are debating is complex, and I apologise for this rather long introduction. The future development of the Community is of vital importance to our country, of absolutely vital importance, and we offer our report as a contribution to the discussion on this future.

Moved, That this House takes note of the Report of the European Communities Committee on European Union (14th Report, 1984–85, H.L. 226)—(Lord Kearton.)

3.24 p.m.

Baroness Young

My Lords, "European Union" is an elusive and emotive term upon which many different constructions may be put. I should like to begin by congratulating the Select Committee on the thoroughness with which it has tackled this important subject.

Their report is a cogent and perceptive analysis of the ideas which lie behind the concept, and how it relates, or should relate, to the activity of the European Community. It will be a valuable reference work for some time to come.

May I also congratulate the Select Committee on the timeliness of its work, a point to which the noble Lord, Lord Kearton, himself referred. The report was published just before the start of the Intergovernmental Conference on the development of the Community which is now taking place, and has proved a valuable contribution to the debate on the direction which the European Community should now take.

On this difficult subject it is as well to remind ourselves that our basic text is the preamble to the Treaty of Rome, which commits us fully to the shared goal of creating, an ever closer union among the peoples of Europe". This closer co-operation among member states, leading to practical benefits for our peoples, is what membership of the European Community is all about. It is an aim to which successive British Governments have long subscribed. The Select Committee's report rightly emphasises that union is not about a Utopian plan for a European federation. It is how best to realise the aims of the Community so that its future and success are assured.

I think that the best definition of European Union is provided in the Solemn Declaration of European Union, based on the efforts of Hans Dietrich Genscher and of Emilio Colombo and signed by heads of government at Stuttgart in 1983. This said: European Union is being achieved by deepening and broadening the scope of European activities, so that they inherently cover a growing proportion of member states' mutual relations and of their external relations". It should be obvious from all this that we are not afraid of European Union. As my right honourable and learned friend the Foreign and Commonwealth Secretary has said, the authors of the Treaty of Rome saw European Union as a continuing process; as a Community growing politically and economically interdependent. Being in constant development, it had no finite shape. They saw it as a journey travelled together in an agreed direction. In that sense—the sum total of the ever closer relationship between us—such a union exists today; I have no doubt that it will be stronger tomorrow. It is a reality as well as an aspiration. It exists in the definite political and economic sense solemnly affirmed at Stuttgart; and the political imperative is growing all the time. The question is how this organic process of "ever closer union" is to be taken forward, allowing Europe to enjoy the real power and influence that its unity alone can bring.

The Select Committee recognise that the Common Market itself is far from complete. Obstacles to the free movement of goods and services continue to hamper trade and make a mockery of the term "common market". It is for this reason that the Government wholeheartedly agree with the committee's diagnosis of the Community's current condition and their conclusion that the completion of the internal market must be a major priority. Progress in this field is the single most important contribution that can be made to making the European Community more effective, more real to its citizens, and the motor for greater prosperity and jobs that its citizens rightly expect it to be.

To the outside world we present a single tariff barrier within which there exists in theory a single domestic market—the internal market. But the Select Committee have recognised in their report that there is still a large element of theory to this—too large for our taste. For example, I would commend to the attention of your Lordships the list of documents required for the transit of a vehicle from Germany to Italy, which appears as an appendix to the Select Committee's Report on page 301.

The Government are glad to note that the committee do not believe that a new treaty is necessary to achieve this and other desirable improvements. Nevertheless, the committee have rightly recognised that there is some impatience with the pace of progress in Europe and a recognition that in a Community of Twelve it will be even more difficult to take decisions than it is now. That is what is now being discussed in the Inter-governmental Conference.

The Select Committee concluded that we should consider amending the treaty, if this was necessary to achieve the practical improvements in decision-taking which we want to achieve. That is our approach. For us, the crucial test of any proposals at the conference is whether they are necessary, whether they will help achieve the goals we have set ourselves, and whether they are susceptible to being agreed by all. We must aim for realistic and practical proposals capable of implementation in all member states. Meanwhile, as the committee recommends, we are active participants in the Inter-governmental Conference. Your Lordships may rest assured that Britain will continue to play a central role in European Community affairs.

I shall now turn to some of the detailed issues raised in the report. The Select Committee report mentioned abuse of the Luxembourg Compromise as the greatest obstacle to the completion of the internal market (in paragraph 101). The Government have no doubt about the importance of the Luxembourg Compromise. The Luxembourg Compromise reflects the political reality that all member states must in the last resort be able to defend themselves against being outvoted on any issue affecting their very important national interests. On matters which fall under majority voting rules, in our view a member state must be able to insist that discussion continues until unanimous agreement is reached if it considers that a very important national interest is involved. But we agree with the committee that we must prevent the Luxembourg Compromise from casting its shadow over decision-taking. We have suggested ways of limiting potential abuse.

The Select Committee's report has some wise words on the role of the European Parliament. We are first and foremost a union of democratic countries. We are unique as a Community in having a directly elected parliament. The Parliament tends to hit the headlines when it rejects the Community budget. But its positive suggestions for the improvement of Commission proposals appear, if at all, at the bottom of the page. Although the parliament is consulted on many issues, it cannot ensure that account is taken of its opinions in the Council's decisions. Hence the frustration felt by many MEPs and the disillusion of some voters.

The Council-Parliament relationship never will be easy. Ministers meeting in the Council are all conscious that they are well and truly accountable to their own parliaments and electorates. That is not going to change. But we can do more to give the European Parliament a proper role in the European partnership without putting that accountability at risk. This means earlier consultation and an earlier opportunity for the European Parliament to give its views on issues under discussion. The Government endorse this aspect of the recommendations of the committee's report.

The Select Committee has made four recommendations about the Council of Ministers. They are a counsel of perfection. The Council's role should of course be one of taking decisions of principle and of laying down the policy within which the Commission should work. This was the intention of Article 155 of the Treaty of Rome which says that the Commission shall, exercise the powers conferred on it by the Council for the implementation of rules laid down by the latter". But it is often difficult to do this in practice. Some of the most technical and detailed matters of Community business, which ought on the face of it to be dealt with by the Commission under managerial powers, are the most contentious—weights and dimensions of commercial vehicles and the chemical content of water for human consumption (such as lead) are examples. We cannot see any alternative to the Council examining on a case-by-case basis detailed matters of this sort in order that Ministers may themselves take decisions for which they can be called to account by their own parliaments. However, we are in favour of greater delegation of authority to the Commission wherever possible.

This leads me to the role of the Commission on which the Select Committee had made four recommendations. The Government wholeheartedly endorse these recommendations. I would in particular draw your Lordships' attention to what has been said about the staff of the Commission who, far from being the overstaffed bureaucracy of popular mythology, are hard-pressed and can be expected to carry an even greater burden when the Community is enlarged in January.

Although the thrust of the Select Committee's report is very much in accordance with the Government's thinking, I must explain to your Lordships why in some cases the Government draw different conclusions from the committee. The committee made a recommendation in favour of a reduction in the number of commissioners to nine. We believe a reduction is necessary. But it would be inequitable for some member states not to be represented at all. We continue to think, and have said so in the Inter-governmental Conference, that one commissioner per member state will suffice after enlargement.

On the proliferation of specialist councils we think that, provided the Foreign Affairs Council retains its overall responsibility for the direction of Community business, specialist councils with the expertise they can bring to bear have a major contribution to make. In practice, the Council of Ministers has to be the major negotiating forum in the Community. It is, after all, dealing with decisions which have to be implemented in each member state and which are often significant legally, politically and economically. We are against everything being referred up to the highest level. But there are limits to the extent to which delegation is possible.

The Government's position on United Kingdom membership of the exchange rate mechanism of the EMS is well known. We have always said that we will join when the circumstances are right, but sterling's status as a major trading currency and the market's perception of sterling as a petro-currency pose particular problems for the mechanism. We also need to consider carefully the implications for the operation of domestic policy. We do not accept the argument that sterling's absence from the ERM is an impediment to liberalisation of the market in financial services.

The Select Committee's report draws attention to the proposals the Government have put forward for a treaty formalising co-operation in foreign policy and security. Such a treaty would play an important role in cementing the valuable practice of consultation and concertation among the ten member states. We need to move from consultation to common action wherever possible. The Inter-governmental Conference is discussing how the strengthening of political co-operation can be achieved by embodiment in a new treaty reflecting the fact that foreign policy is a matter for collaboration between sovereign member states and not something that lends itself to definition under the Treaty of Rome, with the problems of competence and jurisdiction that that would entail.

This debate takes place against the backdrop of the Inter-governmental Conference. European Community affairs inspire varying emotions, but confusion as to what is going on is probably the commonest reaction. This is especially true about the progress of the Inter-governmental Conference. The issues before it are complex, but they are important to the future shape of the Community.

The first session of the Conference was held on 9th September. There have been regular meetings of senior officials in a preparatory group to discuss possible amendments to the treaty, covering in particular those measures necessary to complete the common market, the role of the European Parliament, and whether to update the treaty to include specific reference to issues such as technological co-operation, which are already dealt with in the Community but to which the European Community Treaty makes no direct reference. In a separate preparatory group, political directors of member states' foreign offices are working on the text of the possible new treaty on political co-operation which I mentioned earlier.

A large number of proposals have been put forward. It is too early to judge the shape of any package that the Luxembourg presidency may try to pull together next month for presentation to the European Council in Luxembourg in December. The Treaty of Rome is not immutable. There may be cases where majority voting does not apply, and should apply. But we are not going to find it easy to improve on its authors' work. If we do, it has got to be for a purpose and not to change the rules in the hope that that alone will be enough fully to establish the common market with the enhanced opportunities for wealth creation that this will offer or create a technologically viable Europe able to compete with the United States and Japan. We have to will, and to decide on, the ends as well as the means. We will, therefore, take a view on any overall package at the end of the process on the basis of whether or not it will contribute to the practical improvements in the way the European Community works that we all seek and to the realisation of treaty objectives.

In the time we have available it is difficult to do justice to every detail of this extremely comprehensive and useful report. I hope that it will suffice at this stage to repeat my thanks to the noble Lord, Lord Kearton, and to the Select Committee for the important contribution they have made to a better understanding of the working of the European Community and for the light they have cast on the most advantageous ways in which the Community should develop. My colleagues will find it a helpful guide in the difficult discussions on the future of the European Community currently taking place at the Inter-governmental Conference.

3.40 p.m.

Lord Kennet

My Lords, may I endorse everything the Minister of State has said about what an able and useful report this is? It covers exactly what one wishes it to cover and was produced with admirable dispatch. The House owes the noble Lord, Lord Kearton, and his colleagues more than the usual debt of gratitude for this document.

We must also be grateful to the Government for not having dismissed it before the House had an opportunity to debate it. In these days, these little forbearances should not go without due recognition!

I regret in a way that the Labour Party has not chosen to speak in its usual place at the start of the debate, because it would have given the House up-to-date news as to whether or not the Labour Party intends to stay in the Common Market. That is something we must resign ourselves to not knowing until the end of the debate.

A noble Lord

My Lords, may I ask the noble Lord, Lord Kennet, to speak up?

Lord Kennet

My Lords, we do suffer under a permanent disability on the SDP Front Bench. It is much better in front, and it is also much better behind.

A noble Lord

I did not wish to miss anything.

Lord Kennet

My Lords, much of the report, it goes without saying, we on these Benches endorse. We endorse the reduction in the number of subject councils as clearly good, and it stands to reason that the reduction of the Commission at least to 12. if not to nine, is clearly a good thing; we endorse that strongly. We also endorse the restoration of the Commission to its proper functions under the treaty, and an adequate staff ratio. In all this I was glad to learn that the Government are in agreement with the report. That is good, and no more need be said.

I endorse strongly the requirement of the report, its request, its suggestion, urging that we join the EMS. I am sorry to hear that the Government still think the conditions are not right. What are the conditions which are not right? It cannot be anything to do with the position of sterling vis-à-vis other currencies because since the Government first said that conditions were not right sterling has been all over the place, and if none of the positions it occupied in the last three or four years was right, I should like to know what position would be.

Completing the Common Market, the by now famous and I hope soon to become more famous, list of 46 documents that a German lorry must carry to get into Italy makes the point without further argument. Nothing became the career of our late colleague the noble Lord, Lord Cockfield, in this House so well as his first reaction to being exposed to the Common Market in all its absurdities: he came forward with 300 proposals which would be required in order to complete it.

He made a good splash with that and adopted a positive stance. I regret that no more has been heard of the 300 Cockfield proposals. Assuming he is right, we have a long way to go, and I am not surprised to hear that seven years is the estimate of the Commission for how long it will take. But the point is that to get those 300 proposals it will take majority voting. The reason why this has not been completed already is that there has not been majority voting, or not enough. There has to be more, and the speed with which the Common Market can be completed depends on how much more majority voting there is.

My Lords, looking at the general development of this great, amazing, baffling, new institution of ours, the European Community, I find I am not among those who believe that to stand still is to go backwards. This is a widespread view on the continent. I think a period of no institutional advance is not to be regarded as a tragedy or a dead loss. There must be organic development. To force it will only produce distortion. If there is a kind of winter during which no organic development takes place, that is a pity, but let us not despair. On the other hand, winters of organic development do stimulate vision and it is to the latest winter that we owe the remarkable vision of the Spinelli Treaty.

I want to say a word of personal praise for this particular member of the European Parliament, who year after year has turned out visionary draft after visionary draft, always keeping the right distance ahead of common humanity, who pant after him achieving what they can and seldom going astray from the route he has marked out, though, of course, at nothing like his vertiginous speed. The world needs its Spinellis.

We have nothing against a new treaty. We do not demand it and think it is the only way forward, but I fear that the Government and, indeed, the Committee may have been a little insular in saying, "No new treaty whatsoever". This is a question of national traditions. It is our custom not to have a new document but to amend the old one or, if we cannot amend it, to carry on patching things up, doing things without writing them down. This is not the custom on the continent. There they proceed with carefully thought-out documents succeeding each other over decades and centuries. If they want a new treaty, I do not see why we should object unless it contains something bad. But there is no logic which says there is no need for a new treaty. We might just as well yield to their vision which says, "Since we are agreed we are going to do it, we might as well have it in a new treaty".

This arises most sharply for the British Government at present in the matter of the political co-operation machinery. If the Government are ready to have that as a new treaty and then presumably to face the swallowing-up of that treaty into a later amalgamation—as they faced the swallowing-up of the Coal and Steel Community and Euratom into the European Community, a later amalgamation or separate treaty—then why not take it on board now as an amalgamation in the form of a new treaty as soon as it is born? A lot of undue weight is being given to formalities here. It is always good to give way on formalities, especially when there are points of substance that you cannot give way on.

I strongly support the demand for deformalisation of the European Council, the meeting of Prime Ministers. It has got too grand, too formal. I commend to the House the evidence to our Select Committee of my right honourable friend Dr. Owen. He gave a sardonic account of the accretion of officials who now go to the European Community, which used to be a private meeting of people talking without papers, without decisions to take, to become of like mind on general questions. We should go back to Chancellor Schmidt's original vision of it. There is no reason why the supreme decision-making body should not remain the Council of Ministers, as it is under the treaty. If the Council of Ministers fail to take decisions they are in clear dereliction of their duty under the treaty, and they are in clear contradiction of political and structural common sense in insisting on passing it up to the higher level, to the European Council. But maybe there is room for a system whereby every tier in this pyramid—COREPER to subject councils, subject councils to the Council of Ministers, Council of Ministers to the European Council—should have to obtain the permission of the tier above to pass up a decision. It would be quite salutary, for instance, if the Prime Ministers refused permission to the Foreign Ministers not to decide, and if the Foreign Ministers refused the Ministers of Transport permission not to decide, and to pass it up.

Such a thing would have to be explored. Of course, you could turn the European Council into a two-tier system of its own. I do not mean in any fundamental political way, but procedurally. It could have a few meetings, not more than half a day a year, in which they took decisions, and longer, more frequent meetings in which they consulted generally in private, without officials and without papers before them.

I turn now to majority voting. Part of these reforms—this did not come clearly from the report—must be the written statement of overriding national interest. It is one thing to say that the words, "very important national interest", should give way to something a little stronger, not necessarily "supreme" but probably "vital national interest". That would be an improvement on "very important".

However, if all that we face is a change between a Minister saying that it is "very important" and a Minister saying that it is "vital", that will not take us very far. What is needed is for that Minister, that Government, to be bound to produce a written piece of paper, in advance of the occasion, stating the reasons for which they will refuse to have majority voting on a given decision. They will have to fill up one side, or two sides, of a sheet of paper—I would not be against putting a minimum length on it, as they do on exam papers, which state, "Write on at least two sides"—to be passed to colleagues saying, "This is a vital decision to my country for the following reasons" and listing them as 1, 2, 3 and 4, and publishing it. That would be the end of the story for the Government. They would have their point, and there would not be majority voting on that matter, and the other Ministers would have to lump it. But it would not be the end of the story for the development of the institutions because our national parliaments can read it, the European Parliament can read it and our peoples can read it, and form a proper, true and informed judgment on the policy of each country in this vital regard of how much democracy they are willing to accept in the council.

Turning to the Commission, I have said that we agree with our own Committee's report on this. But there is one point that goes beyond the Committee and which should be examined in future. It would, I believe, be a good idea. The Committee discusses whether or not the European Parliament should have a veto on the election of individual commissioners. It already has the power to dismiss individual commissioners. It comes to the conclusion that it should not—or, at any rate, should not the first time round, although it might perhaps the second time round. One sees the point of that because the first time a person is appointed the European Parliament will not know him and will not have any reason to exercise judgment. The second time around they will know him as he will have been a commissioner for four years. They will have seen him, probably once a month, during those four years, and will have an opinion on whether he deserves to continue.

I propose that we might go one stage further and say that the commissioners should be found from among the members of the European Parliament. This is not a new proposal; it has been going around. It looks a bit bold, but it would have two good effects. First, it would, in itself, strengthen the European Parliament. I am among those who believe that the Community is in desperate need of the scouring action of a bit of democracy on all the dross and incrustations that infest it. It would improve the power of the democratically elected Parliament and, at the same time, make the Commission, in a certain sense, more directly the servant of the European peoples. The trouble about the Commission is that, under the treaty, it is not anyone's servant. It is just a disembodied set of intelligences that is charged with having ideas and then seeing whether they will wash in the Council of Ministers for an outright "yes" or "no" or in the parliament for a "yes" or "no" type of advice.

Who are they, the Commission? That is a constitutional loose end. If the commissioners were elected by the European Parliament from among its own members, the analogy is clear with a national democratic civil service in a national democracy. I submit that we are unlikely to construct a European democracy that does not bear considerable resemblances to our national democracies.

This brings me to my last point. The Government say that the time for greater powers for the European Parliament has not arrived. In general, I do not think that this is true. The time for greater powers for elected people is something that those elected people must decide. It is paternalistic for others who are not members of that directly-elected parliament to judge when it is fit to be considered grown up and to be allowed to settle its own hash. I believe that it should have greater powers.

Even before that, there is something the importance of which is greatly underestimated throughout the Community—the question of the seat of the parliament. Those who have been members of it—there are plenty in the House today, I see, looking around—know what an immense burden it is on the development of European democracy that it should be stuck down there in Strasbourg. Let us think of it in national terms, the national analogy. How would British democracy have grown if the law said that the Sovereign and the Civil Service shall be in London, that the Parliament shall be in Edinburgh and shall not be allowed to meet anywhere except in Edinburgh, and that the Clerks of both Houses of Parliament shall have their being and their houses in Glossop? Every time that Parliament met, its own Clerks, the Committee Clerks, the Clerk of the Parliaments, Hansard writers, the transport office and everyone else would have to proceed from Glossop to Edinburgh, and the permanent secretaries from London to Edinburgh. From time to time, held on a rather short lease, the Committees of the Parliament, collecting their Clerks in Glossop on the way, would be allowed to meet for a short time in London.

We all know that the very essence of democracy is immediate communication between the legislature, the executive and the judicature. If you do not have that, you do not get democracy. You get bureaucracy, confusion and doubt. Those are precisely the factors that now disfigure the European Community. Lastly, I believe that the new treaty, or a new treaty, or an amendment of the old treaty, should not only say that there will be a uniform electoral system but that that uniform electoral system will be adopted by 1989. Democracy (surprise, surprise!) is the answer in this great bureaucracy, as in others.

3.57 p.m.

Baroness Elles

My Lords, first, I owe an apology to the House. I will not be able to stay to the end of the debate. For one of the reasons that the noble Lord, Lord Kennet, adumbrated, I have to take the plane to Strasbourg tonight—there are not many of them—for a meeting tomorrow morning at 9 o'clock during the parliamentary session. I apologise therefore to noble Lords, especially those who are taking part in the debate. I should like to join previous speakers in congratulating the European Communities Select Committee of your Lordships' House on producing what is a most valuable and far-reaching report. The noble Baroness, Lady Llewelyn-Davies, as chairman of the Committee and the noble Lord, Lord Kearton, chairman of the sub-committee, will know how enormously the reports from that Committee are appreciated not only by your Lordships but throughout all the institutions of the European Community including, if I may say so, the somewhat maligned members of the European Parliament as well as the nine other Governments of the member states and of the two other member states as from 1st January 1986. The report has been welcomed and has been read with the greatest of interest. I welcome very much this opportunity to say a few words on the subject.

I should like, first, to comment on the meaning attributed to European union. The introduction to the report states that European union is about how best to realise the aims of the Community so that its future and its continuing success are ensured". This is, with respect, a somewhat minimalist approach. It is one that is certainly not shared by the vast majority of other member states throughout the Community. Of course, in today's debate, we are absolutely right to take the United Kingdom's position and the Government's position, which is well understood and which has been very clearly put forward by my noble friend Lady Young. Let us be aware, however, that there are nine other member states discussing the same problem with us. We have to be careful not to take too nationalistic an approach to this term. Following the speech made by my right honourable friend the Foreign Secretary in Bonn the other day—and may I say in parenthesis how I wish that it had also been made in Birmingham, Bristol and other cities of the United Kingdom—I welcome the fact that my noble friend the Minister has actually made pretty well the same statement in this regard in this House in this country. This is, I think, the first time that the Government have said in this country what they believe by European union. My right honourable friend the Foreign Secretary went a little further following the Genscher/Colombo definition. But I believe that the term implies, as my noble friend has said, both a progress towards closer union—as spelt out in the preamble to the treaty—but also an objective. To my mind, therefore, the best definition (because it was one which looked to the future and is one with which I think few would argue) was perhaps that contained in the Tindemans Report of 1975, then rhetorical and now reality.

Summarily, the objectives were and now are: a united front to the outside world in foreign policy, security, economic relations and development aid. Here, tribute should be paid to the Government for the draft treaty on European political co-operation which I know has been put forward to the inter-governmental conference. Secondly, common policies in economic and monetary matters, in industrial and agricultural sectors and in energy research and regional and social policies as well. Ten years ago those were new, but look where we are today. Ten years later we are now looking to recognise the urgent need for common co-operation in technology, environment and health matters as well. Third, in the Tindemans Report it was stated that there was the need to have institutions with the necessary powers to determine a common, coherent and all-inclusive political view, the efficiency needed for action, and the legitimacy needed for democratic control.

These sum up what 10 years ago was seen to be the vision of Europe and which, bit by bit, has been achieved in these last 10 years. It is indeed not necessary to be a federalist to support this view. While debate on terminology shows a wide gap between rhetoric and reality, the issue itself cannot and must not be ignored, recognising that Britain has a direct interest in the outcome. The Spinelli draft treaty, to which all of your Lordships have already referred, adopted by the European Parliament last year, contains this principle, but goes further. The contribution made by Mr. Spinelli and the European Parliament has provided the major basis for ongoing discussion together with the findings of the Dooge Committee, which spelt out in more discreet terms many of the ideas contained in Spinelli. Both documents express the need for action and highlight by their proposals existing difficulties and blocks in the decision-making process, implicitly recognising that failure to adopt new policies will contribute to a decline of economic and social prosperity of the European Community.

I know that there are some views as to how Governments implement treaties, and these must be taken into account if one is considering a new draft treaty. The United Kingdom has always honourably inplemented every treaty that it has ratified. If it is not a tactless remark to make in your Lordships' House, the same is not true of all other governments; and we have to bear this in mind.

The Commission's carefully spelt out proposals for the completion of the internal market by 1992, as your Lordships will know, drafted by my noble friend Lord Cockfield and broadly supported by the Government, would bring a saving to industry on Commission calculations of something like £8 billion a year lost by formalities at inter-Community frontiers, plus another one or two billion pounds for delays. Since 45 per cent, of British exports go to other European Community countries, our own industries are also losing millions of pounds a year. It is therefore of direct interest to the United Kingdom to support these proposals totally.

The technological Europe—which was also referred to in the Dooge Report—is essential if the gap between Japan, the United States and ourselves (and by "ourselves" I mean Europe) is not closed, and we are already 10 years behind.

Esprit, a common Community programme, has allocated over 100 projects to the United Kingdom this year within a totality of over 400 projects. Here again is direct proof that we are talking not only about ideals and future prospects: we are talking about the realities of today for the citizens both of Britain and other member states of the Community. Surely this is an area which must be more closely co-ordinated. But these policies cannot be achieved if the institutions, whose task it is to make the relevant decisions, are incompetent, inefficient or undemocratic and do not represent the interests of the people affected.

I checked today—indeed, the services of the Commission kindly counted them up for me—and as at 1st June, 1985, there are 763 draft proposals before the Council. Some may not be important; but some are. Only recently the directive on architects was adopted after 17 years, the one on pharmacists after 16 years; and yet these draft decisions directly affect businesses and individuals throughout the Community. I can give one example. We all know about the draft directive known as the Vredeling directive. Businesses are still asking: what is happening? Are we going to be affected? Is it going to be adopted? Is it going to be amended? If your Lordships, and indeed another place, ran the business of legislation in this way, I think all governments would be turned out immediately—and rightly. Consequently, vast numbers of people throughout the Community are kept in suspense because of inefficiency or unwillingness to come to an agreement. Therefore, if for no other reason—and there were many other reasons adumbrated in the report before your Lordships' House—the decision-making process needs serious reform.

First, I believe that draft proposals should not remain undecided longer than an agreed time; possibly two years after the European Parliament's opinion has been received. A time limit would impose either a negative or a positive decision. Updating of the treaty to make certain provisions, notably Articles 57(2), 99, and 100 of the Treaty of Rome, subject to majority rather than unanimous vote might cosmetically improve the situation. But many of the proposals for the formation of an internal market, and which are waiting for decision, could be decided now by majority vote if the threat of veto did not undermine the decision-making process. All governments appear to be agreed that the veto should, first, be retained for vital national interests. I think here that my noble friend referred to "very important" national interests but I hope eventually that the Government might be prepared to amend this to the word "vital". Secondly, they agree that they must be modified so that the threat of its use does not impede progress. It may be that a simple alteration of the Council's internal rules of procedure could deal with that matter, imposing written and public justification where a member state wishes to apply the veto. A gentleman's agreement, though pleasant sounding and in accordance with the traditions of this Government, would not, I believe, be in the interests of any government, all of which, after all, are subject to their own national parliamentary control, when a Minister, on return to his own national parliament, could only refer to an agreement as the reason why he did not apply the veto on a matter on which there may have been sustained propaganda by narrow sectoral interests. I therefore think that however nice a gentleman's agreement sounds, it would not be effective in removing the threat of a veto hanging over what could normally be a majority decision.

Those who are aware that I am a member of the European Parliament will not be surprised that I have a few comments to make about the somewhat Luddite and anti-democratic attitude as to the future and increased powers of the European Parliament in the legislative process. This is clearly one matter on which the European Parliament feels most strongly, rightly and understandably. Having for years watched the delays and procrastinations of the Council for good or bad reason, but having direct adverse effect on our constituents, it is no longer tolerable for European Parliament members to spend hours, days, or months, amending draft legislation but to have no further right to intervene in the legislative process and to have their amendments overwritten, rejected or ignored by the Council of Ministers.

There are proposals before the inter-governmental conference, I believe, from the French Government and from the Commission, as well as from other sources. Her Majesty' Government are asked to recognise the unacceptability to the European Parliament and the possible consequences if some positive consideration is not given to the legitimate demands of the European Parliament. I do not ask for the final decision but I think that the position is intolerable to a democratically elected parliament. We are responsible to our constituents in exactly the same way as those in another place are responsible to the same constituents; we are elected by the same people and we have to answer to them. I am not issuing a threat—far be it from me to do so—but I think that Her Majesty's Government should be aware of the very strong feeling which will turn against this Government in particular if it is shown that we are the country which has denied the European Parliament at least some advance in the legislative process.

I should like to deal with the budget issue. If the European Parliament had not rejected the budget in 1979, the common agricultural policy may well have taken 81.5 per cent. of the budget, as it did in 1978. The fact is that the budget was rejected at that time and pressure was put on the Council. This is of course the Parliament's view; I accept that it may not be the Council's view. Something like 65 per cent. is spent on agriculture and there is increased social fund spending of 35 per cent., which again is of direct benefit to the United Kingdom.

Who can respect an organisation, an institution, such as the Council, which last year dared to present a budget for 10 months when I think we all know that, after all, the year consists of 12 months? That was the 1985 draft budget. The 1986 draft budget contains proposals for 10 member states and totally ignores the fact that, as from 1st January 1986, there will be 12 member states. It is clearly quite impossible for a parliament—which at least expects to be taken seriously by the Council of Ministers if by no one else—to be presented with a draft budget of this magnitude and these characteristics.

The European Parliament is not irresponsible if it is taken seriously. I would say the same for the seal of the parliament. The noble Lord, Lord Kennet, has more than fully explained the difficulties under which members of the European Parliament work. Under the treaty, governments are meant to decide where the seat of the parliament should be. However, the present situation with at least three working places is a recipe for inefficiency, expense, exhaustion and divisiveness between both the parliament and the other institutions with which it is expected to work efficiently. Therefore, at the end of the day I think that the parliament will probably take its own decision as to where its working place should be. As we well know, it is only the temporary that lasts, and we temporarily find our working seat in one place and hope to stay there until member states have finally recognised that we have actually come.

The European Parliament has of course also been the recipient of tens if not hundreds of petitions from individuals and groups claiming to have had their rights, which are established under Community law, violated by member states' governments, their agencies or European Community agencies. I mention this because I do not think it was dwelt on in the report on European union, but it is a matter which I believe is of vital importance for the role of the European Parliament in protecting the citizens whom we represent against violations of their rights under community law. We should certainly like governments to recognise the right of the European Parliament to investigate those matters which concern Community law. It may be that these issues could be resolved by an inter-institutional agreement and not at this stage by a new treaty. But I thought it right to inform your Lordships of the views and opinions of a large majority of the European Parliament.

The success of the inter-governmental conference is of deepest concern to us all. We do not want to see a two-speed Europe encouraged and enhanced. After all, the United Kingdom already has derogations on lorry weights and on clawbacks for the sale of lamb, and I believe—and it is a belief that is shared by many in this House, and by leading businesses and industrial organisations—that it is shameful and harmful for our businesses and for commerce in this country that we are not members of the exchange rate mechanism. It cannot make sense that, when eight out of 10 of our largest export markets are member states of the Community, we are the only country which has a floating exchange rate. I do not pretend to be a major economist; but there are enough economists in your Lordships' House who I am sure would tell me that to have one country with a floating exchange rate against all the others which have exchange rates which remain stable in relation to each other simply cannot be for the benefit of our businesses or our industry.

I would very much hope that—I was about to say at the end of the day but I hope it will be at the end of this year—the Government will see their way, regardless of the fact that it is a petrocurrency, regardless of the fact that they have never found the time right, to be able to be part of the exchange rate mechanism of the EMS.

In conclusion, there are many issues before Her Majesty's Government at the inter-governmental conference. We wish to assure Her Majesty's Government of our firm and loyal support for a successful and positive outcome of these meetings, knowing that if substantive measures are taken to make progress along the road of European union, it will be for the prosperity and security of United Kingdom citizens, who will be the main beneficiaries of the decisions which we hope Her Majesty's Government will take.