European Communities (Amendment) Bill

HL Deb 24 June 1993 vol 547 cc471-513

3.21 p.m.

Baroness Chalker of Wallasey

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Baroness Chalker of Wallasey.)

The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, the Question is, that the House do now again—

The Earl of Onslow

My Lords, I want to ask—

The Lord Chancellor

My Lords, the Question is—

The Earl of Onslow

My Lords—

Noble Lords

Order, order!

The Lord Chancellor

My Lords, the Question is, that the House do now again resolve itself into Committee on the Bill?

The Earl of Onslow

My Lords, I am sorry, but is it not possible that we could take the Statement before the Committee stage of the European Communities (Amendment) Bill, because that will then divide the business neatly and properly as opposed to having the Committee stage interrupted later? It seems to me a sensible suggestion.

Lord Mottistone

My Lords, no.

The Earl of Onslow

My Lords, my noble friend Lord Mottistone never thinks that anything is sensible. It might be a sensible thing to do if it were possible. It is merely a suggestion.

The Lord Privy Seal (Lord Wakeham)

My Lords, I thank my noble friend for his suggestion. Other suggestions have been made through the usual channels. I believe the arrangements that have been agreed are generally acceptable to the House.

On Question, Motion agreed to.

House again in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 [Treaty on European Union]:

Lord Willoughby de Broke moved Amendment No. 22: Page I, line 9, after ("II") insert ("except Article 3(a)")

The noble Lord said: I move Amendment No. 22 and speak also to Amendments Nos. 23 to 26. This group of amendments deals with Article 3(a) - (e) of the Treaty on European Union. I propose to concentrate on agriculture. I do not intend to give the Committee a tour d'horizon under the heading: All you want to know about the CAP but are too afraid to ask. It is worth talking about the CAP now if only because it consumes a phenomenal two-thirds of the total Community budget. The CAP budget for 1990 was £19 billion. That rose to nearly £24 billion in 1992. I understand that it is set to increase by a mind blowing £7 billion over the next few years. Perhaps my noble friend the Minister will enlighten us and tell us whether there are any more precise figures as to what the CAP budget will cost over the next few years. That information would be most interesting.

Those figures are not sustainable in an EC economy which, far from expanding, is contracting due largely to the high cost of its present social and economic policies. The CAP was set up under Article 39 of the Treaty of Rome to achieve the following aims: first, to increase agricultural productivity; secondly, to ensure a fair standard of living for the agricultural community; thirdly, to stabilise markets; and, fourthly, to ensure that supplies were available to consumers at reasonable prices.

The policy has failed on three counts and succeeded on only one, that of raising productivity. I am afraid that that one success has had in it the seeds of its own destruction: fruit and vegetable surpluses dumped at sea; grain mountains de-natured so that while half the world is starving that grain was made unfit for human consumption; milk lakes; butter mountains; wine lakes; oil lakes; and the mountains of Scotland and Wales heaving with sheep.

Did the policy ensure a fair standard of living for the agricultural community? The answer is to be found in the unrest among the farmers on the Continent, especially in France, Spain and Italy, and in the steady drain of people leaving the land in the United Kingdom—some 30,000 over the past 10 years. Did it stabilise markets? That was another of its stated aims. It may have stabilised prices within Europe, but at a level so far above any notional world price that European grain was, and remains, unsaleable in world markets except at the expense of vast export subsidies. We end up in a looking-glass world of subsidies to grow corn and subsidies to sell it.

Did the policy ensure that supplies are available to the consumer at reasonable prices? Again, no. The consumer has to pay in the shops the price that reflects the high, subsidised costs of the raw materials, and of course he also has to pay for those subsidies through his taxes—a singular left and a right.

That the CAP needed change has been recognised for many years, of course. However, the CAP is driven by political rather than market aims, and it has taken a long time to have that change recognised and put through. In May 1992, the MacSharry plan came into effect—a sort of CAP Mark II. It introduced price cuts for cereals, beans and oil seeds, with acreage payments as some compensation for those price cuts over a period of years. It also introduced the notion of a compulsory scheme to set aside 15 per cent. of the acreage devoted to cereals, beans and oil seeds. That new scheme will also add a complicated array or bureaucratic quota controls to beef and sheep farming. The dairy system already has a quota which was introduced a few years ago.

Those quota systems add to industry costs, penalise the efficient, and make it even more difficult for new blood to be brought into farming. What effect the CAP Mark II will have remains to be seen, but the signs are not promising. During the four years from 1988 to 1992, according to Ministry figures, dairy farmers' incomes fell by 45 per cent.; cereal farmers' incomes by 75 per cent.; and livestock farmers' incomes by as much as 90 per cent. According to the Country Landowners' Association, farm incomes could continue to fall even further under the new regime.

Some environmental benefits are supposed to be associated with the set-aside scheme. In particular, we were told when it was introduced that we would have wild flower meadows and birds and that it would encourage wild life and so forth. The reality on the ground does not bear that out. I have a farm of some 900 acres, of which 700 acres are arable. We have 100-odd acres of set-aside. I am sorry to say that this year we have already sprayed the set-aside off in April to control noxious weeds so that they do not seed and spoil the following crops. So there is no wildlife, no insect life and certainly no wild flowers. I hope that when my noble friend the Minister replies she will be able to give an indication of whether there is to be some permanent set-aside scheme considered in the future and whether there are any details of that.

I must touch briefly on the subject of fraud in the EC, although I realise that it is considered in some quarters to be in rather dubious taste to do so. However, as the CAP accounts for some 60 per cent. of the total EC budget and some people estimate that 10 per cent. of the EC budget is lost. in fraud, it is worth mentioning. What measures do the Government have to control fraud on this scale? Are they satisfied that these measures will be effective? Are the Government further satisfied that they have a real measure of control over the decisions taken on the CAP? As I have said, those decisions have been taken for political reasons rather than for market reasons. Are the Government satisfied that the interests of the farmer, the taxpayer and the consumer are best served by remaining subject to the CAP? I suggest that they are not. I beg to move.

3.30 p.m.

The Earl of Onslow

I think that the CAP is possibly one of the most dangerous time bombs ticking gently away over the whole future of the European Community. The Committee has probably heard me banging on about Odessa before now. However, 1 cannot underline my next point too often. As the Committee will be aware, Odessa was the greatest grain exporting port in the world in 1914. The ex-Soviet Union now imports 40 million tonnes of grain a year. At the time of Yeltsin's referendum a man was interviewed on television. He was the head of a collective farm and he said that since privatisation the farm had trebled its output.

The effect on subsidised agricultural world trade of those gantries in Odessa swinging outwards as opposed to inwards is a factor that should be carefully borne in mind. I leave aside the disastrous effect on third world agriculture, whereby with an overvalued! local currency and underpriced corn, people flee from the countryside to live in shanty towns where urban unrest prevails. That causes a total distortion of world trade and a destruction of third world agriculture. leave aside the fact that Japan subsidises its agriculture to the same extent as the European Community. I believe that one can buy rice FOB San. Francisco at about 250 dollars a tonne. The Japanese pay their farmers 2,500 dollars a tonne. That is manic idiocy. The Americans are producing some fruit in California and some sugar in Florida which fetches on the market less money than the cost of the subsidised water to irrigate it.

Some people have mocked President Reagan as being a jolly old buffer with dyed ginger hair. However, he made a really bold projection when he said that what Japan, the European Community and the United States ought to do is to attempt to abolish all agricultural subsidies by the year 2010. That suggestion was laughed to scorn by all the people who considered themselves more intelligent than President Reagan. I believe he was much wiser than most other people under the circumstances.

We must get a grip on this ridiculous CAP whereby the European Community subsidises the production of Greek tobacco and at the same time tries to ban cigarette advertising. Olive oil scandals of enormous scale erupt when it is discovered that the olive trees are growing on the Flammian Way as opposed to in fields. The Mafia takes the end product. Unless we get a grip on the CAP the entire European Community will collapse amid financial disaster. I do not say that as a Euro-sceptic. I have tried to persuade the Committee that I am a Euro-fanatic. I want Europe to work. However, if Europe continues to follow such silly practices, it will not work.

In northern France there are vast plains where immensely efficient grain production is carried out. Those farmers are not the peasant farmers for whom the European Community was established. They are grain barons raking it in. One cannot blame those grain barons for doing so. If someone is silly enough to place a trough in front of someone else's nose, the person who fails to place his snout in the trough is even sillier. If we continue along this path, we are asking for trouble. I do not know what the answer to this problem is but I should like Her Majesty's Government to declare that they will aim for a world subsidy-free agriculture. Prices will find their own level and prosperity will return to the countryside.

If we wish, we can subsidise the gardening and game keeping aspect of agriculture whether that is in Tuscany, Burgundy or East Anglia. However, we cannot allow the idiocies of the common agricultural policy to continue—that applies also to the American and the Japanese price subsidies—without incurring a trade disaster, particularly as the Ukraine is coming back on stream as a world grain producer.

Lord Bruce of Donington

Ever since I first became a Member of this Chamber the common agricultural policy has constantly presented itself as a matter over which there has been no profound disagreement. One or two people accept that the common agricultural policy, as originally established, was quite agreeable. However, over the whole party spectrum—this certainly applies right across this Chamber—ever since the beginning there has been agreement on the fact that the common agricultural policy had to be changed. The feeling that there is something fundamentally wrong with it prevails in the Conservative Party and I believe even in the Liberal Party. It certainly prevails in my own party.

It is not difficult to find out why. The policy of the European Economic Community as it then was—and still is so far—was essentially to provide conditions under which, by open and free trading in the Community. conducted mainly by the operation of market forces, trade could prosper. There were, however, differences in emphasis as to how the effect of market forces might be mitigated to some extent. There was general agreement that the dominant theme in the Community was in favour of the operation of market forces. Against this the common agricultural policy stood out like a sore thumb. Everyone knew that it was the complete antithesis of the whole basis of the Community. The CAP was fundamentally wrong because it rigged prices; it erected barriers; it imposed levies of various kinds and it placed all kinds of impediments in the way of free trade in agricultural products.

For a long time, certainly within my memory and even while I was in another place—which is now in the dim and distant past—it has been accepted that the agricultural industry in the United Kingdom, for various vital and strategic reasons (which, incidentally, also apply to coal, but that is another subject) had to be protected. I believe that there was general agreement, which was not always openly expressed in the heat of party battle, that the way to ensure the future of our agricultural industry was through the establishment of some form of price support, by whatever name it might be known. Indeed, Mr. Williams, who was the agriculture Minister in the administration which I had the honour to support and was widely acclaimed across party barriers as being a very sensible Minister, introduced a policy which was best for the farmers and also best for the consumers.

Although there was a cost to the taxpayer in the subsidies made to farmers—and I hasten to reaffirm that such subsidies are taxpayers' money and therefore one has to pay careful regard to the mattc—the effect was not to increase the price to the consumer. The scheme worked quite satisfactorily. There were marginal differences from time to time in the level of support, but that is only to be expected. Then we became members of the European Economic Community and were subject to a totally different regime.

The broad essence of the agriculture regime under which we are now living is that the security of small farmers, in France in particular, was achieved by adopting an interventionist regime. Retail prices were fixed at a high price in order that the appropriate price could be obtained direct by the farmer. That price had to be sustained by taxation.

Our own contribution to the agriculture budget of the Community, which, as the noble Lord said, runs at two-thirds of total EC expenditure, is some £2.5 billion per annum. Therefore, there is a cost to the taxpayer under the existing regime, but there is also an additional cost to the consumer through the price mechanism. The noble Baroness knows as well as I do that according to the Treasury's own figures that means an extra £17 or £18 a week per family of four over and above what they would pay at world prices. In turn that has an impact on wage levels and wage demands, and therefore also has an impact on the inflationary position of the country from time to time.

It is not as though the system provides much advantage to the small farmers of the United Kingdom, as any noble Lord who is acquainted with the whole spectrum of small and medium-sized farms in this country knows perfectly well. In the main it has benefited the large farmers.

As a by-product, the common agricultural policy has had a profound effect on the environment. I was brought up in my youth in the Fen country of Lincolnshire, and to some extent also on the Isle of Ely. In those days when one drove through or travelled through by train, because it was easy to take trains in those days, one could appreciate the countryside. There were even hedges round fields. There were even trees upon which the eye could rest. However, the Fens became great rolling prairies. They have now had to be, or are in the process of being, replanted in their original form. Those have all been the effects of the CAP.

Lord Mackie of Benshie

Can the noble Lord tell us where the hedges were in the Fens of Lincolnshire?

3.45 p.m.

Lord Bruce of Donington

Yes, I can. I can tell the noble Lord where there were a number of hedges. Of course, there are those who hedge politically, and they are another set of characters who may not find the CAP altogether agreeable.

We all know that the common agricultural policy should be changed. When I went to the European Parliament on behalf of your Lordships' House there appeared to be universal agreement about that. Yet, in this Bill and under Article 3(e) of the treaty it is reaffirmed that the policy remains exactly as it was before. Why is that?

In the period since 1975, under governments of both parties, we have not exactly been on the periphery of Europe; we have been at the heart of it. We have been at the heart of Europe for a long time. Our Minister of Agriculture has been to all the agri-council meetings. Our Chancellor of the Exchequer and Financial Secretary have been to all the ECOFIN meetings. We have participated fully in the activities of the Community. Nobody could say that we have been idle. In fact our Ministers, not to mention their civil servants, have been extremely active at the heart of Europe all that time. Therefore, why has the policy not been changed?

There have recently been negotiations in Europe. They took place before the Single European Act and again before Maastricht. I always understood that if one had a strong hand and occupied a very strong position one did not give it away. The strong position of the United Kingdom, particularly over the past 10 years. has been that we have constituted ourselves as a large part of Europe's export market and they cannot do without us. They have to export to the United Kingdom. At present we have a deficit of about £8 billion per annum with the other member states. We are in a strong position. They need us.

Throughout that period the Government have been in a strong position. Why, therefore, did they not exact a price for their continued co-operation at the heart of Europe? Why did they not complain when outrageous demands were made from time to time, for example, for tobacco subsidies which everyone knows are fraudulent in their essence? Why did somebody not dig their heels in, and say, "No. We won't continue with this unless we have some radical reform of the CAP"?

We have a government who are composed largely, and properly, of people with commercial and business experience. They are people who are capable of negotiation. In the light of the fact that we are a net contributor of £2.5 billion per annum, without which the Community could not balance its books, we have been in a strong position. We have been in a such a strong position that from time to time the noble Baroness, Lady Thatcher, found herself in a position to say: "No, no, no".

In connection with the common agricultural policy, it is high time that some Ministers, bearing in mind the strong position of the United Kingdom and the net contribution which it makes to the European budget, should stand up and say: "No further, unless you reform this policy". Believe me, as soon as that threat is made a more reasonable attitude may be taken towards reform. All that is needed is the will to have it changed, bearing in mind that we have the power to have it changed. We are, have been and will be for some time, by reason of our financial contribution alone, at the heart of Europe. Why can we not do something in regard to reform?

That is why I have raised the subject under Amendment No. 26. Under Title II, Article 3(e) blandly confirms the continued importance of the common agricultural policy. What a whimper with which to go into a conference—merely to do nothing about it. The matter is completely non-party. Any government who reformed the common agricultural policy would have a united nation behind them. They would have the support of the agricultural community, the commercial community and the vast majority of the people of this country. All that is required is the resolve. It is my great regret that that resolve was not shown in the negotiations for the conclusion of the Maastricht Treaty when we had such a good opportunity for doing so.

Lord Hamilton of Dalzell

I wish to take up the point made by my noble friend Lord Willoughby de Broke that in the long run the European Community will find the common agricultural policy too expensive. There is also the argument that that policy will fail for practical reasons. As a landowner and farmer, I believe that we are in a cobweb of Common Market regulations, many of which fail to fit into the unique landholding arrangements that we have in this country. The arrangements for farming and landowning are unique to every country.

Many of the regulations involve prevention of fraud in the Community. When I read the report that the United Kingdom was responsible for 33 per cent. of the fraud in Community's common agricultural policy, I was rather surprised. I had thought that by and large we were an honest lot. However, I then saw that Northern Ireland was responsible for most of that figure. I understand that if one has a frontier which is 300 miles long it is extremely easy to ship material backwards and forward from one side to the other, taking advantage of the different prices.

Since the collapse of the Soviet Union, we now have a frontier which stretches from the Baltic to the Black Sea. That must be some 3,000 miles long. The prices are higher on one side than on the other. How on earth shall we control that frontier? I suppose the Minister will say that the arrangements to prevent fraud in this country will be spread throughout the Community. However, the prevention of fraud not only depends on the honesty of farmers and their inability to commit fraud but also on the honesty and efficiency of the officials who administer the system. I believe that in the end that factor will make the common agricultural policy impossible.

The inclusion of the policy in the treaty seems to indicate that we are now stuck in our current mode until at least 1996. That indicates a paralysis of thought. My firm belief is that farming and all the issues attached to it are of national interest. Such matters should be taken out of international negotiation and handed back to the countries to which they belong. I shall be most interested to hear the Minister's thoughts on the progress of the common agricultural policy.

Lord Eatwell

I wish to reiterate some of the points made by my noble friend Lord Bruce of Donington, and to confirm the Labour Party's opposition to the continuation of the common agricultural policy, which we believe is highly damaging both to agriculture in this country and indeed to the development of British industry.

The connection with industry follows directly from the impact on industrial wages of the higher agricultural prices for foodstuffs within the Community which then feed through into industrial costs. As the Committee will know, the same effect was encountered under the corn laws which made British industry less efficient at the beginning of the 19th century. The abolition of the corn laws was followed by one of the most successful periods of industrial expansion and agricultural prosperity in British history. I am sure that the noble Earl, Lord Onslow, will correct me if my historical facts are wrong.

The abolition of the common agricultural policy system, which has been maintaining high agricultural and food prices within Europe, would similarly benefit British industry. Indeed, the effect on industrial competitiveness would massively outweigh any costs associated with the social chapter which the Prime Minister has said is so damaging to British industry.

I wish to remind the Committee that the common agricultural policy results in bizarre income transfers throughout the Community with some of the richest countries receiving transfers from some of the poorer countries because some of the poorer countries are forced to pay much higher agricultural prices than they otherwise would in order to support agriculture in the richer countries. That notion of transfer from poor to rich is dramatically emphasised in Eastern Europe, an area to which the noble Earl, Lord Onslow, referred. One of the most extraordinary characteristics of the Community's policy towards Eastern Europe is the various restrictions which have been imposed on the ability of the Eastern European countries to sell to the West the only goods they have to sell. That is a recipe for continuing depression in Eastern Europe, and for linking democracy with depression. It would be a disaster if that link were made in the minds of the people of Eastern Europe.

The noble Earl also referred to the link with development policy. That is another aspect of the distribution from poor to rich. I remember that when Mr. Chris Patten held the post now held by the noble Baroness, Lady Chalker, he spoke actively against the common agricultural policy even though it was the policy of the government of which he was a member.

If we remove the common agricultural policy, what system do we put in its place? What agricultural policy would be appropriate for the European Community, and for Britain? There is no doubt whatever that the old deficiency payment system was extremely efficient in its time. That system was not abolished because of entry into the European Community. Its abolition was contained in the Conservative Party manifesto of 1970 which specifically argued that the cost of the agricultural policy should be shifted from the taxpayer to the consumer. One gathers therefore that the Conservative Party was rather pleased with the introduction of the common agricultural policy since tariffs on food were exactly what it proposed in the 1970 manifesto.

Interesting and entertaining as those facts may be, they have absolutely nothing to do with the amendment proposed to the Committee. The amendment simply removes Article 3(e) which states that there should be, a common policy in the sphere of agriculture and fisheries". It does not state that there should be the common agricultural policy which is currently in place. Do the proposers of the amendment seriously suggest that we would not be interested in having a common policy in Europe? For example, would they like high subsidies to agriculture to be allowed in other European countries against which our own farmers could not compete? Surely, if we are to have free trade in food throughout the Community, and indeed wider free trade, it is desirable to have a common policy for agriculture in Europe even though the common agricultural policy as currently formulated is so foolish and damaging.

I also suggest to the proposers of the amendment and those who oppose the Bill as a whole that this is a fine example —indeed perhaps the finest example —of why we need to be in the European Community from the beginning. If Britain had been in it from 1956, we should not have had this nonsense of the common agricultural policy. That is why it is so important for Britain to be involved in the evolution of the European Community institutions right at the heart of Europe, as defined by the Bill, leaving aside the silly protocols which the Government seem to have agreed for party political purposes.

Returning to the amendment, it has nothing to do with the common agricultural policy and, therefore, I suggest that it be rejected.

4 p.m.

The Earl of Onslow

The reason the amendment was put down is that it is a perfectly legitimate hook on which to hang a discussion of the idiocies of the common agricultural policy. That is why one is talking about it. Of course, we will not divide on something like that, but it is a fundamentally important subject which we should talk about and on occasions we have to use procedural devices to get one's oar in, to use a slang expression.

Lord Mackie of Benshie

I had not intended to say anything on this amendment, but I wish to point out to a number of speakers that the common agricultural policy is now in the process of reform. I agree that it has had appalling results all over the world because of the dumping of food, spoiling the prospects of farmers from New Zealand exporting to eastern countries. I can tell the noble Lord, Lord Eatwell, that the process, according to the M acSharry Plan, will be a transfer of tax payment from the consumer to the taxpayer. That is going ahead at the moment all over Europe and it might have been mentioned by previous speakers.

Lord Belhaven and Stenton

As a former farmer who is glad that he is not in farming today, I wish to add a few words to the discussion. It seems to me, from my memory of farming, that set-aside is about the crudest policy that anyone could contrive. Surely it must be immoral, not to say wicked, deliberately to prevent a farmer from using his land for food production. A policy which results in that must be wrongly conceived and I agree with all previous speakers about that. Surely, it should be possible for something to be thought up other than that one-third, or whatever proportion it is, of people's land should be put down to growing thistles and weeds. That is incredible.

Last November I was in Poland on an IPU visit. The one message that came over loud and clear from all the people in the Polish Government, civil servants and so on to whom we talked was that they wanted to be in the European Community by the year 2000. However, when I see the Bill before us I ask myself why. I have asked them why too, because when I travel through the beautiful Polish countryside I wonder whether the peasants want to see 20 per cent., or whatever it is, of their land down to thistles. I think that there would be a revolution over there if they tried to do that.

I have heard rumours, on which perhaps my noble friend will comment, that helicopters are covering every square inch of Britain to make sure that farmers comply with the set-aside regulations—that is using spy planes; Big Brother is watching our farmers. I should be glad to hear that that is not true, and perhaps my noble friend could comment.

Lord John-Mackie

As a farmer who is just looking forward to his 66th harvest, I have considerable experience of what happens when farming is not helped in one way or another. I started farming in 1927 and I moved from Aberdeenshire to Kincardineshire in 1930. I drove 20 acres of my predecessor's potatoes into a quarry hole because there was no demand for them. That same year, my middle brother—not junior over there on the Liberal Democrat Benches—started farming on a dairy farm. He was pouring gallons of milk down the drain because there was no demand for it.

Anyone who farmed from 1927 until the early 1930s would realise what assistance should be given if people want food produced. I agree strongly with the previous speaker about set-aside in a world where 1,500 million people are starving. Many of the speakers, except the last one on this side of the Committee, did not say what they would do. All they want is to get rid of something, but they do not suggest what they would replace it with. I am certain that the best system—and this could be arranged in each country—is deficiency payments. It would solve many problems and it is easy to administer.

Lord Plumb

I rise to oppose Amendment No. 26. From some of the comments I have heard so far, I find it difficult to understand what it has to do with the Maastricht Treaty. Of course, aspects in the treaty are important for agriculture and agriculture is very much part of the overall economy. Under the objectives laid down in Article 39 of the treaty, as concerns the CAP there will be further regulation on prices. That has already been clearly declared in the reform of the common agricultural policy set out over the next five or six-year period. Common rules will be laid down quite clearly on competition, and that is difficult as regards the whole community. There will be co-ordination of national market organisation, and, if we are to achieve stability, it will be extremely important. Machinery will be put in place for stabilising imports and dealing with exports, as well as dealing with discrimination between producers and consumers and producers or consumers.

One of the main objectives of the present common agricultural policy—not the past policy, about which we have heard so much in the past half hour—is to try to combat fraud.

Lord Pearson of Rannoch

Will my noble friend give way? He referred to Article 39 of the treaty and all the wonderful things that the common agricultural policy will do. Is he aware that Article 39 remains unchanged from the Single European Act and, indeed, I fancy, the Treaty of Rome? Would he care to explain to the Committee why nothing has been done about it so far if it will be done in the future?

Lord Plumb

I am aware that the objectives as set out are unchanged and I am aware of the problems of the past. I think that no one has been more involved than I have in trying to bring about the necessary reforms to meet the efficiency which we see in agriculture, particularly British agriculture, compared with the rest of the Community. But, ultimately, the present reform of the common agricultural policy sets out to reduce expenditure. Again, no one has been more critical than I in recent times of the cost of the common agricultural policy as to the part of the expenditure which goes to farmers. Much of it has gone out in export restitution and has merely benefited the few individuals who have been involved in the export of the surplus products. Dealing with those surpluses over the years has been irresponsible in many senses and we are now trying to bring them under control. I certainly do not defend the indefensible. That would be a totally wrong approach.

Let us be positive. As the noble Lord, Lord Eatwell, said very clearly, had we been in at the beginning, we might have been shaping events rather than just reacting to them, which has been the case in recent times. In the context of this debate, we are dealing with a Bill and not dealing with the reform of the common agricultural policy, which, I submit, is a major subject for further debate in the future.

I was very surprised at the wise words of the noble Lord, Lord Bruce of Donington, over the past three days. I listened to him with great interest and learned quite a lot. Therefore I also listened to him with great interest today. I was rather surprised and somewhat disappointed that he did not refer again to a point that I have heard him make in the past; namely, that the cost of the common agricultural policy to an average family of four in the United Kingdom is an increase of £16 per week, a figure which I know the noble Lord has used on many occasions. I had intended to compliment the noble Lord the other day, when I abused the courtesy of the House by not obeying the rules—I therefore offer my apologies, particularly to my noble and learned friend Lord Hailsham. As the noble Lord, Lord Bruce, will appreciate, one cannot be precise on the cost of a policy when one is dealing with living and growing things. The noble Lord has said today that agriculture in the United Kingdom has seen changes and expansion over the years. One point which we have perhaps ignored is the development in technology that has taken place over those years, and which has changed the volume of production, the work of the plant breeders, scientists and all who are concerned in that particular business. The vagaries of the weather often have an even worse effect than the vagaries of the politicians.

In the context of Maastricht agriculture is very much part of the economy. Food is very much a part of the household budget. It is also of key importance in the current round of GATT talks as we look at the world scene. That we must do from the Community outwards; and we must look inwards too. The two big players, the United States and ourselves, are now among the 108 countries involved in those talks. It is imperative that we get this matter right and that we try to get it fair.

Regarding the extra cost of the CAP of which we are so critical, I have sympathy with the points made earlier by my noble friend Lord Willoughby de Broke. I am a farmer and I well understand the points that the noble Lord made. Those increased costs include processing and distribution subsidies, which are still there. We still have support for transport, electricity and telephones in rural areas—an addition to the cost of the common agricultural policy—we have encouragement for the cessation of milk production; and we have the unrealistic assumption that world prices would not change if the common agricultural policy were abolished.

There is an exaggeration inherent in the estimate of costs that can be demonstrated quite clearly if we look separately at the United Kingdom. I hope that Members of the Committee will bear with me for a moment if I quote a few figures to explain what I mean. It is difficult to go back to 1991 because there has been considerable change since then, but in 1991 the transfer from the taxpayer directly to the farmer was £1,959 million, or £34 per head. On a weekly basis that is 65p per week, or £2.60 for a family of four. If one divides the 57.6 million population who live in the United Kingdom into families of four, there would be 14.4 million families, which shows an estimate of £16 extra, which amounts to something like £9,900 million.

In 1991 United Kingdom farmers sold output value at just over £12 billion, of which nearly £9 billion was for products which were supported by the common agricultural policy. We imported £3.5 billion which were influenced by the common agricultural policy. That is an overall total of about £12.5 billion—a fall of 80 per cent. On the basis of the rise in world prices which I predict will take place against the reduction of export subsidies, it is estimated that there will be an overall fall of some 10 per cent., which may be more realistic. If that were passed on to the consumer, there would be a once-and-for-all reduction in the price of food of 2.5 per cent. The average household spends £43 per week on food. That would therefore be a reduction of £1.05p. Forgive me for using those figures in these few words, but I thought they might appeal to the eminent accountants among us.

I believe, therefore, that if we ratify Maastricht—indeed, if we reject Maastricht we have problems—we can get on with the important issues and the job of reform. I merely submit, as the noble Lord, Lord Bruce of Donington, said very clearly yesterday, that while it is the job of the Commission to propose, and for the European Parliament to consider and to recommend disposal, or for the Council of Ministers to dispose at the end of the day, there are those of us who are not without ideas for reform. Now that we have started along that particular route, I hope that we are given the opportunity to continue that reform so that we bring a little bit of common sense to what has not been a common agricultural policy.

4.15 p.m.

Lord Bruce of Donington

Before the noble Lord sits down, since he has been kind enough to involve me in his argument, will he explain—as one who is held in very high regard throughout the entire farming community and who is not without his influence—why, if the fundamentals of the common agricultural policy are wrong (the noble Lord has been a little ambivalent on this matter; at one time I thought that he did not like them, while another time he sought to justify them) he has not used his influence during these past many years to effect some changes in Articles 38 to 47 of the Treaty of Rome, which remains amazingly unamended by the treaty that was negotiated at Maastricht?

Lord Plumb

Thinking back over the past three days, the noble Lord will remember the comments, many of which he himself made, about the sham parliament which is in Strasbourg. Perhaps it is because that parliament does not have the responsibility that it might have had in the past that we find ourselves in this situation. Therefore I submit that if we ratify the Maastricht Treaty it gives us a little more responsibility, so that those of us who are directly elected to that House can work together more closely with parliamentarians at national level to bring about those changes that I have believed in for so long. Therefore the pressure that I have used over that period of time has perhaps not been as effective as it might have been. But I submit that if we ratify Maastricht that will give us an opportunity.

Lord Vinson

I hesitate to come into this battle of giants, but this clause is important. It gives us a chance to examine what some believe is a triumph of idealism over reality when it comes to the trading advantages that come from being a member of the EC. As we are singularly focusing on agriculture, perhaps I may also bring into the discussion the subject of fish, which is normally allied with it.

Let us stand back and see what has happened. We have given away most of our fishing grounds and impoverished our fishing industry in order to show that we are good Community-spirited people, even though we are not yet at the heart of Europe, which is what Maastricht is intended to accomplish. We have reduced substantially our output of milk, when we are one of the world's most efficient and finest milk producers; so this country is in milk deficit. Moreover, because of the nature, size and scale of our farms, we, of all nations, are taking out more good agricultural land from wheat production pro rata than any other country in Europe. While we are on the outside and have not yet signed up to Maastricht, we bend over backwards to show that we are good Europeans.

I ask my noble friend the Minister, if we finally get into Maastricht, whether we shall continue to wish to prove that we are even better Europeans. I can envisage that British natural self-interest—the EC's foundations are based on competitive trade founded on natural advantage—will continue to be eroded by gestures made to the others to show how good we are and now that we are at the heart of things we are even better than before. Can my noble friend reassure us that once we are there, perhaps our attitude will change and we shall begin to put Britain first?

Lord Swinfen

Coupled with the amendments that we are discussing with regard to agriculture, I propose to deal in this group with industrial, consumer and commercial issues. I should like to take the Committee to that area for a Few moments and in particular to Amendment No. 419 which stands in the names of my noble friend Lord Beloff and myself.

Lord Peston

Perhaps I may interrupt the noble Lord. He has raised an important point on which I should like guidance from the Government Front Bench. So far we have been debating agriculture. It had been my hope that we would debate exactly the topics on which the noble Lord now wishes to speak. Certainly I wish to do so. I wonder whether the Government Front Bench would say whether they find it more convenient first to reply on the subject of agriculture and we could then deal with what I and perhaps other noble Lords consider more important; or whether we are to go drifting into other subjects and so on. I am not sure what the noble Viscount proposes to do but it might be helpful, for the sake of the Committee, if we knew what was happening at this time.

Baroness Trumpington

I should like to take up the suggestion made by the noble Lord opposite. It might be a good idea to have a reply on agricultural subjects before we conclude this group of amendments. Then perhaps we could have a further debate and further speeches. I hope it will be to the convenience of the Committee if I resume the House at the end of this group, so that the Statement can be taken.

Lord Cockfield

Perhaps I may make a brief comment on the agricultural matter in order to meet the wishes of my noble friend on the Front Bench. I had given way to my noble friend because I thought that he was going to say something about agriculture as well. There is a very serious problem with the common agricultural policy. I am sure we all believe that serious reform is needed. The problem is how to deal with it in the circumstances that we face.

I want to say a few words about the origin of the common agricultural policy because my recollection of the matter is somewhat different from that of the noble Lord, Lord Eatwell. The common agricultural policy was always regarded as the marriage contract of the Community. That is to say, it was the agreement between France and Germany under which France opened up her markets to German industry and in return Germany paid to support French agriculture. That is the basic situation which remains today, apart from the fact that we have now picked up a large part of the bill. Unless it is realised that there is that nexus, one will never understand what goes on in the common agricultural policy.

I should like to make one point to the noble Lord, Lord Bruce of Donington, whose views on this matter are always most vigorous. When my noble friend Lady Thatcher was Prime Minister (Mr. Peter Walker was the Minister Of Agriculture and I also was a member of the Cabinet), she tried to veto a grossly excessive price increase. I hate to use the modern popular phrase, but she was told to get lost; and that is exactly what happened.

On the next occasion it was Chancellor Kohl of Germany who decided to veto a cut in the subsidy for cereals. My noble friend Lady Thatcher decided that she would not try to exercise a veto to prevent Chancellor Kohl stopping a reduction in the cost of the CAP. So what happened on two occasions, admittedly separated by two or three years, was that my noble friend Lady Thatcher, who after all is just as formidable a character as the noble Lord, Lord Bruce of Donington, on the first occasion was forced to quit the field and on the second occasion decided not to stand and fight.

I wonder whether in those circumstances the very vigorous proposal of the noble Lord, Lord Bruce of Donington, that we should place our fist underneath the noses of the other 11 member states is likely to be successful. There is no difference between the noble Lord and myself in wanting to reform the CAP, reduce the cost of the CAP and to reduce or even stop fraud. But I believe that it has to be approached in a slightly more subtle way than the noble. Lord proposes.

Lord Bruce of Donington

Before the noble Lord sits down, perhaps I may intervene since once again he has raised my name in connection with this matter. Will he exert his prodigious memory, which is one of the most extraordinary memories that I have ever encountered in my life, to tell the Committee his recollection of the events of May 1982 when an attempt was made to exercise the veto on the whole question of agricultural prices?

Lord Cockfield

I believe that is precisely the occasion to which I was referring when we tried to use the veto. I deliberately did not mention a date. I hoped that the noble Lord would fill in the date. I hope that he has got it right. We are certainly talking about the same incident. It was the occasion on which we tried to exercise the so-called Luxembourg veto and we were overridden by the other member states.

Lord Bruce of Donington

I am very glad to have the noble Lord's confirmation, which I was fishing for, in his reply that we tried to exercise a veto and the veto was of no use.

Lord Morris

If my noble friend Lord Cockfield, as he has just suggested, believes that my noble friend Lady Thatcher was so monumentally unsuccessful in influencing the form of the common agricultural policy, how can he believe in the insistence that it is essential that the Maastricht Treaty be ratified in order for us to be in the heart of Europe and to influence it? In particular, he said that holding one's fist up against the reform of the agricultural policy just will not work. I cannot see how he can reconcile those positions.

4.30 p.m.

Lord Cockfield

I do not know whether it is in order for me to respond to that comment. I have not said that reform of the common agricultural policy will not work. There has recently been a substantial measure of reform. My point is a simple one. We have to be at the heart of Europe if we are to exercise any influence. It is only by taking an active—and we hope a positive—part in Europe that we shall ever succeed in obtaining any reform in the common agricultural policy. But it must be done by diplomacy and persuasion. It cannot be done by the exercise of strong arm tactics.

Lord Swinfen

Perhaps I may interrupt and ask for guidance for myself, if not for others. It was suggested that my noble friend on the Front Bench would reply on the questions of agriculture before we went on to the other subjects that are grouped with it. Am I right in thinking that there will be a reply on agriculture and, before my noble friend Lord Willoughby de Broke makes up his mind what to do, we will go on to the other, totally unrelated, subjects? Will my noble friend then make up his mind on agriculture and not on any of the other subjects, or will we come back to the other subjects when speaking on another amendment rather than Amendment No. 22? If so, what amendment will we come back on?

Baroness Trumpington

It is my understanding that my noble friend Lord Ullswater will speak initially on the agriculture question. That will not prohibit any debate on other matters in the grouped amendments. There will then be a final decision taken as to what the mover of the group of amendments wants to do with Amendment No. 22. We can then go on with the Statement.

Lord Peston

I am sorry to confuse the matter. However, the noble Lord, Lord Willoughby de Broke, was supposed to be speaking to Amendment No. 22, which has nothing whatever to do with agriculture. It concerns trade policy. I hope therefore—I say this indirectly to the noble Lord, Lord Willoughby—that he does not reflect on what he wants to do with Amendment No. 22. He has not yet spoken to that amendment, which has nothing to do with the subject about which he spoke. In other words, I take it that we will have an opportunity to consider trade policy, which is what I want to discuss.

Lord Jay

Will the noble Baroness also take into account that when we have heard the answer on agriculture from the noble Baroness, Lady Chalker, there may be others who will wish to speak further on it?

Baroness Trumpington

It is my noble friend Lord Ullswater who will be speaking on agriculture. There is nothing to stop any Member speaking over and over again if they so wish.

Lord Tebbit

Before we leave the subject of the common agricultural policy I should like to pick up the extraordinarily wise words of my noble friend Lord Cockfield. He described—I use my own words—a Franco-German conspiracy against the public interest of the citizens of the Community, particularly against those of the United Kingdom and, as my noble friend Lord Beloff said, the citizens of the world.

We are told that these matters can only be resolved by our being at the heart of Europe. We have been at the heart of Europe, in so far as Brussels is at the heart—my geography teacher would have said it was somewhat nearer to Prague, but leave that aside—for some 23 years. All that we have discovered in that time is that there is a Franco-German conspiracy which could not be broken by the determination of the "iron lady"; it has not been broken by the determination of my noble friend Lord Cockfield as a commissioner, and is not likely to be broken by anyone else.

It is a conspiracy on a grand scale and one which is not only appallingly damaging to the people of Europe who are paying higher prices for their food than is necessary, but also appallingly damaging to the economies of many third world countries with whom we should be trading and from whom we should be buying such products as sugar; instead, we grow our own excessively expensive sugar. Those are countries with whom we should be constructively trading and not on whom we should be dumping agricultural products which destroy their agriculture.

Is it any wonder that such countries turn to us looking for aid? Why do we not give them trade? Why do we not allow them the dignity of producing commodities which we need and which they can produce more effectively, more efficiently and at a lower cost than we can, to our mutual benefit. It is a conspiracy against the interests of the peoples of the world.

I know that my noble friend Lord Beloff will wish to speak later about the effect on GATT. But we all know why the Uruguay Round is in disarray. I will say no more than that it is primarily because of agricultural subsidies. As in Yugoslavia, no one in this conflict is all good. But we can see in the activities of France, in the way that she has influenced the European attitude towards GATT, who is the principal miscreant in this further conspiracy against the world.

I will not go further into that matter because my noble friend Lord Beloff will wish to do so and we should not make these debates unduly repetitive. However, a week or two ago we had a debate on the tobacco subsidy. One of the reasons given for the subsidy of that noxious weed is that there are communities within the European Community which grow it and whose particular circumstances would make it difficult for them to find another crop to grow. If they were denied the subsidy to grow the stuff, which is too noxious even to burn in an Irish peat burning power station, they would be distressed communities.

If we applied that argument to the coalmining communities of the North-East of England, Wales or Scotland, this country would look very different. After all, they are communities which are finding it extremely difficult to find alternative work. I might add that the product of their labours is essentially useful and not essentially dangerous. But they are mere English, Scots and Welsh coalminers; they are not to be treated with the same kid glove approach as Greek tobacco farmers.

Where is the equity? Where is the sense of being cornmunautaire? Where is the social cohesion in those matters? We come to a matter of altogether different scale, one that could be resolved with 10 minutes of the time of a few commissioners and perhaps a Minister or two—set-aside. Let me say in passing that I find the whole concept of set-aside extraordinary and offensive.

I put it in a different context. In this kingdom we have a distressed building and construction industry and a surplus of office space. I await a proposal for set-aside for office buildings. If we were willing to pay £15 per square foot to the developers of Canary Wharf provided that they locked the doors and admitted no one the proposal would be quite absurd. Your Lordships may laugh. It is only absurd because we are talking about office space as opposed to tobacco, agriculture and fields. We acknowledge the absurdity and wrongness of the set-aside policy into which we have been forced by virtue of the CAP.

Let us consider the minor absurdity. Why must all fields that have been put to set-aside be mown by the same (late, whether they are in the far Scottish islands or on the Mediterranean coast? That is a form of cohesion which I do not go along with. As a result, we have a Community that has environmental policies for the protection of wildlife. We know how enthusiastic it is. It will try to prevent us from shooting crows and magpies while leaving the Italians free to shoot anything with feathers that flies—and now and again each other—during the shooting season.

Lord Pearson of Rannoch

Not enough!

Lord Tebbit

My noble friend says "Not enough". Some noble Lords know that even here there are little accidents on shooting occasions. Why within a matter of days can we not have agreement—or even a unilateral statement—by the Government that they will not take notice of the day on which fields that are set aside are to be mown? Why should we not leave it until the end of August, if that is the appropriate date here? After all, our German friends have just made an illegal trade deal with the United States. We all turn our eyes away from it and pretend that it has not happened. Can we not expect our partners in the Community to turn their eyes away frorn the British Government doing something in the interests of the environment and wildlife?

I understand that more than one Member of the Cabinet is passionately devoted to the sport of birdwatching. Can they not somehow use their influence to prevent this needless destruction of wildlife? Is it something too trivial to bother about or a problem that is too great to be solved? Instead, we are intent on inventing such things as milk quotas. Who would have thought that one of the most profitable activities in agriculture would entail leavine one's fields untilled and selling each other milk quotas, not milk? These are the politics of a madhouse—a madhouse that the noble Lord, Lord Cockfield, has said is there solely for the benefit of two nations in the Community.

Is it not time that someone somewhere said no—even if it is entirely symbolic, such as a vote today for Amendment No. 26? Even if your Lordships were to say that such was the lunacy of these matters that Amendment No. 26 should be voted for, not for what it stood for but to show your Lordships' horror, displeasure, disgust and alarm at these matters, it would be only matter of an afternoon in the other place before the damn thing was put back in again in order that the treaty could be ratified. The treaty would still be ratified well before the German constitutional court had reached a conclusion as to whether it violated the constitution. Some noble Lords may be tempted down that path.

4.45 p.m.

Lord Bonham-Carter

I am grateful to the noble Lord for giving way. I have listened with great interest to his speech. I recollect that he voted for the Treaty of Rome, campaigned in the referendum for ratification and was a Minister when the Single European Act was passed. Did he never say no?

Lord Tebbit

Of course I did those things. However, the noble Lord must not assume that we all go through life resolutely resolved to refuse to learn from our experiences. I voted for those measures, not least the European Communities Act, on the basis that if we were at the heart of Europe we would be able to resolve these matters. I voted for the Single European Act, not least on the assurances of my noble friend Lady Chalker that the Luxembourg compromise was intact and the veto remained in place. She gave the same assurance the other day on Second Reading. My noble friend Lord Cockfield had just reminded us that it is intact as long as one is French or German. That is a compromise which does not seem to extend across the Channel. I do not know whether the noble Lord has learnt anything in the past 20-odd years.

Lord Bonham-Carter

No.

Lord Tebbit

I have learnt that possibly being at the heart of Europe is not sufficient to resolve these problems.

Before I sit down I should like to ask my noble friend who is to reply to the debate what the objective is of Her Majesty's Government in respect of agricultural policy. Is it to eliminate subsidy? Is it to return to the concept of subsidising the consumer as opposed to the producer? Is it to ensure that there is some kind of level playing field? Is it even that one day they will veto something and see the veto work? Does the Minister share my view that above all we should remember that subsidies almost inevitably will raise the cost of production and eventually the price of the commodity that is subsidised?

Noble Lords

Hear, hear!

Lord Beloff

While the Minister ponders on his reply to those penetrating questions, I should like to take up one point made earlier in the debate relating to agriculture. (I shall deal later with the question of GATT.) The noble Lord, Lord Eatwell, gave us a talk about the policy of Her Majesty's Opposition on this matter, betraying their total contradictions. Mistaking your Lordships' Chamber for a Cambridge lecture hall, he then left the Chamber. Therefore, in his absence I have to answer a point that he made. I can do so because it has been repeated by my noble friend Lord Plumb. I refer to the repeated claim by the Europhiles that, if we had gone into the European Community at the time of its creation in the 1950s, all would have been different and we would have managed to steer its fortunes in a direction suited to our policies.

I do not argue economics with the noble Lord, Lord Eatwell, or even with the noble Lord, Lord Peston, but as a professional historian I point out that it is always possible to say how things would have been if they had been different. For instance, let us suppose that Nelson had failed to win the Battle of Trafalgar.

Lord Tebbit

The French say that he did.

Lord Beloff

The French cannot be right, because if the French were right we would not need the Maastricht Treaty. If Napoleon had won that battle we would have been part of a Continental protectionist commercial bloc and it would not have been necessary for M. Delors and his friends, nearly 200 years later, to make up for what Napoleon or his admirals failed to do. That is just as relevant an historical argument as to say that if we had done something different the result would have been the other way.

What many people have been waiting for—indeed the noble Lord, Lord Cockfield, has rather discouraged them from continuing to wait—is an explanation of why, in the light of the fact that since our membership became actual we have failed to move the Community, or failed to move it in more than a fairly limited direction, towards a saner policy on agriculture, we think that we could have done it before. Indeed, as I understand the noble Lord, Lord Cockfield, there never was a hope of it, even if we had been among the original participants. Therefore, I wish people would stop that particular argument which I find distressing and irrelevant. What we need to know—and now there is a chance for my noble friend the Minister to tell us—is how the Government intend to proceed to bring the rest of the Community round to our view on agricultural policy.

Lord Stoddart of Swindon

I should like the Minister to respond to one or two small points on fisheries when he comes to reply. The noble Viscount will know that Scottish fishermen have been blockading ports and that south-west fishermen have been occupying MAFF offices because they are not satisfied with what has been happening in the fishing industry. They believe that they have had a raw deal. They believe that foreign fishing fleets have been given opportunities to fish in our waters which they do not have themselves. Our shipbuilding industry, in respect of fishing vessels, is virtually defunct whereas those of other members of the EEC are in fact thriving. It behoves the noble Viscount when he comes to reply to give attention not only to agricultural matters, which have been very well and thoroughly discussed by many Members of the Committee, but also to the fishing industry, which has been brought so low as to be almost non-existent and where the Government are telling fishermen for the first time in history when they may fish and what they may fish for. I hope that the noble Viscount will be able to give some of the replies which were asked for by the noble Lord, Lord Vinson.

The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)

We have spent a considerable time discussing but one amendment out of a group which includes a lot of areas which I know Members of the Committee would like to discuss. So I hope that the Committee will bear with me if I am moderately brief in my comments.

I say to my noble friend that I shall have to resist Amendment No. 26. I believe that Community activity in the sphere of agriculture and fisheries is unchanged by the Maastricht Treaty. It is legitimate and important for the Community to have common policies in agriculture and fisheries, given the fact that member states had their own support systems for agriculture before the European Community was formed. Therefore, a common policy, rather than a common agricultural policy, for free trade in agricultural products between member states is a very important one.

I understand why my noble friend Lord Willoughby de Broke and many others exercise their frustrations about the workings of the CAP. I believe that to be quite natural. My noble friend itemised the fact that there is a subsidy for growing wheat, another subsidy for storing it and another subsidy for selling it. It may he that all these extra costs could benefit the farmer rather than other people.

My noble friend Lord Onslow called the CAP ridiculous and drew our attention to the support for the Greek tobacco industry, the olive oil lakes and set-aside. My noble friend Lord Tebbit wanted to extend set-aside to office buildings in the City. Perhaps he is right, but I would not agree with him.

The noble Lord, Lord Bruce of Donington, said, quite rightly, that there is general agreement that the CAP should be reformed. He said that it rigged prices, erected barriers and was generally of a protective nature. He indicated that it was a high cost to the taxpayer to support agriculture and that it was a high cost to the consumer for the price of the goods that it produces. But I believe that it is important that Maastricht should reaffirm the principle—the amendment concerns the principle—that agriculture and fisheries should be a Community activity because it is within the Community activities that we have a chance of reforming the CAP.

My noble friend asked why we did not take the opportunity to reform the CAP in the negotiations for the Maastricht Treaty. I believe that the reform of the CAP which was undertaken in 1992 is the right way of proceeding. It does not need the Maastricht Treaty to reform the CAP. The CAP is being reformed under the old Treaty of Rome and the Single European Act. There is nothing now in the Maastricht Treaty which will assist with the reform of the CAP.

It is important to reflect on some of the comments that were made during the course of the debate and especially on those made by the noble Lord, Lord Eatwell. My noble friend Lord Cockfield pointed out that the CAP existed when we joined the European Community. At the time that we joined we had to accept the Community as it had developed. My noble friend pointed out the history and origin of the CAP. He pointed to the marriage contract between Germany and France at the time that this was done. He also gave us the indication which I believe we all understand. He indicated that there really are serious problems with the CAP and how we should set out to deal with them. We have managed to get the reform of the CAP on the agenda and have made progress with it. I believe that that shows the advantage of our being in Europe. If we had been in from the start perhaps we would have been in a position to ensure that the CAP did not develop as it is. But my noble friend Lord Beloff would take a different view from that. Anyway, I would again have to say that it has little to do with the Maastricht Treaty as it is.

My noble friend Lord Plumb, with his lifelong experience of farming and farming politics, as the president of the Royal Agricultural Society of England, has worked more than anyone else in your Lordships' House and for many years to improve the working of the CAP, and even when he was president of the European Parliament.

I do not believe that anyone would quibble that United Kingdom agriculture has been most successful since our entry into the Common Market. Structural reforms are required, but United Kingdom agriculture has been very successful during that period. From the Front Bench opposite, the noble Lord, Lord Eatwell, said that he opposed the CAP. He explained that by the income transfers from the poor to the rich countries the CAP policy was doing neither any good. He pointed out that it would be worsened by the introduction into the EC of countries in Central Europe. He asked what should be put in its place. I. believe that he and the noble Lord, Lord John-Mackie, wish to go back to the deficiency payments policy that existed prior to entry into the Common Market.

The noble Lord put the point that the important thing to consider is the alternative. Do we want a free-for-all on agricultural prices in the Common Market? Do we want to allow other countries within Europe to decide their prices when this would greatly affect our own farmers. I agree with the noble Lord, Lord Eatwell, that Amendment No. 26 has nothing to do with Maastricht because it seeks to leave out Article 3(e) which calls for such a common policy. I believe that noble Lords have been aiming at the wrong target.

The reform of the CAP is a very interesting subject. I do not believe that it is a subject that we should be addressing today when we are considering amendments to the Bill. However, Members of the Committee have said that they wish to discuss it because it is reaffirmed as a principal article in the Maastricht Treaty. I am therefore dealing with it on that basis.

5 p.m.

Lord Bruce of Donington

I am grateful to the noble Viscount for giving way. Is he aware that the reason why the amendment was moved for the deletion of Article 3(e) is precisely because the negotiating procedures up to the achievement of the Maastricht agreement did not include any amendment to Articles 38 to 47 of the Treaty of Rome? Had those articles been changed by negotiation by our own Government at the heart of Europe and if agreement reached on other matters concerning Maastricht had been conditional on fundamental changes to Articles 38 to 47 of the treaty, then we should not have moved for the deletion of Article 3(e). There would have been some change. It is precisely because there has been no change that the moving of this particular amendment is designed to draw the attention of the public to the fact that despite being at the heart of Europe for so long, no real effort has been made to secure a negotiated change to Articles 38 to 47 of the Treaty of Rome.

Viscount Ullswater

The noble Lord makes the false point that he made earlier in the debate. The only reason for the inclusion of Article 3(e) in the current treaty is that it mentions fisheries which it did not before. Fisheries were always dealt with under Article 38. But, as the noble Lord rightly pointed out, there has been no amendment to the subsequent articles.

A number of Members of the Committee have called for reform of the CAP. That has been a government objective and they have succeeded in getting it on the European Community agenda. The reform process began in 1992. What it seeks to achieve—I believe that these are the answers to my noble friends Lord Tebbit and Lord Beloff—is significantly to cut prices and to move the CAP closer to world prices, and to reduce the role of intervention, making the CAP more market orientated. It shows the benefit of being in Europe arguing our case, which I believe is a step in the right direction. The ratification of Maastricht—

Lord Tebbit

I am grateful to my noble friend for giving way. I must emphasise the point made by the noble Lord, Lord Bruce of Donington, and also by my noble friend Lord Cockfield. The CAP is a Franco-German conspiracy for their particular benefit. We have now all agreed on that. They wanted a single currency at Maastricht. Was there not then an historic opportunity missed to say, "You cannot continue to play with your special toy, the CAP, for your exclusive benefit in the way you do if you also want us to give you another toy for your benefit". Is not that what negotiation and being at the heart of Europe are about? Having given them a new toy, and one which we did not want, do we not then find that we are still stuck with the CAP?

Viscount Ullswater

That is a peculiar way of arguing a policy which has been in Britain's best interest for a number of years. I agree that the CAP needs reform, but the proposal has been put forward that we should do without a common policy in agriculture. The noble Lord shakes his head, but that is what he is trying to argue; namely, that we should not have a common policy in agriculture and certainly not the CAP. I understand the two to be different, but we need to make certain that the one becomes the other.

Maastricht ratification would allow us to continue to press for those reforms; otherwise I believe that we would be entirely marginalised from the debate. I am conscious that time has elapsed. I believe it is right to wind up this debate. I say to my noble friend Lord Willoughby de Broke that the detailed provisions of the common agricultural policy and not the existence of a common policy itself have created problems for the Community. The details are no part of the EC treaty and can be changed without treaty amendments. I have indicated to noble Lords that reform has started and that the Government are committed to further reform.

Maastricht explicitly adds fisheries to the existing treaty list of common policies. My noble friend Lord Vinson and the noble Lord, Lord Stoddart, asked about fishery policies. My noble friend said that we had given away our fishing grounds. We have shared them and rationalised. We have had to rationalise the catches in international waters between the countries because effectively the stocks were being grossly overfished. What has happened in the recent past is the provision of a method for protecting albeit our diminished fishing industry in order that the period of gross over-fishing should not continue.

Lord Pearson of Rannoch

I wonder whether my noble friend will give way. I understood that it was the scientific and bureaucratic mind which had decided that fishing stocks were being brought to an all-time low. Can my noble friend comment on a report in a newspaper last week which stated that there are now record numbers of, I believe, coley, which have been thrown back into the sea in tens of thousands? In fact, the scientists got it wrong.

Viscount Ullswater

The important fact is that because of the policies which we have had in place for a number of years, the catches have recovered. Therefore, the industry can continue. It looked as though at one time—

Lord Pearson of Rannoch

But it cannot. That is the point. The industry is being stopped from continuing.

Viscount Ullswater

I believe that to be untrue. The important thing is that the stocks should recover in order that the future of the fishing industry should be protected. If we fish the stocks out, the industry will collapse altogether.

I believe that it is time now for my noble friend to make up his mind whether he wants to press—

Noble Lords

No!

Viscount Ullswater

—or withdraw the amendment.

Lord Peston

If the Minister will give way, I thought that we had agreed that the amendment to which the noble Lord, Lord Willoughby, spoke had absolutely nothing to do with agriculture. If he withdraws his amendment, we cannot go on to debate what some of us want to debate, so I beg the noble Lord under no circumstances even to consider withdrawing his amendment. We should like to discuss some other issues.

Viscount Ullswater

I am, of course, in the hands of the Committee. I repeat that I believe that the Government are dealing with the problems of the common agricultural policy in the right way, and I ask my noble friend to reflect on that.

Lord Jay

The Minister has made an extraordinarily depressing speech. I shall make only two comments. First, all he was able to tell us about the common agricultural policy was that after 20 years the Government have got it on to the agenda. He then made the astonishing statement that it had contributed to the prosperity of this country during the past few years. If he thinks that, well, there is not the time now to reply in the way that one would wish to reply to such an extraordinary statement.

Secondly, however, at least the debate has achieved one thing. The noble Lord, Lord Cockfield, has made clear that what being at the heart of Europe really means is not merely that we achieve nothing in the common agricultural policy but that other countries have a veto and this country has not.

Noble Lords

Statement!

5.15 p.m.

Lord Swinfen

I doubt whether we can go on to the Statement. We have not yet dealt with the amendment that is being discussed—

Lord Morris

No, we are interrupting the group.

Lord Swinfen

As far as I am aware we are not interrupting the group. It is not normal practice in this House to interrupt a group; it is normal practice to continue until the amendment has been dealt with and a decision taken.

I tried some time ago to bring the Committee to the industrial, consumer and commercial amendments that are grouped with those on agriculture. If it is convenient to the Committee, I shall do so now. I wanted in particular to speak to Amendment No. 419 which stands in the name of my noble friend Lord Beloff and myself. It refers to Articles 130f to 130p, which cover research and technological development. The amendment would require an annual report to be made to Parliament. It would not change the treaty in any way. It is a small and innocuous amendment but, I think, an important one.

The articles in the treaty, in effect, allow the Community, which, in my view, means the Commission, to take power over research and development. These articles, starting with Article 130f, give the Community, through the Commission, power to decide what research is done and by whom; how much money will he spent and who will find that money; how the results will be published and who will have access to those results; and what technological developments, if any, might follow. If these articles are pursued and become applicable to the United Kingdom. it follows that the existing British research councils will in future be subject to the overall authority not of my right honourable friend Mr. Waldegrave and our Government, but of Brussels. It also follows that research in British universities and in our research institutions will in future be subject to finance and control by the Commission in Brussels. It also follows that the results of any such research will no longer be the property of the researchers and those who have funded that research, and that decisions as to access to those results will rest with Brussels.

Applied research and technological development is conducted mainly by commerce and industry, but it is also conducted by universities and research institutes, often under contract from commercial organisations. The largest single sponsor of applied research in this country is our own Ministry of Defence. What is the position of MoD contracts for research and development? What would their position be if this section of the treaty applied to the United Kingdom? Who will specify the research to be undertaken by such organisations as Ferranti, GEC or the Atomic Weapons Research Establishment? The MoD or Brussels? Who would have exclusive access to the results of that research and development? Again, our own MoD or Brussels?

One of the largest sponsors of applied research and development outside government is the pharmaceutical industry. Under the terms of these articles in the Maastricht Treaty, those pharmaceutical companies would be obliged to share the results of their research with other companies with which they are in competition. At any rate, that is how I read the treaty.

Lord Mackay of Ardbrecknish

I am trying to follow my noble friend's argument in some detail. I wonder whether he has read Article 130g which seems to make quite clear that it is referring to Community-funded research, which is the position at present, and not to research undertaken privately by pharmaceutical companies.

Lord Swinfen

My noble friend reads a different meaning into the treaty from me. I feel that it is only right that I air my worries because they are worries which other people outside the House also have. I think that the Government need to answer them. If I am right and my noble friend is wrong, then the directors and chief executives of those pharmaceutical companies will take their research out of this country and out of the EC to such places as the United States.

As I understand it, Article I 30j gives the Council of Ministers power to decide the rules governing the dissemination of the results of research. That is not so innocuous as it might seem. On my reading of the treaty, it must mean that the ultimate patent rights rest with the Commission instead of with the researchers or the sponsors. It must mean that if the sponsoring company decides (at least for the time being) not to file patents in order to maintain commercial secrecy over a new discovery or invention, under these rules the Commission could still oblige the company to publish. I wonder whether the Commission will compensate the company for loss of those patent rights, and I wonder who will decide the value of the research that has been published. That could lead to a brain drain.

In so far as the Government promote and pay for research and development, surely that is something that is best judged by our Government and not by the Commission. Where is subsidiarity now?

Lord Stoddart of Swindon

I should like to move away from agriculture and turn to Amendment No. 2.4 and Article 3(b) which deals with the internal market. I have always contended that having been in the Common Market for the past 23 years has not necessarily assisted us with our trade. Indeed, as has been pointed out many times in this debate, our trade with the EEC is overwhelmingly in deficit. Indeed, a deficit of roughly £86.4 billion has accrued since we joined the Common Market in 1973.

Over the same period our trade with the rest of the world was in positive balance, a balance of £78.8 billion, so in fact our trade balance with Europe has been very adverse, whereas with the rest of the world it has been very positive. I think that needs to be taken into account when we are discussing the whole question of the internal market, because the internal market, if it is to be of any use, must benefit us to the extent that we are able to compete on an even playing field and we must not be obstructed by non-tariff barriers and other issues which prevent proper trade. That was the whole idea of having an internal market.

However, there is undoubtedly a situation where there are some hidden subsidies and some subsidies that are perhaps not so hidden. Indeed, according to evidence given by the Institute of Directors to the Trade and Industry Committee, the completion of the 1992 programme of 300 legislative measures leaves the significant trade obstacles of: one, protectionist non-tariff barriers; two, diverse administrative procedures; three, the high cost of trans-border transactions; and, four, high level of state subsidies in the EC.

The principle of free movement of goods provided for in the Treaty of Rome and supplemented by rulings of the European Court of Justice, particularly the Cassis de Dijon case, is that EC countries must recognise each others' product standards, subject to essential health and safety requirements. There is therefore no need for the detailed EC product standards we are now seeing, to the detriment of many of our industries. But there are many national regulations in existence and being made, which block market access in the EC, distort competition and put more pressure on the EC to centralise all regulations.

That is the direct opposite of the intention of the Treaty of Rome for mutual recognition of standards. For example, Italy and France have regulated their pleasure boat builders in the interests of safety, and so have blocked trade. Instead of hearing this case at the European Court of Justice, as an infringement of the Treaty of Rome, the Commission has issued a directive laying down a stringent EC framework for boat building. If it is adopted, apparently it will put a huge and unnecessary burden on British boat builders, even if the boats are sold only within the United Kingdom. It will add to costs and reduce the competitiveness of British boat builders. That is absurd. It was not envisaged, and the Government should be fighting their corner on this, but some of us fear that they are not doing so.

A second example concerns Germany and the Netherlands adopting a system of recycling and packaging waste. It is quite a well known case, I believe. The EC is proposing to issue a directive to enforce this system throughout the EC, with let-outs available on a national basis. Meanwhile, Germany is enforcing the new German law, which discriminates against imported goods, contrary to Article 36 of the Treaty of Rome. Again, that is not fair to this country and to other members of the EC. Examples of subsidies distorting competition and trade abound in the EC. According to the Commission's recent statement, The Third Survey on State AIDS in the European Community 1988–1990, 36 billion ecus—I do not like that term: I wish people would translate my briefs into pounds for me. What is it?—

Lord Bruce of Donington

About £25 billion.

Lord Stoddart of Swindon

I am grateful to my noble friend. There is the sum of £25 billion being spent on manufacturing subsidies, an exercise which I understood Her Majesty's Government were against. The public sector receives cheap loans and lax requirements for return on investment to promote key national industries, like telecommunications, transport, banking and energy, whereas in this country no subsidy is allowed. Therefore our industries are in an uncompetitive position. If we are to have this harmonisation, at least there ought to be some fairness for this country. Indeed, it seems to me that with all the regulations that are emerging from the Community at the present time, destroying not only parts of our agricultural industry but also parts of manufacturing industry, we are finding that we do not have a single market but a centralist market.

Again I am quite sure that the noble Baroness, Lady Thatcher, did not intend, when she negotiated this single market, that it was going to be a centralised market; but I am afraid that is what is happening. Indeed, Peter Sutherland, the former Irish competition commissioner, recently remarked that a single market is not merely centralist by intent but by default. Subsidiarity, while a fine concept in principle, would defeat the very purpose of a single market.

So it is quite clear that there are commissioners and there are countries which believe that we have not actually got a free market but we have got a centralised market which is producing regulation after regulation, undermining competitiveness and indeed, in this country, undermining our very manufacturing base. I hope that the noble Viscount, or whoever is going to reply, will take all these points into account.

Lord Aldington

The noble Lord, Lord Stoddart, provokes me again into making a point which I tried to make before. I thought we were concerned in this debate on this Bill in discussing changes in the Community law and, as a result, in British law as a consequence of the Maastricht Treaty. This afternoon the noble Lord, and many other noble Lords, have been discussing in a fascinating way what is now the case, and what has been the case since we joined in 1972. The noble Lord is objecting to the rules of the single market. That is yesterday; that is not anything to do with Maastricht. I could add that I do not see how one can get a real single market without eliminating the discrepancies in practices between the various 12 member states. That is what I think my noble friend Lord Cockfield was about in his magnificent initiation of the single market regime.

It is the same with standards. The noble Lord has been referring to standards. I have some knowledge of that subject because I was for a time president of the British Standards Institution. It was very much in the interest of British exporters and manufacturers that the standards should be the same all over Europe and should not be used as protective instruments against us. But that has nothing whatever to do with Maastricht, and I suggest to noble Lords that at some time or another we have to make up our minds whether, in the Committee stage of this important Bill, we are going to have wide-ranging debates on the subject that is raised or the words that come up. My noble friend Lord. Onslow—I see that he is not sitting in his usual place—asked earlier this afternoon: Did we not understand that he and his friends hoped to hang debates on words in the treaty? I understand that. but surely in the procedure of this Committee we need, in the context of the Bill, to have regard to words as they stand.

5.30 p.m.

Lord Tebbit

I thank my noble friend for allowing me to intervene because I think that I can help him. He must know that in this context an offer of help from me is like an offer of a concrete lifebelt. Nonetheless, I hope that he will take it.

We are debating these matters because they are in the treaty which Her Majesty's Government propose to ratify. Surely there can be no more simple explanation than that. That is why the Public Bill Office, which is not a collection of Euro-sceptic freaks but sober men who have been doing the job for many years in this House, has allowed the amendments to be placed on the Marshalled List. If the amendments are on the Marshalled List, surely it is not unreasonable that they are discussed. I can understand the embarrassment of some Members of the Committee at the fact that these matters are being discussed at all. But they must swallow their embarrassment and allow the Committee to do its job.

Lord Aldington

Whether my noble friend offers a concrete or a rubber lifebelt does not matter. I am not complaining about what the Table has done in admitting amendments. I am suggesting to the Committee that we shall make much more use of the time we have available on the Bill if we discuss the amendments on the basis of the changes which the Maastricht Treaty makes to the law and not on the basis of issues in the Treaty of Rome to which we object. I though t that the discussion was about the Maastricht Treaty and not about Britain being in Europe. That is the point that I am making and I shall continue to make it today, next week and on Report. I thought that that was what we were here for.

Several interesting points arise in this grouping. I hope that we shall touch on industrial policy and on research and technical development which my noble friend Lord Swinfen mentioned. I hope that we shall also concentrate our attention on the changes made by the Maastricht Treaty and not on our objections to what exists, because we shall have plenty of other chances to do so.

My noble friend Lord Swinfen referred to the research and development provisions. The provision which he did not like about the dissemination of information is already in the Treaty of Rome and therefore it is not some evil thing imported by the Maastricht Treaty. Likewise, some Members of the Committee may believe that because an industry chapter and some other chapters are introduced in the Maastricht Treaty, there has been a great change of practice in the Community. For the reasons given by my noble friend Lord Cockfield, that is simply not so. What those chapters are doing, and are usefully doing, is to put into writing in the treaty the practice that has been developed during the years by the Commission with the consent of the Council. I hope that that will be borne in mind because then Members or the Committee will have fewer fears about the matter.

The Earl of Onslow

Before my noble friend sits down, it must be put on the record that in Amendment No. 22 we are talking about the mention of the common agricultural policy in the Treaty of Rome. Some of us happen to believe that that common agricultural policy is a grave mistake. Therefore, we are trying to persuade Her Majesty's Government and my noble friend on the Front Bench to use that particular peg in the Maastricht Treaty to get something done about what is obviously a disaster. Furthermore, I regret to say that the response of my noble friend on the Front Bench was auto-pilot Euro-gunge without any thought whatever. I am sorry to have to say that to one of the nicest Ministers I know.

Lord Peston

My noble friend Lord Stoddart suggested that the noble Viscount might like to reply in detail to all his points. I regard what is going on, as did the noble Lord, Lord Aldington, as a general litany of complaints about the European Community which is not appropriate for the debate today. I have no intention of fighting battles of 20 years ago merely so that my noble friends and other noble Lords can indulge in their persistent anti-Europeanism in one form or another. This is not a debate about whether we should be in the European Community. It is not a debate about the many faults of the European Community, many of which we share. It is a debate about the Maastricht Treaty and its detail, and the noble Lord, Lord Aldington, is entirely correct.

Perhaps I may say to the noble Earl, Lord Onslow, that we spent an hour and a half discussing agriculture and I hope that he is not returning us to that subject. I shall not join him in attacking his noble friend Lord Ullswater, whose reply was entirely sensible. In particular, he pointed out that most of what the noble Earl and his friends are saying has nothing to do with the Maastricht Treaty. We share the view that the CAP is an inefficient way of helping agriculture and we should like to do something about that. However, as the noble Lord, Lord Aldington. said, we are discussing the Maastricht Treaty and I shall confine my few remarks to that.

With the exception of the amendment tabled by the noble Lord, Lord Swinfen, to which I shall return, most of the amendments before us relate to Article 3 and to strengthening the free-trade aspects of the European Community. I and my noble friends tabled an amendment to deal with that. It is now irrelevant because we tabled it in order to ensure that we could discuss these matters. If Article 3 is interpreted at its face value and, in particular, if we can believe what is said about subsidiarity—namely, that much of what happens in Article 3 we hope will happen at the level of the individual nation—the Maastricht Treaty, especially in this area, should be strongly supported by the Committee. It achieves most of the aims which the noble Baroness wanted to achieve in the Single European Act and it reinforces them.

There are Members of the Committee who do not favour the single market. The speech of my noble friend Lord Stoddart was one of pure mercantilism. Our balance of payments position with the Community is a complete irrelevance; it is as much of an irrelevance as the position with any individual nation. What matters is our overall balance of payments position. Complaining that we happen to be in deficit with one particular part of the world is neither here nor there—unless one is a mercantilist, which I thought we had got rid of 150 years ago. I hope that the noble Viscount will not be trapped into that debate, which goes back a long time and at one point split his own party.

In pushing for the abolition of restraints of many kinds, Article 3 argues that we do not distort competition. I agree that the Community does not play according to the rules, but that is for another day. In supporting such points, in arguing that we ought to do more to ensure that we have a common market and in arguing that we strengthen competition policy and so forth, they are parts of the Bill which I should have thought the Committee would overwhelmingly wish to support. I say in terms that I support them. I want to hear from the noble Viscount that, subject to two matters, the Government support them too.

Most of these matters should be dealt with at the level of the individual state. The more that we can push them to that level the better. In case after case the main role of the Community is to make sure that the states do what they ought in respect of competition. The noble Lord, Lord Swinfen, made a good point and has tabled an interesting amendment. The noble Lord is no longer in the Chamber so I shall break my usual rule and refer to what he said. I am anxious about a particular matter and it may be that the noble Viscount will wish to take advice and come back to it on Report. It is that the noble Lord, Lord Swinfen, said that by directives the Community could overcome patent law. That was what he appeared to say in terms of dissemination of research. I find that hard to believe. I should like guidance on that matter and to return to it later.

There is, however, an aspect of Amendment No. 419 which I like. I should like to hear the noble Viscount's remarks on that amendment because I find it extremely attractive. It would be a good idea to have an annual report. Having said that, I have no great desire—and I am sure the Government have no such desire—to amend the Bill in order to achieve that result because that would create all kinds of problems in another place. However, perhaps the Minister would give a few words of encouragement by saying that the Government will pledge to present an annual report to Parliament because that would be helpful.

I believe that Article 3 is good and is one of the better parts of the Bill. It is not subject to any of those ludicrous opt-outs secured by the Prime Minister. I hope that those who have tabled the amendments will withdraw them and that the Government will be as supportive of their own Bill as I am.

Lord Bruce of Donington

I must pass some observations on the remarks of my noble friend. There is a tendency among academics to like everything tidily bound up in academic terms. I appreciate the noble Lord's isolation in that particular respect. We cannot always follow my noble friend into the stratosphere of the tutorial or the classes to which he is so accustomed and so skilful in giving. However, the fact is that the treaty which we are discussing has a political context and was introduced in a political context. It is not as though the Prime Minister, when commending it to Parliament, commended it in academic terms as to whether or not it complied with this or that law which had or had not previously existed. The Bill was presented to Parliament as a political triumph and within a political context.

In a few years' time it may be that my noble friend will condescend to descend into the political arena and depart from his academic attitude towards this matter. However, we must consider the treaty within its political context. I address those remarks also to the noble Lord, Lord Aldington. He tends to take a legalistic attitude when it suits him, but he must know perfectly well that whatever laws are laid down, some member states flaunt the law all the time. I presume that that is tolerated by the noble Lord.

Lord Aldington

The noble Lord knows that to be incorrect. He sat with me when we reported on the matter and made recommendations to the House. Will he withdraw that abominable statement?

Lord Bruce of Donington

I have not the slightest intention of withdrawing my remark. The noble Lord knows just as well as I do, and just as well as any Member of the Committee, that France, for example, obeys only those regulations which it suits it to obey. Most of the rest are shoved out of the window when it suits France to do so. We can be quite blunt about that. To discuss the treaty within any context other than a political and enforcement context is quite unrealistic. The treaty affects people, human beings, throughout Europe and in our own country.

Lord Beloff

I believe that it is time to pour some balm on these troubled waters. Therefore, I shall speak to Amendment No. 426 because I believe that the Government would like to accept that amendment. After all, it merely puts into precise legislative words what the Government have been telling us is their policy over the past few years in successive debates, not only on Maastricht but on general commercial and economic policy; namely, that the cornerstone of their policy with regard to trade is the successful completion of the Uruguay Round of the GATT negotiations. No doubt the Government are prepared to confirm that.

My amendment proposes that that should be used as the lever which has been sought during some of the current debate; that is, to move certain aspects of Community practice our way. There is surely a bargaining counter in this regard. We know that the Community would be able to accept the Uruguay Round were it not for the French Government. That is no secret because M. Balladur has said again and again that he does not accept the agricultural aspects of the proposed agreement and that France will never give up agricultural protectionism.

How do we persuade France to act to the contrary? France wants us to be part of the Europe created by Maastricht. I suggest a straight bargain: we will pass the necessary measure in order for the Government to ratify the treaty when the Government's own policy—the adhesion of the European Community to the GATT—is fulfilled. I cannot see how Her Majesty's Government can possibly reject that amendment because, when the Bill returns to the other place, they will no doubt recommend that the House of Commons, which, to judge by its speeches, is dedicated to the GATT, should accept the amendment. At a quarter-to six, after nearly three hours of debate, this gives us an opportunity to come together on a very moderate, sensible and practical amendment.

5.45 p.m.

Lord Pearson of Rannoch

I do not think that we should leave this group of amendments without touching on commerce. Therefore, I wish to speak to Amendment No. 23 which proposes to remove Article 3(b) from the Treaty on European Union. This article says that one of the new competences of the Community is to be a common commercial policy. I wonder whether the Minister could explain to us what is meant by the expression "common commercial policy" in the context of the treaty. I understand that no such explanation was forthcoming in another place and, therefore, it is perhaps worth pressing the question in this Committee.

We already have a common market established under the Treaty of Rome and I believe that we have understood by now what that concept of a common market means. But we now have a new expression "single market" which was established by the Single European Act, as that treaty is known. Again, I think we have mastered the implications of that one. So what now are we to understand by a "common commercial policy" on top of the common market and on top of the single market?

If it is intended to mean a common policy on external tariffs such as GATT, that is already being pursued without the need for the union treaty. How will the declaration in the Maastricht Treaty of "a common commercial policy" improve matters? I should have thought that the recent negotiations on GATT demonstrate all too clearly that a common policy is adopted by all parties only if each sees it to be to its advantage to approve it. France, for one, has demonstrated that measure of retention of its national interest. However, I must assume that a "common commercial policy" means more than GATT.

What does it mean? Under the principle of subsidiarity, if that is to mean that decisions are taken at the lowest administrative level most closely associated with the subject in hand, surely for the most part commercial policy is something which each individual trading company establishes for itself. It is not even a matter for national governments, let alone a supranational government in Brussels.

Another of the activities listed in Article 3 and relevant to this debate is Article 3(1). This says that the Community will be engaged in: the strengthening of the competitiveness of Community industry". Again, I suggest that it is for each individual company to strengthen its own competitiveness both within the Community and in the rest of the world.

I am questioning whether the strengthening of the competitiveness of an individual company, an individual industry or a series of industries is a proper function for a political institution—namely., the Community—especially in view of the Community's record to date on those matters, and whether in fact the Community and its institutions can strengthen the competitiveness of what they intend to strengthen.

What I suspect will happen as a result of this clause will be the distortion of competitiveness in favour of certain sectors, certain regions, certain industries, certain countries and certain companies as against others within Europe. But whatever the meaning of these clauses, no one can say that they are not centralising measures and, therefore, I would have to ask my noble friend the Minister how he squares that with the constant statement of our Government that this treaty is a decentralising measure.

Lord Ezra

The noble Lord, Lord Pearson, has referred to Amendment No. 23. Technically, we are meant to be discussing Amendment No. 22. I should like to come to that just to find out what those who have proposed the amendment have in mind. Amendment No. 22 proposes the elimination of Article 3(a). Article 3(a) reads as follows: the elimination as between Member States of customs duties and quantitative restrictions on the import and export of goods, and of all other measures having equivalent effect". If that article is eliminated, it means, presumably, that those who support the amendment feel that there should be a re-introduction of customs duties and quantitative restrictions on the import and export of goods between member countries and of all other measures having equivalent effect. That, of course, goes to the root of the Treaty of Rome, the first act of which was to remove those barriers. In fact, it goes much further back than that, because, as the Committee will recall, we were the prime movers in the creation of a European free trade area. The whole underlying concept of the European free trade area was that customs duties and so forth should be eliminated.

Lord Tebbit

I am grateful to the noble Lord for giving way. I want to help us to make progress. To that end, perhaps I may explain to the noble Lord once again why amendments of this kind are on the Marshalled List. They are not necessarily on the Marshalled List because their movers wish to carry through the intent of the amendments, but it is the only way in which we can have a debate on those matters. The noble Lord is well entitled to have his debate on those matters, but he should not assume that it is necessarily the intent of the noble Lord who put down the amendment to delete Article 3(a) also to give up the elimination as between member states of customs duties and so on. It is a peg upon which to hang a debate but not upon which to presume other people's opinions before they are given.

Lord Ezra

I find this a puzzling procedure. We have amendments presented to us. We are told that they are pegs upon which to hang a debate and, "Of course, we have no intention of persuading anyone to do anything about it". Yesterday I asked a similar question as a result of another amendment of this sort which appeared to suggest that the noble Lord moving it was against price stability. I was told, "Not at all. Of course we are in favour of price stability. We merely put it in to stimulate a wider debate". I am getting a bit lost in this whole procedure. We are having amendments put forward which we are told are not really amendments; they are just pegs. That seems to be a new term in our procedure. I feel that we should now perhaps, as these amendments are all pegs which we are not meant to debate seriously, invite the noble Viscount, Lord Ullswater, to conclude this part of our deliberations.

Noble Lords

Hear, hear!

Viscount Ullswater

I apologise if noble Lords find the debate rather disjointed. I confess that I do too. We are continuing with the other areas mentioned in Article 3 of the principles. We started with agriculture. The others relate to areas primarily of an economic and commercial nature. I was pleased when the noble Lord, Lord Peston, explained what he meant by Amendment No. 158 which is in the joint names of the Opposition Front Bench. Amendment No. 159 is in the name of the noble Lord, Lord Bruce. It seeks to delete from the Bill the entire text on industry in Title XIII. I realise that that was a method of discussing the subject. I am pleased that the noble Lord, Lord Peston, said that he supported the provisions and that he hoped that the Government also supported them.

Industry has of course a vital role to play in the economic well-being of the Community and its citizens. The UK therefore welcomes the provisions of the industry chapter. It is entirely right and proper that the treaty should address industry policy. The industry chapter provides for Community action in three main areas: to help industry adjust to structural changes; to encourage a favourable environment for initiative and co-operation between businesses; and to foster the exploitation of the industrial potential of innovation and R&D policies.

The chapter reaffirms the principles enshrined in the Commission communication entitled Industrial Policy in an Open and Competitive Environment, adopted by the Council of Industry Ministers in 1990. That communication emphasises the importance of free and open markets in promoting a strong and competitive industry and eschews the use of sectoral-specific support measures. Those principles have stood the test of time well and are directly in line with UK policy.

The noble Lord, Lord Stoddart, pointed out that we have an adverse balance of trade with Europe. He felt that the efforts to create a single market were centralist rather than competitive. Our exports to Germany equal those to Japan and the United States combined. The European Community countries account for eight of our 10 largest export markets. The Community brings us foreign investment. Foreign investors, especially those from the United States and Japan, come here because we provide such an attractive base for the single market. They add to British industry and jobs and they add to the nation's prosperity. I believe that those from outside recognise not just the value of the single market but the strength of Britain's place within it.

My noble friend Lord Aldington stressed the importance of the single market. He drew our attention to the fact that most of the changes sought by the amendments that we are discussing are not changes to the Bill, because, apart from those expansions of the principles in the article on industry, they are not changes to the law made by the Maastricht Treaty.

Mention has also been made of research and development. Amendments Nos. 34 and 168 to 178 seek to leave out of the Bill the various provisions of the Maastricht Treaty covering research and development.

The Community has a useful role to play in research and development. It can facilitate collaboration on projects of common interest where the large scale and high costs make them too large for individual member states to tackle alone and can help avoid waste of effort and resources by ensuring that there is no unnecessary duplication. Community research complements action taken by member states and can tackle issues which transcend national boundaries. With its emphasis on development of technologies with wide-ranging applications, Community R&D can play an important role in improving the competitiveness of industry in the EC. That is, furthermore, an area of EC activity in which the UK has gained substantial benefits: we get back more than we put in.

Under the provisions of the Maastricht Treaty, all EC research activity will be brought within one framework. That will allow for better co-ordination and better control. The treaty also sets clear rules for participation and the dissemination of results—a point to which I shall return—and provides for decision-making by unanimity which will allow us to keep control of the overall size of the budget and the direction of the programme.

Amendment No. 419 in the name of my noble friend Lord Swinfen seeks to insert a new clause into the Bill requiring the Government to report annually to Parliament on the Community's research and development programmes. Effective mechanisms already exist for reports to Parliament on the formulation and implementation of Community policy in this area. Such a new clause would simply serve to add to the complexity of procedures and is not something that should be enshrined in legislation.

I draw my noble friend's attention to Article 130p which states: At the beginning of each year the Commission shall send a report to the European Parliament and the Council. The report shall include information on research and technological development activities and the dissemination of results during the previous year, and the work programme for the current year". A copy of that report is available in the Libraries of both Houses. I believe that that article goes a long way to satisfy the noble Lord's desire for sufficient parliamentary scrutiny. However, the matter is still subject to Parliamentary Questions being asked in this Chamber or in another place. I believe that that measure increases the transparency of the activity in the Common Market.

6 p.m.

Lord Swinfen

I hope my noble friend will allow me to intervene. I asked him specific questions on defence research. I asked who could decide what research would be carried out by our defence contractors. Would that be the Commission or ourselves?

Viscount Ullswater

If it is a question of R&D by member states, the member states have the entire right to decide what they wish to investigate. What we are talking about here is Community funded R&D that is carried out across the boundaries of member states. I have indicated how important it is that we should have the funds that the Community has at its disposal rather than the funds of individual member states to carry out this additional research. The kind of programmes that are being carried out currently concern information technology, biotechnology and materials technology. We are interested in generic technologies and not necessarily those of near market research.

The noble Lord, Lord Stoddart of Swindon, in talking to Amendment No. 22 wanted to query the effect of the single market. I believe that Article 3(a), (b), (c), (g), (h) and (1) combined deal with the internal market and free trade. These are fundamental aims of the Community and have been since its foundation—a part of the Community to which the UK signed up and a part of the kind of Community we want to see. I rather agreed with the noble Lord, Lord Stoddart, when he spoke about the workings of these policies which we need to make sure we oversee and correct. We need to lower barriers to trade within the Community so that we can increase wealth in the United Kingdom and the rest of Europe. I do not think it would be at all sensible to try to remove these areas of activity from the list of Community activities.

Lord Stoddart of Swindon

Before the noble Viscount passes on—

Noble Lords

That is not a felicitous expression!

Lord Stoddart of Swindon

I apologise. I hope that the noble Viscount will be with us a long time as he is so courteous and does his very best to answer questions that are put to him. On the question of the single market, the point I was trying to make—I do not necessarily believe that a single market is necessary, as the noble Viscount is aware—was that if we are to have a single market, we must be assured that this country is not being put at a disadvantage by non-tariff barriers and by subsidies which under the Treaty of Rome are illegal. That was the point that I was making. Whether I agree with the single market or whether I agree with the whole lot is irrelevant. The fact is that it is there. I was seeking to obtain the assurance from the noble Viscount that Her Majesty's Government, within the context of the Treaty of Rome and within the context of the single market, were dealing with these matters and were pushing the interests of this country for all they a re worth.

Viscount Ullswater

I believe the noble Lord was commenting not only on the completion of the single market but also on what he considered to be state aids. I believe he was querying whether the United Kingdom indulged in state aids and whether we obtained the benefit from them that he indicated other countries did.

Lord Stoddart of Swindon

I am sorry to interrupt—

Noble Lords

No!

Lord Stoddart of Swindon

It is no good Members of the Committee shouting no. This is a Committee stage. We must discuss this matter as a Committee. This is not a Second Reading debate and this is not Report stage. This is the Committee stage. Members of the Committee may rise as many times as they wish to clarify points. I believe the noble Viscount has probably misrepresented me. I hope he will reconsider what he has said.

Viscount Ullswater

What I was trying to say—I do not believe I had an argument with the noble Lord, Lord Stoddart—was that I believed the noble Lord was explaining that the United Kingdom should not put itself at any disadvantage in the application of state aids and that any form of the workings of the single market should not put the United Kingdom at a disadvantage. I agree with the noble Lord on that. I was going on to make the point that the United Kingdom has taken advantage of state aid rules to obtain clearance for many new schemes and individual projects. It would not be right to think that the United Kingdom did not make use of what was available under the Treaty of Rome and under the Single European Act. The Maastricht Treaty adds a further possibility of exemption to the third paragraph of Article 92 which concerns the aid to promote heritage and culture conservation. I believe that that is a reasonable addition.

My noble friend Lord Pearson of Rannoch asked me pointedly what was meant by the common commercial policy. I can do no better than to refer him to Articles 110 to 115. That policy has not materially changed since the Treaty of Rome and the Single European Act. Article 110 states: By establishing a customs union between themselves Member States aim to contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restriction on international trade and the lowering of customs barriers". That is what is meant by the common commercial policy. The article indicates how that customs union should be established.

I am not certain whether my noble friend is suggesting that we should not go down that route. I believe he is suggesting that somehow we can do better on our own than we can in an international forum. I do not believe that to be true. My noble friend Lord Beloff—

Lord Pearson of Rannoch

I apologise but could my noble friend deal with my main question in my intervention which concerns the meaning of Article 3(1) when it suggests that the Community of all things should be engaged in, the strengthening of the competitiveness of Community industry That was my main point. I suggested that that was a centralising measure. I suggested, and I suggest, that the Community is incapable of doing so.

Viscount Ullswater

That relates to the article on industry which we have already discussed. I believe that we should be seeking to improve the competitiveness of industry. That article allows us to pursue that objective.

Having said that, the Commission can only act unanimously and must make certain that its actions do not lead to the distortion of competition. Those actions should lead to a system of open and competitive markets. I believe that my noble friend would agree with all those sentiments. Therefore, I believe that he should support the inclusion of the industry chapter in the treaty.

My noble friend Lord Beloff wanted to offer me something with which he thought everybody could agree. He said that we had a bargaining counter and that the GATT agreement should not come into force until the Community had agreed the coming into effect of the Uruguay Round. There is no justification, within or outside the treaty, for postponing its entry into force until such time as the Uruguay Round is concluded.

Recently, at Copenhagen the European Council stressed that it was essential to relaunch the multilateral process in Geneva as soon as possible and called for agreement before the end of the year. It was important at that stage of the negotiations, and before the G7 economic summit, to give a clear signal that the Community would work for a GATT round settlement before the end of the year.

Lord Bruce of Donington

I am most grateful to the noble Viscount for giving way. He read from the conclusions of the Copenhagen conference. However, he omitted the words "including agriculture". The actual text reads: The European Council stressed that it was essential to relaunch the multilateral process in Geneva as soon as possible on all topics, including agriculture". I do not know whether the noble Viscount omitted the words "including agriculture" by accident, but the statement refers specifically to agriculture.

Viscount Ullswater

I am pleased that it does, because that is one of the most important areas on which we need to seek agreement.

Lord Bruce of Donington

I am trying to help the noble Viscount.

Viscount Ullswater

I accept any help that is offered to me while I am standing at this Dispatch Box.

The Uruguay Round negotiations were launched in 1986. We hope that they will be concluded as soon as possible. As the Government have made clear on a number of occasions, this is a key objective and the successful conclusion of the round will be to the benefit of all. However, I do not believe that it can be used in the way my noble friend suggested. It is certainly not a reason for delaying the entry into force of the Act.

Lord Beloff

I am grateful to my noble friend for giving way. My point was that the French Government had made it clear that they would not go ahead with concluding the agreement if agriculture was part of that agreement. Does the Minister concur that that is what the French Government have said?

Viscount Ullswater

I believe that many member states have problems with that aspect of the round. I do not believe that it is a narrow point of concern to the French. France is no exception, but they did not stop a clear and forceful signal being given. They were signatories to that particular conclusion.

All the areas covered by the amendments are, by and large, already included in the Treaty of Rome and the Single European Act. Incorporation of these areas in the Maastricht Treaty does not, therefore, signify a departure from existing Community practice. In many areas the Maastricht Treaty represents a useful codification and limitation of Community activities. I urge the Committee to oppose the amendments.

Lord Willoughby de Broke

I was very interested to hear the views of the Committee on this group of amendments. In particular, the arguments on agriculture, which occupied quite a long time, showed how strongly many Members of the Committee feel about the matter. The arguments boil down roughly to two points of view. The first is the view held by my noble friends Lord Plumb and Lord Cockfield that it would be best for us to stick by the provisions of Article 3(e) and its predecessors because that is the best way to go about reducing the current admitted excesses of the CAP. The second point of view is that held by those others who feel that we have already had long enough to reduce the excesses in the present provisions of the treaty.

While disagreeing entirely with the common agricultural policy, the noble Lord, Lord Eatwell, felt that he was able to agree with the provisions of the treaty because they did not use capital letters but referred simply to a common agricultural policy in Article 3(e).

I was a little disappointed by the reply of my noble friend Lord Ullswater in relying on the existing provisions of the reformed CAP—the MacSharry model, CAP Mark II—to protect the consumer and taxpayer from the depredations of the CAP. However, at this stage I beg leave to withdraw Amendment No. 22.

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.