European Community: Increased Integration

HL Deb 07 June 1989 vol 508 cc854-89

3.4 p.m.

Viscount Chandos rose to call attention to the case for Britain's full participation in a more integrated European Community while maintaining Britain's national interest and cultural identity; and to move for Papers.

The noble Viscount said: My Lords, Europe looms large in your Lordships' House. The work of the House and its Select Committee is central to Britain's monitoring and absorption of Community law and directives. There is, as a consequence, a consistent and strong European theme to your Lordships' debates. Over and above that, I am conscious of the great part that Europe has played—sometimes happy; sometimes unhappy—in the lives of so many of your Lordships with a few years seniority over me: the world wars and their aftermath; the long campaign to achieve Britain's belated membership of the Community; the dissolution of old-established political loyalties over the issue of continuing membership, and hence the very creation of my own party.

It is hardly surprising, therefore, to feel a sense of nervousness at least in introducing today's Motion, as well as concern that the recent debates on European issues such as 1992 and the single market might make further discussion of Britain's role in and relationship with the Community redundant. But it seemed that, only eight days before polling in the third direct elections to the European Parliament, it would have been an opportunity missed not to try to address some of the very fundamental differences in the European vision held in this country, not least by members of Her Majesty's Government, ironically at a time when there is perhaps greater consensus about many of the practical imperatives of the single market.

Fate has, I think, further encouraged me that this was a justifiable choice of subject for, though the intervention of Mr. Edward Heath may sometimes seem like that of a tormented Trollopian figure drawn from a mixture of The Pallisers and the Last Chronicle of Barset, the charges against the Government are serious and, I shall argue, largely well-founded.

Only yesterday Mr. Norman Tebbit kept the pot boiling merrily when, in the Goodman lecture at the Royal Society, he announced that he stood absolutely alongside the Prime Minister and that any major transfer of sovereignty to Brussels would create not just a clash of governments but a clash of parliaments and a resulting disintegration of the Community. That came not just from a member of the government which put through the Single European Act but the Secretary of State for Trade and Industry in the period during the legislation's preparation, if not its final enactment.

Sovereignty is an emotive word, and although I felt it best not to include it in the wording of the Motion, it is impossible to address the core of the disagreement about Britain's role in the European Community without considering the question of sovereignty and the extent to which it can be pooled or partially transferred without either abuse of the English language or neglect of the national interest.

Let me begin by saying that the most outspoken proponents of European federalism can in their way harm the European cause, not perhaps as much as the equivalent extremists from the nationalist or little England school, but harm it nonetheless, through arousing unnecessary fears and suspicions among even the most sympathetically inclined supporters of the Community. When I talk to fervent federalists, and I see that gleam in their eyes, I am irresistably reminded of the words of one of the great past Members of your Lordships' House: I do not know what effect these men will have upon the enemy, but, by God, they terrify me".

If the provocation and counter-provocation between federalists and the militant nationalists is as destructive as the equivalent interchange between Right and Left in domestic politics, we can nonetheless reaffirm our commitment to a European Community based on something other than the lowest and meanest common denominator.

Last week the Foreign Secretary—the Foreign Secretary whom the Prime Minister is reputed to be thinking of sacking for his extreme and irritating support for the European Community—said: The single market is a brilliant amalgam of economic liberalism and European commitment that sums up the philosophy of the late 1980s to a T. It is the Visa card not the social charter, which is the instrument of the ever closer union of the peoples of Europe foreseen in the Treaty of Rome".

Your Lordships on this side of the House will probably agree that the Visa card and not the social charter sums up the philosophy of the Conservative Government throughout the 1980s. But I do not believe that it sums up the philosophy of the European Community; and nor, in truth, does the Foreign Secretary whatever his attemps to prove to his leader that he can be as narrow minded as her in his concept of Europe. Although the earliest manifestation of the European Community was predominantly in the areas of trade and agriculture, let nobody be in any doubt that its origins were far broader and more multifarious than that.

Forty-one years ago Sir Winston Churchill said: It is impossible to separate economics and defence from the general political structure. Mutual aid in the economic field and joint military defence must inevitably be accompanied step by step with a policy of closer political unity".

The Visa card vision of Sir Geoffrey Howe reduces the European ideal to that of a prefabricated hypermarket, while the inconsistencies and contradictions of the Prime Minister's speech in Bruges betray her fear of a great, carnivorous European monster threatening to devour the British people and their traditions, like a child's fear of the dark. That is perhaps less surprising if we examine the achievements and failures of the Prime Minister.

When confronted by an identifiable and indisputable enemy, the single minded determination of the Prime Minister has proved a national asset. But while the noble Lords, Lord Donoughue, Lord Bridges and Lord Greenhill, have in recent debates paid tribute to the occasional benefits to the Community of the Prime Minister's obdurate approach, her single mindedness, regrettably, turns to simple mindedness in trying to respond constructively to the complex and interwoven fabric of a European movement and the European Community and an imaginary enemy must be conjured up.

If, then, the Community is to be more than a glorified free trade area, what then is the resolution of Mr. Tebbit's concern about the transfer of sovereignty? Professor Kenneth Minogue of the LSE wrote recently that sovereignty can be abandoned but not pooled. But while Mr. Heath, and indeed the SDP European manifesto, refer to a pooling of sovereignty, in his speech in The Hague in 1948 Sir Winston Churchill had already gone far further in saying: It is said with truth that this involves some sacrifice or merger of national sovereignty, but it is also possible and not less agreeable to regard it as the gradual assumption by all the nations concerned of that larger sovereignty, which can alone protect their diverse and distinctive customs and characteristics, and their national traditions".

Yet I believe that pooling of sovereignty correctly denotes the nature of the relationship between the Community and the member country. Professor Minogue himself acknowledges that a sovereign power can choose to delegate the right to make certain decisions by way of a treaty, and that the ability to revoke that treaty represents precisely the over-ride control which preserves the country's ultimate national sovereignty. When assets or resources are pooled in other walks of life there is almost always the ability for partners to reclaim what they have pooled, sometimes easily, though sometimes with greater difficulty and disruption.

So long as every member state in the Community has the individual right to revoke the Treaty of Rome, however painful that may be, then I would argue that sovereignty can be safely, constructively and not irreversibly pooled. The United States of course saw bitter civil war to prevent states seceding from the Union, but it is the nature of the non-federal political union encapsulated by the European Community that every member country should be free to secede if it wishes.

Perhaps I may turn briefly to just a few of the specific issues which have been at centre stage in the European debate and the European election campaign. My noble friend Lord Kilmarnock will talk in greater detail about the social charter whose concept has so aroused the Government's fears of allowing socialism in through the back door. Let me just say that, in the eyes of many people who are no more socialist than noble Lords opposite, the core of what is being proposed by the Commission is fair and logical and that, with active and constructive participation by Britain with the other Community members, a wholly acceptable social dimension can and should be agreed.

The very origins of the Community lie, as I have suggested earlier, in similar post-war roots as NATO and there is much more, as my right honourable friend Dr. David Owen has argued, that can be done to enable Europe collectively to defend itself more strongly and less wastefully. As a new era of international turbulence and instability threatens, co-ordinated European diplomacy—the preventive medicine of international relations—will, as our ally the United States has made clear, so often achieve far more than the efforts of individual countries. This is all the more true in terms of overseas aid as well where Britain's budget also lamentably falls behind the example of our European partners.

I am sure that your Lordships will be aware that Britain is in breach of the Treaty of Rome through having, alone of the 12 member countries, a disproportionate electoral system for the European elections. I shall not seek your Lordships' sympathy for the effect that this has on the representation of the SDP and of the Democrats in the European Parliament, but rather draw your attention to this as both a cause and a symptom of what the director of the Centre for European Policy Studies today described as Britain's unfamiliarity with, and dislike of, the kind of coalition politics that are inevitable in a multi-party parliament. Britain's influence on the Community is thereby significantly reduced and the unnecessary sense of being a passive passenger in a coach driven and navigated by others is fostered.

The continuing prevarication of the Government over full membership of the EMS and their knee-jerk opposition even to the consideration of the progressive evolution of monetary union, are symbols of the Government's but, most of all, of the Prime Minister's muddled concept of national sovereignty. A novice student of international monetary economics can identify that, even for the locomotive economies of Japan and the United States, there is no such thing as complete economic or monetary sovereignty.

Full membership of the EMS would not be an economic panacea and neither I nor my colleagues in the SDP have ever argued that. But it would be a valuable weapon in the fight not only against inflation but for market share for our industries as well. On the day after the Spanish Government announced their definitive intention to join the exchange rate mechanism by the middle of 1990, this Government should be ashamed of the insincerity of their promises to join "when the time is ripe", after innumerable opportunities to do so over the past few years with immediate and lasting benefit to the British economy. Let none of your Lordships underestimate the additional handicap this places on British industry or the growing threat to our financial markets and the position of our financial institutions.

There are few metaphors left to describe Britain's missed opportunities in Europe that have not become cliches. I have sought to argue that even now it is not too late to claim the benefits arising from full participation and a broad vision of our role in the Community, without the unacceptable or irreversible loss of sovereignty, national interest or identity. If, on the other hand, the Government continue to pursue their suspicious, grudging and limited approach to membership of the Community, we will have less prosperity, less influence and no greater real independence. My Lords, I beg to move for Papers.

3.20 p.m.

Lord Thomas of Swynnerton

My Lords, I recently had the privilege of serving on an international jury to give the first "Catalonia" prize to the philosopher Sir Karl Popper. Sir Karl travelled to Barcelona to receive his cheque for 100,000 dollars for services to liberty, since that is what the prize is for. As I listened to this English philosopher who is of Austrian origin talking in the mediaeval palace of the Generalitat in Barcelona about Peisistratus and Homer, I had an irresistible reminder of the significance, serenity, continuity and grandeur of European civilisation.

European civilisation (of which the British culture mentioned in the Motion as part of the title of the debate of the noble Viscount, Lord Chandos, is not just a contributor but an essential part) is not the same as the European Community; or is it?—since after all the European Community would not have received the motor and the energy which it has had behind it without the recollection of the civilisation of the past and indeed of the present. The Motion of the noble Viscount gives us a good opportunity to consider the character of the European Community in the future, not after 1992, or after for the British perhaps the more important year of 1993 when the Channel Tunnel opens, but in the years leading up to the year 2000.

By the year 2000 I suppose that we shall be doing far more things in common with our European neighbours than would have been conceived possible 50 years ago. After all, we already have what is by most definitions one might say European agriculture. It is not called that but that is what it is. By the year 2000, policies in relation to transport, scientific research, the environment and other matters will have also no doubt been put into effect and we shall have seen how well they work. Above all, European law, which as we know has considerable competence already in spheres of safeguards, in relation to the environment and in relation to the equal treatment of men and women in employment, will have made a very substantial impact on all our countries.

The name of this association of European countries will probably still by the year 2000 be being debated. "Federation" will not be used since it is a word that has a great many enemies in different countries for a large number of reasons. "Confederation", with its comforting Swiss connotation, perhaps will be a better word. The "United States of Europe" will probably not be a very popular expression, even though Napoleon used it, since it has naturally American connotations. The "Union" which we already have also has an American connotation and, as we have seen, is extremely vague and is open to many interpretations. I suspect that the word "Community" will still be being used. That will disappoint a number of Europeans. I heard M. Rocard, the Prime Minister

of France, recently say that he hoped that he would be achieving a "European nation" during his time in politics.

Perhaps more important than the definition of what this association will be is the question of who will be participating and what it will be doing. As to the participants, I think we can envisage very well that, by the year 2000, several more western European states—Austria and Switzerland; perhaps Sweden and Norway—will have after all decided to associate themselves with this adventure. Even more important, and anyway more inspiring, will be the possibility that one or other of the nations of what we have come to regard as eastern Europe, but which we should surely think of as central Europe—Mitteleuropa—will also have drawn back towards us. I very much hope so.

As to the other question of what this association of European states will be doing, of course this is at the heart of the most important political issue in Europe today. It is worth recollecting in this debate that the concessions which we have already made towards European collaboration have been on such a scale that our predecesors in this House, whose pictures we see along the corridors, would certainly not think that the state we have at the moment is the same as their state. They would find it surprising, even if some would find it inspiring, to enter this country by a gate marked "European Community nationals".

The second point of which I want to remind the House is that in the 1990s there will be a considerable momentum towards European collaboration, regardless of what we ourselves think should be done, partly because of the great weight which the Government have given towards the idea of the single market of 1992. In the mid-1990s, it will be as if we are in a boat on a river trying to catch hold of a willow or a tuft of grass at the side. We may find the current extremely strong and we may not be able to stop exactly where we want. For those reasons we should think very carefully about where the river is in fact going.

Whatever happens to the current dispute between the Government and the European Commission, it seems likely that many Europeans, despite our eccentric selves, will, even if they are Europeans by culture or by impulse (or élan, as M. Rocard put it in the speech to which I referred a moment ago) will find that some of their interests and ideals may be threatened by what they see as centralisation, corporatism and a lack of adequate democratic control.

I have no doubt that we should try to draw a line between what we hope in the future will remain a national sphere of competence and a European one. This may not be very popular in the Commission. It will not seem very communautaire since of course the treaties to which we have given our name are open-ended ones. More or less any intervention can be justified if one looks at the preambles. Nor may it be very popular as an idea with Her Majesty's Government since it may seem premature. Nevertheless, something ought to be done, although it will not be easy.

The geographical frontiers of Europe have been very difficult to define, especially in the East, and so perhaps will the functional ones be inside our borders. However, something along those lines should be done. We may otherwise very well find that the European ideal—which despite superficial pedantries is a great ideal—will be poisoned by continuing arguments about radishes or school textbooks.

3.30 p.m.

Lord Stoddart of Swindon

My Lords, the noble Viscount, Lord Chandos, whom we should thank for initiating the debate at this particular time, seemed to complain in his speech that the EC was still seen as a trading and economic Community. However, the noble Viscount will of course remember that the idea of the EC was sold—or perhaps it was not sold—to the British electorate on that basis; it was not put to the electorate on the basis that it would be a unitary Europe or a federal Europe or, indeed, an integrated Europe of the sort which he and his party apparently believe in.

There are of course continuing doubts about the EC. The reason for such doubts is that the promises which were made to the British people—and, indeed, to others—that they would derive great economic benefits from the EC, simply have not transpired. Before considering the future of the EC, we must consider the past. I contend, as do many others, that the promise which was made of great economic benefit to this country arising from our membership of the EC has simply not been kept.

Let us look first at our balance of payments situation in relation to that of the other countries of the EC. Before we entered the EC we had a positive balance of trade of about £400 million in cash terms. In 1988 we had an adverse balance of trade with the EC of about £14 billion, representing virtually the whole of our adverse balance of trade. Therefore the economic benefit of trade has not arisen; indeed, far from being an economic benefit, our membership of the EC has been an economic liability.

Let us then look at what else has happened to our people. We were promised good, wholesome and cheap food; but, arising from our membership of the EC, every family of four in this country pays an extra £700 per annum for its food. Has our membership of the Community assisted the environment? There was a great hoo-ha, a great fuss and complimentary remarks from the faddist lobby when we had imposed upon us from the EC a directive which stated how we must label cigarette packets. As I said, there was a great cry of approbation from the health lobby. But, what those people had not realised is that, while the EC was doing that and spending a mere £7 million on advertising the adverse effects of cigarette smoking, it was spending £2 billion on subsidising tobacco growers. That is the sort of Community which we have; but it is not the sort of Community which was promised to this electorate in 1972 during the passage of the European Communities Act, nor indeed during the referendum of 1975.

Therefore the promises have not transpired. Moreover, because the promises have not been kept

and because it is now not possible for the proponents of the EC to show the British people what benefits they have derived, we have a new philosophy: having entered a failed Community we should in fact enter it even further. In other words, because we have had detrimental effects from the EC, perhaps if we give more power to the Community we may derive some benefits. Frankly it is a mirage and the Government are absolutely right to say to the EC and to this country, "So far in relation to sovereignty and no further".

The noble Viscount criticised the Prime Minister; indeed I do often, but not on this occasion. The spectre of the loss of sovereignty to a European superstate was raised not by Mrs. Thatcher but by Jacques Delors. It was M. Delors who told this country, and the world, that by the end of the decade 80 per cent. of all the important financial and economic decisions would be taken in Europe. That was what alerted the people who believe in the future of Britain as a sovereign state. That is what made them ask, "What is happening here?" It was not anything to do with socialism; it was all to do with where and at what level decisions affecting the people of this country should be taken.

The noble Viscount, Lord Chandos, and his colleagues, who unlike the Labour Party—and unlike the Conservative Party as a matter of fact—have succeeded in maintaining a lesser part of popular support in this country, believe that we should join the ERM. Indeed I believe they also think that we should go into further economic and monetary union. But, we should understand that economic and monetary union, as proposed in the Delors package, implies the surrender by national governments of their fiscal, monetary and exchange policies. They would be surrendering them to the institutions of the EC, one of which would be a European central banking system outside the control of any single government, including the British Government, or any parliament. Therefore under these proposals the Government of Britain would reside not in Westminster, or even in Whitehall, but in a system of central banks under the control of a small junta of financiers who would be impervious to the views of the electorate. That is not the kind of community I want.

I believe in European co-operation and, like the noble Lord, Lord Thomas of Swynnerton, I also believe that Europe has frontiers far wider than the 12 nations of Western Europe. Europe is far bigger than the EC, it is far more important and it also has a long cultural heritage. I am no little Englander, although I very much believe in the people of this country and their abilities which have contributed so much to the world. What I should like to see, and what I think most people of goodwill in this country would wish to see, is good co-operation between all the nations of Europe.

But that must be under a system of government which they understand and which is responsive. There has been no need for Japan, Korea, Taiwan or Singapore to unite into some common market to make themselves successful. They are successful on the world stage because they believe in themselves and they have leaders who believe in their countries. That is what I want to see for Britain That, I hope, is where our future lies.

3.40 p.m.

Lord Bonham-Carter

My Lords, I thank the noble Viscount, Lord Chandos, for introducing this debate at this apposite moment. I agreed with the general tenor of his remarks. When talking about sovereignty, which I shall be doing later, one must say that if one is going to increase the powers of the European Community that must be combined with decentralisation within the Community and within the member states of the Community.

I listened, as usual, with the utmost interest to the words of the noble Lord, Lord Stoddart of Swindon. His speech it seemed to me to be an interesting exposition of the utter confusion in which his party finds itself as regards its attitude towards the Commission. I do not know whether he represents the majority or the minority.

Lord Parry:

My Lords, the noble Lord should raise the level of the debate not lower it.

Lord Bonham-Carter

My Lords, it is perfectly fair for me to comment on a speech which has just been made. If the noble Lord wishes to intervene, I shall be happy to listen to what he has to say.

Lord Parry

My Lords, I merely ask the noble Lord and the House to keep the debate at the level that it has reached and not to lower it.

Noble Lords

Order, order!

Lord Bonham-Carter

My Lords, I am astonished that the noble Lord is so sensitive. I am merely commenting upon certain divisions within his party which were made apparent by his noble colleague's speech. I shall continue to point to some aspects of the noble Lord's speech which I found difficult to follow; for example, he has suggested that in the campaign to persuade this country to join the European Community no reference was made to the political implications of so doing. I can only say that in the old Liberal Party, which was the first party to advocate this country's entry into the European Community—a position which has since been adopted by the Conservative Party and the Labour Party—we always made it 100 per cent. clear that a derogation of sovereignty was implicit in the Treaty of Rome.

According to my recollection, that was made clear in the referendum campaign. The noble Lord went on to say various things about the way in which the Community had worked, and ended by saying that it was not the sort of Community that he wanted. What I was not sure about was whether he was advocating that we leave the Community. If so, he is in minority. At the moment, many countries wish to join the Community. They include, neutrals such as Austria and Scandinavian countries such as Norway. In Eastern Europe a number of countries have indicated that that is what they wish to do. It is odd that people should advocate at this moment the view that the Community is something which has done this country what amounts to harm.

It if for those reasons that I found the noble Lord's speech an interesting, but rather unconstructive contribution. That having been said, one must go on to say that whenever one discusses this country's position vis à vis the Community, one has to start by reminding all British governments that from its earliest beginnings, the European Community was inspired by a political idea, prompted by the experience of a succession of European civil wars. That it chose to achieve that political idea by economic means did not make the Community any less political. It was the misunderstanding, whether deliberate or not, and the refusal to recognise that fact that led to us excluding ourselves from the Community, to the creation of the free trade area, and to the breakdown of the free trade area negotiations in 1958–59.

Today it seems to me that once more the same refusal to recognise the essentially political nature of the Community has led to a supposition that the Single European Act, creating a single European market, can be seen largely in economic terms, and that its implications in political terms are marginal. In fact, its political implications are of great importance and are inescapable. That is obvious from a reading of the Act.

If we are not to repeat the mistakes we made in the past, it is essential that we should not blind ourselves to that fact or pretend that those political implications do not exist. For example, M. Delors' prediction, to which the noble Lord, Lord Stoddart of Swindon, referred, was not a spectre or mirage. When he said that by 1995 80 per cent. of all important economic decisions would be taken at EC level rather than national level, he was saying something which seems to me more and more likely to be true, and something that we should recognise.

I ask noble Lords to look at what is already happening today. Mr. Ludlow, whose article was referred to by the noble Viscount, Lord Chandos, and who is the Director of European Policy Studies, calculates that in environmental policy in 1988, 80 per cent. of all legislation adopted in Britain was of EC origin. Do not let us pretend that those political implications do not exist; or, secondly, do not let us pretend that the Delors Committee's plan for economic and monetary union is not developing a momentum or a current, as the noble Lord, Lord Thomas of Swynnerton, called it. It is a current which I and, he, if I understood him rightly, doubt whether the Government can stop. If we try to exclude ourselves from those movements which are going forward and gathering momentum, we shall do so to our detriment. We may be fairly confident that the other countries will go ahead without us.

Thirdly, the Single European Act—this is on the same theme of the momentum which is developing—requires the European Community to review European political co-operation in 1992. We shall find, I predict, as the founders of the European Community foresaw, that economic integration demands political integration; that political integration requires political machinery; and that the existence of political machinery and political institutions legitimises and formalises political co-operation.

Each of those developments inevitably involves a derogation of sovereignty. That has always been the case. That will always be the case. It is in the Treaty of Rome. It is in the Single European Act, both of which we have signed. In addition, there now exists a European Parliament, to which this Parliament, this Government and the British press pay all too little attention. Parliaments like to accumulate power, and the European Parliament is no exception to that rule. It has in recent years accumulated power, and it will continue to do so. I would argue that it is right and proper that it should.

It is no use the Prime Minister complaining about European bureaucracy if she does not take any steps to curb it. The way to curb bureaucracy is to make that bureaucracy responsible to a democratically elected parliament and to a Council of Ministers, which acts almost as a second chamber in the European Community, and which conducts its business not in private but in public.

President Gorbachev spoke of ossified dogmas which he said had to be abandoned. It seems to me that the Prime Minister clings to some ossified dogmas about the European Community. One represents the European Community as a threat to our cultural identity. If the Prime Minister occasionally went abroad for her holidays, she would find French, German and Italian cultures unconcerned about this dreadful threat to their identities. I cannot see why she should think that the British cultural identity is so much more vulnerable than theirs. If there is a threat to our cultural identity, it comes not from the European Community but from Sky Television and the Americanisation of our television screens which this Government are so busy promoting.

Another ossified dogma is the EC's bureaucracy. The third which has been so well and thoroughly dealt with by the noble Viscount, Lord Chandos, is that national sovereignty must be protected at all costs and in all circumstances. I believe that the sooner we abandon that last dogma, the better we shall be able to influence and direct the future of the European Community.

3.50 p.m.

Lord Benson

My Lords, the Motion calls for a more integrated European Community. I should like to make the plea that there is very little hope of an integrated European Community until we get the basic organisational structure of the Common Market on to a common sense basis. It comprises at present six different layers of authority, disjointed and uncoordinated. First, there is the European Council, which considers wide policy issues after meeting two or three times every year. It does not determine legislation.

The second layer is the Council of Ministers, which is the main decision-making body. It comprises Ministers from each of the member states who fight their own corners, and think of their own particular state in making their decisions. The composition of the council meetings varies depending upon the subject: transport, finance, agriculture. Different members meet, making their decisions in isolation and without reference to the others. The Council of Ministers does not meet in public; its proceedings are secret. Its decisions are communicated to the national governments after they have been made. Inconsistency is virtually guaranteed by changing the presidency every six months. Important decisions have to be unanimous.

The third layer is the representatives and ambassadors of the member states who sit in Brussels. A great deal of their time is spent in planning the work and the sessions of the Council of Ministers. They are not a formal Community institution, but by common consent they carry a great deal of influence in the conduct of Community affairs.

The fourth layer of authority is the European Parliament, but it has no legislative powers. It can express opinions; it can talk; it can give advice. But the ultimate decision rests with the Council of Ministers meeting in secret. Basic decisions which affect all citizens of the Community are not therefore made by the European Parliament, however elected. They are made by the Council of Ministers.

The fifth layer is the European Commission, which carries out the day-to-day work, but it has the sole power of initiative. Also, apart from the court, it has the sole power of interpreting the provisions of the Treaty of Rome. Technically, it is under the surveillance of the European Parliament, but that is wholly unrealistic because the only way in which the European Parliament can enforce its authority is by removing the whole of the Commission en bloc on the basis of a two-thirds majority of the European Parliament—a totally unrealistic proposition.

The sixth layer of authority is the 12 member states in which the bulk of the revenue arises and the expenditure is made. The degree of surveillance which is possible by the other five layers of authority over the sixth layer of authority is very small and very difficult to apply.

If we had set out to formulate an organisational structure which would be transparently inefficient, and indeed a long way removed from democracy as we understand it in this country, we could not do better than the organisation we have in post at present. Let us look at some of its achievements. The annual budget of the Community is £25 billion per annum. Of that sum, every year between £2 and £6 billion is squandered and frittered away in fraud and irregularities. That has been going on for years. Next, the gross mismanagement of the common agricultural policy has been continuing for years. The great bulk of the revenue is expended on that policy, but only nine out of every 100 workers are engaged in agriculture. The accumulation of huge stocks of unsaleable goods and the vast expenditure of money on storing them is totally inexcusable.

The financial and budgetary administration of the Community is wretchedly weak. Year after year in annual reports and special reports the Court of Auditors draws attention to bad and inefficient administration. Sometimes a little is done with those reports, but on the whole most of them are ignored or not treated seriously. Then there is the lack of political will, to which Select Committees have drawn attention. Again and again decisions are not made because they are politically difficult or because the necessary majority cannot be obtained.

If we really feel that an integrated Europe is necessary, I suggest that the first thing we must do is to get the organisation right. Until that is done, I cannot believe that there is any hope of a united Europe with freedom of frontiers and the free movement of people, goods, capital and services. There is further talk of a single currency, but the smallest economic principles must be observed, that we cannot have a currency unless we have a federal government who can manage the economy upon which that currency is dependent. So I think that the first task is to get the organisation right. It has been recognised for a long time that it is weak and inefficient. The real problem is that nobody has the courage to tackle it.

3.57 p.m.

Lord Kilmarnock

My Lords, I wish to say a few words about the so-called social dimension mentioned by my noble friend, which has suddenly emerged as an elixir newly discovered by the Labour Party—though not apparently by the noble Lord, Lord Stoddart of Swindon—and has correspondingly become the subject of bitter denigration by the Government. I do not believe that either of these reactions is justified by proposals for a social charter, as far as we know them at present, although we have yet to see the final version of the Solemn Proclamation of Fundamental Social Rights that the Commission wants to propose to the Council.

Let us therefore look first at the motivation behind the pryoject. It is clearly designed to reassure unions and employees generally that the 1992 completion of the internal market is something more than a charter for capitalists. It is in the nature of a quid pro quo to the European labour forces for the dismantling of the last trade barriers and the opening up of the single European market to transnational companies which are naturally likely to locate where labour and social costs are least. Obviously there is some considerable merit in the aim to introduce civilised minimum standards of employment and to ensure that one member state cannot blatantly undercut another.

Our own record of industrial relations is not such that we can afford to sneer at efforts to get the people of Europe on board for the more dynamic economy at which the 1992 project is aimed. But as the social proposals spring from a tradition of social partnership and co-determination which is somewhat alien to our own, the Government immediately dismiss the package as creeping or backdoor socialism, without troubling to distinguish what is industrially useful or ethically desirable from what should be treated with a little more caution.

Let me start with one or two reservations. Personally, I attach great importance to preserving freedom of manoeuvre nationally in two vital areas—fiscal policy and the control of social security. I think any British government of whatever persuasion would, or should, aim at that. The fiscal side does not fall strictly within the broadly social remit that I have set myself. However, with the various kinds of interesting possibilities of fiscal innovation in the direction of tax neutrality on the agenda, I would want to keep my options open here.

The European exchange rate mechanism would, I am convinced, have been a help to Mr. Lawson in controlling domestic inflation, as my noble friend Lord Chandos said, and as he himself clearly believed when he was shadowing the deutschmark. However, central budgetary control is not a necessary element on the road to a common currency, and he would be right to resist that.

Next, the social security system is another extremely potent weapon of domestic social policy in the hands of any government. I, for one, would be extremely reluctant to surrender control of it. This is especially so because we on these Benches are opposed to the idea of a European minimum wage. I am not sure whether that will be included in the final draft of the solemn proclamation. The phrase used in the press release of 17th May was a "fair wage". That sounds unexceptionable until we remember that the concept of the just wage went out with the mediaeval guild system and its redefinition has been the subject of profound political dispute ever since. It would, therefore, be extremely difficult to establish, particularly if Community-wide figures were attached to it.

The arguments against such wage-setting are well known. It introduces rigidities into the labour market with the ultimate effect of keeping people out of work. Further, it penalises poorer countries, unless perhaps their wage bills are subsidised out of Community funds. That is not to say that there should be no norms of basic social protection. However, in our view, it is much better to go for a minimum income through an integrated tax and benefits system, which would, incidentally, remove the worst affliction of all suffered by low paid British workers, which is the punitive combined marginal rate of tax and national insurance contributions at the bottom end of the scale. This is another area in which a British government should preserve some freedom to act.

If the Commission is in danger of being somewhat over-ambitious in some aspects of the proposed social charter, when one comes nearer to the human and civil rights aspects, it is on much firmer ground. Thus, freedom of movement and association and collective bargaining must command universal, or at least very broad, assent. So, too, must equal rights and equal pay for men and women in the same jobs, and parental leave. Equality of opportunity must command broad assent in so far as it can be achieved through education and training. Therefore, I strongly support the Commission's proposal for a right to continuing vocational training, particularly if it gives a boost not only to adult retraining but also to the radical restructuring of the arrangements for the 16 to 19 age group which is so urgently required in this country. If it does anything to push us towards an educational maintenance allowance at 16 plus, I shall be happier still.

Then there is the matter of health and safety at work and the protection of children and young people. No person in his right mind would oppose that. The same goes for the integration of disabled people which has been so remarkable a feature of recent social advance.

It might be thought that, given our long tradition of social legislation, which dates back to the mid-19th century, we might be ahead of the rest of the Community in many of these matters. But the only area in which our legislation, if not our practice, seems to be ahead of the Community is that of health and safety at work. Otherwise, the indications are that there is a general trend away from the standards outlined in the charter. The charter would, for instance, make provision for the limitation of the hours worked by young people. This would have an obviously beneficial effect on their possibilities of further education and training. However, the Government's Employment Bill, which had its Report stage in another place yesterday, goes straight in the opposite direction. It removes restrictions on the hours and wages of minors, thereby encouraging them pell-mell into the labour market at too early an age, and thus into a downward spiral of low paid, unskilled work.

As regards sex discrimination, there is more litigation in this area from Britain and Ireland than from anywhere else in the Community. This may be a tribute to the role of the Equal Opportunities Commission, but it does not say very much for our employers' practices. So, while there are some things that we are right to be chary of, there are other widely accepted social and employment standards against which we do not measure up too well. If we are afraid of creeping or back door socialism, or any other bogey conjured up by the Government, it is worth looking at what we actually put our name to, or rather what that enlightened lady, Mrs. Chalker, did on our behalf, in the Single European Act.

In subsection III on social policy in Article 118A, we read that: Member States shall pay particular attention to encouraging improvements, especially in the working environment, as regards the health and safety of workers, and shall set as their objective the harmonisation of conditions in this area, while maintaining improvements made". We then learn that directives under this section may be made by qualified majority, laying down: minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States". This is followed by what amounts to an exemption for: small and medium-sized undertakings". I can see little there which should cause Mr. Fowler too much loss of sleep or send the Prime Minister into a towering rage. Gradualism is the order of the day and they will have much less difficulty in making reasonable British points if they are prepared to listen to the points made by others. The British Monster Raving Loony Show is now frankly out of date in Europe and should be taken off the road. It should definitely not be trundled out again in Madrid. Perhaps the noble Lord, from his more balanced Foreign and Commonwealth Office perspective, could pass that on as one of the messages of this debate. Perhaps if that particular show were managed by his department, it might work out very much better for all of us.

The truth of the matter is that the wider the social charter seeks to range, the less it will be possible for its promoters to argue that it is a necessary precondition of the success of 1992. The Government therefore have some freedom of manoeuvre. But, rather than putting the boot into something that clearly accords with the aspirations and values of practically all our fellow members, a wise government would be in there talking coherently and persuasively about those areas, which I have mentioned, on which they have reservations, while acknowledging those in which we ourselves are less than perfect.

We do not want any more ranting about socialism, which is in any case on the decline worldwide. We do not want the negativism of Bruges. What we do want are the particular British virtues of perspicacity, pragmatism and good sense. A modicum of courtesy would also not come amiss. In that way we are more likely to influence the final shape of the proclamation, which will be made with or without us, and to diminish the number of unnecessarily intrusive directives.

Finally, the social market economy which we espouse is fundamentally predicated on securing the social acceptability of a free market system. We believe that that requires fair, as opposed to merely formal, equality of opportunity, a wide dispersal of property and a basic income guarantee. To the extent that any European proclamation or instrument meets these aims, we will support it wholeheartedly. But if, and where, it strays into excessive bureaucracy, or conformism, or centralism, or corporatism, or utopianism, our voice will be raised against such threats to our national interest and cultural identity. The noble Lord, Lord Thomas of Swynnerton, pointed towards some of those dangers as possibilities along the road. It seems to me that that position is well expressed in the terms of the Motion of my noble friend, which he moved so eloquently. I congratulate him on it. Although convention will require him to withdraw it, I commend its spirit to the House.

4.8 p.m.

Lord Gladwyn

My Lords, I propose to say a very few words regarding the possible effects of recent events on the North Atlantic Alliance and, hence, on the European Community. The prospects for both have, I believe, been improved by President Bush's very welcome initiative. It is true that agreement between the super powers on the limitation of their conventional weapons in Europe—weapons comprising aircraft, tanks and, for the first time, men—may well take longer than he suggests. But if, as we must all hope, the negotiations are at least partially successful, then talks on short-range nuclear weapons will certainly start. I agree, at least on this, with the Prime Minister,' that once they do start the day of the so-called "third zero" will not be very far off.

Incidentally, the row on short-range weapons has probably only been postponed if, as seems quite likely, the West German Government, emerging from the coming elections, refuses to allow modernised Lance missiles to be stationed on German soil, where United States troops are nevertheless likely to remain—at least we must hope so.

This brings me to the point that, whether we like it or not, the emergence of what may broadly be termed left-wing or left-of-centre coalition governments in practically all the continental member states of the Community is something that must now be seriously contemplated. Without venturing into party politics, I might add that some such government or coalition might possibly in the next year or two even take the place of the present Gaullist régime in this country. In any case our continental colleagues are very likely to agree fairly shortly on some scheme for giving effect to the Single European Act and hence making the Community more efficient which, as the noble Lord, Lord Benson, has said, is now essential. If we stand out, all the chances are that they will go ahead without us.

The noble Lord who is to reply to this debate will correct me if I am wrong, but I just do not believe that the Americans would welcome such a development. They would surely prefer us to be part of a united Europe on the broad lines proposed by the Commission rather than a kind of aircraft and missile carrier on the edge of a Europe with which, for so long at any rate as their troops remain, they will inevitably have a "special relationship" rather than with us. All the more so if our absence results in an increase in anti-American or even neutralist tendencies, especially in Germany.

That is not to say that all the hopes now placed on 1992 will necessarily be realised, particularly if it results simply, as the Government apparently want, in the abolition of all impediments to trade and nothing else. There has recently appeared in France—and it is said to have created a great impression—a book by a brilliant young inspecteur des finances called Alain Minc entitled La grande Illusion. By this he apparently means that a purely economic solution of the problem of increasing unity is likely to be disastrous. The Darwinian conception, as he calls unrestricted free trade—a kind of survival of the fittest—would result, he thinks, in appalling and intolerable hardships for many nations and for most smaller industries unless accompanied by some control of credit including a central bank, great financial asistance for the backward countries, some social or welfare state provisions, and above all a common policy on defence.

M. Minc's book is rather irritating. I think that he is too pessimistic regarding the withdrawal of United States troops, which in the long run he regards as inevitable. He also appears to think that the Germans would willingly accept an Anglo-French nuclear umbrella if the American one was withdrawn. However, his general argument that there is now a real danger of what he calls "continental drift" towards the East, and an ensuing "Finlandisation" of Europe unless Western Germany is firmly embodied in some form of meaningful political union—including, if possible, the United Kingdom—is surely unanswerable. Must we really assume that Mrs. Thatcher cannot recognise this obvious danger and the obvious means of avoiding it? If so the hope must be that she will eventually be replaced by somebody who can.

4.15 p.m.

Lord Monson

My Lords, we are all grateful to the noble Viscount, Lord Chandos, for the chance to debate this thought-provoking topic—thought-provoking because implicit in the wording is the tacit acknowledgement that the attainment of further integration of the EC without jeopardising either national interests or cultural identities (not just Britain's) would be a difficult and delicate task. Why, therefore, attempt the task, one wonders. It is not as if further political integration were a prerequisite for fostering friendship between peoples. Indeed, the opposite may be true, as I shall argue later.

Euro-fanatics are notorious for their hostility towards "Atlanticism", which one might loosely define as friendship and co-operation between English-speaking peoples. One sometimes wonders whether they also feel that we are duty bound to like the West Germans better than the Austrians, the Belgians better than the Swiss, the Danes better than the Norwegians, the Greeks better than the Turks, the Spanish better than the Poles, and the Sicilians better than the Maltese merely because the first group in each case are members of the EC and the second group are not.

By the same token the absurd notion that further integration is essential in order to prevent physical conflict between nations simply will not wash. If this were so the EC nations, individually or collectively, would long since have clashed with Sweden, Switzerland, Austria, Hungary, East Germany and so on. Logically there would have been clashes between Canada and the United States and between Australia and New Zealand as well. Nor is there anything in the preposterous claim made at the time of the 1975 referendum campaign that integration would, in some suitably vague and unspecified way, give the people of the United Kingdom greater access to Beethoven, Voltaire, Breughel, Carpaccio and so on. Art, music and literature have always transcended national frontiers, thank goodness, and always will. The Common Market plays no role in this whatsoever.

The long-term viability of an integrated foreign policy must also be open to question. The much vaunted EC united front in response to the Argentinian invasion of the Falklands was more apparent than real. Had the conflict continued any longer serious cracks would have appeared in the facade of European unity, or rather EC unity. One must not make the far too common error of using "Europe" as a synonym for the EC.

So what are we left with?—the idea, I would guess, that further integration is needed to increase wealth and prosperity within the Community. Only an ivory tower elitist totally out of touch with ordinary people would deny that all people in every era welcome greater prosperity, both in their capacity as private consumers and in their capacity as beneficiaries of public spending, but not at any cost, which is why the vast majority of British people will, for example, welcome the Government's ban on juggernauts over 38 tonnes, which our overcrowded island simply cannot cope with whatever may be the case on the Continent, even if such a ban reduces the average family's income by a few pence per week. In other words, for the British public economic efficiency is not the be all and end all.

Furthermore, the average family's prosperity depends not only on dismantling barriers within the Community but also on dismantling barriers around the perimeter of the Community. Banning or severely restricting imports of sugar from the Caribbean not only impoverishes Caribbean sugar producers but makes EC consumers poorer than they would otherwise be. So far as concerns the internal barriers, most of those are already well on their way to being dismantled in any case. The United Kingdom has been more scrupulous than many other countries in fulfilling its obligations in this respect.

The trouble is that the majority of draft directives now emanating from Brussels—at a rate that would never be tolerated by the House of Commons or by this House—have nothing to do either with the unimpeded flow of goods and services between the different nations of the Community on the one hand or joint action against pollution, drug smuggling and terrorism on the other. In any case, the latter requires the co-operation of the entire Western world, not only of the 12 EC countries.

The issue of so-called workers' rights and the social charter apart—I make no comment on that given my mixed feelings about it—we seem to be left with an absolute spate of over-zealous legislation seeking to interfere in the purely domestic affairs of countries throughout the Community. I do not particularly care for bull fighting, but it is none of my business. It is no business of anyone else either, except the Spaniards, yet the EC is apparently trying to ban it despite the protestations of King Carlos himself. So much for the "protection of cultural identity". Efforts are doubtless now being made to ban the Frenchman's traditional Gauloises and Gitanes on the grounds that they contain too much nicotine or tar. The German autobahnen are also threatened with speed limits for the first time, against the wishes of the Germans themselves.

As for ourselves, the list of proposed impertinent interferences in our domestic affairs is too long to recite. I shall mention just four at random: the ban on the driving of minibuses within the UK by deaf drivers; the requirement for a vet to be present at a game shoot; the introduction of a close season for vermin; and a ban on the imperial system of measurement, even for unpackaged fruit and vegetables sold directly by greengrocers and farmers to British people. I am not talking about items that are exported to the Continent. The human-scale imperial system forms part of our cultural identity, as a glance at Shakespeare will demonstrate, as it formed part of the Continental cultural identity until the totalitarians of the French Revolution abolished it just under 200 years ago.

Even those measures that are admirable in themselves, such as the requirement for greater minimum tread depths on motor tyres announced the other day, are surely matters that lie solely within the competence of national parliaments. If that is what a more integrated European Community is all about, one wants no part of it. The noble Viscount, Lord Chandos, said that he was unhappy with the word "sovereignty". I am not very happy with it either. Let us talk rather about self-determination; that makes the whole matter clearer. Why should there be this urge to legislate, to dominate, to override the national will in so many matters, both trivial and important? The clue must lie in the alarming analogy that I have heard twice recently. It goes like this: the European Community is like a bicycle; unless one keeps pedalling it forward furiously, it will collapse. What an admission of instability and innate weakness? Can one imagine institutions such as the British monarchy, the Roman Catholic Church, the American Constitution—notwithstanding their gradual, inevitable adaptation to changing times—being described in such terms?

The logic of the bicycle analogy is that the EC should proceed at all speed to become, first, a federal state and then a fully fledged unitary state. Only when it has reached the end of the road can the bicycle be safely stored in its rack. That logic is borne out by the fact that much of the proposed legislation is more appropriate to a unitary state than to a federal state. The components of a federation have far more freedom to decide matters for themselves than the allegedly sovereign nation states of the EC appear to have at the moment.

Common Market enthusiasts—among whom I have never pretended to count myself—must put a brake on the zealots and Utopians in their midst if they want their ideal to be attained. The reality is that the ill will created by excessive harmonisation will destroy the only harmony that one needs or wants—harmony between peoples.

4.25 p.m.

Lord Ezra

My Lords, it was only on 3rd May that the noble Lord, Lord Cledwyn of Penrhos, introduced an important debate on the challenge of 1992. I think that, in spite of the relatively short lapse in time, the noble Viscount, Lord Chandos, is absolutely right in introducing a similar subject for debate today. After all, as he has pointed out, this is the week before the European elections. It therefore gives noble Lords the chance to survey the whole European scene.

I think that we should begin by reminding ourselves of the very positive progress that has been made towards the achievement of the single market. In the same debate on 3rd May, the noble Lord, Lord Young of Graffham, pointed out that 50 per cent. of the measures that needed to be introduced to achieve the single market had in fact been achieved. That is slightly beyond the half-way mark, so it is a great achievement.

Furthermore, there is not the slightest doubt that at what one might describe as the working level, involving industrialists, trade unionists, trade organisations and bodies such as the British Standards Institution, a great deal of contact of a positive nature is being developed in Europe, at Brussels and at other meeting places. Such contact forges the sort of European Community that is being prepared for the future.

However, it is disturbing that, while that positive work is going on at that level, speeches are unfortunately being made from time to time at what one might call the political level which throw doubts on the whole endeavour. I should have thought that it would be far better to encourage the achievements at the working level by more positive speeches from now on, as we near the full achievement of the single market, than to go on raising those doubts.

The question arises whether that single market can simply be a free trading area. It cannot. If we are to remove barriers between the movement of goods, people and money, the rules under which that free movement is to be undertaken must be agreed; otherwise there is bound to be distortion. The rules that must be agreed must ensure that trading is fair and therefore that standards of health and quality should be common so far as possible. In the case of the movement of people, we must agree on which qualifications will count in the various countries of the Community, so they must be linked together in some way. So far as concerns the free movement of money and capital, we must not only consider the rules that apply in each of the member countries but must also be concerned about the rules that apply outside, particularly with regard to the banks which have been established to such a large degree in London and other Community centres but are based in the United States, Japan and elsewhere. Those rules must all be worked out.

In my opinion, it is therefore idle to suppose that one can simply say, "Let us have free trade, but leave it at that". We must go into the other matters to make sense of the situation; otherwise we shall have total distortion. I believe that that point is fully recognised at what I call the working level. I hope that in future top level political pronouncements the Government will pay regard to that and show that this indeed is an inevitable consequence of agreeing to create a free market in Western Europe.

Some doubts have been expressed by some of today's speakers, I have no doubt with very genuine motives, as to whether we are looking at this Community in too small a perspective or whether it could jeopardise our sovereignty and so on. However, the fact is that the objective of creating the single market in 1992 has put Western Europe on the map.

A few days ago I was at an international meeting in Vienna which was attended by people from the Community countries, non-Community Western European countries, one country from Eastern Europe, America and Japan. We were discussing general economic and financial trends in the world. The largest part of our discussions centred around the creation of the single market. The Americans expressed their concern about whether or not it would be a fortress Europe, but they are gradually coming round to the view that it will not be. They have been assured time and again—and I am glad to observe the role of the United Kingdom Government in giving those assurances—that such is not the intention. However, clearly we have to live together on a fair basis with the interchange of goods, financial services and resources. The Japanese also made very clear their concern; hence their great interest in establishing themselves in various European countries and in particular in Great Britain. So far as concerns the Eastern European country—and perhaps as it was a private meeting I should not mention it by name—those people were nonetheless very keen on finding ways in which they could be associated with this development, which they saw as of great and historic importance so far as concerns the whole of Europe.

Whatever doubts and hesitations some of us may feel about this development, let us be quite sure that in a world sense it is regarded as very important indeed. It is gratifying that Britain is among those who are at the centre of this movement, and I believe that we shall receive much added strength from these developments so long as we participate in a positive way.

Perhaps I may illustrate that by mentioning a personal experience which occurred when I was in the coal industry. We were trying to stimulate the sale of British mining equipment throughout the world, but we found that there was a move in Brussels to fix the standards for European mining equipment on the German DIN system. The Germans were perfectly justified in pressing for that move but our response was not simply to sit back and say how unfair it was. We sent a very strong team to Brussels to negotiate in favour of the British standards. I am very glad to say that the outcome was a reasonable compromise which enabled us to continue to export on a substantial scale.

The lesson which I derive from that experience is that we should not sit back and complain about events that have gone wrong and decisions against our interests that have been made by people in Brussels; we must ask ourselves whether we have made the effort to send the experts over there. We must make the effort to contact our representatives within the Commission and the other institutions and those Ministers who attend the meetings of the Council of Ministers in order to make absolutely sure that British interests are clearly identified and put forward at the right time and in a constructive manner.

I would be the last person to suggest that we should accept everything that comes out of Brussels. There are many occasions on which obviously we must express a different opinion. Indeed, that is the case with every single member of the Community. The question is how we do it. I suggest that we get in early, quickly and positively. It is still felt in Brussels that British representation at the working level is not as strong and adequate as that of some other countries. We are still not putting in quite enough effort in spite of the progress made. The right way to influence this important development is to contribute as much as we possibly can to shaping it in the right direction. If that can be one of the messages to come out of this important debate, I shall be delighted.

4.35 p.m.

Lord Taylor of Gryfe

My Lords, it is always a pleasure to follow the good common sense and practical contribution of the noble Lord, Lord Ezra. I am in the fortunate position of being sandwiched between the excellent contribution to this debate of the noble Lord, Lord Ezra, and the wisdom that we are about to hear from the noble Lord, Lord Jenkins of Hillhead, which is based on his experience as the president of the Commission.

I have only one or two points to make. One of them is that I regret very much that there has been only one speaker from the Conservative Benches. We are on the eve of the European elections but only one speaker from the Conservative Party has participated in this debate. It may be that this debate clashes with some sporting event taking place this afternoon. On the other hand, it may be that if two speakers from the Conservative Benches were to address us, they would speak with diametrically different views because it is quite clear that the Government are in disarray. So much is obvious from the kind of lively debate that is taking place between the Prime Minister and Mr. Heath.

This afternoon I might have been tempted to correct the balance and quote from a book written by Mr. Michael Heseltine as his contribution to this debate. I commend to the Minister and the Government the wise words of Mr. Heseltine, with his view of Europe. He deplores our lack of initiative and lack of commitment to the European idea and he addresses that topic very forcibly in his book. I might even quote another Conservative leader in support of our argument and mention the great speeches of Sir Winston Churchill at the end of the Second World War when he showed us a vision of a united Europe. I must say that the speeches of the present Conservative Prime Minister fade into insignificance beside the statemanship shown by earlier Conservative leaders who addressed themselves to this subject.

It is sad that this great debate about Europe is being trivialised by arguments about the size of advertisements on cigarette packets. We are in the midst of great events in Europe. As we read the news bulletins we must all be aware that ideas are changing in Eastern and Western Europe. It is the end of communism and the end of a faith by which people in Eastern Europe have lived. In this vacuum people are seeking a new vision and new ideas to which to commit themselves because they have lived by a faith which is now discredited.

Under these circumstances I think it is right that we should look at this European idea with the breadth and vision to capture people's imagination. People are seeking an idea and an ideal. One may say that that is all right for the broad vision but let us look at the detail. In the earlier debates on this subject we spent some time on European monetary union and also on the report over which M. Delors presided. The bankers who prepared this report were not Marxists. They were not socialists. In fact I believe that Mr. Robin Leigh Pemberton sat on the committee, and you cannot get much more conservative than that. They agreed to these proposals for a further development of European monetary union.

Why did they do so? You may talk about keeping our country and its institutions pure and undiluted by European influences. That is not the real world any more. Last week the Bundesbank decided not to increase its interest rates. Mr. Lawson sat in No. 11 Downing Street and waited for the message because it was the Bundesbank which last week determined whether our interest charges would go up in Britain in response to their decision. That is the kind of world we live in today. We are no longer isolated from these events. We can no longer build a wall around ourselves.

I believe that this country can make a useful contribution to Europe. I listened with great interest to the noble Lords, Lord Monson and Lord Benson, and I have some sympathy for their criticism of some of the inadequacies of the Community. It is easy to criticise the frauds and all the other weaknesses that have emerged. We are building a large, new institution and it would be a miracle if difficulties such as have been mentioned had not emerged.

But what do we do? We complain about the common agricultural policy. The trouble about the common agricultural policy is that it was devised before we entered Europe, and therefore we had to accept the rules. New problems are emerging in Europe today. If we were to sit outside these events there would be no point in complaining about the inadequacies or weaknesses of the CAP when we were outside. Our job—indeed as part of our national pride and responsibility as a nation—is to play a full part in these great historical events. I hope that today's debate will encourage us to grasp the opportunity and see the vision.

4.43 p.m.

Lord Jenkins of Hillhead

My Lords, I congratulate my noble friend Lord Chandos on having chosen this Motion, and also on the relevant and perceptive terms in which he phrased it and phrased his speech. I should like to make a comment in a moment or two about his choice of the words "national interest and cultural identity". Before I do that I should like to say a word or two about some of the interesting speeches that his Motion has provoked.

The first, is the speech of the noble Lord, Lord Stoddart of Swindon. The noble Lord spoke with unusual dogmatic eloquence this afternoon. I do not say that in any way in criticism. I have some sympathy for it for a reason that I shall come to in a moment. He is in a rather uncomfortable position at the moment because he sees his party slipping away from him on Europe. The reason for my sympathy is that I once saw my party slipping away from me on Europe in the opposite direction. Maybe that made me a little dogmatic and possibly a little more eloquent than usual at that time too. Therefore I have some sympathy with him on that issue. I welcome the present movement in the Labour Party, which I regard as strong and important, but in view of the history of somersaults I take it with just a pinch of salt, and I am a little sceptical about the degree of widespread conviction or commitment that goes with it.

I listened with great interest to the noble Lord, Lord Benson, who spoke, if I may say so, with great detailed knowledge for someone from outside about the Community institutions. Of course they are not perfect. They are far from perfect. Of course they are too complicated. However, they do in a sense represent an inevitable ambiguity within the Community at its present stage of development. That is the ambiguity in the feeling throughout the member states that a lot of things have to be done at a European level if they are going to be done at all, combined with a certain doubt about how much transference of sovereignty they are willing to engage in.

That is really the essence of the problem. As it is peculiarly strongly represented by a feeling in this country, it is not altogether sensible for us to criticise the Community because it does not sit down with more speed and detailed application than the Founders of the American Constitution in Philadelphia in 1766, and work out a perfect, brand new constitution for Europe in a short time. To say that Europe cannot progress until it has introduced perfection, or something near perfection, in its institutions is, if I may say so with respect to the noble Lord, a recipe for despair.

Nor do I think that the noble Lord was wholly accurate in his assertion that you cannot have some form of currency union without a full federal government. I believe that events will contradict him probably in the course of the 1990s or as we get to the year 2000, but that is speculation. However, there is also a certain amount of history. There was such a thing as the Latin currency union which prevailed for pretty well 50 years between France, Italy, Belgium, Switzerland and maybe one or two other countries until 1914 unsupported by any federal government or any political superstructure. Therefore I think that the noble Lord's proposition is not entirely true.

I come back to the two phrases in my noble friend's Motion; first, the question of "maintaining Britain's … cultural identity". I do not believe that that is remotely in danger or at issue. My noble friend Lord Bonham-Carter spoke with great force about that point. If it is in danger, that danger comes from across the Atlantic and not from across the Channel. Such a fear is not felt by countries which have at least as strong a national cultural identity as we have ourselves. Indeed I know of nobody in Europe—I do not know of the most determined European—who thinks it right or feasible that we should see in anything like the near future, or perhaps ever, an exact replica of the United States of America in Europe.

That is for a very good reason. The Europeans who founded the United States had turned their backs on their countries of origin and been through a melting pot. That is not the case in Europe, will not be the case, and should not be the case. Therefore what is achieved in Europe will be something different from that, but not something which will in any way threaten our cultural identity.

The other point that my noble friend talked about was the importance of "maintaining Britain's national interest" while progressing towards greater European unity. I did not entirely agree with the point made by the noble Lord, Lord Monson, but the fact that he put this in showed that he thought that it was a very difficult enterprise. I do not think that it is difficult at all. I am rather filled with dismay at the now increasingly likely prospect that this Government, under the leadership of the Prime Minister, are going to repeat for the fourth time the mistake that we made in our relations with the Continent of Europe in 1951, 1957 and 1978, not out of Euro fanaticism but because by following this policy, by learning nothing from the past, we unnecessarily reduce British influence in Europe and serve British interests, let alone European interests, extremely badly.

There is no doubt that this recipe that we apply to ourselves is not one that the noble Lord, Lord Stoddart, might wish for; his had a certain logical consistency, although I do not agree with it. It was that we go off in another direction and we find a different policy which has nothing to do with the Community. We always hesitate at the point when we are asked to participate in some new way forward, and then join belatedly, rather shamefacedly, dragging our feet at a late stage. What is absolutely inevitable is that by doing this we sacrifice our influence over the formation of the institution that we ultimately join. It guarantees that leadership in Europe remains almost exclusively Franco-German, not by the wish particularly of Paris or Bonn but by the decision of London. It does not mean Britain against the rest of Europe. It does not mean Britain on top. It means, unnecessarily, Britain third, fourth or even fifth in Europe.

I was interested in the point to which my noble friend Lord Chandos also drew attention: the decision of the Spanish Government to join the exchange rate mechanism of the EMS by mid-1990. I shall never forget that at the end of 1985, the month before Spain entered the Community, I asked Felipe Gonzalez, the Prime Minister of Spain, what he intended to do about the exchange rate mechanism. He said, "Join as soon as I possibly can. Economically it is rather difficult for Spain, but I am absolutely convinced that in order to play a part in Europe and to have influence in Europe, one has to participate at all levels of co-operation within Europe. That is why I was so determined to keep Spain in NATO and why I want Spain to be in the exchange rate mechanism as soon as possible". I was extremely struck by that and also depressed that a Spanish Prime Minister—who at that stage had not been in the Community at all—could see the truth that had eluded successive British prime ministers during the preceding 13 years in which we have been in the Community.

I have no doubt at all that this laggardly policy, this policy of always being reluctant, is extremely damaging to British interests and British influence in Europe. I have also been dismayed in the past few weeks and months to see the speed with which this Government, or some members of it, have slipped— surprisingly, in view of what we were saying a short time ago—into anto-European rhetoric. They are looking for bogeymen in Brussels—into building up M. Delors into some kind of Marxist foreigner who has to be mistrusted for those reasons. He is of course a foreigner. He can hardly help that. Indeed in Europe one cannot entirely avoid having certain dealings with foreigners. That is in the nature of the enterprise, but to describe M. Delors as Marxist is stretching language beyond the bounds of plausibility.

The major thing which M. Delors did before becoming President of the European Commission was to jerk the first Mitterrand government—he was the finance Minister in it—away from the dogmatic doctrinaire socialist, if you like, policy towards a much more open trading policy to remain faithful to the partnership with Germany and to the European orientation of France. That he did firmly and decisively. To believe that he is a Marxist bogeyman is the language of fantasy and, indeed, the language of anti-European fantasy, and not the language of constructive European fact. I hope that before it is too late the Government will draw back from this increasingly anti-European note which is coming into many speeches and which will render a mockery of 1992, let alone what may come after 1992.

4.53 p.m.

Lord Cledwyn of Penrhos

My Lords, we are all grateful to the noble Viscount, Lord Chandos, for his Motion and for the impressive speech with which he introduced it. As other noble Lords have said, the noble Viscount could not have timed his debate better as the elections to the European Parliament are imminent and the atmosphere within the Conservative Party and the Government is, I understand, electric. The noble Viscount's Motion seems balanced and reasonable, but in her present mood the Prime Minister may not be attracted to the call in the latter part for, full participation in a more integrated European Community". I shall deal with our own attitude to the Community in a moment. Our recently-published policies are forward-looking and constructive. I am grateful to the noble Lord, Lord Jenkins of Hillhead, for his encouraging remarks about them.

Today our concern is with the Government. The responsibility for tackling and resolving the problems which stand in the way of Community unity belongs to the Government. If there is failure and disunity the fault will be theirs. It is therefore our duty in this debate to examine the Government's response to the problems which face Britain at present. The general view—and this goes beyond the party political argument—is that the Government are in a real mess. As the Financial Times said on 23rd May: The split over Europe which has broken through the Conservatives' normally impenetrable gloss of unity will not go away". In the approach to 1992—we have the Madrid summit later this month—we need a clear policy and a firm lead from the Government. In international matters it is the duty of all governments to work for a united view. But what do we see on the Government Benches in both Houses? We see the biggest split in the Conservative Party since Robert Peel repealed the Corn Laws. Let us look at the facts. We are Members of the European Community. Mrs. Thatcher set a final seal to that when we signed the Single European Act in 1986. We presume that she realised what she was doing. Yet, at this crucial moment in our history, the Prime Minister contrives to be at odds with virtually all European leaders and with members of her own party. We are witnessing a very strange drama.

The recent speeches of the former Conservative Prime Minister, Mr. Edward Heath, are known to us all. I do not propose, out of sympathy for noble Lords opposite, to enter into any detail; I know that his speeches are engraved on their hearts. Then there are Mr. Michael Heseltine's speeches. Those, along with his recent book, mentioned by the noble Lord, Lord Taylor of Gryfe, calling for closer British participation in Europe, reflect the views of an important segment of the party opposite. The noble Lord, Lord Plumb, leader of the Conservative Party in the European Parliament, pleads for European unity.

We are aware too that there are strains within the Government. Sir Geoffrey Howe does his best to pour oil on troubled waters. We must all feel sympathy for him. We know that the Prime Minister views the Foreign Office more or less as Mrs. Mary Whitehouse views the media—with considerable suspicion. Sir Geoffrey, as we know, is a committed European.

One of the key issues involved in integration is the Government's reaction to the Delors committee's recommendation on European monetary union. As the House knows, there are three stages. The first is that the EMS would be refined; the second, that new Community institutions would be set up; the third, the establishment of a central bank and a European currency. Can the noble Lord tell us whether the Government support these three proposals, or any of them? I am sure he will agree that they are central to the impending single market in 1992 and that they will be accepted by a majority, if not all the Community partners.

Some commentators have said that the Government will accept stage one but not the other two. But stage one means putting sterling in the European monetary system. Do the Government support that? If they cannot answer now they will have to decide in time for Madrid. This is a crucial issue. Again, on the question of integration the Government give the impression of resisting reasonable Community measures. Let me give four examples some of which have been mentioned by noble Lords. The first is the Lingua programme which is to help young people learn at least two foreign languages. That seems to me an admirable objective as we approach 1992. But the Government seem to be against it.

The second is the proposal to strengthen health warnings on cigarette packets. I turned to The Times to see what it had to say. It described the Prime Minister's attitude to the proposal as "pointless obduracy". The third is compliance with the EC drinking water directive, which this House has accepted. Mr. Ridley has said that the Government will see that that decision is overturned in another place. In my view that would be disgraceful and I hope that the noble Lord can be prevailed upon to bring about a change of mind. The fourth is the social charter about which the noble Lord, Lord Monson, had some doubts. It seems to Members on this side of the House a moderate and reasonable document.

I regret to say that there is a touch of hysteria about the Prime Minister's all-out condemnation of these modest proposals. I do not wish to be unfair and I find myself wondering whether the Prime Minister and some of her colleagues believe in the Community and wish to remain within it. They appear to me to reflect the spirit of the old European Free Trade Area—EFTA as we called it—rather than that of the European Community. If that is the case, then she and they should say so plainly. Mr. Edward Heath went further than that when, on the BBC on 29th May, he said: One can only reach one conclusion; that she would like to see the break up of the Community". That may be going a little too far, but the Prime Minister's current attitudes could have unpredictable consequences. She has made plain ther views on sovereignty—an emotive word, as the noble Viscount, Lord Chandos, said. We understand that she has told Ministers to oppose in Brussels anything that seems an arrogation by the Community of national sovereignty. I can understand that attitude, but we have already conceded important elements of sovereignty. The Prime Minister did so in 1986. As a Welshman, I recognise that Wales did so substantially several centuries ago. We conceded our sovereignty to a larger concept and I sometimes wonder whether we were wise to do so!

The noble Viscount's Motion refers to, maintaining Britain's national interest and cultural identity". We fully support that, as, I believe, does the Conservative Party. As the House knows, the Welsh people are especially concerned about the preservation of their language and their cultural identity. We understand that those will be protected within the Community by the Treaty. We on this side of the House assert that we must sustain and preserve in this Parliament our rights to determine matters which are of direct national interest.

Furthermore, we believe that if we co-operate in good will with other member states we can gain considerable benefits for the people of this country. I usually find myself in agreement with my noble friend Lord Stoddart. However, I do not share his pessimism in these matters. He holds his views sincerely but I regret that he does not find himself in agreement with the present policies of our party on the issue.

On 3rd May we in this House debated "The Challenge of 1992". We stressed that the problem of fraud must be tackled decisively. Again, the noble Lord, Lord Benson, rightly referred to the allegations of fraud and to the distortions created by the common agricultural policy. There are other issues to be considered such as social rights, the environment and industrial regeneration. However, if crucial decisions are to be taken at a Community level we must also ensure that effective democratic accountability is established.

The noble Lord, Lord Thomas, referred to the need to "draw a line". I agree. The roles of the European Parliament and of our own Parliament must be clearly defined and understood. We must pay the warmest tribute to our own Select Committee, now under the chairmanship of my noble friend Lady Serota, which scrutinises European legislation. It has a reputation not only in this country but throughout the Community. Soon we may have to consider how that committee with its sub-committees should be extended.

We are also closely concerned with the social dimension. Again, I regret the Prime Minister's reaction to the social charter. In social terms we have a great deal to gain from co-operation on a variety of issues. It would be far better if we held ourselves ready to discuss these proposals step by step rather than condemn them without consideration. Let us masticate a little before we swallow! Incidentally, there was a good deal of common sense in the comments of the noble Lord, Lord Kilmarnock, about social security.

Again, we must co-operate to create a cleaner and safer Europe. I believe that every noble Lord will agree that environmental pollution cannot be tackled by national governments on their own. We believe in working with our European partners to raise environmental standards.

In conclusion, I believe that at the present time we are in real difficulty because of a lack of clarity in government policies on the future place of Britain in the European Community. The Prime Minister appears to be leading us into a Hampton Court maze. She and some of her colleagues appear to have no idea how to get us out of it. As the noble Lord, Lord Ezra, said, we need a positive, clear and constructive approach which will help to shape Community policies in concert with our partners.

The forthcoming Madrid summit will give the Prime Minister an opportunity to define her attitudes to the major issues that noble Lords have dealt with in this debate. We welcome the promise of unity which emerged from the NATO conference. I hope that the Prime Minister will depart from Madrid with a similar promise of co-operation and unity in the European Community. If she fails in this it will be an unpredictable day for the United Kingdom. I do not like to contemplate the consequences which could ensue from a divided government in Britain on the threshold of historic developments.

5.6 p.m.

The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur)

My Lords, it is not long since we debated a Motion tabled by the noble Lord, Lord Jenkins of Hillhead, on the conduct of British foreign policy. The future of the European Community was one of the main subjects which we then addressed. As the noble Lord, Lord Ezra, reminded us, in May your Lordships had the opportunity to focus particularly on the issues connected with the completion of the internal market during a debate tabled by the noble Lord, Lord Cledwyn.

Both noble Lords, made notable contributions to our debate today. However, I cannot say that I agree with every word that they have said, but both debates were worth while. I join with those noble Lords who have expressed gratitude to the noble Viscount, Lord Chandos, for giving us yet another opportunity to consider our policy towards the Community.

While I listened with great care and enjoyed much of his speech, I found some of his remarks to be a little cynical. I hope in my remarks to paint a slightly more constructive picture on many aspects. While I agree with my noble friend Lord Thomas and the noble Lord, Lord Stoddart of Swindon, about the concept of a wider European identity, the fact is that the Community is moving forward. The Single European Act and the accession of Spain and Portugal have given it a new dynamism. As my noble friend Lord Thomas of Swynnerton pointed out, in February of last year we succeeded in putting the Community's finances on a sound footing through tight control of the common agricultural policy. The next major Community frontier is 1992.

I agree with the noble Lord, Lord Bonham-Carter, that the European Community has a political basis and it has been a great success. By 1992, devastated post-war economies will become the biggest trading bloc in the world. It will be a beacon of prosperity and liberal values. The diversity of the traditions contained within it is very much its strength. We want greater unity and not uniformity. "Pluralism" and "choice" are our European watchwords. It is a complex tradition, as my noble friend Lord Thomas pointed out when during his speech he painted the picture of the ceremony in Barcelona.

In the march towards 1992 and the Europe of the future, Britain is in the van. One would not believe that from some of the remarks that have been made today. However, the Government have repeatedly made clear that Britain's future lies in Europe as an active member of the Community. British prosperity depends on the prosperity of the Community as a whole. I shall not follow the noble Lord, Lord Taylor of Gryfe, or indeed the noble Lord, Lord Cledwyn of Penrhos, on the matter of individuals' views on Europe in any sense. The fact is that our commitments—and by that I mean the commitments of this Government—are a matter of record, most recently, for example, to make concrete progress towards European unity and to strengthen the Community's economic and social cohesion as provided by the Single European Act. We want a Community which speaks with authority on the international stage. Therefore, our aim is a more united Europe which can compete better in world markets, contribute more fully to Western security and promote European and Western values more effectively.

How do we achieve those ends? When it comes to the matter of sovereignty I do not dispute the suggestion of the noble Viscount, Lord Chandos, that we need a more integrated European Community. That is already our aim and is also the aim of our partners. However, the Community is a unique organisation and we need to be clear what we are talking about. The relationship between Community institutions and the structure of decision-making in the Community tells its own story. The same is true in the United States, where the division of responsibility between the national government and the 50 states on the one hand and between the three co-equal branches of federal government on the other produces a deliberate political balance.

Balancing interests is also inherent in the Community's constitution; that is, the treaties. We need strong Community institutions and Community law in order to ensure that progress is made to provide direction and consistency. For that purpose we and other member states have pooled sovereignty in the areas covered by the treaties in order to make common decisions. However, we have not lost it. Despite the institutional changes introduced by the Single European Act, including the new co-operation procedure with the European Parliament, the last word remains with the Council of Ministers and therefore with member states' governments, who are accountable to national parliaments.

I agree with my noble friend Lord Thomas of Swynnerton that there is also a natural division between those issues covered by the treaties on which there should be common action by the Community and those which should be left to member states. Issues such as public health, culture and school education are not part of the treaty and should remain matters for national governments and other institutions within member states. We must in any case observe what the Commission calls the principle of subsidiarity; that is, that the Community should not get involved, even in areas where it has competence, in things which member states can do as well or better. As far as I can tell, that is only common sense. I am glad that that was very much the theme of the remarks of the noble Lord, Lord Stoddart of Swindon.

Having said that about the noble Lord's speech, I cannot follow him all the way. I beieve that it may be beneficial if he and his party would perhaps cease to look backwards and look further forward. I suspect that they are facing in the opposite direction from the Community in which we are trying to work. As regards trade in the European Community, it takes 50 per cent. of our exports. The export-import ratio has been doing better than that with the rest of the world. The trade deficit is due to faster growth in demand in the UK than the rest of the European Community and the falls in price and production of oil. The fact is that the deficit in services is little changed in real terms since 1973.

If the framework which I have described is observed, we have the basis for Community development in those areas where common action is required. However, we respect also the richness and diversity of our European tradition. The Community's top priority at present is the completion of the internal market in 1992. That was a priority of successive British Governments but for too long the scale of the task intimidated the Community. However, that is not so now. Today the philosophy underlying the single market programme is that of deregulation, liberalisation, openness and enterprise. If those sound to your Lordships like British lyrics to a British tune, you would not be wrong. We have brought down the barriers in the United Kingdom and are now doing the same with our partners in the Community. Those who claim that Britain is out of step with Europe need to be able to explain that away.

Some 90 per cent. of the proposals in the Commission's single market White Paper of 1985 have now been tabled and nearly half have already been agreed. Those include major UK objectives such as liberalisation of capital movements, liberalisation of transport, mutual recognition of professional qualifications, opening up of public works and supply contracts and other measures such as those on food law and standards. There is still some way to go, but we are on course. In fact 1992 is already all around us. It is a phrase which 60 per cent. of British people, according to a recent poll, and 90 per cent. of British business are aware of.

Despite the fears of the noble Lord, Lord Kilmarnock—and I think he somewhat distorted our attitude towards it, although I am sure he did so inadvertently—we also believe in the legitimacy of the social dimension to the single market and to Community policy generally. I do not believe that I can follow him into the detail of health and safety legislation and that sort of thing, but we have a proud social record in the United Kingdom on job creation, equal opportunities and the partnership between public and private sectors. Completion of the single market will create more growth and that will generate more jobs.

However, for the reasons that I have given, we believe, like the noble Lord, Lord Monson, that in this area each country should be free to develop its own policies in accordance with its own traditions. We are proud of our approach to the social areas. We too care about the human dimension. However, we also care about growth in jobs and enterprise and we need to hit all those targets in the Europe of the 1990s. We oppose European Community-wide social harmonisation for its own sake. That would risk diverting the Community from its main task; namely, completing the internal market on time. To pick up some of the individual points made by the noble Lord, Lord Monson, it is certainly true that we should avoid over-prescriptive and unnecessarily intrusive Community interventions.

Community legislation on the lines proposed in the social charter would be a throwback to a past which we in this country and many others in the Community would prefer to leave behind us. Of course we touched on the matter of economic and monetary co-operation raised by the noble Viscount when he introduced the debate and also by the noble Lords, Lord Bonham-Carter, Lord Taylor of Gryfe and Lord Cledwyn of Penrhos.

The report of the Delors Committee on economic and monetary union was published on 17th April. The noble Lord, Lord Cledwyn, referred to one particular stage. The paper proposes three stages of undefined length concluding in an economic and monetary union. The report is certainly a thorough analysis of what economic and monetary union would entail and the major transfer of sovereignty which that would imply, although it quite rightly sets no timetable for the achievement of its three stages. However, it suggests that stage one should begin in July 1990.

That stage contains a number of practical measures which the Community can take to further economic and monetary co-operation. Some of those measures have been on the agenda for many years and we believe that the Community should take them forward as soon as possible. They include the financial aspects of the completion of the single market such as capital liberalisation and improved economic and monetary co-operation.

We also support other practical measures such as the wider use of the privately traded ecu and its use where appropriate in intervention and increased holdings of EC currencies and foreign exchange reserves. We have made quite clear in discussions with our EC partners our readiness to take forward work on this substantial programme of practical measures. The Community should now concentrate on such practical steps. The United Kingdom can play a major role in such discussions, having led the way in the abolition of capital control, the issuing of Treasury bills and the holding of ecus and a variety of EC currencies in our reserves.

The noble Viscount, followed by the noble Lord, Lord Jenkins of Hillhead, referred to the European monetary system. Nothing that I say will be news to your Lordships. We support the underlying principle of the EMS which is consistent with the priority we have given to monetary stability and control of inflation in this country. That is the background against which, as your Lordships know well, we have long made clear that we have decided on the principle of membership of the EMS, which means, yes, we will join and the only question is when.

The noble Lord, Lord Cledwyn, referred to parliamentary scrutiny, as indirectly did the noble Lord, Lord Benson. In this regard we believe that parliamentary scrutiny is an essential part of the EC legislative process. Westminster scrutiny works well. It is certainly the best in Europe. Nonetheless, we believe that existing procedures could be improved, though no radical change is necessary. As your Lordships will be aware, the Government are currently looking at ways to bring about changes in that scrutiny.

The noble Lord, Lord Benson, referred to the common agricultural policy. He will be aware that intervention stocks are falling: butter is down 90 per cent. in the past 12 months; there is no longer a milk powder mountain; stabilisers are working; the 1989 price fixing (that is, the general price freeze) has reinforced reforms; agricultural expenditure in 1988 is estimated at 1.1 billion ecus (£750 million) lower than the guideline, with 1989 expenditure likely to be more than 2 becus below the guideline.

The noble Lord, Lord Benson, raised an important point concerning fraud. The subject was touched upon in the debate in May. The United Kingdom has led the way in ensuring that fraud against the Community budget is treated with the seriousness that the problem certainly deserves. It was an initiative taken by the United Kingdom which ensured that the annual reports of the Court of Auditors were discussed substantively by the Council of Economic and Finance Ministers. These reports have consistently played an invaluable role in helping to highlight the nature of fraud and possible counter-measures. We have also produced many new ideas for tackling fraud, including pressing the Commission to produce new or revised proposals to improve controls in agricultural export refunds and intervention storage. These have been welcomed.

I very much agree with the noble Lord, Lord Gladwyn, that the Community should play its part in strengthening our security. The British contribution to the co-ordination of European foreign and security policy is second to none and we have consistently supported a better Western European contribution to wider Western defence; for example, through the recent awakening of the Western European Union. As regards frontiers—another point put by the noble Lord, Lord Monson—our concern is to ensure freer movement for Community nationals between member states. However, that cannot be at the expense of the continuing security needs of the United Kingdom and other member states. We need to continue to combat threats of terrorism, drug trafficking and illegal immigration both through retaining essential residual checks and by encouraging increased co-operation between member states.

I am grateful to the noble Lord, Lord Ezra, for his recognition of the practical work on the single market. The Government are involved in that every day and many of the measures which he mentioned—recognition of professional qualifications, to which I have referred, and rules for a single "passport" for foreign banks—have been British priorities for some time. We have pressed for this sort of measure to British advantage in Community councils.

The European identity does not stop at the external frontiers of the European Community. Our love of freedom based on the rule of law and constitutional government and our vision of the dignity of man and the prime role of the individual in our societies are shared across the European Continent.

For the first time since the war the countries of Eastern Europe, for so long cut off from their European legacy of freedom, are beginning to rebuild the type of society their peoples want. The Government wish this process of reform well. If it succeeds, our wider European identity will again be enriched. The Community has a part to play and our success and the challenge of 1992 are a magnet for other countries throughout the Continent.

It is the values of openness and enterprise which the Community must project to the rest of the world as well, keeping open the world trading system, contributing to the freeing up of relations between East and West and cementing trade and political relationships with our major western partners. That is the way forward.

Viscount Chandos

My Lords, I thank all noble Lords who have spoken today for making what I think has been a most interesting and lively debate, demonstrating on the one hand the continuing diversity of views on our very membership of the Community and on the other our extensive and expert detailed knowledge about European issues.

I cannot say with any honesty that the skilful and polished speech of the noble Lord, Lord Glenarthur, has convinced me that the Government do not in fact have deep divisions on our proper role in Europe—divisions which are terribly damaging to British interests, as the noble Lord, Lord Jenkins of Hillhead, emphasised. However, I am sure that your Lordships' House can rely on the Minister and his department of state to act as a helpful influence on their colleagues in government.

If, like my noble friend Lord Taylor of Gryfe, I was sad not to hear more contributions from the Benches opposite—even if the noble Lord, Lord Thomas of Swynnerton, can certainly do the work of many noble Lords—it would be inconsistent with my desire to maintain our cultural identity to regret the competing attractions of one of our great national sporting events. Perhaps though in the light of our debate today I might have wished that it was Longchamps and not Epsom which cast such a bewitching spell. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.