HL Deb 12 July 1990 vol 521 cc447-59

3.58 p.m.

The Lord Privy Seal (Lord Belstead)

My Lords, with the leave of the House I shall repeat a Statement being made in another place by my right honourable friend the Prime Minister about the economic summit held in Houston from 9th to 11th July, which she attended with my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer. The Statement is as follows:

"With permission, Mr. Speaker, I will make a statement on the economic summit held in Houston from 9th to 11th July, which I attended with my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer. The communique and the separate political declarations issued at the summit have been placed in the Library of the House. Our discussions ranged widely, and we achieved important, practical results which meet the needs of the times. Great credit for this is due to President Bush for his firm and friendly chairmanship.

"I shall summarise the main points of our discussion, under seven broad headings. They are: the world economy, international trade, assistance to the Soviet Union and Eastern Europe, developing countries, the environment, drugs, and political issues.

"First, the world economy. Economic expansion is now in its eighth year in our countries, with notable growth both in incomes and in the number of new jobs.

"We ascribed this excellent record to sound budgetary and economic policies. These should continue if economic expansion is to be sustained.

"Much emphasis was placed on the need for more saving, at a time when the investment needs of the world are expected to grow in Central and Eastern Europe and in the developing countries.

"I reaffirmed Britain's determination to get down inflation as our first priority, and our intention to join the exchange rate mechanism.

"Secondly, international trade. In my opening remarks, I stressed that the touchstone of success at the summit would be our attitude to the continued freeing up of world trade. I am glad to report we reached agreement which should make possible a successful conclusion to the Uruguay Round of world trade negotiations later this year.

"The main difficulty lies in the subsidies and other forms of support and protection which virtually all major countries give to their agriculture. We agreed in Houston that we should each make substantial, progressive reductions in our agricultural support programmes. This will cover internal support barriers to market access and export subsidies.

"To subsidise inefficient producers to keep them in business is unfair to those who are competitive. The outcome should therefore be to the advantage of British farmers, who are among the most efficient in Europe.

"I believe that the result will also be very welcome in other countries, including the developing countries, and will open the way to resolving the remaining problems in the GATT negotiations.

"Most importantly, it will give a clear signal that we are determined to go on with the liberalisation of world trade, which has contributed so much to growth and prosperity. That was the most encouraging message from this summit.

"Thirdly, we discussed assistance to the Soviet Union. We all recognised the Soviet Union's need for technical assistance and know-how. Indeed, many of us are already providing management training, for instance. But help from the Summit Seven as a group should be tied to introduction of genuine market policies and to encouraging the Soviet Union to mobilise its own extensive resources. We also pointed to the need for the Soviet Union to shift resources away from the military sector and to cut its support to nations which promote regional conflict. It is not our purpose to provide an oxygen tent for survival of much of the old system.

"For that reason, we agreed that there should be a thorough study of the problems and needs of the Soviet economy, and of the criteria for assistance, led by the International Monetary Fund which has the greatest expertise in this area. Other organisations will be involved and the Commission will be closely consulted. Their report should be completed by the end of this year. Thus we can ensure that any help we give will be properly targeted and effective.

"Fourthly, developing countries. We noted that the best help we can give the developing countries is to sustain our own economic growth and keep our markets open.

"We welcomed the growing acceptance in many developing countries themselves that the best way to growth is through market-oriented policies, openness to foreign investment, and sound, democratic Government.

"We reaffirmed our support for the case-by-case debt strategy: and agreed to support longer repayment periods for lower middle-income countries, which are implementing strong reform programmes.

"Fifthly, the environment. Here we acknowledged that there is still some uncertainty about how much global warming is due to natural causes and how much to man-made causes. But the threat of irreversible environmental damage required us to take actions which are justified in their own right.

"We all want the World Climate Conference in November to consider the best ways to stabilise greenhouse gas emissions. This would lead on to the negotiation of a framework convention on climate change by 1992, under the auspices of the UN Environment Programme.

"We welcomed the decisions at the recent London meeting to phase out chlorofluorocarbons by the year 2000 and to provide financial assistance to the developing countries, to enable them to meet their obligations. We also attach particular importance to action to save tropical forests.

"I believe, as a result of this summit, there is now a much better understanding and sense of common purpose among the G7 countries on environmental issues. This is vital if we are to tackle these problems effectively.

"Sixthly, drugs. On this we underlined once more the crucial importance of international co-operation in every aspect of tackling the drugs problem: production, demand, trafficking and money-laundering.

"We pledged our support to the countries engaged most directly in the fight against drug trafficking. And we agreed to set up a special task force to ensure that precursor and other essential chemicals are not diverted to the manufacture of illicit drugs.

"The summit discussed some of the principal international political issues, and agreed statements on securing democracy, on terrorism and on the growing problem of proliferation in nuclear and other fields.

"We acknowledged some recent progress in China, and said we would be ready to relax measures in response to further positive steps towards political and economic reform. We also called on all parties in South Africa to refrain from violence or its advocacy.

"Finally, I invited other heads of government to meet in London for a further summit next July. The great achievement of these summits has been to make it easier for all of us to reject short-term soft options in favour of longer-term real solutions; in favour in particular of: sound economic policies; freer competition; keeping our markets open; identifying new problems, such as drugs and the environment at an early stage; and tackling them by co-operation. The world looks to these summits for a lead, and I believe that the G7 countries have once again provided just that, particularly on trade.

"Last week's very successful NATO summit in London was an important step towards a safer and more peaceful world. Our meeting in Houston takes us towards a more prosperous world for everyone."

My Lords, that concludes the Statement.

4.7 p.m.

Lord Williams of Elvel

My Lords, the House will be grateful to the noble Lord, the Lord Privy Seal, for repeating the Statement made by the Prime Minister in another place. I should say in passing that we would have welcomed a similar Statement on the London NATO summit which was covered in the last paragraph of the Prime Minister's Statement. We believe that that summit was one of historic importance, whereas the Houston G7 summit would certainly not in our view qualify for that particular description. Nevertheless, there is much to be welcomed in the Statement and in the communiqué, especially as regards drugs. We support any measures that all governments can take to combat the drug menace. We also welcome any steps which can be taken internationally.

We agree that international trade and the Uruguay Round are of fundamental importance to the future of the world economy and that agricultural subsidies tend to restrict that trade and indeed form a substantial barrier to a successful conclusion of the Uruguay Round. Therefore, we shall support any reasonable measures which can be taken to reduce subsidies. However, can the noble Lord tell us what precise measures the Government have in mind in this connection and whether they will protect marginal upland farms which, alas, are not as efficient as some of our other farms and do not qualify, in the words of the Statement, as being, among the most efficient in Europe"? Indeed, there are serious rural problems which have to be met.

As regards the world economy, we agree with the Government that emphasis should be placed upon the need for more saving. However, is it not the case that the decline in the savings ratio has been due to the world consumer boom—that is, the consumer boom in the industrialised world—and that that boom has been precisely the result of government policies? That is especially true in the United Kingdom where equity has been released from the housing sector. How do the Government intend to meet the emphasis that the G7 summit put on the need for more saving when in the past they have been discouraging saving?

Again, we note that the determination to reduce inflation is the Government's first priority and, in passing, I ask the noble Lord: is it not true that it was the Government themselves who put up inflation? Fine, let us get it down again. We note also our intention to join the ERM. Will the noble Lord assure the House that the Prime Minister has a united Cabinet behind her on that issue? After all, following certain remarks reported in the Spectator magazine, it is difficult to believe that the Cabinet is wholly united behind the Prime Minister in her approach to Europe.

I turn to international trade. I have already dealt with the agricultural subsidy problem. There is of course problem of protectionism in other sectors. During the summit discussions were other forms of sectoral protectionist measures such as textiles in the United States —if I may raise one rather contentious issue—taken into account, and, if so, what view was taken?

The Statement deals with assistance to the Soviet Union. It is a curious approach to send in the IMF to make a study of the Soviet economy and not to recognise that economic aid is fundamental to bringing the Soviet Union where we in the West would like it to be. Is it not the case, as a result of the summit, that Germany, France and Italy are prepared to offer assistance to the Soviet economy even now, whereas we in this country and, as I understand it, the United States, will wait for the results of the IMF study? Is there not an illogicality there?

I move on to the developing countries. Is it not odd that the Statement is made on the same day as the OECD has published a study which says that there will be greater competition in the third world for funds from the developed world and that the competition for the existing savings of the industrialised world will be much greater given developments in Eastern Europe and the continuing requirements of the developing countries? That is a point where we feel that the summit has not given a fair lead to the industrialised world. I should be grateful if the noble Lord would comment on that issue and describe what measures the Government are undertaking to combat the OECD conclusion.

On the environment, does the noble Lord accept that we find that section of the Statement fundamentally disappointing? No serious targets have been set. There will be pilot projects. There are pious statements about forestry and various well-meaning assertions of belief but the Statement is not very strong. Why did the summit reject the idea of having targets for environmental projects such as carbon dioxide emissions? Why are we merely talking about framework? Is that a lack of political will? If the reference to the environment in the Statement is disappointing, the reference to drugs, as I said, is welcome. We shall support it.

I welcome the less self-congratulatory nature of the Statement compared with the communiqué. I hope that the noble Lord the Lord Privy Seal will agree with me when I say that, in the House and elsewhere, we must be careful about how far we crow over what is happening in Eastern Europe. Those eminently desirable developments need to be encouraged, not merely cheered on with some form of triumphalism.

In conclusion, perhaps I may again thank the noble Lord and say that we generally support what G7 has done. But we do not regard the summit as nearly as consequential as the London NATO summit.

Lord Jenkins of Hillhead

My Lords, as someone who attended an early three and half summits of this series of 16 Group of Seven summits, perhaps I may thank the Leader of the House for having repeated the Statement. Three and a half is of course a puny record compared with the Prime Minister's record of attending 12 of the 16. The reason for the half, as some noble Lords with long memories may recollect, is that I had a little difficulty in getting into the first of the four.

The Statement is inevitably rather bland, as was the communiqué. The Statement was, in some ways perhaps, a little less bland, as the noble Lord, Lord Williams, said. I do not complain unduly about that. To my mind the purpose of the summits is not so much to reach hard decisions, which is expecting rather a lot, but to open temporarily the minds of those participating to the problems of their fellow world leaders and to a rather wider perspective than can sometimes be the case.

I welcome the fact that the Prime Minister seems to have played a somewhat more bland and emollient role than at some recent summits, both European and world. I raise two detailed points. One is on blandness; the other the reverse.

The Statement, referring to the past eight years' performance, says: We ascribed this excellent record to sound budgetary and economic policies". As the United States constitutes between 35 per cent. and 40 per cent. of the national income of the assembled countries, did the seven leaders seriously congratulate the United States on its budgetary policies over the past eight years? It would have been remarkable if they did. It would be straining blandness a little beyond the normal meaning even of that elastic word.

The Prime Minister said: In my opening remarks, I stressed that the touchstone of success at the summit would be our attitude to the continued freeing up of world trade". Will the Leader of the House inform us what purpose, style or meaning the insertion of the word "up" in that sentence conceivably serves? Will he tell us whether he noted that I congratulated, and I do so generally, the Prime Minister on having a more emollient attitude at the summit? Does he think that the sour hysteria of Mr. Ridley's effusion in the Spectator helps the Prime Minister to have better relations with her colleagues, not just with Chancellor Kohl but with Presidents Bush and Mitterrand, who have such a markedly different approach to the general issue? I understand that Mr. Ridley has withdrawn, he says unreservedly. Normally, I am in favour of accepting apologies, but will the Leader of the House tell us whether that withdrawal means that he did not have the thoughts, did not use the words in which they were expressed, or merely that he wishes that they had not caused such a furore?

Lord Belstead

My Lords, I am grateful to both noble Lords for responding to the Statement which my right honourable friend has made in another place. The noble Lord, Lord Williams, expressed regret that a Statement on NATO was not repeated. That was for the simple reason that there has not been a Statement on NATO today. Some NATO matters may be discussed while the Statement is being made at the other end of the passage, but my understanding is that no such Statement is being made today.

Lord Williams of Elvel

My Lords—

Lord Belstead

My Lords, I could not add anything else if the noble Lord challenged me. I am merely telling him that.

Lord Williams of Elvel

My Lords, let me make it clear, because I must have been wholly unclear. I was not saying that there was a Statement today which is not being repeated here; I was saying that there was no Statement today, and that I was rather disappointed.

Lord Belstead

My Lords, I am sorry. I misunderstood the point. There we are.

Although the noble Lord, Lord Williams, asked many quite penetrating questions, he was uncharacteristically less than generous about what the summit has achieved. I am grateful to the noble Lord, Lord Jenkins, for making the point that in a sense the ball has been pushed in the right direction by the summit. The G7 summit is not the place for detailed trade negotiations, but there is no doubt that it has given a strong political push to the Uruguay Round whose success is vital to our prosperity. Now come the hard political decisions that must be taken by the countries concerned in the Uruguay Round. We shall have to see where we go.

The noble Lord, Lord Williams, asked me for undertakings on agriculture and he quite rightly pointed out that those who are less advantaged in the agricultural system in this country need assurances. I can do no better than to quote from the relevant paragraph in the communiqué: The negotiations on agriculture should therefore be conducted in a framework that includes a common instrument of measurement [and] provides for commitments to be made in an equitable way among all countries". Obviously it will now be up to the common agricultural policy countries how they interpret those words. I hope that the noble Lord will feel, as I do, that the words are sensible and fair and should not give us cause for alarm in the context in which the question was asked.

The noble Lord asked how, in this country, we would encourage more saving. I rest on saying that the Budget was a good move in that direction. He also asked whether the Government were entirely united in their approach to the exchange rate mechanism, as mentioned in the Statement. The answer is a resounding yes. He asked me whether textiles were dealt with. They are mentioned in the Statement, together with other commodities. However, we are now in a situation where, particularly as a result of the agreement on agricultural matters at Houston, work can go on speedily over the next few weeks in order to prepare for the trade negotiations that will take place in Geneva over the succeeding five months. Included in the negotiations will be textiles.

The noble Lord, Lord Williams, asked me a question which I thought was absolutely fair and required me to give an answer. It was whether the Federal Republic of Germany, France and Italy now intend to offer aid to the Soviet Union; the British Government do not and will simply await the outcome of the study. It is important that I make the point that technical assistance and know-how can be provided now. We led the way with our aid to Eastern Europe and the know-how fund which we started. The outcome of the G7 summit regarding the USSR is to give encouragement and precisely what the Soviet Union needs.

A central point is that not only are the matters that I have just mentioned underscored but so is the need for the Soviet Union to modernise its own resources. The two achievements regarding the Soviet Union at Houston were, first, that there was agreement on the objective of tying aid to achieve genuine market-oriented policies. Secondly, the crux of the joint agreement was that the IMF was to lead the study, in consultation with the European Commission.

The noble Lord, Lord Williams, asked me about the OECD conclusions in the context of the developing countries. In cash terms we have an increasing aid programme but it is important to make the point that that does not count the aid which we are suddenly finding as a result of the earth-shaking events that have occurred in countries of Eastern Europe.

Finally, the noble Lord asked why targets were not set on environmental matters. It is important to note from the communiqué the G7 agreed strategies which it said would lead to a framework convention and protocols. Protocols are mentioned explicitly in paragraph 63 of the communiqué, showing that the G7 countries agreed that they would get down to business.

I do not believe that there are any other matters to which I should reply. I noted what the noble Lord, Lord Jenkins, said about the remarks of my right honourable friend in another place, the Secretary of State for Trade and Industry. I have nothing to add to what he said.

4.28 p.m.

Lord Boyd-Carpenter

My Lords, I am sure that my noble friend is aware that many people, both in your Lordships' House and outside, wish to congratulate the Prime Minister on her great success at this conference in achieving a decision to reduce the degree of protectionism in world trade, particularly agriculture.

Can my noble friend indicate whether the likely sequel to this is for the European Community to propose for the coming year a reduction in agricultural support and also in interference with agricultural imports from other parts of the world? Perhaps my noble friend could underline the importance of this. Will he give your Lordships an indication of the total current cost to the Community of the common agricultural policy? I hope that he will also be able to indicate that it is now accepted that the degree of protection and subsidy under this policy must be reduced. Perhaps he could indicate the amount of financial saving likely to accrue to this country by way of reduction in our contributions to the Community.

On the point raised by the noble Lord, Lord Williams of Elvel, about aid for the USSR, is my noble friend aware that many of us take the view that to give financial aid as opposed to advice to the USSR is a mockery? That country still spends a far larger proportion of its gross national product on military preparations than any other major country in the world and to give financial aid in those circumstances would seem to be something of a mockery. Perhaps my noble friend could indicate that Her Majesty's Government will not contemplate financial aid to the Soviet Union until that country puts its own house in order by diverting to civil development a great deal of the money which it at present applies to military preparations, for whatever purpose one does not know.

Lord Belstead

My Lords, I am grateful to my noble friend Lord Boyd-Carpenter for his remarks and for the congratulations which he has given to my right honourable friend the Prime Minister on being an important party to the agreement for further reduction of protectionism. That also concerns agriculture.

My noble friend asked me detailed questions about agricultural support. He asked whether the reduction in agricultural support would also mean no further interference with imports. The answer is that fairly recently the chairman of the agricultural negotiating group of the Uruguay Round in Geneva, Mr. de Zeeuw, gave a report which is specifically mentioned in the communiqué. The de Zeeuw Report said that the negotiations which would take place in the second half of this year must concentrate upon market access, export subsidies as well as internal support. My noble friend can be assured that the answer to the question he asked me is yes. I am sorry that I do not have at my fingertips the information on the percentage of the Community budget that is devoted to the CAP. However, despite the use of stabilisers, it is still pretty large. I would be rash if I attempted to suggest what savings will be achieved. I come back to the point that I sought to make in answer to the noble Lord, Lord Williams, which is that it is agreed in the communiqué that commitments should be made in an equitable way among all countries to try to achieve what has been agreed. It is important that I repeat to the noble Lord, Lord Boyd-Carpenter, that it has been agreed that there will be substantial and progressive reductions in support for agriculture.

As regards help to the Soviet Union, the Government entirely agree with my noble friend that it must be right that the principle of conditionality should rule in deciding how and what support to give to the Soviet Union. The fundamental point is that the Soviet Union must take radical steps towards a market oriented economy and it must shift resources away from the military sector. My noble friend made that point. As regards giving the absolute undertaking that my noble friend asked for, we must now await the IMF report. We expect it at the end of the year.

Lord Diamond

My Lords, there is a great deal in the Statement for which we can be grateful. I welcome much of what has been said. I believe this meeting was successful, but it also underlines the value of continuing meetings of this kind where heads of state are prepared to discuss their different points of view on world matters with one another. That is a healthy development and should be continued. The comments in the communiqué on international trade are encouraging and very welcome. Apart from a number of minor points, including the question which the noble Lord, Lord Jenkins of Hillhead, asked and to which he did not receive a reply—I would have asked the question had he not asked it—namely, what additional significance is to be attached to the word "up" in the term "freeing up" something or other, there is one major matter on which I am uneasy.

I do not share the view which has been expressed that we should give the kind of signal to the Soviet Union which the wording of this communiqué has given. A signal has been given that we are not prepared to help or to consider giving help until our detailed political requirements have been satisfied on a number of matters affecting the internal policy of the Soviet Union. To my mind the communiqué does not give the impression that we are willing to help or that we realise that in order to overcome many of the Soviet Union's difficulties economic help of one kind or another is essential. It gives the impression that we are not at all anxious to help and that we are using this occasion to squeeze the Soviet Union and its leader and to compel it to adopt policies hurriedly which we ourselves would not adopt hurriedly. We are not hurrying to reduce our military budget over the next six months as far as I am aware. We are taking a much longer view on that matter.

It is unfortunate that in the wording of the communiqué we have gone far beyond what I thought was intended; namely, to give every encouragement to the President of the USSR and to make it absolutely clear that we are prepared to give unstinting help to enable that country to turn around.

Lord Belstead

My Lords, the Government have great sympathy with what the noble Lord, Lord Diamond, has just referred to. However, it is worth recording that Mr. Gorbachev wrote letters both to President Bush and to the Prime Minister before the G7 summit began. I interpret the reply to Mr. Gorbachev, as a result of the G7 summit, as a positive one. The emphasis was on technical assistance and know-how, which is precisely what the Soviet Union needs. However, the essential point is that we intend to help the Soviet Union to mobilise its own resources. There is a clear paragraph in the declaration on the decisions that the Soviet Union needs to take to improve its own prospects and to shift resources away from the military sector.

I would say to the noble Lord and to the noble Lord, Lord Jenkins of Hillhead, that the term "freeing up" is rather a loose expression. If I may dare to suggest an improvement to the Statement, perhaps the word "liberalise" might have been a little better.

Lord Beloff

My Lords, on the point about the IMF, are we to understand that the Soviet Union will co-operate in this inquiry? It is one thing to send the IMF to look at some developing country of small size and limited resources, but to expect a report on the economic affairs of nearly 300 million people is quite another and could only be done with the active co-operation of the Soviet Union. Has that co-operation been sought and given?

Lord Belstead

My Lords, there is nothing that I have heard which could possibly lead me to give a negative response to my noble friend. If I am wrong about that, I would immediately write to my noble friend and place a copy of the letter in the Library. I should add that at the Dublin summit the 12 Community nations agreed that they themselves would undertake a study which would be led by the Commission. We are obviously in close touch with the Soviet Union and it was put on notice, as it were. As far as I am aware, the Soviet Union was positive in its attitude to that measure. In a sense there will be two studies running in parallel. I do not believe that that will cause any problems, but everyone must ensure that the work comes together towards the end so that coherent conclusions can be studied by both the countries of the G7 summit and of the Community with the well-being of the Soviet Union in mind.

Lord John-Mackie

My Lords, I wonder how many of your Lordships—I think the noble Baroness, Lady Elliot, would be one—remember the last time that subsidies were withdrawn from agriculture. That occurred in 1923 when the help that was given to produce more food from 1916 onwards was withdrawn in full. From 1926 to 1934 or 1935 there was one of the most appalling agricultural depressions that this country has ever experienced. Something like 5 million acres of land went out of production. When the last war started, an enormously expensive programme had to be initiated to return that land to agricultural production. I wish to warn noble Lords of what can happen in such circumstances. I started farming in 1926 and I can speak feelingly about the agricultural depression. I came through it. I remember the low wages that were paid to workers in agriculture and the poverty that existed in the countryside. The noble Lord said that there would be an equitable framework to ensure that the agreement worked fairly. I hope that it will work this time because it certainly did not work in 1923.

Lord Belstead

My Lords, the noble Lord, Lord John-Mackie, has almost unrivalled experience on this matter. However, the mechanism of the agreement is that all the seven countries that are signatories to the agreement—the European Commission was represented at Houston too—should agree to a progressive reduction of the huge subsidies which exist in all countries as regards agricultural production. One of the prizes for that is that the communiqué contains extremely positive language as regards using multilateral rules to prevent imports coming into the countries concerned. The noble Lord will remember that the United States has taken unilateral action from time to time in order to prevent imports. That has not been a good thing as regards exports of foodstuffs from the European Community. The position will change and one of the reasons why it will change is that we have an agreement on the direction in which subsidies for agricultural production should go.

Lord Ezra

My Lords, does the noble Lord recall that in recent years there has been more than one occasion on which relations between the European Community on the one hand and the United States on the other on matters of trade policy have been somewhat strained? Would he say that as a result of the recent summit relations are now improved?

Lord Belstead

My Lords, my answer is most certainly yes. I believe that it has been a most successful summit. There is no question but that as a result of what happened at Houston it is now possible for those who have the job over the next three weeks of deciding on the framework for the further negotiations on the 15 different areas on which the Uruguay round of GATT negotiations will concentrate to go ahead and set that framework. Then, over the next five months the final negotiations will take place.

Lord Hatch of Lusby

My Lords, I should like to ask the noble Lord two questions, both of them echoing a point which my noble friend Lord Williams introduced but which was not really answered. First, why did the noble Lord the Leader of the House use the word "cash" in relation to the provision of aid to developing countries and when responding to the question concerning the OECD figures? Why did he not give the real change in overseas aid rather than the cash terms?

Secondly, on the environment, there is a paragraph in Section 5 of the communiqué which seems to fudge the issue of global warming. It appears to be a reflection of the opinions of one section of the White House staff and contrary to the opinions of President Bush's environment minister. Has the conference followed the opinions of Mr. Sununu rather than those of Mr. Reilly? Is it not the case that the West Germans were anxious to fix targets and that when the communiqué talks of stabilising emissions that means that the situation is bound to get worse whereas the West Germans have already pledged themselves to reduce emissions by 25 per cent.? Why did the British Government not support Germany at the conference in Houston?

Lord Belstead

My Lords, I realise that the noble Lord has strong and expert views on the aid programme. I mentioned cash because that was the figure that was in my mind. There is to be a fairly significant cash increase in the United Kingdom's aid programme over the next couple of years. We are planning an aid programme of £1,750 million by 1992–23 compared with £1,500 million last year. I repeat that the upward cash figure is in addition to considerable resources which I am very glad to say are now being devoted to the countries of Eastern Europe. We also have to keep an eye on what the IMF will recommend regarding the Soviet Union.

To reply briefly to the question on global warming, I cannot add to what I said earlier. It is important that protocols are specifically mentioned in the communiqué because that shows that everyone plans to get down to serious work. We have undertaken to stabilise: our CO2 emissions by the year 2005 because that is a target that we believe we can hit.

Lord Stoddart of Swindon

My Lords, perhaps I may ask the noble Lord the Leader of the House a couple of quick questions. The first relates to the common agricultural policy. Can he make it absolutely clear that what has been agreed is that the subsidisation of over-production and of dumping on the world markets is to be phased out by the European Community? If that is so, how soon can we expect a reduction in the £16 extra per week that every family is paying as a result of those subsidies, to which the Prime Minister referred?

Secondly, in relation to ERM, is the noble Lord the Leader of the House aware that I find it rather strange that the Prime Minister, who is a free marketeer, wishes to tie this country into a fixed exchange rate? That is tantamount to going back to the Gold Standard and will have a detrimental effect on the expansion of our economy. Does she really mean that she wants to join a system of free-floating exchange rates? Does she still believe that she can go to a conference at a weekend and agree that the pound should be devalued or revalued?

Finally, in relation to the remarks made by Mr. Ridley, will the noble Lord ensure that the jackboot tendency in the Tory Party does not stop free speech within it?

Lord Belstead

My Lords, the noble Lord asked me whether the subsidisation of agriculture—and he mentioned two particular areas—was now to be phased out. The wording used is "progressive and substantial reductions". The noble Lord asked whether that would be reflected in the amount of subsidy which it could be said that each family in the country has to provide. The answer is that a great deal depends on the negotiations to which the G7 summit has opened the way and which will take place during the last five months of this year.

If the noble Lord will not think me discourteous, having heard about half a dozen ERM questions over the last three weeks or so I shall say simply that the undertaking in the Statement by my right honourable friend the Prime Minister is that our intention is to join the ERM. As the noble Lord knows, that will be when the Madrid conditions are fulfilled.