HL Deb 23 June 1993 vol 547 cc428-64

8.46 p.m.

House again in Committee on Clause 1.

[Amendment No. 19 not moved.]

Lord Pearson of Rannoch moved Amendment No. 20: Page 1, line 9, after ("II") insert ("except the following words in Article 2: "economic and social cohesion"").

The noble Lord said: The purpose of the amendments which are grouped with Amendment No. 20 is to query the wisdom of our support for the EC's cohesion fund policy, the European Investment Bank, the Economic and Social Committee. and the Committee of the Regions. Of those, I shall leave other Members to deal with the Economic and Social Committee, which at the moment seems capable of continuing as a harmless, if expensive, talking shop.

I have to say, however, that the Committee of the Regions may well be one of the pegs to which my noble friend Lord Tebbit has made such perspicacious reference. If so, it is a pretty sinister peg. As always with these pegs, as my noble friend explained, the provisions laid down in Chapter 4, Articles 198a to 198c have been drafted so that they appear relatively innocuous now and are therefore likely to be accepted by the member states without demur. As my noble friend pointed out, that is how the Euro-planners work. They establish the basis for future action in 1996 or earlier by ensuring that their initial proposals cannot be objected to. They rely on the naivety of national legislatures to approve the necessary paving provisions which form the basis of the later policy that they have already conceived.

In the case of the Committee of the Regions the plan, like all good frauds, seems innocent enough. The committee seems designed to satisfy the alleged aspirations of, for instance, the German Länder, the Flemings, the Scots, the Catalans and inhabitants of other regions said to be dissatisfied with their present lot. However, the true purpose of the birth of this institution may well be to facilitate and accelerate the diversion of power over the regions from national parliaments to the European Community centre, thereby undermining the integrity of the existing nation states.

Indeed, the Foreign Office appears either to have been taken in by that strategy or anyway to support it, if its deceitful little publication Britain in Europe is anything to go by. On page 12 the Foreign Office states: There will be a new Committee of the Regions which will advise the Commission and the Council of Ministers on issues concerning the European regions. This will help to ensure a stronger voice for th,a regions at European level".

I ask the Committee to concentrate a little on that last sentence. Surely it amounts to a somewhat worrying suggestion that the member states are not adequately conveying the regions' voices to the Community's forums? Surely it subtly hints that the member states are failing the regions? I must ask my noble friend the Minister to give us an assurance that what I suggest is nonsense. I have no doubt that she will do so. I can but remind her that what she says will be on the record when, later this year or at the latest in 1996–97, we come to consider the cloak which will be hung on this particular Tebbit's peg (if such it is and if I may so describe it).

Whatever my noble friend replies, the importance of the Committee of the Regions is obvious from the second paragraph of Article 130a, which reads: In particular, the Community shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least-favoured regions, including rural areas". The Committee of the Regions is therefore to be a key player in converging the economies of the member states so that we may all move towards the glorious goal of monetary and political union. The committee doubtless will have much influence on the distribution of cohesion funds, which are supposed to produce level playing fields everywhere, where only steep mountains shoot skywards. Cohesion funds and level playing fields are two essential tools in the fashioning of the great socialist state which we are now contemplating.

Perhaps I may put another very simple question to my noble friend the Minister. Do the political, bureaucratic and legal minds which have dreamt up this monstrous concept understand, or do they not understand, that a level playing field and a market are contradictions in terms? I fear it is obvious that many Members of the Committee do not understand that fundamental conflict either. Perhaps it is only obvious to those of us who have worked most of our lives in commerce and industry, where we have had to earn money in the real world to pay the taxes and salaries of the politicians and bureaucrats who have dreamt up something so far removed from a genuine common market. I hope that my noble friend can answer my question.

That leads me to the cohesion funds themselves. I should have thought that the proposed cohesion funds would be unacceptable to a Conservative Government. The principle on which they operate is essentially socialist in character, being the redistribution of wealth from richer to poorer countries. Most. people do not seem to mind doing that when the money in question consists of charitable foreign aid, but these cohesion funds are different. Under them, British taxpayers' money is going to help other European countries build factories and motorways so that they can better compete with our own industries in the so-called single market and elsewhere. Can my noble friend tell us roughly how much of the money that we could otherwise be spending here is given away in the folly of the cohesion funds?

Baroness Elles

Perhaps my noble friend will give way. Is he aware of how many millions, if not billions, of pounds go to Northern Ireland from European Community funds which have helped the Northern Irish to rebuild their economy? Does his argument totally apply; to say that Conservative Governments do not welcome payments from the Community to parts of the United Kingdom that need financial resources?

Lord Pearson of Rannoch

When my noble friend the Minister comes to reply to the question that I put to her, I feel sure that she will include Northern Ireland in the United Kingdom. Can my noble friend tell us roughly how much of the money that we could otherwise be spending here is given away in that folly? Of course she should include Northern Ireland in that calculation.

I should call it folly even if it worked in the theory in which I have described it. But in practice it is worse. The recipient countries cheat with the money that is given to them and often use it, in effect, for other purposes. For instance, Spanish steelmakers are being given back door subsidies by the Spanish Government by having their social security payments deferred. Indeed, Sub-Committee B of your Lordships' Select Committee on the European Communities is having great difficulty in establishing just how much aid is being given by national governments to prop up their own industries to the disadvantage of British industries.

Let me quote from a letter that I have just received from the legal department of your Lordships' Select Committee. It reads: Of course, if national aid is lawful. it must he notified to the Commission so that figures are available. Illegal aid, on the other hand, will not he notified to the Commission and delinquent national governments are skilled at carrying out these transactions in ways which make the grant of aid as well as its amount very difficult to detect". Quite so. I am sure that that comes as no surprise to Members of the Committee who are familiar with the way in Which other member governments, and particularly the recipient governments, flout the Community's rules to their advantage. But why do we go on giving them these absurd cohesion funds, amounting in total to some 12 billion ecus per annum on top of that? Can my noble friend enlighten us?

In view of the hour and the large number of amendments in this group, I shall not further depress the Committee with too much information about the European Investment Bank. So far Britain has contributed a mere £1.5 billion for 19 per cent. of the European Investment Bank's capital. But Italy gets 40 per cent. of its inter-Community lending. France received 62 per cent. of the number of loans that it made to small and medium-sized enterprises in 1991, amounting to 23 per cent. of their total value. In comparison, the UK received 1 per cent. of the loans, amounting to 3 per cent. of their value.

Need one say any more? I think not. But as we are committed to subscribing an extra £7.24 billion capital by 1998 to that bank, I must ask my noble friend the Minister whether she believes that it will be wisely used in the interests of the poor old British taxpayer. I beg to move.

9 p.m.

Lord Bruce of Donington

I listened carefully to the remarks made by the noble Lord, Lord Pearson of Rannoch. Perhaps I may approach the matter from an entirely different angle altogether. It may in part differ from the approach that he saw fit to take.

I speak now as a self-confessed or proud socialist. From our point of view when the terms of the Treaty of Rome were renegotiated in 1975 one of the most desirable outcomes was the establishment of the European Regional Development Fund which provided, among other things, for a redistribution of wealth in the sense then described. It became quite clear that the operation of the free market, as always—an inevitable characteristic of the free market—tended to create pockets of prosperity at one time (the "golden triangle of Europe" was referred to) and at the same time produced the conditions in what were called the "depressed" areas or later the "development" areas which obviously required some social redress. Therefore, I am in complete agreement with the further development of the regional development fund. It serves a useful purpose aside from the aims and objectives of the Maastricht Treaty. It brings a greater measure of fairness and justice within our society which, if it is to remain a vibrant and living thing, must have an element of cohesion within it.

Therefore I make no objection to the development of the regional development fund. I was one of those who advocated further consideration being given to the report of the then commission chaired by Sir Robert McDougall. which indicated that, in order to have any effect on the growing polarisation of wealth and poverty, which is the characteristic of free market forces throughout the world. we should have to make substantial increases to the regional development fund. In more recent years, as the Committee is well aware, reforms were made to the structural funds in which they were regrouped, together with the agricultural guarantee and guidance fund in order to produce a greater pot out of which some correction could be made.

Unfortunately, notwithstanding the provision of aid to development areas—which always has to wear the label of the European Commission (quite inaccurately since the funds are provided by the member states)—one of the results of the development of the ordinary operation of a free enterprise society was that, despite those endeavours, year after year ever since 1972, the richer areas of the Community have become richer and the poorer areas poorer.

That brings me to a specific aspect of the Maastricht Treaty. I repeat that I have no objection whatever to the redistribution effects which ultimately, in Keynesian terms, continue to stimulate correctly the ordinary demand. Some people who advocate cuts in public expenditure in the United Kingdom at the present time often forget that the costs of social security come from somebody else's income that contributes to the continuation of the economy. Reduce some of those transferred payments and one precipitates an even greater depression than we have now.

My objection in regard to the Maastricht Treaty stems from its association with economic and monetary union. Once one has a situation in which the economic affairs of the country and of the Community as a whole are in the control of non-elected and non-accountable bankers, no account is taken of the regional disparities about which we know in the United Kingdom and which are still emerging in Europe. There is no control over the consequences upon society. Therefore, in order to remedy those disparities, if indeed they can be remedied within a society operating on completely free market principles, we are dependent not upon the Council of Ministers, not upon an elected government as in our own country, but upon the Commission.

I emphasise to the Committee once again—and I trust that if the penny has not yet dropped, it will do so—that the Council can act only on a proposal from the Commission. The determination of the way in which the European development fund, or rather the cohesion funds, can be distributed lies in the hands of the Commission. The decision is made under the treaty. The apportionment of the funds under the treaty can be determined by majority vote in Council.

Lord McIntosh of Haringey

Perhaps my noble friend will forgive me. He is asserting that the economic and social cohesion policies can be considered by the Council only on a recommendation from the Commission. Perhaps he would be good enough to refer to Article 130b. under economic and social cohesion, to a sentence which he wished to take out by his Amendment No. 161. It states: Member states shall conduct their economic policies and shall co-ordinate them in such a way as, in addition, to attain the objectives set out in Article 130a". Does my noble friend agree that the sentence he wishes to take out makes it clear that the initiative in the first place is that of member states?

Lord Bruce of Donington

The initiative is in the treaty. The Commission is responsible for bringing forward the practical proposals for the implementation of the policy stated in the treaty. It is the Commission that brings forward the proposals and the Council decides whether or not it will adopt them. For that purpose it will adopt majority voting.

I have in mind what has occurred over the past two or three months in regard to the political pressure exerted quite openly by the Commission on member states to ratify the Maastricht Treaty. Expressed in loose terms—I do not mean to be offensive; I am merely giving the shorthand—the fact of the matter is that the Commission has brought pressure to bear on some member states to ratify promptly the Maastricht Treaty by holding out to them the benefits that they will receive from the cohesion fund. Nobody will deny that it applies more particularly to Ireland. I have the suspicion that the speedy ratification by Spain, Greece and other recipients of the funds provided by Germany, ourselves and (to a minor extent) France, has been profoundly influenced by the inducement offered to those other member states by the cohesion fund.

I object to that arm being retained by the Commission. I have no objection if it is taken out of the hands of the Commission altogether. I have no objection if the allocation of the new aids is made by the unanimous decision of the Council of Ministers. But that is not the case under the treaty. In my view, that goes to the very root of the treaty. It makes the ultimate economic climate and economic circumstances within which decisions are made subject to the actions of non-accountable international bankers. It then leaves distribution open to considerations that may rest upon the desirability of obtaining majority votes for this and that policy or as part of a package deal. I believe that the Committee will do well to look askance at the provisions included in the treaty.

Lord Thomson of Monifieth

For once I am moderately happy to follow the noble Lord, Lord Bruce of Donington, but first perhaps I should declare what is no longer an interest but a definite prejudice. I am a former member of the European Commission. It was my duty to set up the first regional development fund. Your Lordships will know of my bias.

When I looked at the amendments I was astonished to find the name of the noble Lord, Lord Bruce of Donington, heading Amendment No. 31 to take out Article 3(j), which concerns the strengthening of economic and social cohesion. I was also astonished to find the noble Lord, Lord Stoddart of Swindon, leading Amendment No. 20, which removes the phrase "economic and social cohesion". I believe I am right in saying that in Amendment No. 52 the noble Lord, Lord Stoddart, wants to take out Article 4b, which is concerned with the European Investment Bank. The Committee will be aware that the phrase "economic and social cohesion" is, as I concede to the noble Lord, Lord Bruce of Donington, a term of Brussels bureaucratic art meaning a regional development policy or assistance to poorer areas by the more just distribution of resources. I cannot believe for a moment that the noble Lords sitting just below me in the gangway, but not far away from me in general philosophy, wish to espouse that kind of philosophy. I understand that totally in the case of the noble Lord, Lord Pearson of Rannoch, who has just spoken, or in the case of the noble Lord. Lord Tebbit, who is not now with us. I am bound to say that, as is happening so often in this debate, noble Lords are not protesting about the policy of economic and social cohesion, though I fully concede their concern on these matters. They are opposed in principle to membership of a community, part of whose economic policies is the redistribution of resources to go alongside economic and monetary union and the other processes of integration.

Lord Bruce of Donington

I am most grateful to the noble Lord. He did not fully understand or perhaps was not present at the time. It has already been explained to the Committee that the purpose of putting down these amendments is in part exploratory and that the discussion will take place on groups of amendments rather than upon the merits of individual clauses.

The noble Lord cannot have it both ways. If he and others wish each amendment to be taken separately we can go on for the next month or so. If we are to discuss the amendments as a group—which I understand to be the view of the Committee and which has been agreed by the Opposition and Government—surely the Liberals may accept the same kind of view. We are seeking—it is hoped that we shall have a moderate degree of success—to put forward arguments within a group rather than be tied to an individual amendment. The noble Lord cannot have it both ways. If he wants to discuss individual amendments we can go on for years, but the arrangement that has been agreed through the unofficial usual channels has been to discuss the amendments by subject. The individual amendments are only a vehicle for getting the issue on the Marshalled List.

Lord Thomson of Monifieth

I think that the noble Lord is seeking refuge in a procedural protection. For my part, I think unusually in this debate, I am speaking to particular amendments within this group instead of making a Second Reading speech. I do not wish to delay the Committee but I want no more than to make that point.

9.15 p.m.

Lord Bruce of Donington

In point of fact, for the convenience of the Committee, I was in the process, together with the officials of the House, of removing a whole series of amendments in order to simplify the grouping process to which I have referred and which so far has resulted in a very interesting exchange of views on both sides of the Committee. If the noble Lord wishes to dissuade me from doing that, I shall leave the amendments on the Marshalled List—and, okay, we shall debate the lot.

Lord Thomson of Monifieth

The last thing in my mind is in any way to increase the length of this debate. I appreciate the noble Lord's procedural point but he has accused me of wanting to have it both ways. When the noble Lord, for whose convictions and attitudes I have the greatest respect, including his objection in principle to British membership of the Community, begins to lend his name to amendments that put him against social and economic cohesion, I think that he is trying to have it a little both ways.

I listened to the speech of the noble Lord, Lord Pearson of Rannoch, with close interest. If he is objecting to British membership of the Community, then I understand and respect that position. If in terms of the stage we are now at in British membership of the Community, associated with the treaty which we are now discussing, the noble Lord puts the points of view that he has just put to the Committee, I hope he understands that he is engaging in an exercise in Right-wing revisionism of an extraordinary character. The social and cohesion policies of the European Community, developing from the regional development fund, which I had the very great honour of helping to establish, were, when Britain joined the European Community, a major priority of the then Conservative Government led by the then Conservative Prime Minister, now Sir Edward Heath. They were totally in step with what had been the basic policies of governments of all parties in this country and a part of the temper of the times.

Whatever one's degree of enthusiasm for market economies, there need to be the mitigating forces of a positive policy of social and economic cohesion, generally represented in this country by development area policies and in the European Community by the various structural policies. I hope that the noble Lord, Lord Pearson of Rannoch, knows how deeply out of step he is with the whole tenor of government in this country over the whole of the post-war period. I profoundly hope that when we hear an answer from the Government Front Bench he will have a very thorough repudiation of the philosophy expressed in the amendment he moved a few minutes ago.

Lord Pearson of Rannoch

If I may be allowed the mildest of replies to the noble Lord, Lord Thomson, I think that he has just confirmed precisely what I said about the political and bureaucratic minds which have brought this creature that we are considering into being. I have nothing at all against the—

Lord Tordoff

When the noble Lord refers to "this creature", is he referring to the Treaty of Rome?

Lord Pearson of Rannoch

No, I am referring to what is proposed to become the European Community, that was the European Economic Community, and still is until this treaty is ratified, and before that, the Common Market. I am completely in favour of the Common Market, but as a member of your Lordships' Select Committee on Europe, I have come to see that in many aspects the Single European Act went too far. I am convinced that this Act goes much further than is necessary for the good of the countries involved.

Lord Thomson of Monifieth

If we may just complete these exchanges I shall then shut up. Does he wish to see the end of social and economic cohesion policies within the European Community?

Lord Pearson of Rannoch

The social and economic cohesion policies of the European Community are not working. They contain massive fraud and they are not working in the purposes for which they were intended. They work to the disadvantage of this country and they do not work to the health of the economies of the countries to which they are applied.

Lord Tordoff

Do I take it from that that the noble Lord is saying "Yes" to the question that my noble friend has just asked?

Lord Pearson of Rannoch

No. The noble Lord asked me whether I wished to be out of what I understood to be the Common Market. What I would like to do is to go back to the Common Market and I would like to remove from it all the abuses which have grown up and which we now see from the Single European Act. I do not want the Treaty on European Union signed at Maastricht to come into effect because I believe that it will add to the damage which we have already started with the Single European Act. It is an entirely separate question.

Lord Moran

Perhaps I may change the subject and ask a question of the noble Baroness about the Committee of the Regions which is one of the subjects about which amendments are grouped in this series. As I understand it, it would be a new body to be set up under Articles 198a to 198c of the Maastricht Treaty. It would be a purely advisory and consultative body consisting of 289 members representing the regions and the United Kingdom would furnish 24 of them.

Can the noble Baroness say, first, what the Government envisage that this committee would do? Secondly, can she say how our 24 members will be chosen? In the context of the United Kingdom, I am not sure what a region is. Are the members to be selected on the basis of local authorities or will there be special representation for Wales, Scotland and Northern Ireland? How shall we do it?

As I understand it, this proposal came originally from the German Länder which want to exercise more influence in Brussels and all of which have now established representation in Brussels. In Germany it is quite clear what the regions are. It is equally clear in Spain. But in other countries, including our own, it is less clear. As I understand it, it is left to the Government to decide who our representatives will be and presumably what they will do. I imagine that the main role of the committee would be to lobby for funds.

There is one aspect about which I wish to ask. Article 146 of the Maastricht Treaty refers to the meetings of the Council of Ministers being at "ministerial level" which, as has been suggested, could open the way to the participation of regional Ministers at the Council. I shall be interested to know what the noble Baroness can tell us about that because we do not have regional Ministers unless by that it is meant the Secretary of State for Scotland or the Secretary of State for Wales. It seems to me that that provision would discriminate somewhat against countries which do not have regional Ministers as such. Anything which the noble Baroness can tell us about that would be very helpful.

Lord Swinfen

I wish to speak in particular to Amendment No 418 which is one of the group and which stands in my name and that of my noble friend Lord Beloff. Unfortunately, my noble friend is not here, but he would speak far better to it than I would. This amendment would require Her Majesty's Government to, report annually to Parliament on the proposal, formulation and implementation of the Community's actions, objectives, aims, policies and decisions on Economic and Social Cohesion under Articles 130a to 130e, together with a statement of the policies of Her Majesty's Government in respect of the matters referred to in that report". That requirement parallels the requirement of Article 130b for the Commission itself to report to the European Parliament. But my amendment would make that reporting on an annual basis rather than every three years, as proposed under the treaty signed at Maastricht. After all, it is our taxpayers' money which would be a major contribution to the cohesion fund. Article 130d of the Maastricht Treaty makes specific reference to the establishment of a cohesion fund in 1993; that is this year: to provide a financial contribution to projects in the fields of environment and trans-European networks in the area of transport infrastructure". On the assumption that the cohesion fund moneys are spent in the way envisaged by the treaty—I am sure that noble Lords appreciate that there can be no guarantee that such will be the case—the beneficiary countries will simply be able to transfer their own taxpayers' moneys to other areas and to use them for other purposes. According to Aims of Industry, backdoor subsidies to the Basque steel casting firms are already being given by the Spanish Government in the form of the deferral of social security payments, thus enabling such firms to cut their prices. I would strongly suspect that similar things are happening in other parts of the European Community.

One of the defences of the cohesion funds made by advocates of the Maastricht Treaty is that the payments made are supposed to help the poorer countries to meet the economic convergence criteria set up under Article 104c. It is spurious to argue that the receipt of cohesion fund monies will help member states to avoid excessive budget deficits. Without the monies, the factories and motorways in question simply would not he built. In any event there is a much wider debate concerning the feasibility of economic convergence within the timescale envisaged by the treaty.

The final act of the Maastricht Treaty contains a protocol on economic and social cohesion. This protocol, inter cilia, refers to the signatories declaring their intention of allowing a greater margin of flexibility in allocating finance from the structural funds to specific needs covered under the present structural funds regulations. In other words, as I understand it, the monies do not have to be spent on motorways, railways, factories and so on. One can only guess at the alternative uses.

In my view, it would be much better if we were to establish our own European development agency on the lines of our excellent Overseas Development Agency so that we could ensure that the money the United Kingdom puts towards the cohesion policy is properly spent and not used to the detriment of British business. It would also mean that we had much greater accountability to Parliament, but this is probably not possible within the European Community, and therefore in my view we do need regular reporting to Parliament.

Lord Eatwell

I should like to answer the question that was posed by the noble Lord, Lord Pearson of Rannoch, in introducing the amendments concerning the social and cohesion funds. He asked in what way were they in this country's best interests. It has been suggested by noble Lords that these funds are in this country's best interests as they are some form of social security—they are a transfer from rich to poor, and this is desirable. I am sure that Members of your Lordships' House would like to see the situation of poorer nations improve and so this social security function might be supported.

I want to suggest that these funds are in this nation's best economic interests, in our self-interest. The reason is that we exist within the European Community in a highly interdependent market. Whether we have monetary union or not, within that interdependent market depression or deflation in part of that market is contagious. Therefore if there are regions which are disadvantaged, either because they are industrial regions now in decline because their industries have become outdated, or whether they are regions which have not managed to develop the momentum of economic growth satisfactorily, their decline and their lack of income exert a depressive force on the overall growth of demand in the system as a whole.

That is why every federation and every nation state has developed mechanisms for transferring income within the country from richer parts to poorer parts of that country or federation, whether it be the Federal German Republic with its elaborate systems for transferring monies from rich to poor Länder, or the United States of America, which actually, through its systems, reduces income differentials between states of the Union by 40 per cent. Alternatively, as is the case primarily in the United Kingdom, the tax and benefits system may automatically transfer resources from the richer parts of the country, lived in by people who pay higher taxes and receive lower benefits, to the less well off parts, lived in by poorer people who receive more benefits and pay less tax. Whatever system there might be, every nation state and federation that has operated effectively and maintained high rates of economic growth has devised mechanisms for transferring resources around the system to maintain the overall level of demand.

The system we created in Europe before the implementation of this treaty, and the system that will exist after the treaty has been ratified, is peculiar in the sense that we have a single market and close, and perhaps unified, monetary systems, and we shall have virtually hermetically sealed tax and benefit systems. So the automatic processes of transfer, and the maintenance of demand which arises through the tax and benefit system, will not operate within that interdependent market (that free, open market) for which the noble Lord, Lord Pearson, expresses enthusiasm. Because it does not operate, the market will have a tendency to depression: the weaker regions will drag down those regions that have greater potential for prosperity. That is why the social and cohesion funds are so important.

Those funds are not important in taking up the entire slack of the system, so to speak, but they are important in priming the pump of development in the weaker regions or, indeed, in those regions which have been previously prosperous and which, because of the nature of industrial progress, are now suffering from restructuring problems. It is therefore important that we maintain and enhance the structural and social cohesion programme as a means of maintaining the balanced growth of the Community as a whole, because it is the achievement of that balance which will allow the Community as a whole to maintain a higher rate of growth within each member state, including the UK. That is why the development of the social and structural funds as part of the Community's overall growth strategy is in this country's best interests.

In that context, I should like to ask the Minister to tell the Committee when she replies why the British Government have consistently opposed the increase in the overall budget for social cohesion strategies. When it is in this country's best interests, why have they so persistently set their face against the growth of social and structural funds? Secondly, will the Minister say why, when structural funds have been made available to the UK, the British Government have consistently subverted their impact by not allowing EC funds to be additional to government funding, and have, instead, reduced government funding when EC funds have been applied so that there is no general net benefit to the regions of the UK?

Lord Aldington

I venture—

Lord Monson

My name is on the amendment. Noble Lords: Order, order!

Lord Aldington

The noble Lord has spoken so much that he might let me have a go.

Lord Monson

My name is on the amendment.

Lord Aldington

I venture to speak in this debate because I chaired an inquiry into the Community's regional and development policy. The report that the committee agreed received the general acclamation of this place and had the support of my noble friend Lord Pearson of Rannoch. I think that he must have forgotten that. It also attracted the interest of the noble Lord, Lord Bruce of Donington. I am amazed, as the noble Lord, Lord Thomson of Monifieth, was amazed, that Members on that side of the Chamber should lend their names to these amendments.

Lord McIntosh of Haringey


Lord Aldington

How do they think we can have a single market without having economic and social cohesion? Do they not realise that regions throughout the Community, including backward regions in our country, have gained greatly by this policy?

The noble Lord, Lord McIntosh of Haringey, intervened to remind his noble friend that the member states take the initiative in these affairs. That is so under the treaty. The regional development policy need not result in fraud, as my noble friend appeared to imply. Fraud does not arise from the fact that there is a regional development policy or a cohesion fund. It comes from the fact that some member states do not look after their public funds properly. It comes from the fact that the regulations and the procedures of the Commission are not always as they should be, as the noble Lord, Lord Bruce, and I pointed out in an inquiry. That is the fact; it is not the existence of the policy or the fund that is wrong. Therefore, I do not understand why these amendments have been proposed.

I am amazed that my noble friend Lord Pearson of Rannoch is opposing a new article in the Maastricht Treaty to extend the regional development fund policy to rural areas. That was recommended by my committee and Members of this Chamber, but it is the first time that the proposal has been made to include it in a treaty. That is another reason why I am opposed to these amendments. Frankly, I am stupefied that Members of the Committee should be proposing some of these amendments.

I turn to the point made by my noble friend Lord Swinfen about reporting to Parliament. The regional policy of the Community is reported annually to Parliament and the Select Committee looks at it every three or four years. Members are kept up to date if they read the papers in full. I do not believe that there is further need for statutory requirements.

For all those reasons I strongly recommend the Committee to reject the amendments. On top of that, I see that there is a proposal to negative the new article about the European Investment Bank. That article has been in the Treaty of Rome for some time. I cannot understand why Members of the Committee should lend their name to such a proposal. Therefore, broadly speaking, I am against it.

Lord Monson

Earlier today the noble Baroness, Lady Seear, challenged the noble Lord, Lord Stoddart of Swindon, who, en passant, had criticised the cohesion proposals. She asked him whether as a socialist he did not support the principle of rich countries subsidising poor countries. I hope that I have paraphrased the noble Baroness correctly. As one would expect, the noble Lord, Lord Stoddart, replied most effectively. Equally, he might have pointed out that it is one thing to compel taxpayers to give money to genuinely poor countries, whether they be in Eastern Europe, Africa, Asia, the Caribbean or elsewhere, but that it is quite another thing to compel citizens to see their hard-earned taxes diverted to countries which by any objective definition are by no means poor.

All the EC countries, even the poorest, are among the 40 wealthiest countries in the world; they are in the top quartile, as one might put it. Anyone who has recently been stuck in a traffic jam in, let us say, Portugal or the Republic of Ireland will have noticed that it consists not of battered lorries but of shiny, new, expensive cars and will have realised how relatively wealthy those countries have become.

There is another very curious feature of the cohesion proposals, particularly as they affect the United Kingdom, which many people would prefer to keep under wraps but which some of us feel must be brought into the open. One of the main professed objectives of the Maastricht Treaty, as of earlier treaties, is to foster goodwill and friendship among the peoples of Europe. The noble Lord, Lord Cockfield, has reminded us of that on many occasions. Some of us may suspect that in practice the Maastricht Treaty will have the opposite effect, particularly if the subsidiarity proposals turn out to be a damp squib. Nevertheless, the fostering of goodwill and friendship is definitely one of the professed objectives of the Treaty.

How curious it is that two of the countries to which the British taxpayers will have to contribute under the cohesion proposals make territorial claims either upon United Kingdom colonies or upon parts of the United Kingdom itself. That is hardly a sign of friendship and goodwill. I refer of course to Spain which has a claim upon Gibraltar and to the Republic of Ireland with its claim upon Northern Ireland. Notwithstanding the Anglo-Irish Agreement, Articles 2 and 3 of the Irish Constitution still claim jurisdiction over United Kingdom territory. That claim is upheld fully by the Irish courts which have declared that the constitution overrides the Anglo-Irish Treaty in that respect.

The noble Lord, Lord Stoddart of Swindon, told us this afternoon that every family in the Republic of Ireland receives £35 per week from Community funds. My research has established much the same thing, albeit set out in a slightly different way. Every man, woman and child in the Republic of Ireland receives £120 per annum from UK taxpayers. That is set to rise after the cohesion proposals come into effect.

The right way for those countries, which are already fairly well-to-do in global terms, to progress further economically, is by evolution and not convolution (those doing the convoluting being the United Kingdom and Germany, which are the only two net contributors of any significance to Community funds). The best and most honourable way for such countries to progress is to pull themselves up by their own unaided efforts of which I am sure, with their undoubted deep pool of talent, they are more than capable. Hong Kong, Singapore and other countries have shown how successful such a self-help policy can be.

Lord Sefton of Garston

I almost hesitate to jump into what seems to be an elite band of people who have set themselves up either as economists or well-knovvn experts on international relations. I speak from a simple point of view.

In 1946 I was engaged in an educational establishment which invited a Frenchman to come to England. The fact that he was on the Left wing of politics makes no difference. He told us about the privations which had been suffered during the war and he said that the French needed the British Labour movement to come in and help because they needed to rebuild a very firm society. That struck me as an extremely worthwhile aim.

I am always mystified by all this talk about how great Great Britain or the United Kingdom is. One would think that it is the best country in the world, that it is well managed and in complete control of its own affairs. The truth is that it is not. It is not even in control of its own energy policy. During the past 10 to 14 years we have given that away to the boardrooms of this country.

How many times have I heard it said in this exclusive Chamber that we are part of a global economy? And yet today we are arguing about whether or not we should be part of that global economy. Whether or not we decide to accept the Maastricht Treaty, we shall be part of the global economy. I have no doubt about that.

I had no hesitation in deciding for myself where our future should be: in the first place, it should be with Europe, with all the fault s that will arise from a merger of common interests; and, ultimately, it should be with the world. Perhaps I may—if I dam—use the words of Thomas Paine who, I believe, said, "I am a citizen of the world; my religion is to do good." There is nothing wrong with that statement.

However, what amazes me is that we see adult politicians on both sides starting to worry about our losing a little economic advantage by going into the Maastricht Treaty and establishing the European Union. Well, what if we do? We just heard a quotation whereby someone seemed to suggest that it was wrong to pay Southern Ireland families £35 a week out of other people's incomes. I do not see anything wrong with that, if it will stabilise the economy and the standard of life between one people and another.

I have with me an amendment that springs from my experience in Liverpool. We heard the noble Lord. Lord Tebbit, in his deliberate way, tell us this afternoon that we had a development programme of regional policy in the country and that it was a success. Well, the Common Market has just decided that the incomes of people in Merseyside are so low that we are now numbered among the worst in the European Community. If that is an example of success, I do not believe that I have ever heard of one.

I shall return to the question of £35 per week later. But my experience in Liverpool tells me that, through all the ebbs and flows of our wealthy and poorer periods as a nation, one thing has stood out quite clearly over the past 40 to 45 years during which I have been worrying about the problem—namely, that whenever there is a recession or a slump the situation in the South East becomes a little uncomfortable because a few people lose their jobs. Then, when it is over and the economy picks up, London gets overheated and people start complaining about the fact that they cannot get on the trains, or find a bus; or, indeed, about the terrible privations of spending two-and-a-half hours commuting to work.

However, as the economy slowly builds up, what happens in Merseyside or in Northern Ireland? The answer is that the economy stays on the same level. In certain parts of Merseyside we now have 50 per cent. unemployment, while they are grumbling in the South East. I mention that point not because, as some people suggest, I have a grudge against London and the South East; I do so merely to illustrate what are the problems and to emphasise that, at the same time, in London we are starting to develop an economy that is becoming overheated.

I do not know when we shall reach the situation where we need not talk about the transfer of money from the rich to the poor; what we need is a transfer of resources. To me, resources are coupled with jobs. In my view, the sooner the debate is over the better it will be. The sooner we wholeheartedly join with Europe and look for the weaknesses, the sooner this country will be able to give a lead to the rest of the world. As I said, I cannot wait for the debate to be over.

But while we continue to talk about the movement of resources, what are we creating? We are creating a dependency culture in certain parts of the world. We know what has happened in the South East and we know all about the economic resources and what has taken place as regards the provision of jobs inside the Civil Service. No one can tell me that they have moved anything like the number of civil servants out of the South East into the other parts of the country that they claim. They have not done so. A miserable pittance has been moved from the South East; indeed, one has only to look at what is happening now on Vauxhall Bridge.

I conclude on this note because I feel I have a cheek even speaking in this exclusive company of experts who know all about these matters. If development is concentrated in one area—the noble Lord, Lord Bruce, mentioned this—to a greater extent than occurs at the moment, there will be nothing left over for the poorer parts of the Community. Jobs will be created in Brussels, Luxembourg and in the so-called golden triangle. Those jobs will be self-perpetuating for many years to come. Amendment No. 406A, standing in my name, states: Her Majesty's Government shall advise any person proposed under subsection (1) above that if appointed he should in exercising his duties as a member of the committee give due consideration to the need for the de-centralisation of Community administration as a step towards the 'harmonious and balanced development' of economic activities". That does not mean the transfer of cash: it means the transfer of jobs created for the European Union.

If we can embark on that course, we may, instead of creating further dependency cultures, start to convince people in Scotland, Wales, Northern Ireland, the south of Italy and other peripheral areas that they are part of the Economic Community. If my little amendment even starts people thinking about that, it will have achieved a benefit for all the Community. Let us stop talking and vote on this matter as quickly as possible. Let us get on with the job of making the Community better.

Lord Sanderson of Bowden

I wish to say a few words about the European Regional Development Fund. The noble Lord, Lord Thomson of Monifieth, mentioned that. Coming from the area of the country that I do, I cannot speak highly enough of the fund. It has achieved a tremendous job of work. When my noble friend the Minister replies to this long debate, I hope she can tell us a little about the cost to Britain of the cohesion funds. As I understand it, the seven-year agreement will hopefully increase public expenditure in the United Kingdom by a very small percentage. However, I would like to have that confirmed.

I was interested to hear the noble Lord, Lord Bruce of Donington, say that commissioners do not always get things right. That is true. They certainly did not get it right when it came to deciding the geographical area for Objective Number One in the Highlands and Islands recently. It is thanks to the European Parliament that the area now may include such places as Rannoch Moor. Perhaps my noble friend Lord Pearson of Rannoch will remember that there are certain parts of this country which benefit from regional funds. I would never like to see that kind of assistance being reduced, as those areas face difficulties as regards development. I hope my noble friend the Minister will also elaborate a little on the Committee of the Regions. I particularly wish to know which people from the UK are eligible to be appointed to that committee.

Lord Jay

Perhaps I can help the Committee in the matter of the cohesion funds, which have re-emerged in the argument. I believe that so far the debate has been the victim of a certain confusion. If we are trying to help regions which are depressed for historical, geographical or demonstrable economic reasons, of course there is an overwhelming case for assisting those regions. I have advocated this policy throughout my life. While doing so I even visited Dundee on one occasion, at the invitation of the noble Lord, Lord Thomson of Monifieth, I believe with favourable results.

In that case there is an overwhelming argument for this activity. However, in the normal course of events, where there is more than one economy, and all have currencies of their own, and some of those economies are weak compared with those of their neighbours, the natural remedy—nature's remedy as Keynes would have called it—is for the exchange rates of the weaker economies to depreciate in relation to the richer countries. That produces the least painful solution which is possible in the real economic world since it gives an advantage to their exports and compels them to pay a rather higher price for their imports. That is the effect of their weaker position. There is a natural process by which a weaker economy will correct its difficulties in that way. That has happened with Far Eastern economies.

However, if one declares that over a large area there will be a single currency, for both weak and strong economies, one artificially cuts off the natural remedy from the weaker areas. In doing so one creates a problem which did not exist naturally and would not have existed if one had not acted in that way.

That is what the Commission and the treaty propose with the cohesion funds. Previously there were regional development funds but the cohesion fund was only invented because the EC insisted on imposing a single currency on a very large area, which was bound to tell against the weaker countries. We must recognise that fundamental distinction.

There is every reason for assisting, by such transfers, areas which are depressed for historical, geographical or natural reasons. However, it is absurd o create a new problem by creating an artificial single currency and then having to correct the hardship caused by one's action at very great expense when that would not naturally have been necessary. Those are the basic economics of the problem. I hope that we shall discuss the matter in that way in future.

Lord Willoughby de Broke

I wish to speak to Amendment No. 388 in my name which deals with the protocol on economic and social policy. My noble friend Lord Swinfen touched on that protocol. I should like to enlarge on one or two points before moving on briefly to cohesion.

The protocol covers those areas not covered in Title XIV, which simply states that the cohesion fund makes provision for the British taxpayers' money to be spent on motorways and railway infrastructure in Greece, Spain, Portugal or wherever the Committee of the Regions may decide. One of the statements of the fifteenth protocol—there are 19 protocols but the Cornmittee will be relieved to hear that I wish to touch on only one—mentions that that money is to be spent on various specific needs projects not covered by present regulations. Perhaps my noble friend the Minister will give some indication of what those special needs projects are likely to be, apart from environment and transport infrastructure. Are they perhaps one of the pegs referred to by my noble friend Lord Tebbit which are inserted in this treaty for future reference as unspecified projects?

I should like to make two further points in relation to the amendments concerning cohesion. First, vast sums are considered necessary for the cohesion and structural funds. In a speech in January 1991 my right honourable friend the Prime Minister mentioned a structural policy costing between £11 billion and £12 billion each year from 1993. The Times of Monday this week reported that save for Britain, European economies are shrinking rather than growing. How can a stagnant or retreating economy possibly support such grandiose schemes of economic subsidies? Will the Minister give the Committee any information on the current estimated size of the proposed cohesion fund? Is the timetable set out in the treaty still operative—that is, by December 1993? Of course, a further difficulty arises if the Community is due to be enlarged by nations from Eastern Europe, and I am thinking of Poland, Czechoslovakia and Hungary. Will all those countries qualify for cohesion funds? If so, who will pick up the tab? At present there are only three countries which contribute. I imagine that the same three will continue to contribute to a much larger Community with much larger needs than the £11 billion or £12 billion—a figure which is so airily tossed around at present.

I need to ask another question of my Front Bench. Should this Conservative Government consider approving a Bill which commits us to signing the protocol? The fifteenth protocol, with its stated aim of requiring richer countries like Britain to pay subsidies and aid to poorer countries, is discredited doctrine. It is centralised planning which is so beloved by the bureaucrats the world over but which has lamentably failed to pass the test of historical reality.

I find it hard to understand what a Conservative Government are thinking of in putting their name to a protocol which will channel large sums of money to roads, factories and infrastructure in other countries, enabling those countries' products to compete with ours on world markets. That can only have an adverse effect both on export income and on job prospects in this country. Asking the British electorate to support that would be like asking turkeys to vote for Christmas.

I wonder, too, what, let us say, car workers in Rover would think of their taxes being used to support and subsidise other countries' industries in order to enable them to compete with their members for orders and for jobs?

A few days ago my right honourable friend the Prime Minister was interviewed on the "Today" programme on his way to the most recent Euro-summit in Copenhagen. He said unequivocally then that the Community had to become competitive in world markets and he would be putting that message across loud and clear to his fellow heads of state.

But the fifteenth protocol, and with it the whole cohesion fund, runs directly counter to the idea of free trade, the single market and a competitive economy. Our economic policy should be geared towards efficiency and world competitiveness. There are huge export and investment opportunities for British companies in China, Hong Kong and the Pacific Rim, North America, and in the countries of the Commonwealth with whom we already have historic and successful trading links. That is where our economic efforts should be directed, not to supporting rival economies in Europe—economies which, as we know only too well and as we have heard today and in yesterday's debate, hive off enormous sums in Euro-bribes. I believe that the commissioners are unable to decide to the nearest £5,000 million how much fraud is committed. Structural fund moneys will only mean that the Mafia will smoke longer cigars, be driven around in bigger cars and have fatter bank accounts.

The whole concept of paying large sums into an outdated programme of economic and social cohesion is philosophically misguided and financially impractical. I hope that the Government will accept the amendment in the constructive spirit in which it is offered.

Lord Clinton-Davis

I wish to intervene briefly from the Front Bench although my noble friend Lord McIntosh will seek to deal with the question affecting the Committee of the Regions.

I wish to state at the outset that we are wholly in support of the concept of economic and social cohesion. I believe that the arguments were well encapsulated by my noble friend Lord Eatwell earlier in the debate. In that contribution he specifically rebutted the arguments, although he could not have anticipated the speech from the noble Lord, Lord Willoughby. There is an element of self-interest in this issue. There is an interdependency in our economies. That is an issue which the noble Lord, Lord Willoughby, failed to recognise. He would do well to read the Protocol on Economic and Social Cohesion and I shall read two declarations from it. The member states: DECLARE their willingness to modulate the levels of Community participation in the context of programmes and projects of the Structural Funds, with a view to avoiding excessive increases in budgetary expenditure in the less prosperous Member States: The further declaration states: their intention of taking greater account of the contributive capacity of individual Member States in the system of own resources, and examining means of correcting, for the less prosperous Member States, regressive elements existing in the present own resources system". I do not wish to deal further with that, I was prompted to intervene largely because of two comments that were made from a different spectrum in the debate. One was at the beginning from the noble Lord, Lord Pearson, who said that member states were significantly failing their regions in relation to structural funds and that the funds worked to the disadvantage of the United Kingdom. Then the noble Lord, Lord Aldington, said that the United Kingdom had gained greatly from the structural funds. I agree with that.

However, the case I wish to develop briefly is that we could have gained far more and could in future gain far more than is the case at present. The United Kingdom is about to lose £520 million-worth of funding from the European Community which could go unclaimed in 1993 simply because the Government disregard obligations which were fulfilled in the other member states. For years, the Government have failed to recognise the principle of additionality. It is that European grants to local authorities should be available to be spent in their own areas, but government rules prevent local authorities from borrowing to match those grants and prevent them being spent.

Just before the general election, after indulging in a considerable volume of personal attack on Commissioner Millan, the commissioner responsible for regional policy, a number of government Ministers, and in particular Mr. Lilley, who, I think, was responsible at the time, seemed to shift their stance. However, that has been illusory. Although it was promised that Eurofunds would be treated separately from local authority spending and full additionality would operate from April this year, problems still abound. I shall just mention two: total credit approvals to councils have been reduced by 25 per cent., so matching funding cannot be found. The second is that there is a wide variation of practice between government departments so there is a great deal of confusion as to how the system should operate. What is happening is that the Treasury wishes to maintain complete control over United Kingdom spending rather than allow initiatives to assist regional development, even from some of its own departments. By their refusal to allow Community money to be spent in our regions on the scale that is possible, the Government undermine the value which the United Kingdom receives from her Community budget contributions. What the Government are about is short-changing the country. This absurd departure from common sense should stop immediately. That is a point which the Government need to take into account at once.

Lord Mackay of Ardbrecknish

I wish to look at two aspects of the group of amendments: the amendments and the debate on Clause 6 stand part, which is down in this group, on the Committee of the Regions, which is covered by Article 198. The other place inserted into the Bill Clause 6, through which the 24 members appointed by the United Kingdom to the Committee of the Regions are all to be councillors. I think I am right in that and perhaps my noble friend will confirm it when she winds up.

My understanding is that those councillors will be appointed by Her Majesty's Government and I presume that they will be selected in some balanced way—as I hope my noble friend will confirm—not only to achieve a balance politically, which would be only right and proper, but also to achieve a balance geographically. I think I am right in saying that the objective of the committee, as the British Government see it, is to concentrate on those regions which are at either a distance disadvantage or an economic disadvantage within the United Kingdom and within the Community.

I can see, because the Government have no amendments down, that the new Clause 6, put into the Bill in the other place, will stay in the Bill. I can understand that. My concern, which I hope my noble friend will take on board, is that it will mean that the 24 Members from the United Kingdom will be drawn from rather a narrow base. Councillors are perhaps no longer as good a cross-section of the community as they once were. When the Government look at the 24 councillors whom they will put on to the Committee, they will have to attempt to ensure that they represent a reasonable cross-section of the community, from the wealth creators upwards or downwards (or however one wants to describe it).

The main points that I wish to cover are those referred to in the amendments which deal with economic and social cohesion (Articles, 130a etc.). I have been staggered almost beyond belief at some of the remarks I have heard during the last hour and 20 minutes. I must say that the idea that social cohesion is something reprehensible which ought not to be in the Treaty of Maastricht or anywhere else is a most amazing proposition. Is the proposition that there should be social disintegration? We see social disintegration on the far side of the European Community in Yugoslavia. Surely the one thing that we want, both inside our own country and inside the Community, is social and economic cohesion.

I am amazed that there are amendments down to remove this part of this particular treaty. I can understand people who are opposed to the European Community, but I would have thought that especially people like the noble Lord, Lord Bruce of Donington, would have taken the view that if we have to have a European Community, then surely to goodness it should do something about economic and social cohesion. I would even have hoped that my noble friend Lord Pearson of Rannoch—as his title tells you, he comes from a pretty disadvantaged part of these islands—would want to see some economic and social cohesion. I must tell the noble Lord, Lord Willoughby, if I heard him correctly (I shall read what he said carefully tomorrow) that he seemed to dismiss all thoughts of economic and social cohesion. If that were really the policy implemented by Her Majesty's Government, very few people would live in the peripheral areas of this country. The Highlands and Islands, for example, where my previous constituency was situated, have much to thank the social and economic cohesion of this country's policy for, and that of the European Community. It has added to the wealth of that part of the country and has allowed it to contribute to the wealth of the whole country. I assure noble Lords who have any doubts about that that if they go to Shetland, or Orkney, or the Western Isles, they will see that over the past 20 years, thanks to the policies of United Kingdom governments and those of the economic Community, through the ERDF and FEOGA, that considerable advances in the economy of those particular parts of the country have taken place, thanks totally to the cohesion funds of the United Kingdom and the European Community. If the noble Lord doubts me:, I suggest that perhaps he should take a week off and go and have a look at those areas; he will see exactly what I mean.

But it is not only a question of the rural areas. It is a question of declining industrial areas. We have such areas in all parts of the United Kingdom. I certainly know that those parts of Scotland where we have seen industrial decline—for example, my noble friend Lord Hamilton of Dalzell takes his title from an area which was once economically very prosperous and is now, because of the decline in steel and coal, in considerable difficulty economically—look not only to the social cohesion fund of the United Kingdom Government but also to the social and economic cohesion funds of the Community for help in trying to restore their fragile economy. If that is not a sensible and positive thing to do, then I do not understand how we expect our country to be one nation and one country, with all parts and all people pulling together.

It is the same with the Community. It is a totally false argument that if we help the southern Irish economy, the southern Portuguese economy, the Spanish economy or the Italian economy, it will be entirely negative. Perhaps I dare say to the noble Lord—possibly in terms of an economics lecturer, putting it more bluntly in a way that I certainly understand—that if we can improve those countries' wealth and standard of living, they will want to buy goods and services. We are in the business of selling them such goods and services. Therefore it is in our economic self-interest that those parts of the Community should be encouraged to be more prosperous by funds such as the ERDF.

I do not wish to take up any more time. In conclusion, we have had a debate lasting one hour and 25 minutes. I hope that those who have spoken have the courage to put their words to the test of the Division Lobbies so that we will see on the record those who are opposed to the concept of social cohesion.

10.15 p.m.

Lord Stoddart of Swindon

I ask the noble Lord to come and join us. After that speech, come and join us! I had not intended to speak very much in this debate.

Lord Hailsham of Saint Marylebone

Yeah, yeah!

Lord Stoddart of Swindon

I can understand people saying "Yeah, yeah", particularly those who have resisted any debate on the matter at all—the people who wanted to silence debate on the matter. I am talking about the people opposite who have sat down and made jibes at other people who wish to take part in the debate. I can understand them wanting to silence debate. But I was provoked first by the noble Lord, Lord Thomson of Monifieth. and then by other noble Lords into answering some of their questions. Why, they asked, do I support some of the amendments on the Marshalled List? Why am I against the cohesion funds?

I shall tell the Committee why I am against them. It is because I simply do not believe that the Europe which is being constructed by the Maastricht Treaty, and undoubtedly by subsequent treaties, is the right way forward. I simply do not believe that the kind of Europe which is being built up will become the economic wonderworld that some people believe it will be. That is why I do not believe in cohesion funds.

Indeed, I tell the Committee once again that I believe that the best way to govern is not through supranational organisations but through national organisations. If we are to retain democracy, we need to be governed at the lowest possible level, a level which people accept and a level at which people understand and will obey. Therefore I am opposed to the use of cohesion funds for setting up a supranational organisation to which I have always been opposed. I hope that the Committee will not ask me to change a point of view which I have sincerely held over a very long period of time and which I believe has had some substance.

In 1972 we were told that we were joining a common market. There was an absolute denial that we were going into a European union. Time and again we were told that that was not intended. Those people who now criticise us for wanting to discuss this treaty are the very same people who told us then that we were out of our mind to be talking about a European union. But we were not out of our mind. The treaty proves that. The Treaty of European Union sets up new institutions which we shall all have to follow; new methods of redistributing wealth to which we shall all have to adhere. That is the reason I lent my name to the amendments—because I wished to be consistent. I believed that I was right in 1972 and in 1986, and I believe that I am right today. Would any Member of the Committee have me do less? Would any Member himself do less? I sincerely hope not.

I believe in what I am saying because I have seen the operation of the European Community so far. I have not yet seen any benefit to our people from our membership of it. I have seen two common policies, one on agriculture. Can any Member stand and defend the common agricultural policy, which has put thousands of our farmers out of work and which costs every single family in this country £18 extra a week? Will Her Majesty's Government defend that policy? Of course not; they oppose it—or at least that is what they tell us. The other policy is the common fisheries policy. Does anyone believe that our fishermen are happy with that? Of course not. When I say that I am opposed to the concept of European union, it is on good grounds.

That is the reason I lent my name to the amendments and why I believe that the cohesion funds should not be paid. They will not be under proper democratic control; they are needed in this country and the £2.5 billion which we pay across the exchanges in net contributions could be better used in this country—in Scotland, Liverpool and elsewhere. Perhaps I may say to my noble friend that one of the reasons why Liverpool has declined in importance is because the balance of our trade moved from the Atlantic to the Continent of Europe. That is perhaps one reason why Liverpool declined. There may be others and of course he is an expert on the matter.

Lord Sefton of Garston

I am not an expert. The real facts are that Liverpool depended for its existence upon the trade between the two greatest continents in the world, and that disappeared. My plea is that Liverpool and Merseyside be treated as an area in this country needing assistance. But I do not plead for money. I plead that the resources that are over-supplied in the South East should be moved to Liverpool. The plea in my amendment is that that same principle should be applied in Europe. It has nothing to do with the balance of trade. The balance of trade would have moved to Europe in any case. The point that my noble friend is missing is that it does not matter what we say; if we had stayed out of Europe we would have stayed out of the world economy.

Lord Stoddart of Swindon

My noble friend is not correct. I should be happy for more resources to be transferred from the South East to Liverpool and there would be more resources available if, as I have already said, we were not spending £2.5 billion every year in subsidising affairs in the European Community. But the balance of trade has certainly shifted to Europe. Whether or not that is a good thing I do not know. As we have heard, we have a £95 million trade deficit and perhaps it would have been better if our balance of trade had been more worldwide rather than being concentrated on a small section of the world.

There is much more I could say about cohesion funds but I shall not do so because time is getting on. I sincerely hope that in future when people criticise me for putting my name to amendments they will understand that I do so because I believe in what I am doing and that those amendments are necessary.

Before I sit down, I should like to refer to Amendment No. 406 which seeks to insert at page 2, line 24, at end, the words, and has been nominated by the appropriate local authority association and can be expected to remain such an elected member for a term of not less than three years". That refers to the local authority members who will be appointed to the Committee of the Regions. That is a serious point. I hope that the noble Baroness will be able to give an assurance that the people to be appointed will be likely to remain members of the local authority for most if not all of the four-year period of office, and that the local authority associations will at least be consulted. If she can give me an assurance on those matters, it may well be that I can withdraw at least this amendment.

Lord Peyton of Yeovil

I should like to spend a few moments congratulating your Lordships on the part you have been privileged to play in these enthralling debates. In particular, I pay a glowing tribute to the noble Lord, Lord Stoddart of Swindon, who surely deserves to be dubbed the star performer. He has no doubt helped us to understand the issues and has done so totally without prejudice or any tendency to yield to the tiresome vice of repetition. I am sure your Lordships will be willing to echo my most earnest hope that the speeches that the noble Lord has made during the course of these debates will be the monuments by which he will be most remembered. I cannot recall that in the annals of this Chamber he has ever reached such high peaks of oratory, perception and intelligence as he has today. I hope that the noble Lord will be content with that record and will not endeavour to surpass it in subsequent proceedings.

In all the happiness and joy that the noble Lord has engendered in my heart and mind in what he has said I have one dreadful fear; that is, that my noble friend on the Front Bench—whose patience and intelligence I greatly admire—may be induced to attempt to answer it. I hope that she will resist that temptation because she may alienate some of the loyal support that she may otherwise find behind her.

I am distressed to see that the noble Lord, Lord Jay, has departed. He made a very interesting contribution. We always expect from the noble Lord great intelligence and perception, but this evening he delivered himself of the verdict that so far the debate had been the victim of a certain confusion. I do not believe that any of us would be so presumptuous as to seek to rival or compete with such an accurate description as that to which the noble Lord, Lord Jay, treated us. I am so deeply sorry and aggrieved that he is not here to receive my congratulations and those of other Members of the Committee.

The other star, so far as I am concerned, was the noble Lord, Lord Sefton, who sought to interrupt me just now. I am so sorry that I did not give way. He delivered in the force of his comments "the sooner this debate is over, the better". I cannot think of a sentiment more generally shared by most members of the Committee. I do not wish to delay its total fulfilment longer than I need except just to wonder what on earth is the destination that my noble friend Lord Willoughby de Broke wished to conduct us to. So far as I could understand, we were sailing off to the Pacific rim with no thought of whether we had any duties, obligations or possible gains in Europe. He dismissed it with the splendid words that we were philosophically misguided.

Perhaps I may conclude on this, I know, possibly vain hope —that those who do not find themselves in total agreement with the Maastricht Treaty, those who may have some serious misgivings about it, will not allow those misgivings to take them so far along the road of prejudice as to do serious damage to our parliamentary institutions.

10.30 p.m.

Lord McIntosh of Haringey

It is possible that I may find myself in the same Lobby as the noble Lord, Lord Peyton, as he and agree on a number of the matters that we have been discussing, so I think I ought to take the opportunity of dissociating myself from what he has just said. First, I think that he is unwise at any time of night or day to indulge in prolonged sarcasm in the way that he did. I think that it is unfair to himself more than it is unfair to my noble friend Lord Stoddart, whose patent sincerity the Committee will recognise.

I think also that the noble Lord is wrong to resent and express resentment of the time that is being taken to debate these matters in Committee. I know that the time that has been allocated for these debates has been a matter of agreement between those who are opposed to the passage of the Bill as it stands and the Government. Indeed, we on our side have been party to those agreements. And having been party to those agreements, it is right that we should give everyone who has a point of view the opportunity to express it. We ought not to interrupt any more than we have to. I gladly give way.

Lord Peyton of Yeovil

Perhaps I may say that I am deeply obliged to the noble Lord for his advice without necessarily feeling obliged to take it.

Lord McIntosh of Haringey

I cannot tell whether or not that was sarcastic so I am not sure in what sense I ought to take that intervention. It is important that Members of the Committee should have an opportunity to express themselves and it is important that we should not denigrate those who. out of a deep sense of concern, feel it necessary to attack various elements of the Bill and of these treaties. At the same time I do not agree with my noble friend Lord Bruce when he criticised the noble Lord, Lord Thomson of Monifieth, for referring to particular amendments. We have agreed to debate these amendments together and we are grateful to all of t hose who have taken part in that agreement. We still have the responsibility, since we will be asked to take a decision on the amendments, of looking at the amendments and looking at their implications. I propose to take a minute or two to do just that.

I must say at the beginning that, although I am temperamentally inclined to a conspiratorial view of history —I like to think that there are evil forces around which make it more difficult for those of us who are clearly in the right to achieve our objectives—some of the things that have been said this afternoon and this evening have surprised even me. I thought that the assertion of the noble Lord, Lord Hamilton of Dalzell, that the European Coal and Steel Community arose not from Jean Monnet but from the needs of Albert Speer to bolster up the German war effort, was a particularly choice example of the conspiratorial view of history.

In introducing this group of amendments I believe that the noble Lord, Lord Pearson, went a little far from time to time. He described the Committee of the Regions as being "particularly sinister". He described it as a "fraud". He described the government publication on the subject as "a deceitful little publication". He described it as "a monstrous concept". We can take different views without indulging in that kind of language. If the noble Lord is disposed to make comments of that kind he could have made a better job of showing in what way the committee was particularly sinister.

If we take the trouble to look at the clauses which are the subjects of these amendments, it is very difficult to find the sinister interpretation which a number of noble Lords have placed on them. Amendments Nos. 20 and 31 seek to take out early references in Articles 2 and 3j to economic and social cohesion. They are clearly legitimate paving amendments. Amendment No. 52 has not been debated at all. It seeks to take out references to the European Investment Bank, which is referred to in Amendments Nos. 237 and 238, which, again, have not been debated at all.

I have to say immediately that there are two amendments in the names of noble friends on the Front Bench; namely, Amendment No. 167 and the Motion that Clause 6 shall not stand part of the Bill. Both those amendments were put down before other amendments were available. The intention of those amendments was simply to see that the matters were discussed. We certainly do not think that Title XIV or Clause 6 should be taken out of the Bill.

Then we come to Amendment No. 160, etc., concerning the economic and social cohesion and the structural funds. Noble Lords who tabled these amendments seek to take out virtually all—although, interestingly, not all—the elements of the economic and social cohesion provision. I shall come back to that issue again because I believe that it is critical to our attitude towards that part of the treaties.

In Amendments Nos. 234 to 236, my noble friend Lord Bruce and the noble Lord, Lord Tebbit, seek to remove the provision for the Committee of the Regions. I found that very strange and I also found the argument of my noble friend Lord Jay very strange. He sought in terms of which I believe Milton Friedman would have approved to say that the geographical and economic difficulties should be dealt with by the exchange rate. I am not quite sure whether he meant that Catania and Strathclyde should devalue whereas Brabant and London should revalue. I do not think that he quite realised that the regions which are helped are not exactly the same as those which have separate currencies. The Committee of the Regions is there in an advisory capacity —I emphasise that fact—to the Council of Ministers, the European Parliament and the Commission in order to ensure that the structural funds are actually used to good effect. It has been a triumph for my right honourable and honourable friends in another place to ensure that we have in the Bill Clause 6 which secures that the membership of the Committee of the Regions from this country shall be themselves members of local authorities and shall genuinely represent those regions rather than simply being appointed by Whitehall or Westminster.

The view of the local authority associations, after considering the amendments agreed to in another place, is that no further amendment to Clause 6 is required. That is relevant to the point made with the best of intentions by my noble friend Lord Stoddart when he sought to make a further amendment to it.

Then we have the amendment of the noble Lord, Lord Willoughby, to the protocol on economic and social cohesion. My noble friend Lord Clinton-Davis has made clear what was not perhaps evident: that the protocol is an attempt to ensure that economic and social cohesion is very much more at the initiative of member states rather than being centrally directed by Brussels. If he looks again at the protocol and compares it with the text of the treaties, he will see that it has the very opposite effect to that which he was alleging.

One could speak for ever on this complicated group of amendments, but I think I have said enough. However, I should like to respond to the statement by the noble Lord, Lord Pearson, that economic and social cohesion is essentially socialist in character. For those of us to whom socialism is not a dirty word, that is something with which we agree. But of course it is broader than that. From what my noble friends Lord Eatwell and Lord Sefton and the noble Lords, Lord Aldington and Lord Mackay, have said, it is not possible to distinguish between our economic benefits, as citizens of the United Kingdom, and the social justice element of economic and social cohesion which is put forward, in comparison with British legislation, with commendable clarity and simplicity in the articles of these treaties. Economic and social cohesion is proposed because it is right in itself and because it is good for us as well as good for the rest of Europe. I hope that the Committee will not see fit to agree to these amendments, which would take out these valuable parts of the treaties of the European Community.

Baroness Chalker of Wallasey

This has been an interesting debate. There have been nearly 20 speakers and we have discussed the three main areas. A number of questions have been raised and I will now seek to respond to them as well as commenting on the amendment that was moved.

First, I think it behoves us all to realise that the Community's commitment to assist the less well developed regions dates back to 1975, when the European Regional Development Fund began. I want to pay tribute to the noble Lord, Lord Thomson of Monifieth, for what he did as a Commissioner. I remember going to see him as a constituency MP, and he really did seek to help the regions in a way that was most commendable. We may not always have agreed with what he said, but he certainly made regional development a reality for those who came from the less well-off regions of the country.

Economic and social cohesion has the specific objective of reducing economic disparities between the regions of the Community. That first appeared in the treaty with the 1986 Single European Act, which added the five new Articles 130a to 130e, which have been the subject of a number of debates in this group.

These specified that the main instruments of cohesion would be the structural funds, including the European Social Fund, the ERDF and of course the European Investment Bank, about which several of your Lordships have commented tonight. The new provisions in the Maastricht Treaty are the attempt to build on those articles by stating that the EC policies and actions must take cohesion into account, although this is not a sweeping provision designed to ensure that all EC actions are subordinated to the objective of cohesion because other treaty provisions must be taken in their context. I think that this is important to remember.

The second way in which the treaty seeks to build with the five new articles is by providing for the establishment by the end of this year by unanimity in the Council, by the cohesion fund for projects in the fields of the environment and trans-European networks which will benefit the Community as a whole.

The interim arrangements are already in place. There is little doubt that by the end of this year, with the ratification of the Maastricht Treaty—I hope by all 12 nations—we shall be able to proceed to help those regions of the Community that need the assistance. I shall return to the arguments put by my noble friend Lord Pearson of Rannoch and others about what they believe this is all about.

We build also upon those articles by providing the cohesion protocol which is annexed to the treaty. That assistance from the cohesion fund will be made available only to those member states which have a per capita GNP of less than 90 per cent. of the Community average and which have implemented sound macro-economic policies designed to attain their targets agreed in their convergence programmes with the Community. I believe that the Maastricht Treaty improves upon the existing cohesion articles in the treaty by targeting the Community's cohesion effort where it is most needed.

Some Members of the Committee have noted that the Maastricht Treaty says nothing about the level of cohesion spending. The reason is that the Edinburgh Summit took the necessary decisions to finance the economic and social cohesion objectives, as reaffirmed in the Maastricht Treaty. Although the settlement was generous, it was rather less than the Commission was demanding. For the period 1992–97, the Commission sought over £90 billion for structural actions. The final agreement was £5.7 billion less than that.

I was asked about the structural funds in the UK. One-seventh of the UK's structural funds allocations have been spent, as my noble friend Lady Elles said, in Northern Ireland. Nearly half has been spent in regions affected by industrial decline under Objective 2. More than a quarter has been spent on training for the long-term unemployed and young people. Rural areas also benefit from development grants and agricultural restructuring to the tune of about £640 million. I was asked about projects in the UK. Let me give some examples because we truly benefit: Sheffield and the lower Don Valley have benefited from an ERDF grant of £11.3 million, with a supertram project; the Belfast cross harbour rail bridge received an ERDF grant of £5 million; the Vatarsay causeway linking the Isle of Barra and the Isle of Vatarsay in Scotland has received a grant of £1.7 million from the ERDF; in Strathclyde there is the Stepps bypass; at Swansea there are the Carnathen Road improvements; and there are many other examples. This country benefits as well as other countries in the Community from the structural funds.

In moving Amendment No. 20 my noble friend Lord Pearson of Rannoch spoke in a rather strange way, I felt, about the contradiction that he perceived between an open market system and a level playing field. What he may not understand is that when countries have been so far behind they need some help to give them even a starting chance to compete in that market. That is the philosophy. It is not to prop up uneconomic areas; it is to give them a chance to earn their own living. That philosophy is one which in my lifetime the Conservative Party has always supported.

I believe too that we have to ensure that we fulfil the philosophy which is included, clearly, in Article 13Oa that In order to promote its overall harmonious development, the Community shall develop and pursue its actions leading to the strengthening of its economic and social cohesion". I should have loved the word "growth" to have been included, because that is what we are after, but the word "cohesion" is the word that seems to work in other parts of Europe, so we have the word "cohesion".

I was asked why we need the cohesion fund in addition to the ERDF and other funds. It is, as I said, because of its specific aim; to aim at those problems where the four poorest member states need extra flexibility in financing the projects in the fields. That is because we considered that the arrangements under the existing structural funds were not adequate in that respect.

The kind of projects to be financed are expected to be of broader benefit to the Community as a whole. There is no doubt that the cohesion protocol adds an important element of conditionality into the cohesion fund which requires the recipients of the fund to follow sound economic policies as specified in Article 104c of the Maastricht Treaty. That would have been impossible, certainly difficult, to achieve in the existing, well-established funds because they would not have borne that particular amendment.

Perhaps I may move on to the issue of taking up structural funds from the Community. That was mentioned by the noble Lords, Lord Clinton-Davis and Lord Eatwell. I fully accept that there have been problems in the past with taking up structural funds entitlements. Noble Lords may recall the blocking by the Commission of EC structural funds to help the coalfields. Agreement was reached with the Commission to unblock the funds. But having worked closely with the Commission to prevent such problems recurring it seems that sensible dialogue with the Commission is the best way of solving these difficult problems.

It is not unreasonable, on the face of it, for the Commission to insist that EC structural funds do not displace equivalent national spending. It is important that the Commission is made to understand that UK arrangements demonstrate additionality. But much rests on finding an answer to the hypothetical question of whether this spending would have taken place without the EC funding. I believe that it is important that our local authorities and other bodies are left to decide for themselves whether they wish to support the projects which could receive Community funding. Every effort is being made to ensure that the UK structural fund allocation is fully taken up.

I have spoken of cohesion and the structural funds in those general terms. I turn to the points that were raised about the Committee of the Regions. The noble Lord, Lord Pearson, and others mentioned the Committee of the Regions. The noble Lord, Lord Moran, asked a number of questions. The Government welcome the establishment of this committee. A wide range of EC policies affect regional and local interests either directly or indirectly. We therefore believe that it is right that they should have the opportunity to make an input into the Community's decision-making process.

The Maastricht Treaty establishes that the committee will have advisory status, which was one of the questions I was asked. But the committee must be consulted (Article 198c) on new proposals in a number of areas such as education, vocational training, culture, public health, cohesion and trans-European networks, which are covered by separate articles. The Committee of the Regions may also be consulted in any other instance which is considered appropriate or issue an opinion on its own authority where regional interests are clearly involved.

The treaty provides that the committee will be made up of representatives of regional and local bodies appointed to serve for four years. The treaty makes it clear that it is for the governments of member states to nominate their national candidates to the committee, but it is left up to the member states themselves to decide how their seats should be allocated among their regions and what kind of representatives should be nominated. In the United Kingdom the Secretary of State for the Environment will take the lead in the selection of representatives in England and the Secretaries of State for Scotland, Wales and Northern Ireland will do the same for their parts of the kingdom.

Perhaps I may say to the noble Lord, Lord Stoddart, who asked about this matter towards the end of the debate, that of course Ministers will take into account the views of the local authority associations. We hope to announce the allocation of seats among the four parts of the Kingdom during the summer.

I understood the noble Lord, Lord Moran, to ask whether regional Ministers could be on the Committee of the Regions.

Lord Stoddart of Swindon

I am sorry to interrupt the noble Baroness, but I asked her about the continuation of the person as a local authority member. Will she deal with that?

Baroness Chalker of Wallasey

I hope that Members of the Committee will possess their souls in patience. An enormous number of questions were asked and I was just about to turn to that matter.

Lord Hailsham of Saint Marylebone

Hear, hear! You are doing your best.

Baroness Chalker of Wallasey

I will answer the noble Lord, Lord Stoddart, right away so that he does not lose his track, even if I then lose mine. Under Clause 6, those who are elected will remain on the Committee of the Regions for the period for which they are appointed. I hope that those nominated will not only serve in the future but will be those who have experience of the region in the past because I believe that that is important. The noble Lord asked me whether those people would be able to serve for their full period. I believe that they will serve for the period for which they are appointed under the Act.

Perhaps I may return to the question that I was seeking to answer. The noble Lord, Lord Moran, asked about regional Ministers. I give an example. My honourable friend the Minister of State for Scotland, Lord James Douglas-Hamilton, has gone to an education council as the education Minister for Scotland with the agreement of Ministers in this country. But to serve on the Committee of the Regions, any such Minister would need to be a local councillor as well and that is unlikely to be the case. I hope that that clears up that point.

Ministers who sit on the committee to advise or answer questions of the committee, which seems to be a possibility, just as Ministers have gone before the economic and social committee in the past, would have to he completely independent in the performance of their duties. In other words, they will go to give general information and not to lobby in the way that the noble Lord, Lord Moran, suggested. Article 198A covers that.

I believe that I have covered how members will be selected, with the help of the local authority associations, by the Secretary of State for the Environment and the Secretaries of State for Wales, Scotland and Northern Ireland.

The committee will use the common organisational structure which is provided for the Economic and Social Committee, which is a sensible, cost-reducing measure. To those who have intimated that it is yet another part of the bureaucracy, I can say that we have sought specifically to avoid a separate secretariat and to make sure that members are there not only in the way that Article 198C describes it but in order to be consulted wherever it is considered appropriate.

I was asked also about the European Investment Bank. That bank has an important role to play and this country has also benefited from it. My noble friend Lord Pearson of Rannoch asked about Italy taking 40 per cent. of EIB lending in the Community. If one looks at many of the areas of Italy, it is perhaps not surprising, having been there from the beginning, that it has benefited in such a way. Perhaps I may point out a matter which my noble friend Lord Pearson did not seem to appreciate; namely, that the United Kingdom is currently the third largest borrower from the EIB, taking last year £1,823 million of the total lending within the Community. That was some 15 per cent. We were only exceeded in borrowings by Spain which took about 19 per cent. and Italy which took some 24 per cent. The EIB has, indeed, benefited us all over the country. I am quite clear that we shall continue to benefit from this part of the support for the regions of our country.

The noble. Lord, Lord Bruce of Donington, asked about the Commission being responsible for the apportionment of the funds. Of course, the Commission is involved; but so are the member states. Because of the additionality, which some of the noble Lord's noble friends do not like very much, there is very close control on the bids for resources of a regional development nature.

I feel that the contribution of my noble friend Lord Mackay answered the comments made by my noble friend Lord Willoughby de Broke. I was deeply concerned when he described his concept of aid and regional policy as having been put to your Lordships in a constructive spirit. He suggested that there should be, as he called it, a regional development agency somewhat similar to the Overseas Development Administration. I must say that I do not believe that the role in regional development which is needed throughout the Community could be carried out by this country alone, or by those countries concerned as regards their poorer regions. In my experience, there is much to be gained from co-operation between the partners and also from the sharing of many of the development ideas, even within the Community. Therefore, I do not believe that my noble friend's concept was one that we could follow.

My noble friend Lord Willoughby de Broke asked me several further questions. He asked about the timetable for the fund. I can tell him that it is unchanged. He then asked about the size of the fund. The answer is £12 billion for the cohesion fund over seven years. He also asked about enlargement and made comments about the way in which central and eastern European countries would take a large proportion of the money. The only enlargement before the Community at present is that to Austria, Sweden, Finland and Norway. Each of those four countries would be new contributors to the development efforts of the Community. Certainly the central and eastern European countries will not join until their economies are much more robust.

In talking about Amendment No. 418, my noble friend Lord Swinfen asked about regular reporting to Parliament. I can tell him that there is regular reporting. I shall look into the question of time intervals, but it is nearly always carried out on an annual basis because that is the way we run our business in the country. There is no reason why it cannot be undertaken on an annual basis. I do not believe that it needs to be written into the Bill or, indeed, into the treaty.

The noble Lord, Lord Eatwell, talked of priming the pump in the weaker regions. I thought that that was a very good expression for describing what we are trying to do to encourage the weaker regions to stand on their own feet. That is the philosophy. My noble friend Lord Aldington gave some expert advice and reminded us of what some of his colleagues on the Select Committees have said and done in the past. I must say that I found myself much in agreement with him.

I understand the contributions made by other Members of the Committee. I found the comments of my noble friend Lord Sanderson of Bowden very persuasive. He has direct experience of what has taken place. Those with direct experience are those who can show that this is not a crazy policy, as some have tried to describe it. It is a policy for the growth which we wish to engender in these poorer parts of our Community.

There is one final comment that I want to make about fraud as this was mentioned a number of times. There were a number of wild comments about fraud. However, the problem with fraud is always, as my noble friend Lord Aldington said, in the member states. The big question—this is a paradox really—is: how can one bear down on member states who one believes to be acting fraudulently without increasing the Commission's powers to investigate? In this Bill and through this treaty we are increasing the powers of the Court of Auditors. We are seeking to make sure that we can bring before the court a country that does not comply with a regulation.

We are reviewing the structural funds at present and I can assure the Committee that coping with the problems of fraud is uppermost in our minds. It will be a key subject for resolution and I believe it is clear that we are intent on ensuring that all the resources are used for positive outcomes and are not used fraudulently.

The noble Lord, Lord Bruce, said that the Commission might use the funds to buy support in other contexts. I believe he is wrong. Article 130d makes the matter quite clear. It states that the Council will set up a cohesion fund, to provide a financial contribution to projects in the fields of environment and trans-European networks in the area of transport infrastructure". That could not be clearer. Many questions have been asked tonight that reflect real concerns. However, more than half of the speakers tonight have expressed the view that the best way for the poorer regions of the Community to catch up with the richer ones, and to increase trade as a whole—if we can strengthen the poorer regions of the Community then we can strengthen trade overall—will be to pursue sound economic policies and encourage enterprise.

Article 3a of the Maastricht Treaty reiterates the principle of an open market economy with free competition. The Community's cohesion effort has a role to play in supporting such policies because they are of benefit to the whole Community. I know that many of the amendments moved tonight were moved to probe the Government's position. I hope that my noble friend Lord Pearson of Rannoch will realise that we are intent on making cohesion, and indeed development, work in a proper way. I hope that he may see fit to withdraw his amendment. Should he not do so, I must advise the Committee to vote against Amendment No. 20.

11 p.m.

The Earl of Dudley

I hope that I may quickly ask the noble Baroness whether she can give a specific answer to the charge of the noble Lord, Lord Peston, which I found disturbing; namely, that over £500 million was available for local authorities from the Commission but was being blocked by the Treasury. I hope that that charge is untrue, but it deserves an answer.

Baroness Chalker of Wallasey

It was the noble Lord, Lord Clinton-Davis, who asked about that. When I was speaking about additionality it was that very point that I was answering.

Lord Pearson of Rannoch

In trying to sum up this debate I shall mention one or two of the points that have been put to my noble friend the Minister which I am afraid she has not answered. I know that there is an agreement that we should try to finish by 11 o'clock but I have to put it to the Committee that the 12 minutes taken by my noble friend Lord Peyton did not exactly earn the sympathy of the Committee or contribute much to the debate.

Noble Lords


Lord Pearson of Rannoch

Could I help my noble friend by saying that in the matter of fraud in the Community there is one way of course of reducing the amount of such fraud and that is by not increasing the powers of the Commission and by not giving so much money to the people who are taking it?

I am afraid that one or two questions were asked., and, as this is the Committee stage, I have to press my noble friend for an answer, though perhaps not now, if that is the sense of the Committee. One point I put to her was whether she could assure us that the Committee of the Regions would not become what I and others have come to describe as a "Tebbit's peg" which will undermine and replace the authority of the national parliaments in due course. I do not think that I received an answer to that question.

In answer to my question as to whether the political, bureaucratic and legal minds which have created the proposed European Community understand that a level playing field and a market are a contradiction in terms, I understood my noble friend to say that we had to give the poor countries the chance to earn their living. Other noble Lords took that line as well. She also said that this country benefits as well as other countries. But I am not sure whether I heard her give a precise answer as to what is our net contribution to the cohesion fund. Of course this country benefits, but what is the net balance? Are we, in fact, net payers in this matter?

I have to say that I asked my noble friend whether she believed that the £7.24 billion which we are committed to subscribing to the capital for the European Investment Bank will be wisely invested in the interests of the British taxpayer. I also have to tell the Committee that the noble Lord, Lord Eatwell, who I am sure is not going to press my noble friend the Minister on this question, asked her very clearly why the United Kingdom has set its face against growth in these cohesion funds if our Government believe that they are so helpful.

One other question put to my noble friend by my noble friend Lord Willoughby de Broke concerned Protocol 15 and the money to be spent on specific needs projects which are not environment, transport or the other matters. These are very substantial figures and I hope that in due course we shall get an answer to that question.

Those are the questions on which I should like to press my noble friend the Minister. I also think it would be appropriate for me to answer some of the points which were put against our position on these amendments by other noble Lords.

My noble friend Lord Aldington mentioned your Lordships' report on regional development policy. He said that the policy need not result in as much fraud as occurs. I do not believe that anyone denies the figure of at least £5,000 million a year annually, or perhaps more, in that regard. My noble friend Lord Aldington went on to say that some member states do not look after their funds. Our point in this matter is that we do not really mind if they do not look after their funds: what we object to is when they steal ours.

My noble friends Lord Aldington, Lord Sanderson, Lord Mackay and others went on to praise the benefits of these funds when they reach the rural grass roots. Rannoch Moor, with which, obviously, I am associated, was mentioned as a grass root in question. I have to say two things to them. First, would we not perhaps have had more money of our own for the grass roots of Rannoch Moor and elsewhere if we were not wasting so much money in other directions and on other less honourable grass roots? I must also say that they have picked an extremely good example of the way in which the bureaucratic mind wastes these funds, when they reach the people they are supposed to help, in the sheep grant, where £30 is given per ewe annually at the moment which results in huge numbers of sheep being on the ground to the detriment of the ground. I think that they do very considerable damage in the world where I live.

I shall draw to a close, the Committee will be pleased to hear, by saying that I enjoyed very much the speeches of the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Stoddart of Swindon, from the Benches opposite. I think that they made entirely clear from those Benches—and I may say that their views are shared by others on those Benches who did not speak tonight—that they are not in the least bit against redistributing wealth. They merely wish to point out, as we have wished to point out, that the cohesion funds and the economic and social policies of the Community do not work, do not achieve the purposes for which they are spent, and are very unlikely to do so under the structure envisaged by the Treaty on European Union.

Having said that, and having gone three minutes beyond the time which my noble friend Lord Peyton so generously gave me, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Trumpington

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at quarter past eleven o'clock.