The European Union: Inter-Governmental Relationships

HL Deb 25 May 1994 vol 555 cc761-832

3.5 p.m.

Lord Healey rose to call attention to the state of the relationships between Her Majesty's Government and the governments of the other member states of the European Union; and to move for Papers.

The noble Lord said: My Lords, a few weeks ago the Foreign Secretary stated quite rightly:

"As a nation we have not yet come to grips with the new debate … Unless we can lift our sights and see more clearly how the world around us has shifted we shall put at risk Britain's position in the world".

The proof of that is all around us. The failure of Her Majesty's Government to lift their sights in the debate on Europe has put our position in the world at risk. I cannot recall any time during my lifetime when Her Majesty's Government have had less influence in the world—in China, in Hong Kong, in Malaysia, in the Middle East, where the Foreign Secretary recently spent 10 days and no one noticed when he went or when he came back, or in Bosnia where the Government have regularly committed U-turns on the question of whether to put in more troops and whether to permit bombing of Serbian positions, under pressure from the United States or France.

That lack of influence is above all evident in the European Union. Our last presidency was regarded by all our partners as a disaster. When the Maastricht Treaty was being negotiated, the Prime Minister paid Herr Kohl of Germany a heavy price for opt-outs on the European Monetary Union and the social chapter—the price of recognising unconditionally the newly created states of Slovenia and Croatia, thereby wrecking the plans of the noble Lord, Lord Carrington, for a settlement in Yugoslavia. Up to that point, the settlement had a fair chance of success. The concessions were totally unnecessary as it turned out because the German Bundestag voted itself an opt-out on the European monetary union unilaterally, as our Parliament had every right to do. As for the social chapter, on which the Government obtained an opt-out in the hope of appeasing the Euro-sceptics on their Back Benches, those Euro-sceptics voted for the social chapter in the last vote on the question in the House of Commons.

In fact, the whole Maastricht affair has been a total disaster, as many noble Lords on both sides have pointed out. The Maastricht Treaty added nothing of consequence to the Single European Act, which was forced through Parliament on a guillotine by the previous Prime Minister. Yet the present Government dithered and dallied for well over 12 disastrous months before finally, through a series of extremely disagree-able and rather sleazy manoeuvres, managing just to squeeze it through the House of Commons.

We were squeezed out of the European exchange rate mechanism. Our Chancellor of the Exchequer called forth a torrent of abuse against the German Bundesbank, claiming that it was responsible, although it was only carrying out its duties as an independent central bank. Since then we discover that the Chancellor of the Exchequer was secretly in favour of it all the time.

The final humiliation was the totally unfeasible and unnecessary argument we had about adjusting the qualified majority voting rules on which the Prime Minister told the Guardian newspaper that he was quite prepared to risk the enlargement of the Community. Of course, he finished up with a humiliating admission of defeat.

The result of all this is that Britain is now so unpopular among its partners in the European Union (as we now call it) that Sir Leon Brittan's name can scarcely be put forward, in spite of his undoubted ability, simply because he is British. That is the situation that has been created. I have to ask: why? The answer of course is that the Conservative Party and the Government it has produced have totally failed to recognise how the world has shifted.

The previous Conservative Prime Minister—I am sorry that she is not in her place—told us that there was no such thing as society. There was only the state, and I'état, c'estmoi. So she centralised all power in Britain under her own control in Whitehall or in unelected quangos. She did not believe in the nation state; that was a 19th century invention. She believed in the type of monarchy that was exercised by her model, Louis XIV.

She did not win many friends by her behaviour. Chancellor Kohl was deeply offended, not only by her opposition to the re-unification of his country but also by her remarks about him since in her memoirs. I am glad to say that President Mitterrand was not enraged. He simply roared with laughter. Asked about the Chunnel, he said:

"They will race at great pace across the plains of northern France, race through the tunnel on a fast track and then be able to daydream at very low speed, admiring the [English] landscape and the countryside… until the day when someone over there in London decides to harmonise the way of doing things between the continent and the island".

That is a very disagreeable situation for any patriotic Briton to find himself or herself in. I am glad to say that there has been some advance with the present Prime Minister. He at least seems to believe, not in Louis XIV, but in the nation state. However, in saying, as the Foreign Secretary did, that,

"the first reality is the resilience of the nation state. The European Union can no more aspire to abolish it than to end history",

he is entirely missing the point. The plain fact is that the nation state as it has existed for nearly two centuries is being undermined by many factors—mainly technologi-cal —of an international nature. The ability of national governments to decide their exchange rate, interest rate, trade flows, investment and output has been savagely crippled by market forces, to which this Government give an absolute value. The globalisation of finance, under which Mafia-gilded young lemmings can move 1,000 billion dollars a day in micro-seconds across the exchanges, pushed us out of the exchange rate mechanism. So this Government had to jettison within 24 hours something that they had called the "sheet anchor" of their economic policies. What I cannot understand is why members of the Government worry so much about what Jacques Delors might do when they have seen what George Soros has done, and may do again.

The globalisation of finance is the first big international factor to undermine the nation state. We now find as well the globalisation of investment under which any firm will put a new factory wherever the relevant skills are cheapest and wherever its ultimate market is closest. We find environmental pollution to be an international problem. A nuclear accident 1,000 miles away six years ago is still killing sheep in Cumbria. And there is a matter to which we pay far too little attention: international crime has now become a major problem. The drugs traffic alone is said to move 500 billion dollars a year. The collapse of the Soviet Union and the civil war in Afghanistan mean that there will soon be enormous new masses of drug material arriving in the western world from central Asia. None of these problems can be dealt with by the nation state alone. All of them are beginning to undermine the very foundations on which the nation state is built.

Although the particular problems that I mention require global, not regional, solutions, at the end of the cold war we face a lot of problems to the east of the European Union to which the European Union has a major responsibility collectively to find a solution.

The Foreign Secretary would probably agree with what I have said so far. But he is unable to say so because he is a member of a party and a Government who are deeply divided and who believe in what the Foreign Secretary himself called,

"a permanent cultural revolution in the style of Trotsky or Chairman Mao".

We are all familiar with the Maoists and Trotskyites in the present Government. We even have (at least, in our House) one or two "Mau-Mauists". I am sure that the noble Lord, Lord Tebbit, would not dissent from a such a description.

What is disturbing is that at least four members of the Government support the Maoists and Trotskyites, and regularly say so in public. The Chief Secretary told students the other day—at Eton, I gather, as well as at Southampton University:

"If any of you have got an A level it is because you have worked at it; go to any other country"—

any other country, he said—

"and when you have got an A level you have bought it".

He should have been sacked on the spot. He outraged all our friends in Europe and far beyond, in Japan and in the United States. That complaint about buying degrees comes rather oddly from a Government who have just decided to allow foreigners to buy residence in Britain if they can put up a million quid.

The same Minister, the Chief Secretary, said:

"Our mission must be to rebuild national self-confidence … We need to assert the value and the quality of the British way of life and of British institutions. We are proud of our history, proud of our language, proud of our culture, proud of our military skills".

Of course, the Government proved that by suggesting recently that we should celebrate the death in Normandy of 36,000 brave Britons by having competitions in frying spam fritters. And it is an odd set of remarks, incidentally, to come from the son of a very distinguished and fine immigrant whose family have lived in Spain for generations.

Then we have the Secretary of State for Social Services publicly attacking immigrants to this country as "crooks and scroungers". Our great national poet had a word for him. As he wrote in one of his sonnets:

"Lilies that fester smell far worse than weeds".

We can all agree about that.

What is so depressing is that the Prime Minister, instead of sacking these people from his Cabinet, as his predecessor, Sir Edward Heath, has rightly suggested many times in the House of Commons, has given in to them. The reason, of course, is that when these—I apologise for using the phrase—four "bastards" (it is the Prime Minister's phrase about his government colleagues) appeared at his party conference, the conference fulfilled another of Shakespeare's prophetic remarks. Noble Lords will remember how Edmund in King Lear says:

"Now, gods, stand up for bastards!".

And they stood up for every one of the bastards in turn. The Prime Minister was so alarmed that he decided to call himself "the greatest Euro-sceptic of them all".

The result is that we do not have one friend left among the other governments in the European Union. There is only Monsieur Le Pen. He is the only other party leader in Europe who supports the present Government's stance on the social chapter. Now the Government are desperately searching for friends wherever they may find them. They have found one in the new Government in Italy. Our ambassador there recently invited Mr. Fini to lunch. Mr Fini is the head of the neo-fascist party who said that Mussolini was the greatest statesman of the 20th century. The Foreign Secretary himself described the new Italian Foreign Secretary in terms of praise which reflected very badly on his other colleagues in the European Council of Ministers. In fact, the Foreign Secretary is suffering from what he himself described as, intellectual shrinkage—as if we despaired of convincing anybody of anything and simply wanted to devise ways of protecting ourselves against a Europe and a world which is bound to run against us".

Anyone who has read the Conservative manifesto for the current European elections must find the phrase "intellectual shrinkage" a very apt description of it. The Foreign Secretary would have done far better to emulate the noble and learned Lord, Lord Howe, and leave a Government who would not allow him to conduct a decent foreign policy for Britain instead of acting as a kind of tatterdemalion Talleyrand, appearing on television programme after television programme with a kind of ingratiating casuistry, both unconvincing and unconvinced.

We now have an important section of the government party planning, so we are told, to get Britain out of the European Union altogether at the next possible opportunity, perhaps in 1976—or rather 1996. I am living in the past like so many of us, but not quite so far back in the past as the people I am criticising. The plain fact is that this Government and the party from which they are drawn are fighting phantoms. There is no chance whatever of a centralised super-state in Europe. All the opinion polls show that there is an overwhelming majority against that, not only in Britain but also in France and Germany.

What we have to look for in Europe is not a federation. Federation as a means of uniting states rather than dividing up states—as it divided up Germany after the war—has never worked. All the great 18th and 19th century federations have collapsed or are now collapsing, from the Soviet Union to Canada. The European Union is groping its way towards a new type of political system in which nation states retain their identities but can also get to grips collectively with the cataclysmic changes released all over the world by the end of the cold war. At the moment, Britain has been totally sidelined in that search by the behaviour of the British Government over the past decade and more.

I think noble Lords will agree that I have tried to be kind to the Prime Minister. But I was reminded today that he described John Smith, whose premature death we so much deplore, as "the poodle of Brussels". Our Prime Minister is universally regarded as the noodle of Brussels. However much noble Lords may groan, so long as he remains there we are condemned to impotence in Europe.

My Lords, I beg to move for Papers.

3.25 p.m.

The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley)

My Lords, as is right and proper, I start with apologies from my noble friend Lady Chalker, who sadly is unable to be here today owing to her presence in America. As is conventional, I also first offer my gratitude to the noble Lord, Lord Healey, for giving us the opportunity to hold this debate and correct some of the misconceptions about Britain's policy toward Europe and our relations with our partners.

The noble Lord feels that he is trying to help rebuild our image abroad, but perhaps he will accept—I am sure that all those behind me will agree—that he is going about it in exactly the wrong way. The noble Lord made scarcely any mention of the European elections on 9th June, in two weeks' time. I hope that he will not mind if I digress briefly and make just a few points about those elections. I imagine that one or two other noble Lords may also do so in due course. After all, it is possible that one or two noble Lords might not have made up their minds as to how they might cast their vote. I certainly offered some advice on a previous occasion to the noble Lord's colleague, the noble Lord, Lord Bruce of Donington, suggesting that he might consider voting for the Conservative Party on that occasion.

Perhaps I could repeat that advice to the noble Lord, Lord Bruce of Donington, and to the noble Lord, Lord Eatwell, and remind them that on that occasion they will be voting for a Member of the European Parliament and not casting a vote for or against this Government. The noble Lord, Lord Bruce, will be aware of the Herman Report which was recently considered by the European Parliament.

Lord Bruce of Donington

My Lords, I am most grateful to the noble Lord for having given way so early in his speech. As he made several references to me, I invite him to say when I said that I would vote for a Conservative candidate. If he can find an occasion on which I said so I should be most grateful. I can tell him now that I most certainly would not do so.

Lord Henley

The noble Lord should listen to me. I did not say that he had voted for the Conservative Government. I was trying to offer some helpful advice on the occasion of 9th June, possibly allowing him the chance to vote for the Conservative candidate in the European constituency in which he lives.

As I said, the noble Lord will be aware of the Herman Report which was recently considered by the European Parliament. Unlike the fat boy, I do not wish to make the noble Lord's flesh creep; but he will be aware of just how far that report went down the line of federalism and increased powers for the European Parliament, the abolition of our veto and so on. I should like to make the point that when the noble Lord and others come to put their cross on the paper and cast their votes they should remember that when it was voted to note that particular report the Socialists and the United Kingdom Socialists voted for it and the Conservatives, more or less to a man, voted against it.

I should like to offer the House a quotation from an article in last Thursday's Independent newspaper. It reads: He underlined that Europe needs Britain, and says that the EU must do what it can to accommodate British doubts. The British, he says, have always questioned their role, and British scepticism over the limits of European unity has shaped recent debate, most notably over Maastricht, for the better. 'Only Great Britain asked real questions' before Maastricht, he said; the construction of Europe was virtually on auto-pilot". The speaker referred to was not a Member of this Government. In fact it was M. Delors, the President of the European Commission. His comments illustrate perfectly Britain's approach to Europe. We are at the heart of the debate, analysing issues, raising our doubts where they exist and working with our partners to help the European Union develop in a way that ensures that it does not become a Europe solely for bureaucrats and politicians.

This Government work hard to maintain the excellent relations with their partners within the European Union which have been fostered and developed over many years. From time to time we have disagreements with them. That is unavoidable, particularly within the framework of the European Union where member states must inevitably make compromises. We do what we can to minimise those conflicts and usually our efforts to find a mutually acceptable solution are successful. But we are not in Europe to win political popularity contests. When we disagree we say so. Let us not make the mistake of believing our partners do not do exactly the same; the French over the latest GATT round; the Greeks on Macedonia: the Germans over BSE; several member states over CAP reform. I could go on.

It is, however, wrong to concentrate only on those occasions when the Government must risk unpopularity by taking a position which opposes that of some other member states. As M. Delors acknowledged, we have been at the heart of European debate, shaping policy. We were the driving force behind the single market, perhaps the European Community's most important single achievement. Our liberal, non-protectionist approach drove the EC's policy on the GATT round which reached a successful conclusion last year. The disciplined and realistic deal on the EC's next five years of finances agreed at Edinburgh was achieved thanks to this Government's determination. We launched an initiative to crack down on fraud. We started the ball rolling on enlargement at the Edinburgh Council in 1992. There are many other examples. There are those who like to try to present the United Kingdom as isolated within Europe. The evidence tells a very different story. We are at the centre of European policy making and we intend to stay there.

To continue to shape the debate in Europe we must have a vision of how we want the EU to develop. We have such a vision and it is an approach which is increasingly shared in other member states. We believe the following principles should guide European construction. First, we want a Europe that is competitive and free-trading. That means that we must have flexible labour markets. We must reduce the burdens on our businesses; we must keep social costs under control; and we must bring down remaining trade barriers and spread the gospel of free trade in the rest of the world. That is the only route to resolving unemployment.

We also want a Europe in which the principle of subsidiarity is applied fully and consistently across the whole range of Community legislation. That is already happening. The Commission's report to the December European Council in Brussels expressed its determina-tion to pursue changes—in the name of subsidiarity— which would involve the repeal or ratification of up to one-quarter of existing Community legislation. The Commission agreed to withdraw, repeal or amend 16 of the 24 items in the Anglo-French subsidiarity list presented to it last year. The Germans have said that subsidiarity will be one of the themes of their forthcoming presidency. They will have our strong support.

It is important that the two intergovernmental pillars —the common foreign and security policy and interior and justice co-operation—produce results. These are early days. But we have already agreed on five CFSP priority areas—Russia, former Yugoslavia, the Middle East peace process, South Africa and the promotion of stability and peace in Europe. In the third pillar, we want to see Europol up and running and we are working closely with Germany and other partners on issues like asylum.

We want to see more flexibility in Europe. As my right honourable friend the Foreign Secretary said, in our vision countries are not assigned to slow lanes or outer circles. We all accept a common commitment to principles and disciplines without which it would not be possible to maintain a genuinely open single market, a basis of fair competition and a framework of law in the Union. But beyond that, the Union should encourage maximum flexibility. There may be areas in which some members of the Union see advantage in closer integration, while others choose to stand aside. Beyond the core disciplines we want Europe to develop in tune with the sentiments and interests of its separate peoples.

Finally, we want a European Union that is open to others. It was never conceived as an exclusive, rich man's club. We hope that the forthcoming referenda in Austria, Finland, Sweden and Norway will be positive on membership of the Union and that those states will join at the beginning of 1995. Thereafter, there are others—for example, from Central and Eastern Europe —waiting at the door.

Being at the centre of Europe, as I believe we are, does not just mean being in the pack, in the middle of opinion on every issue. What it means is setting the pace and producing some of the innovations that drive the Community towards a position with which we and other member states can feel comfortable. We will continue to work closely with our partners to achieve that goal. I am sure that we will continue to disagree on some issues; but our views will continue to be respected by our partners who know that we will continue to study with great care the proposals that come from the Commission to ensure that the European Union develops into the outward looking, free-trading decentralised body that I am sure all noble Lords wish to see.

3.35 p.m.

Lord Jenkins of Hillhead

My Lords, I am in general an admirer of the way in which the noble Lord, Lord Henley, holds his end up at the Dispatch Box, and I make no exception with his speech today. But this debate deserved a higher level of intervention from the Government Bench at one end or the other. The noble Lord, Lord Healey, and I have had our differences—and some agreements—over many years, but by any standards he is one of the four or five most distinguished and notable ex-Ministers in this country today. I believe this is the first time that he has initiated a debate in this House since he joined us. It is on a subject which is absolutely central to our political controversy and life at the present time. With two Cabinet Ministers in this House and a senior Member of the Foreign Office— though we understand that sometimes we all have occasion to be in America and other places—I think, to put it frankly, the Leader of the House should have opened the debate himself. That would have been only courteous to the House.

I hope that the forthcoming European elections do not hang too heavily over this debate. So far they have not done so. There are two reasons why they should not. First, great though my respect is for your Lordships' House, I doubt whether anything said today will have a discernible effect on how people vote on 9th June. Secondly, an excess of party politics have over the past 35 years or so bedevilled any effective British European policy. During most of that period there has been a substantial pro-European majority in the House of Commons. But it is a cross-party majority. No government have been able to muster a pro-European lobby from their own party which could defeat both the Opposition and their own anti-European tail. Party leaders—and perhaps even more, party Whips—hate cross-party majorities. The result has been muddle and weakness consistently in our European policy.

Since the ejection of sterling from the ERM 20 months ago, I have been totally unable to discover any sinews of direction in British European policy. There are times when the Prime Minister has given a new meaning to Lloyd George's old joke about Lord Derby being like a cushion who bore the imprint of the last man who sat upon him. Of course, in the sitting stakes Herr Kohl is a powerful contender. As a result, if there are any faintly pro-European noises which emerge from the Prime Minister or the Government on a Tuesday, there is a briefing on the Wednesday that they are not to be taken too seriously and on Thursday there is a Statement which sounds as though the Government think that anything beyond a free trade area is a centralised, federalist, socialist, Gallic conspiracy. That is accompanied by a curious illusion, which we heard directly expressed by the noble Lord, Lord Henley, this afternoon, that everything in Europe is now going our way and that the other governments are increasingly rallying to a British lead.

That, I must say, has not been very apparent in our pointless, isolating and humiliating performance on the question of the blocking minority. And it is based on a fundamental flaw of analysis such as British Governments have consistently made over our whole post-war relations with the continental countries. What is true is that the events of 1992–93 were a severe shock to European confidence and to any easy assumption that we were on a straight, smooth road which led ineluctably to a single currency without any further action and to various other integrationist measures. But our respective reactions to that setback here and among the main countries on the Continent have been utterly different. The British Government's reaction has been, "What a wonderful excuse to block anything further". The Franco-German reaction, accompanied by many who follow their lead, has been to seek alternative ways forward in order to overcome the admittedly severe setback which there occurred. And the recovery of nerve in the continental countries has been further and stronger than I expected.

I think that a single currency for those who wish to participate—and very awkward it will be outside it—is again a perfectly feasible prospect by the turn of the century or very soon afterwards. And, our nonsense apart, the enlargement agreements with the four EFTA countries have been well handled by both the Council of Ministers and by the Parliament. The catchphrase that everyone is swinging to the British Government's point of view therefore shows every sign of being in the classic tradition of "game, set and match" after Maastricht and the Prime Minister's unbelievable statement in the summer of 1992 that sterling was on the way to replacing the deutschmark as the principal European currency.

Our persistent negativism makes it much more difficult to secure legitimate British objectives in Europe. And the endemic nature of our negativism was brilliantly illustrated by the Foreign Secretary, rather surprisingly, a few weeks ago. Mr. Hurd I certainly regard as one of the more pro-European members of the Government and I also tend to regard him as one of the more logical members of the Government. Yet even he produced this wonderful piece of bathos: Our message is positive", he blandly announced, in that we see no alternative to Europe". That negativism greatly weakens our hand in Europe.

Take enlargement, for example, where I agree with the general thrust of the British Government's policy in favour of enlargement. But what now has to be faced is a much more difficult and important enlargement than that involved with the four EFTA countries. That is to bring the Visegrad Four—Poland, the Czech Republics, Slovakia and Hungary—into the Community. It is more difficult because of the depth of the ditch between their economies, and to some extent their political habits, and those of the West which was dug by 45 years of communism. But it is more important because, whereas in the case of the EFTA Four membership would be a nice little bonus, in the case of the Visegrad Four it is a vital anchor to their whole democratic future and security orientation. Yet by persistently giving the impression that we want enlargement to weaken and not to strengthen the Community, the British Government greatly diminish the power of our advocacy in its favour.

Furthermore, we also undermine the purpose of enlargement. The Poles or the Czechs do not want just to join a free trade area. In many ways that is the last thing their economies need or want. What they are interested in is a political and security community to give them a sense of belonging and orientation. Thus the minimalist approach is in fact the enemy of effective enlargement, which is supposed to be the basis of the Government's policy. Deepening is not the enemy of widening in the European Union, or vice versa.

Much of the Government's attitude towards Europe stems from a confusion of nationalism and national interest. They are very far from being the same thing. Indeed they, unlike widening and deepening, very often are the enemy of each other. The Irish, who have much more historical reason to be prisoners of nationalism than we are, have been very successful in subsuming their nationalism in Europe, and in consequence are doing very well indeed, to an extent that often arouses envy in this country, from the point of view of their national interest. We have been much nearer to the reverse.

Then, on Monday, Mr. Major complicated the issue by bringing in patriotism intermingled with some rather curious history. Not being a tremendous Dr. Johnson fan, I refrain from citing him on patriotism, but I do observe on the historical references that I am not sure that many parts of the United Kingdom regard their monarchy as being descended from Wessex, or that it is very natural to cite, as the Prime Minister did on Monday, our two 700 year-old universities—one incidentally is much closer to 800 years old—together with our language as being worthy signs of our ancient separateness and ancient insularity. It is surprising because for a substantial number of centuries the universities operated almost exclusively not in the indigenous language but in one which attempted a European universality and because particularity and separation are inherently alien to the whole concept of a university.

I think that the Prime Minister really would be better advised to look for his European policy to our true national interest in the future, which means finding and keeping some real allies in Europe, rather than to such peculiar ideas of the past.

3.47 p.m.

Lord Richard

My Lords, I am grateful to my noble friend Lord Healey for drawing attention to this issue. Perhaps I may start by making two observations. I find myself in agreement with what the noble Lord, Lord Jenkins of Hillhead, said about the way in which the Government have approached this debate. It is, to put it mildly, somewhat unfortunate.

So far as concerns the speech of the noble Lord, Lord Henley, he read it with his usual aplomb. I was reminded as I listened to him of a story which used to be told about Sir Thomas Beecham. When he was rehearsing an orchestra and performing a piece of music he did not like his head would droop, his arm would go up and he would make a faint sawing noise across the top of the orchestra and the top of his head. On one occasion he was doing this while rehearsing, I believe, a not very well-known piece of Vaughan Williams, when the music suddenly ceased. He turned to the orchestra and said, "Why have you stopped?" They said to him, "That's all there is, Sir Thomas". "Thank God", he said. I am bound to say that when the noble Lord was in full flow, if that is the right way of putting it, that image came quite closely into my mind.

I am also grateful to my noble friend Lord Healey for emphasising the fact that the nature of the world in which we now have to operate has changed, and changed so dramatically. In a sense, what this whole European debate is about is whether or not this country is capable of recognising that change, and adapting to it, or whether indeed we persist in denying that we now have to function in an international environment in which independence and national action are becoming, frankly, increasingly irrelevant. Multilateralism has taken over. Noble Lords on the other side of the House may regret it, but it is a fact of life and it is one that this country will have to live with.

I believe, too, that misunderstanding or misrepresentation regarding the nature of sovereignty, whatever that doctrine may mean, is perhaps at the heart of the deterioration of the Government's relations with our European partners. Why is it that France, Germany, Italy and many of the other countries inside the Community seem able to adjust their position to an increasingly closer Europe with far greater ease than the United Kingdom?

When one looks at the host of international institutions of which we are now a member—NATO, the United Nations, GATT, the IMF, the World Bank and even the Council of Europe—all of them involve to some extent a voluntary diminution of national independent decision-taking. We have voluntarily ceded the power—I do not mind whether we call it sovereignty —to take independent national decisions for reasons that we have thought good. What on earth is so different about the principles of European union? It seems to me that the only real difference is that in respect of the European Union the institutions for that decision-making process are better established, more effective and have a greater supranational quality. In many ways it is precisely the effectiveness of that joint decision-making process which has caused the problem.

In essence, our interests are not so very different from those of our European partners, but the Government do not seem to accept that. We all survive on trade. We all protect our agriculture—some to a greater extent than others—and perhaps in different ways. We all have similar problems regarding investment, production, unemployment and our currencies, yet somehow or other to the majority of our Community partners Europe is seen as an opportunity for helping to deal with these problems. As far as this Government are concerned, it is seen as a danger and a hindrance.

Neither can one argue that this is because of the uniqueness of our historical experience. France certainly has as individual a history as we do. I believe it is because we have just not yet genuinely accepted that whatever our past may have been our future lies in and with the Continent of Europe and our European partners. The crucial question that needs to be asked and which was asked by my noble friend Lord Healey, is whether the existing institutions of the union are those best adapted to cope with this multilateral era, not whether everything should be weighed against some mythical notion of national sovereignty which probably never did exist and, if it ever did, has now certainly ceased to.

I believe that in the run-up to 1996 there are three issues with which this country should be concerned. First, there are the Union institutions themselves. I said a moment ago that we should be asking the question clearly and pointedly whether we are satisfied with the functioning of the institutions in the sense that they represent the best available mechanisms for dealing with this increasingly complex multilateral world. Of course they are not perfect, but they are ones in which there is at present an intended and clear structural balance of objectives.

The Commission is charged under the treaties to produce what they perceive to be European-wide policies to deal with European-wide problems. It is a function which is clearly spelt out and it is the way in which it operates. The council representing the individual member states is there to enact such policies as it thinks fit. The parliament is intended to provide democratic accountability and legitimacy.

But, in essence, what those institutions are for and what they provide are a set of mechanisms for identifying common problems and producing action in concert. What on earth is wrong with that? There is nothing wrong at all in questioning the relationship between the institutions or even the functions of the institutions themselves, but it is an absurdity if the test ceases to be whether it helps in resolving common problems and becomes whether or not it dilutes our independence of national decision-making.

Secondly, we must recognise in the run-up to 1996 that there has to be a social dimension to this European venture. The European Union is not made solely for the better functioning of the multinationals. It has to pay attention to the problems and concerns of the people themselves.

I have to say frankly to the Government that I was dismayed at the way in which the social chapter has been referred to and treated in the Conservative manifesto. Perhaps I may quote from it. I am not usually given to quoting Conservative tracts, but in this case I believe that it is worthwhile. One can see the way in which the Government are approaching this problem. It says: we will not allow Europe to damage our labour markets by reimposing handicaps we have abolished in Britain". It does not define them, but never mind because it is a good, round, ringing statement. The manifesto continues: 'Through the Social Chapter, the Community could have imposed damaging restrictions on British people's freedom to work when and how they please. New European regulations, driven by the left, could have burdened our businesses with costly and complicated procedures—with grave consequences for British jobs". That is a travesty of the real position and the Government know it. It is high time that they came off it.

Furthermore, that attitude on the part of the Government and our ludicrous opt-out is just not working. The multinationals, as expected and as anticipated, are finding that it is just not possible to operate in one way on the Continent and in another way here. There was an example of that on television last night when the executives of Vauxhall were being interviewed as to how they were approaching the problem. The consequences of that are even more ludicrous and damaging for this country.

What it means is that many of the aspects of the social chapter will be introduced. They will go on being introduced here as well and because of our opt-out we shall not be in a position to influence those decisions. It is ludicrous. If anyone had suggested 10 years ago that that would be the position in which this country was likely to find itself they would have been laughed off the stage. It provides, perhaps, some truth that the result of the Government's policy is that decisions are going to be taken in bodies on which we are not represented and over which we shall have little control, but which will directly affect the lives of British people.

Thirdly, we must try to get back to what I would call the normal courtesy of diplomacy. The atmosphere within which the Government have chosen to operate in Europe—and they have chosen it quite deliberately over the past 15 years—is appalling. Our partners neither understand nor appreciate the Government's; attitude towards them and the institutions of the European Union. The pursuit of cheap headlines and the temporary placating of Tory Euro-sceptics has taken precedence recently over what is actually needed —a much quieter pursuit of British interests, the assessment of which should be far less hysterical than at present. To continue in the present way is highly damaging to British interests.

I give two examples, one of which has already been quoted. The European banking institutions are not, as they should be, coming to London. Why not? It can only be because of the policy that the Government have pursued. The other reasons for it do not make sense in terms of where the financial structures are, where the financial expertise is, or where financial opportunity will be. It is explicable only because of the fact that the; British Government pursued a policy in which they said. "We wish to opt out from this process". Our partners understandably said, "Very well, the bank will go to Frankfurt, not to London".

Sir Leon Brittan is not going to become president of the Commission. Why is that? It is nothing to do with his qualities as a commissioner or as an individual; it is because he is British. Why is that going to disqualify him? It is because of the policy which has been pursued by the Government of this country over the past 15 years. At the heart of Europe? That is a travesty.

There is now deep scepticism inside Europe towards almost any given British initiative. It is no longer believed that we are basically on the same side as our partners. The antics over our Maastricht ratification have left a legacy of bewilderment and bitterness. We have just about run out of any credibility and goodwill which we might have had left. It will do us no good whatever in the long run—nor even in the short, come to that. Ministers in Europe, MEPs and Commissioners, can all read Hansard just as easily as anybody else—and they do. They can see the way in which the Government, and particularly the Prime Minister, have trimmed and tacked in relation to his European policies to avoid internal party difficulties. It is a shameful period in British history and frankly we deserve almost everything we are getting in return. When one considers the immense fund of goodwill and the warmth of the welcome that we were given when we joined the Community, the way in which those invaluable national assets have been squandered over the past 15 years is enough to make even the steadfast despair.

What is the object of the exercise? What is government policy designed to achieve? Whatever the object is, the result is clear. It has been to irritate the maximum number of people for the minimum political and economic advantage. That must change if we are to have any major influence on the pattern of European decision-making which will affect us radically in the future. I confess that I just do not understand the thinking behind the Government's policy, try as I will.

4 p.m.

Lord Campbell of Croy

My Lords, like, I am sure, the whole House, I thank the noble Lord, Lord Healey, for providing the opportunity to discuss this subject today. I am only sorry that he started his speech with the comment that the British Government were regarded as having had a disastrous presidency of the Commission and spoke of sleazy and disagreeable manoeuvres. His general theme was that relations with the governments of other members of the European Union were being damaged.

That is not my assessment. Members of the European Union have their differences and their problems. Britain has placed itself at the centre of discussion and negotiation. The British Government are clearly aiming for policies and decisions which are best for the European Union, while keeping British interests to the fore. Happily, in most fields, the interests coincide. Where they do not, the other governments expect cogent advocacy. They protect their own country's interests in the same way. Friendly relations need not, and are not, impaired by such arguments. Indeed, the attitude of the British Government is understood and respected.

Examples of British initiatives and pressures which have had, and are having, good effect, include the formation of the single market and the efforts to complete it. My noble friend Lord Cockfield, as a Commissioner, played a leading part in that. Such examples also include the principle of subsidiarity, which has now been accepted; control of the budget and of our share of it; and the reduction and elimination of fraud. Your Lordships will probably recall the references I made in this House to multiple moving olive trees. Even Macbeth, after Birnam wood, would have been astonished at the mobility of those trees for the purposes of double and treble counting. Britain is operating in that area to try to do away with the fraud.

There is also reform of the common agricultural policy, the CAP. The framework of that policy was formulated before Britain joined. That was unfortunate. But improvements are being made now at British insistence. Another example is avoiding an unnecessary burden of costs for British industry and commerce. Recent reports indicate that Germany and other member countries appreciate the importance of that.

As it is 15 years since there was a Labour Government, comparison is difficult. It was during the time of the last Labour Government that the first referendum in the United Kingdom took place, in 1975, on whether to remain in the EEC, as it was, which Britain had joined two and a half years earlier. That did not endear the British Government of that day to the other member governments. It did help the Labour Government out of a difficulty. In the general election campaign of 1974, Labour gave the general impression that it was hostile to United Kingdom membership and so benefited from the anti-Common Market feelings among the electorate. However, the situation within the Labour Party with regard to the European Economic Community before the February 1974 election has been described by a close observer in terms that the Labour Party was more deeply divided in opposition than it had been in office. Who wrote that? It was the noble Lord, Lord Healey, in his memoirs The Time of My Life. After coming into office in 1974, the Labour Government obtained—

Lord Healey

My Lords, I am most grateful for the assiduity with which the noble Lord follows my writing. I hope that he learned a great deal from my book. Does he agree that the tragedy at the moment is that the Tory party is more divided in government than it was in opposition? I cannot help watching what is happening without being reminded so much of "the home life of our own dear Queen 10 years ago, but, thank God, she has passed away." The noble Lord's party is actually in office and its divisions are catastrophic for this country's influence in the world.

Lord Campbell of Croy

My Lords, this is a timed debate and I hope that I shall be allowed some extra time for giving way as I was happy to do because I was glad to be able to quote from the noble Lord's memoirs. I was just about to say that I hope that my mention of them will help his royalties—and the royalties from the successor. I understand that more memoirs are on the production line. I can tell your Lordships that the book is a very good read; I commend it.

I was saying that after coming into office in 1974, the Labour Government obtained some cosmetic changes to the original terms of entry. That was not difficult because those changes were insubstantial. The referendum was then held. It is curious that there seems to be no reference in the memoirs to the 1975 referendum. I realise that the noble Lord, Lord Healey, was at that time completely absorbed as Chancellor of the Exchequer in pressing financial and economic affairs leading later to having to cope with the IMF.

When the noble Lord intervened just now, he spoke about the divisions in the Conservative Party at present. They have become very clear because there is such a small majority in the other place. I hope that the noble Lord has taken note of the views of some of his noble friends sitting on the Benches behind him. I shall not mention names, but I think that most of my noble friends know who I mean.

I took part in the referendum of 1975 and found it refreshing to be on platforms with members of other parties as well as my own, discussing subjects of the greatest importance and interest. Nonetheless, I was well aware that the majority of the Labour Party, and of the Labour Party's Members of Parliament, were campaigning on the other side for a "No" to Europe. The Cabinet was allowed to go both ways as well.

Lord Healey

As now.

Lord Campbell of Croy

The governments of the other member states in the European Community must have found that somewhat difficult to bear.

Lord Healey

They do now.

Lord Campbell of Croy

Well, they did then, and we can only speak about what happened more than 15 years ago because the Labour Party has not been in government since then.

To complete the picture, one must go back to 1972 and the crucial vote in the other place on entry to the EEC on the terms negotiated. There was a free vote for the Conservatives, but the Labour Party, in opposition, had a three-line Whip which was defied by 69 Labour MPs who voted in favour while 20 abstained. The noble Lord, Lord Healey, talks about divisions. Let us remember those divisions from the past which are all on the record. Of course, there were some Conservative MPs opposed to the terms of entry, but that was the reason for the free vote which gave them the opportunity to express their opposition. So when the Labour Party was last in office, and in opposition before that, it gave the governments of other members of the European Community plenty to worry about.

To return to today, I believe that it is the President of the Commission, M. Delors, with whom it may be difficult to preserve the best of relations. No one can criticise him for lack of energy or determination. For nearly 10 years, he has been pressing for more centralisation—over-centralisation in the view of many. In my opinion M. Delors has been aiming to be a latter day Monnet. He would like to go down in late 20th century history in the same way. I believe that he is misguided. One cannot be certain, of course, but in my view M. Monnet would be pleased with where the European Union has reached today and would not be urging extreme centralisation or advocating one huge state. M. Monnet's vision encompassed nation states working and acting together. We should remember that he and M. Schuman whose 1950 declaration started the whole business were concerned primarily that Germany and France should settle their differences and become the basis of a Europe of co-operation and co-ordination. I am sorry that the noble Lord dragged in Normandy. I have been involved in previous commemorations, and I also lecture for the Ministry of Defence in Normandy with the help of a German colonel who was on the other side. I accompanied the Prime Minister at a press conference on 6th January where he announced arrangements in Normandy and the Portsmouth area. That was at the beginning of this year. There were to be dignified events of thanksgiving and remembrance. They were acceptable to everyone concerned, including the Normandy veterans. Chancellor Kohl says that he would not have accepted had he been invited, and that was the view of my German army friends who were on the other side in the war.

I conclude on a personal note. I shall be in Normandy again shortly for a few days. I have been looking up a speech I made there on the 30th anniversary in 1974, soon after Britain entered the EEC. I was leading our Scottish Division's group. That was 20 years ago. The speech was made out of doors on Hill 112, which many will wish they had never met, to a largely French audience although it contained some British veterans. I was speaking in French, but here is an extract of the English translation: We can be thankful that the countries of Europe are working together and that such a war is now impossible. Some of us who have been working in diplomacy and politics have the satisfaction of knowing that this aim has been achieved". In lighter mood, I said: A new generation is represented here today. The piper was not with us thirty years ago. He was not bom. He is one of my sons who has come for the purpose from his Regiment of Highlanders serving with NATO". If I am asked for the French for "bagpiper", I can tell your Lordships that it is cornemuseur.

4.12 p.m.

Baroness Williams of Crosby

My Lords, perhaps I may add my thanks to the noble Lord, Lord Healey, for introducing a debate which one hopes will be able to address one of the major issues of our time in a way that is often difficult for another place. I am grateful to him, as I think we all are, for enabling the debate to take place.

I turn for a moment to the speech of the noble Lord, Lord Campbell of Croy. He deserves, of course, our great appreciation for the contribution he has made for the creation of a united Europe, but his very remarks underline the central point that was made by my noble friend Lord Jenkins; namely, that both the major parties in this country have been split down the middle on the European issue. That is the nature of the British tragedy, and one of the reasons why our influence in Europe has been so much less than this country's history, democracy, influence, or power deserve it to be.

Few people can speak with more direct understanding of that issue than my noble friends Lord Jenkins and Lord Rodgers or myself. We were part of that group of 69 Members of Parliament who voted against the three-line Whip in 1969, because we believed that Britain was right and proper to seek to become a member of the European Community.

Lord Richard

My Lords, and me.

Baroness Williams of Crosby

My Lords, yes, indeed, the noble Lord, Lord Richard, is entitled to add his name because he, too, was in that Lobby. But the truth, as the noble Lord, Lord Richard, knows as well as I do, is that all through the 1960s and 1970s the Labour Party was profoundly split on the European issue, and in consequence Britain's voice was an ambivalent voice throughout that decade at a time of the important: developments resulting from the first major expansion of the European Community.

The Labour Party has now, I think, put that behind it. It is now largely a united party on the issue of the significance and importance of staying within Europe, and it now believes that there is no alternative to British membership of Europe. But what a strange irony it is that the legacy of the Labour Party—a profoundly divided party on the European issue—in the 1980s became the inheritance of the Conservative Party which, with great respect, despite the brave attempt of the noble Lord, Lord Henley, to present it otherwise, all in this House and in another place know to be the case; namely, that the Conservative Party is profoundly divided on that issue.

Anyone who reads today the debates conducted over the Treaty of European Union—the so-called Maastricht debate—must realise what a terrible lost opportunity that was. For it was for this ancient Parliament to contribute to thinking about the European Community, about how it might develop; about how it might become democratic; about how it might meet the legitimate interests of nation states, while at the same time developing a united position where it was necessary and required. Essentially, we threw that opportunity away. The debate was small-minded, parochial, bitter and extended, and was not to the honour of the Palace of Westminster.

Having said that, let me turn now to three of the great issues that confront us, for I fear with regard to those issues too that the Government's ambivalence will make our contribution much less than it might be. The first of those issues is the IGC of 1996, which is now coming down the track towards us at a terrifying speed. For that IGC is likely to move to try to shape a political and constitutional dimension for the European Union, not necessarily a federal one. Everyone knows that as a result of the current enlargement, and the prospect of the second enlargement to which my noble friend Lord Jenkins referred, the institution of the European Community will be unable to cope with the decision making that is required from them. I shall come in a moment or two to why that decision making is more urgent and more important than it perhaps was a few years ago.

The Commission is becoming too large to do its job effectively. We have to think about how it might be organised so as to become a more effective body than it is today. The European Parliament, if we proceed simply on the basis of arithmetical projections from where we now are to a Community of 16 or 20, will exceed 800 Members, and will go on to exceed 1,000 Members if the expansion goes on to take in the whole of the continent of Europe. That, I think all of us can agree, will not be a viable size of Parliament.

Many of us I believe, on all sides of the House, would like to see the European Parliament made more effective, less complex and puzzling, with a simplifica-tion of its procedures, a clear right of veto and much closer and effective relations between national parliaments, so that the supervision of the Executive can be carried out more effectively. That is a democratic desire, regardless of which party one happens to come from, and we are giving no thought to how we are to propose an improvement and reform of the European Parliament and its relationships with national parliaments. That matter, too, will be decided for years to come at the 1996 IGC.

We are giving little thought to what the Council should look like. I must say for myself, and, I believe, all my noble friends in the party of which I have the honour to be a member, that the extreme secrecy of the Council's proceedings should no longer be acceptable to the democratic citizens of the European Union. We have little ability to control the Executive or the body which serves it, the Commission, because we do not know what is actually happening. Despite the astonishingly striking and meritorious activities of the Select Committees of this House and another place, the overwhelming secrecy in which the Community's affairs are conducted, not just by the Commission but by member governments including our own, is something we surely ought to address before the IGC takes place and the Danes and the Dutch go for a much more open system, we not even having decided what our position ought to be.

With regard to the inter-governmental conference in 1996, I suggest that the great debate ought to start now in this country. I further suggest that that great debate ought to be enthused by intelligent and thoughtful contributions from the media. Dare I say that we might even address the matter in our national curriculum? That takes up a large part of the time of children in schools. It should give some recognition of the fact that we are members of the European Community by giving more prominence to the learning of foreign languages and by teaching our children something about the heritage and the history of that Europe of which we are a part. We are teaching them nothing of this. The national curriculum is exactly what it says it is; no more and no less.

Finally, perhaps for two minutes I may address the reasons why it is so important that Britain begins to play a truly major part in Europe rather than kidding itself with phrases such as "being at the heart of Europe". Many of the members do not regard us as playing a positive part at all. The reason for that was touched upon by my noble friend Lord Jenkins and by the noble Lord, Lord Richard. That central issue is that today we are looking at the gradual slipping towards chaos of more and more of the countries to the east of the European Union.

This morning I was in Kiev. I watched the acting Prime Minister leave to try to sort out a potential war in the Crimea. Many people in the Ukraine expect that to begin to escalate into yet another dangerous rift in the order in that part of the world. I do not need to repeat what is happening to Russian forces in Georgia, Tajikistan and many other areas of an extremely unstable part of the world.

Our ambivalence plays towards making that chaos more probable. The European Union cannot escape what is today its central responsibility; the central responsibility not only of the Union but of all its member states to maintain the stability of our Continent; to protect the new democracies in central and eastern Europe, which are still in an extremely fragile state; and to begin to extend some of the benefits of more rapidly expanding prosperity and trade to those countries whose income per head is less than one-seventh of ours.

I suggest that we can no longer luxuriate in our own parochial divisions. There is too much to do. We owe too much to history and to the future not to be part of doing it.

4.23 p.m.

Lord Cledwyn of Penrhos

My Lords, I too am grateful to my noble friend Lord Healey for his stimulating opening speech in which he set the scene for this important debate. I supported our membership of the European Community mainly on political grounds and because, like the majority of people in this country, I thought that two terrible wars with their appalling losses were a grim lesson and that a union of the old enemies was essential.

The Community represents a historic achievement and the task and duty of this country and the other nations in the European Union is to strengthen the bond and the trust between them. We do have other commitments towards the Commonwealth and the United Nations, but the Government must realise that the success of the European Union has to be our primary objective.

Nations in other regions of the world are uniting and developing; for example, the United States with Canada and Mexico, and the countries of the so-called Pacific Rim. China too is developing rapidly. Some commentators are comparing Europe unfavourably with those areas. That is a short-sighted view because we know that if we manage our affairs efficiently the European Union can compete and co-operate with any other combination in the world.

However, what is our experience thus far? Have we made the most of our combined resources? Are we moving forward in friendship and understanding? I regret to say that the answer cannot be an enthusiastic affirmative. The European Union has achieved a great deal and we have benefited in many ways from our membership, although some might deny that. The present Government have been in power for 15 years. Whatever the arguments, regrettably we find that our relations with the other European countries are at their lowest ebb. That is a tragedy. The Government must begin to face reality and recognise that there are huge difficulties to overcome and acute problems to solve. On the economic side, we have failed abysmally to co-operate in order to find solutions to our problems. We have gone through the worst recession in 60 years but I have not detected close and warm co-operation between ourselves and our partners. The tensions between us have been apparent to all.

In two years' time a crucial conference will be held to renew the European Union's structure and to prepare for enlargement. What are the Government's policies on these absolutely crucial developments? I read their election manifesto with hope, but I am afraid that that hope was dashed. Next year we look to the accession of Austria, Finland, Norway and Sweden. The European Union will be a union of 16 countries, and that is only a few months away. Have we planned for it constitutionally and economically? There will be a larger Parliament and a larger Commission? Are we: ready for them?

I want to see enlargement but I also want to see a workable and effective democratic organisation. The Government have not explained to the British people their policies on this vital development. Indeed, they know little about it. I have discussed these matters with people in various parts of Wales and they ask, "What is the Government's policy on these great issues? We do not know". I said, "Perhaps, when the election comes, you will be told". I am afraid that on reading the Government manifesto, the people of this country will be disappointed. It is a depressing state of affairs.

However, that is not the whole story, because the 1996 conference will be preparing for enlargement to eastern Europe. That is an undertaking of great complexity and significance. It is vital that the Union should be stable and economically sound when these eastern countries enter. The Union already consists of & variety of countries: the rich north and the not-so-rich south, the big and the small, and so on. We must plan carefully and in detail so that there is a real possibility that we can live in harmony in a union of 20 or more countries. This calls for leadership of the highest quality. We must look and plan beyond the excitement of an election.

In all these considerations, our relationship with Germany is of particular significance. It is obviously important that this country should maintain good terms with Germany, as indeed it did for most of the post-war period. But relations have been strained during the past three years or so. The Government's opposition to unification was particularly damaging, and there were other causes of division. That demonstrates how fragile relationships within the Union can be. I do not believe that the Government have handled the crisis well. They should realise that the possibility of a friendly bond is very real. German capital investment in this country is substantial. There are a large number of German students in our universities, and there are very good relations between our forces in Germany and the German military and civilian populations.

It is true that this Government have had some unhappy experiences in recent years. Britain's departure from the ERM was one and the mess over European Union voting rights was another. The Government did not handle either problem particularly well. But taking everything into account, it is in my view absolutely essential that we should sustain a close and amicable relationship with Germany. Those who think otherwise have not begun to understand the history of the past 1.50 years.

A German official is recorded as saying: We have worked together extremely well in the past and we want to do so again. We want to develop a common policy on central and eastern Europe. This is an example of the sort of concrete alliance Mr. Major has also talked about". When he replies, can the Minister say whether he agrees with that summary? Can he also tell us what is the latest position in relation to the successor of M. Delors?

In recent debates, both in this country and in Europe, we gain the impression that we must either be supporters of federalism or of nationalism. Not at all. It is those very factions which are making a lot of noise and giving the European Union a bad name. I support a united Europe and one with a strong social structure. I regret that the Government have moved away from that with their prejudice against the social chapter, although the other 11 members support it. We shall regret that in due course.

I do not want to see a bleak, centralised union, influenced and run by a large bureaucracy; nor, on the other hand, do I want to see jingoistic units which have always been the precursors of violence and war. I often ask myself: can I be a Welshman, can my children and grandchildren be Welsh, and can we preserve our language and culture in the expanding and ultimately huge European Union? The answer is yes, provided that the union is thoroughly democratic; provided its schools from the Ukraine to the Atlantic coast teach their children the meaning of democracy and tolerance; and provided that we work closely together to organise our economies efficiently and in the interests of all levels of society. Britain must take its proper place at the centre of the European Union with others determined to achieve those objectives. I see that as the only road to peace and stability.

4.32 p.m.

Lord Reay

My Lords, one could perhaps be forgiven for supposing that the motivation behind today's debate is unusually political for your Lordships' House, proceeding as it does from the still vibrant pugnacity of a brilliant old political warrior, as the noble Lord, Lord Healey, is, and timed to coincide with the campaign for the European elections. So it has proved to be. Rarely have I heard in your Lordships' House a more party political introductory speech.

The noble Lord, Lord Healey, referred to the deep divisions, as he described them, in the Conservative Party. Of course, there is a whole spectrum of attitudes in our party towards Europe, just as there is in the party opposite. However, the Labour Party has indulged in far greater gyrations on the subject of Europe than has the Conservative Party. The Labour Party has changed its mind on Europe no fewer than six times. In 1983 its members recommended withdrawal from the Community, only eight years after they had recom-mended acceptance of the renegotiated terms of entry that they had secured to the people in a referendum. In 1987 they were still talking about withdrawal. Once their great love of Jacques Delors has passed, with that gentleman, from the scene, I would not put it past them to change their minds yet again.

However, nothing defines better the difference on Europe today between the Conservative and Labour Parties than their respective attitudes to European social legislation. The two linked problems of high unemployment and low competitiveness, reflected in low economic growth, are the most urgent issues facing Europe today. One of their causes —and in the case of unemployment perhaps the principal cause—is the inflexibility of Europe's labour market and, in particular, the social costs of employment. Of Europe's 20 million unemployed, 50 per cent. have been unemployed for over one year and 25 per cent. for two years or more.

So far as concerns private sector employment, which is where the wealth creating jobs are made, since 1973 the United Stated has created 10 times as many new jobs as has the Union, and Japan has created three times as many. As Sir Leon Brittan describes it in his book entitled The Europe we Need: Europe has created a working super class and a jobless under class, a Europe of two social speeds with an ever-widening gulf of alienation between them". It stands to reason that every proposed additional social cost will tend to aggravate the problem. But here we have a Labour Party proposal for a minimal wage across Europe, which will raise the cost of employment further and which is the antithesis of what has been responsible for job expansion in America.

The Labour Party is also calling for the introduction of works councils which will involve the unions in formal consultation arrangements, enshrined in law, over companies' business plans and as such would constitute a huge leap backwards into the 1970s so far as concerns this country. Labour policy is that public spending should be used to "promote", "generate" or "boost" new jobs. Those concerned also propose an industrial policy and, the effective application of regulations in all countries in order to ensure that industry is not disadvantaged by unfair competition". That sounds to me suspiciously like a retreat from a commitment to free trade.

The Financial Times, the party opposite's erstwhile supporter as its members will remember, summed up its editorial yesterday by saying that the application of this socialist philosophy across the European Union could virtually be guaranteed to ensure that Europe as a whole remains a high cost, over-regulated region whose enterprises would indeed be disadvantaged in com-petition with those from other parts of the world.

The Prime Minister's statement that he intended this country to be at the heart of Europe has sometimes been derided and, indeed, is still derided by noble Lords opposite. But I think that it is quite justified. In many respects opinion in Europe is moving our way. The Commission's recent White Paper on growth, competitiveness and employment shows itself how seriously others in Europe have begun to view the issues to which our refusal to accept the protocol drew attention. Other member states have also allied themselves to this country's campaign to promote subsidiarity and deregulation. As my noble friend mentioned, the French Government joined with us in putting forward at the 1993 summit a list of EC legislation which could be scrapped or modified.

The German Government have followed our example of setting up a deregulation unit in Bonn and a German Minister recently proposed a task force of outside experts to root out unnecessary European Union legislation—a proposal, I believe, not immediately acceptable to M. Delors. The German Government have pledged to put deregulation high on the European agenda, as my noble friend mentioned, for its presidency. They have proposed the immediate scrapping of 30 pieces of European legislation and 24 policy initiatives. President Kohl has even retreated somewhat from his former super-federalist position and has recently stated categorically that we are not building a United States of Europe.

A successful conclusion to the GATT round—the greatest act of market opening that the world has ever seen—was achieved after determined pressure by the Prime Minister and brilliant diplomacy on Europe's behalf by a British Commissioner. As my noble friend said, we have led in the fight against fraud and in the fight against state aids, which promise nothing but further industrial decline.

We lead in the gigantic struggle to reform the CAP, where the first achievements are coming through and where perhaps the tide has at last been turned. No one today in Europe would question the importance of our contribution towards the achievement of a single market, once again spearheaded by a British Conservative Commissioner. As regards the CSFP, we are a pillar of the pillar.

We have pressed for the accession of the EFTA countries—a happy event which comes ever closer— and of the countries of central and eastern Europe where the talk has become not of whether they will join the Union but of when. Our know-how fund has become the flagship for the Union's own aid efforts in central and eastern Europe. Then of course there is privatisation. Privatisation, whose first appearance was so derided by the party opposite, has become the rage—the rage right across Europe.

In all these policies and areas of policy, not peripheral but central to the fortunes of Europe and the history of our times, we have played an active, leading and often decisive part, many times winning adherents for policies where we started as a lone voice.

We have been at the heart of Europe, we are at the heart of Europe, and that policy works to the benefit of ourselves and of Europe. But what of the future? There is an ample agenda. The CAP must be further reformed; the single market completed; state aids further reduced; the Commission's interfering instincts kept under control; markets kept open; the budget kept in check; Europe's competitiveness enhanced; the Union's defence identity built up while keeping it compatible with NATO; and the Union's foreign policy must be developed. Those are some of the tasks ahead. For the rest, I refer noble Lords to an admirable publication which appeared yesterday entitled A Strong Britain in a Strong Europe and subtitled The Conservative Manifesto for Europe 1994 and available from an address close to here for a modest charge.

As regards the single currency, that will be a matter for the parliament of the day in this country to decide, if and when other countries decide to go ahead, as I expect they will. I do not believe there will be any pressure on us to join it, any more than there is pressure today on us to rejoin the ERM.

What of the inter-governmental conference in 1996? Here I believe we should put forward our own agenda, and central to that agenda should be the preparation of the Union, in particular its institutional preparation, ahead of the accession to the Union of the countries of central and eastern Europe. Nothing is more striking than the determination with which those countries have hitched their star to the Community. Their enthusiasm provides us with a wonderful, unrepeatable opportunity to unite again the Continent of Europe—this time in freedom.

But the Union will need to adapt its institutions, as well as the CAP, if those countries are to accede. The present institutions could not operate for 20 or 25 member states as they do now for 12. There could not be the same arrangements for commissioners, or for the operation of the Council presidency, or, most important of all, for voting in the Council where a three-tier voting system might have to be considered. The number of official languages will also be a thorny issue. It will be tricky too to continue to secure a balance which all can accept between the weight to be given to small and large countries. Neither must feel at the mercy of the other.

The prospect of the Union's enlargement to the East is sufficient by itself to justify the 1996 inter-governmental conference, and the more it is confined to that task the more focused will any new treaty be and the more likely to be comprehensible and therefore acceptable to public opinion, unlike the Maastricht Treaty which offered something to everyone and perhaps lost something in its appeal as a result. We in this country have a great tradition of involving ourselves often in moulding the world's events. I cannot believe: we now suddenly wish to turn back and in on ourselves; and retire to our country cottages to write complaining letters to newspapers while the world passes us by, ruling us but heeding us not. The only position for us, if we wish to continue to use our influence to the maximum on the world's affairs, is to continue to remain where we now are—where the Conservative: Party has placed this country, at the heart of Europe.

4.44 p.m.

Baroness Lockwood

My Lords, my noble friend Lord Healey, to whom we are all grateful for initiating this debate, my noble friend Lord Richard, and now the noble Lord, Lord Reay, have all referred to the social chapter. I, too, want to refer to social aspects of the European Union. But unlike the noble Lord opposite, I come to completely different conclusions. I also want to refer to individual rights of citizens within the Union because I believe that the relationship of individuals is an important part of the relationship between countries and between governments. My remarks are based on my experience within your Lordships' House and with the Equal Opportunities Commission of which I was chairman from 1975 to 1983.

The Equal Opportunities Commission saw advantages for British people, women in particular, in developing the interaction between British and European law in promoting equal opportunities between men and women. That was done in two ways; first, by establishing case law through the domestic and European courts and, secondly, by liaising and co-operating with equivalent bodies in other member countries. On the initiative of the EOC, this latter co-operation led to the setting up of an advisory committee to the European Commission which has helped formulate subsequent policies on equality between men and women. My other experience of the European Union has been through membership of your Lordships' Select Committee on European affairs, and particularly my membership of Sub-Committee C on social and consumer affairs where I served a period as chairman.

Our debate today is on the relationship of governments within the Union. I rather fear that the Government's relationship with individual countries of the European Union sits uneasily with the concept of a social Europe as well as a trading Europe. Indeed, evidence from the Government to a number of your Lordships' Select Committee inquiries has indicated the minimal approach the Government have to social matters. This has been one of the major areas of difference between the present UK Government and others. Nevertheless it is, I think, an indisputable fact that a "social" Europe has been of great advantage to British people, and in particular to British women. It is on that aspect that I wish to concentrate.

From the outset, Article 119 of the Treaty of Rome made clear the right to equal treatment in terms of pay and conditions of employment between men and women. The scope of the article was considerably expanded by the 1975 equal pay directive, the 1976 equal treatment directive and the 1979 social security directive. Not only was Article 119 extended, but our own equal pay and sex discrimination Acts were strengthened and some gaps filled by the directives.

I give one or two examples of new opportunities made available through European law and the development of case law. The first concerns equal pay. The definition of equal pay was considerably widened to include the concept of equal pay for work of equal value. That was achieved through the development of case law and, regrettably, eventually through infringe-ment proceedings being taken by the European Commission against the British Government. But eventually our own Equal Pay Act was amended to include the concept, which gave many more opportunities to women to claim equal pay.

Secondly, our domestic legislation excluded matters relating to death and retirement—not only the important subject of pensions and survivors' benefits but also redundancy payments and other benefits associated with the state retirement rule. The European Court of Justice has ruled on several occasions that in certain situations pensions and other benefits are deferred pay. This has provided further equality of opportunity and further equal treatment for women that would not have been possible under our domestic legislation. Some of those benefits, incidentally, have also been very much to the advantage of men.

My third point relates to women's dependency. Our own legislation was based on the assumption that women were dependent on their husband's income and thereby excluded from certain benefits, including invalid care allowance. But, again, the 1979 social directive brought in those women, and benefits were won for them.

My last example is equal treatment for part-time workers, an area covering some 5.5 million workers in this country. At present there is no right for part-time workers to enjoy the same terms and conditions as full-time workers. But a number of cases based on European legislation have opened up opportunities for part-time workers to claim benefits pro rata with full-time workers.

Not all those cases were initiated in Britain through the British courts. For example, the very first case taken to the European Court of Justice was that of a Belgian airline stewardess. Two of the key cases which have opened up opportunities for part-time workers were taken through the German courts. So the right of individuals to pursue cases through our own courts and also through the European Court of Justice is an important right which is enjoyed by all citizens within Europe. It needs to be safeguarded. It can bring benefits not only to the individuals who have taken up the case but to workers throughout the Community. However, I have to say that it can be a long-drawn-out process.

Of much wider application are the directives which require member countries to amend domestic legislation. A recent example was the 1992 pregnancy directive, which led to amendments to our own maternity leave provisions and ensured for the first time a minimum of 14 weeks' maternity leave for every woman worker, whether full or part-time. Although there were, and still are, some criticisms of aspects of government policy in implementing the directive, nevertheless that right was given to British women.

The draft part-time working directive, which has now been in the pipeline in one form or another for over a decade, is another area where the 5.5 million part-time workers in the UK could benefit. Regrettably, the directive is, and has been continually, blocked by the UK Government. The veto on the directive is in keeping with the Government's decision to opt out of the social chapter. The Government's view is that the directive and other benefits would impose difficulties for British employers and would make it more difficult for women to get jobs. We heard from the Minister and the noble Lord, Lord Reay, some of the Government's thinking. I do not accept what they say. We would not be uncompetitive with our European colleagues because, whatever the colour of their governments, they have accepted the social chapter.

If we look at our position vis-á-vis other European governments it is other indices such as the percentage of the GDP invested in industry and production per worker which make us less competitive with our European partners. It is only on labour costs that we are cheaper. But no matter how we attempt to cut costs we cannot begin to compete in terms of labour costs with the Asian rim. We have to compete on other terms.

Britain's industrial future does not depend on cheap labour; it depends on a highly skilled workforce, high investment in industry and well managed companies. Such companies and industries could, I suggest, sustain the social chapter. It is to that kind of approach that I suggest the Government need to turn their attention.

4.57 p.m.

Baroness Elles

My Lords, relationships, if they are good, are generally not subject to wide and detailed media coverage. Therefore I am particularly grateful to the noble Lord, Lord Healey, for having given us the opportunity in this House today to discuss the relationship of the present Government with other member states of the European Union which, because they do not receive coverage, are singularly good. The debate gives us, particularly on this side of the House, the opportunity to emphasise some of those points.

I shall not follow the road taken by the noble Baroness, Lady Lockwood, except to make two points. Judging by the number of young and elderly people who come to this country from other member states, social welfare benefits in this country are among the best in the European Union.

Secondly, in relation to the protection of individual rights I should like to take this opportunity to pay tribute to my noble friend Lady Vickers who died recently. She did a great deal for women in this country and in Europe through her invaluable work in the Council of Europe, as well as through her wide links with Commonwealth countries and other countries throughout the world.

I should also like to mention that it was the late Lord Broxbourne who introduced into the European Parliament the declaration on the rights of the individual in order for those rights to be protected within the European Community system. He pushed for the setting up of the system of ombudsmen which has at last found its way into the Maastricht Treaty.

I should like the House to be aware that through those two remarkable people this side of the House has made a valuable contribution to developments in those particular fields which were touched upon by the noble Baroness.

The European Union is a unique system which depends on participation, negotiation, co-operation and, eventually, decision. Consequently, as noble Lords who have experience in this field will know, to achieve one's objectives implies co-operation, understanding and the sharing of ideas and views with other member states. Let us look at the record of the present Government over the past two years in the field of European affairs. Many of those issues have already been referred to. However, I wish to stress some of the achievements of the Government which sprang from government policies in this country. Gradually they have been accepted by other member states and wholeheartedly adopted.

First, we have evidence of that factor in the Maastricht Treaty, beginning with the principle of subsidiarity in Article 3b. We now see in the election manifestos of other countries—I refer to the manifesto of the CSU which is part of the German Government party—that priority must be given to subsidiarity. It may be a new departure for Germany, but it is in its manifesto.

Secondly, I refer to the undertaking recognised in the treaty that only after our national Parliament has decided can the United Kingdom move, if it so wishes, to a single currency. I understand that Members opposite are in favour of a single currency but they have not stated whether they support the terms of Maastricht —that it is for our own national Parliament to decide. They have not said whether they agree with the criteria before which no member state could move forward to a single currency. That again was one of the major planks of the negotiating team led by the Prime Minister during the Maastricht negotiations.

As regards the agreement to consider the question of moving to a single currency, the noble Lord, Lord Healey, mentioned that that consideration applies also to Denmark. It was the German Federal Court which decided, as a result of the Brunner case in October of last year, that the Parliament in Germany must decide before going to a single currency because such & decision exceeds the German constitution as at present drafted. It was not a parliamentary decision that the German Parliament should decide on the move.

The Government have led in the field of foreign policy. Many noble Lords will recall that when my noble friend Lord Carrington was Foreign Minister—I am pleased to see him in his place—he initiated the London report on European political co-operation which led to the common foreign and security policy articles in the Maastricht Treaty whereby common decisions shall be taken on foreign policy issues. As has already been mentioned, since the treaty came into force in November of last year proposals for joint action have already been put forward in five areas and decisions taken.

The implication is clear. There is a decision by all member states to join together in foreign policy issues which are the concern of the European Union. That has been a major British initiative. I believe that in Britain we suffer from understating our own achievements. If I had to criticise my own Government and Prime Minister it is that he does not say "I did this" or "I achieved that". I believe that he would be justified in so doing but it would not be considered to be British and the Government would still be open to Opposition criticism. Nevertheless, I believe that we have achieved a great deal for which not enough credit has been given.

Enlargement was another major plank of government policy for some years. We hope that we shall welcome four new member states on 1st January 1995.

Again, mention has been made of the major successful negotiation for the GATT agreement, on which Britain was deeply involved. A brilliant British commissioner succeeded in bringing that negotiation to a satisfactory conclusion.

With regard to bilateral terms, some noble Lords have referred to the proposal by Minister Rexrodt of Germany to set up a task force to look at deregulation in order to deal with the major economic problems facing Western Europe, especially in the field of employment. In parenthesis, perhaps I may say that, so far as I know, we are the only country in Europe at present which has a declining number of unemployed. For that we can be truly thankful for our own policies as we now come out of recession. Consequently, member states look to Britain for guidance and encouragement in policies which over the past two or three years we have successfully followed in reducing the rate of inflation by cutting public expenditure and by other means.

Similarly, there is an Anglo-Italian proposal to extend activities of Europol—that is a sensitive matter —and to encourage growth prospects in central and eastern Europe. There are proposals for further cultural activities with France. There is a close relationship between France and Britain, to say nothing of the Chunnel. A great deal of French investment is coming into Britain, and British investment going into France. There is the Anglo-French list of EC legislation which should be stopped.

Those are simple examples to indicate that one cannot have such a relationship with other member states without a good understanding with them. Only yesterday at a meeting we discussed the institutions of the Community. A German speaker said, "If a blip is made by the UK representative" —he referred to a recent incident which several noble Lords have mentioned—"it could not be a mistake by Britain because it is so well organised and competent. There must be a hidden agenda". The member states have been looking for that hidden agenda with regard to the majority vote and have not found it. However, it was a well-earned tribute to the efficiency and representation of our country within the European Community.

I congratulate the noble Baroness, Lady Williams of Crosby, on her speech. It is the kind of speech that we should be hearing in two or three months' time in discussing the institutions and the Europe that we want.

However, we are actually dealing with a particular problem at the moment which rather concerns me. I wondered why the Motion of the noble Lord, Lord Healey, is worded in the way that it is. I understood him to say—I hope that I have his words right—that it is now clear that we have a new type of system in which nation states retain their identity. In the Euro-Socialist manifesto, to which the Labour Party is committed, I read that the party opposite is signed up to a federalist system. Whether or not it wants that is another matter, but I can assure noble Lords that my experience in the European Parliament was that the European Socialist Party is committed to a federal Europe. One has only to consider the votes that it has cast on decisions on the new draft constitution for Europe, and a raft of policies. Therefore, I suspect that the noble Lord, Lord Healey, was using the issue as a helpful mechanism whereby it can now be said, "The noble Lord, Lord Healey, who of course is one of the most distinguished Labour Party Members, says we are going to stick to nation states, and we can scrub all that nonsense about federalism".

However, we now have the forthcoming elections and I remind the House that David Martin, former leader of the Labour MEPs—he is currently Vice-President of the European Parliament—said: Let's stop defending, pretending and apologising … a Socialist super state is exactly what we do want to create (in Europe)". Jean-Pierre Cot, Leader of the Socialist group, said, We Socialists are not going to settle for a minimalist, free-market Europe … We see… a wholly unacceptable drift towards free-market thinking. It is high time this was stopped". If the Government are accused of being divided, I could use other words for the party opposite. It is not divided but it is fudging what it has signed up to in its manifesto, and what it now presents to the British people. That party is now beginning to realise that it is the Government who are right; that the Government have recognised what the British people want. That is not a federal state but a Europe in which Britain plays a leading role, as it has done over the past two years and will continue to do.

5.9 p.m.

Lord Shepherd

My Lords, the last few words of the noble Baroness reminded me of the contribution made by my noble friend Lord Cledwyn. He said that we approach the election in different ways and with different spirits. If we approach it, as he said, in a spirit of nationalism—which I thought was the context of the noble Baroness's concluding remarks—then we are on dangerous ground. The House ought to be reminded that the Iron and Steel Community was formed not solely or entirely for economic reasons. It was formed for political reasons, to bind the wounds and ease the tensions between France and Germany. From that first step it was possible to create the Common Market. From the Common Market we now have the European Union.

If that was federalism as described by the noble Baroness and others, then at this stage I oppose it. I believe that the political evolution in Europe will one day bring it about, but well beyond our lifetime and perhaps our children's lifetime. One day it will happen.

It seems to me that we must seek to create within the European Community a real sense of harmony among nations and people. I travel quite extensively and regularly through Europe. What worries me is that whatever may be the spirit and understanding between Ministers, there is great dismay among the people of Europe, great anxiety as to the future of the Community and the failure of Britain to play the role that those people had hoped we would play when they welcomed us into the Common Market.

As the noble Baroness, Lady Williams, said, we need to take people much more into account. That is not only true here but also throughout Europe. One of the benefits of the referendum, at least in France, was that the Maastricht Treaty was fully debated. We did not have a debate in this country of any merit. It appeared to many people that the treaty was negotiated with not much transparency and it was then imposed upon us. It would be dangerous to think that in succeeding years we shall be able to take that path again. I entirely agree with the noble Baroness that between now and 1996 governments, and Parliament in particular, must make a greater conscious effort in truth and honesty to put the issues before their peoples. The peoples are entitled to know what is being negotiated on their behalf. Matters of detail as to whether this or that is done can be discussed at the Council of Ministers, but the big issues are matters which the people of this country and Europe are entitled to know. If they are not informed and are not aware of them, then grave repercussions will follow.

On that line, therefore, we should look to 1996 in terms of the institutions. Anyone like the noble Baroness who sat with me on the European Communities Committee will know that there is major anxiety among all of us, irrespective of party, as to the structure of the Community institutions. The noble Baroness, Lady Williams, said that the conclusions of the Council of Ministers are rarely printed. We only know that our committees fear that the conclusions take many weeks before even national parliaments become aware of what ministers have concluded in the Council.

Therefore, I fully support that, although debates within the Council may have to be in private because obviously deals are done and in that type of community they have to be done, at least the public, and Parliament in particular, ought to be fully informed as to what conclusions have been reached and what impositions placed upon them. I strongly support transparency.

Further, we need to seek a more equitable relationship in power and responsibility between the Council of Ministers and the Commission. To that end, I support the major development in the improvement of the Council secretariat. I also strongly believe that the Council of Ministers itself should have the power and responsibility to initiate proposals. If that were accepted, it would in a sense change what seems to us a lack of accountability. The Commission has the right and duty to make proposals, but it is for the Council of Ministers to say yea or nay.

Therefore, we should have a thorough look at the Commission. Having sat with the noble Lord, Lord Campbell of Croy, on Sub-Committee A where we are considering waste and fraud, I consider that waste is probably greater in terms of currency than fraud. None of us can be satisfied either with the position of the Commission or, for that matter, even with the British Government. I can see their difficulties, but I hoped that they would take a much stronger view. This House will be able to judge whether I was correct when it reads the report which I hope will come out shortly.

I should like to see a commission for the Treasury, with a right and duty not only to justify and authorise expenditure but also to monitor it, to ensure that we receive value for money and that money is spent where it was intended to be spent. I should also like to see the Commission, through analysis, make a judgment between what may be limited resources and how in the interests of the whole Community the resources could be better deployed. The CAP is certainly one of the targets.

Unless we do something about the CAP, I believe we shall be unable to absorb the eastern European countries. The problems with the CAP are so insoluble that it will not be possible for those countries to enter, and I believe that their entry is important for security reasons. But that is for the Commission. What do we do? The noble Baroness, Lady Williams, said that we need a debate. However, to have a debate we need facts and information and we need to know positions. With the Treaty of Maastricht it was as though it was imposed upon us and Parliament.

I thought that we should start a debate, but how do we do that? I do not think that the Government can keep their own positions tight to their heart. They have a duty to inform Parliament what are their objectives for 1996. But the House is the only place in the whole of the European Community that has a scrutiny procedure for measures proposed by the Commission. It is well within the remit of the Leader of the House to establish the principle that we should have two ad hoc committees for each parliament. We should set up a committee to examine what the prospects lire for 1996 and what we as a House would recommend to the Government on how they should approach the matter and what we should like to see put forward. That in itself would create a debate both in Parliament and outside.

I return to a phrase which I used a few moments ago. We have to restore harmony among ourselves, Parliament and the Community. We are far from that now. But a conscious effort has to be made to create confidence, not only among our fellow national states but above all else among the people of the Community.

5.20 p.m.

Lord Bruce of Donington

My Lords, the debate, introduced so ably by my noble friend Lord Healey, is about the state of relationships between Her Majesty's Government and the governments of other member states. It is not a debate about the relationships between the individual citizens of various countries and ourselves. It is about the relationship between governments.

I rather thought that the noble Lord, Lord Healey, considered that we were somehow in default; that there was something wrong with us; that we were unpopular generally with the governments of other member states. I tend to take the view—and, as noble Lords know, I am not a very controversial person in these matters—that there is no compulsion on any British government, of whatever political persuasion, to agree the whole time with the governments of other member states. It would be rather supine to have that responsibility laid upon us. I can think, for example, of the degree of acerbity that existed between the Government of the United Kingdom and the Government of the French Republic over their attitude towards GATT. Surely we did not have to lick the heels of the President of the Republic of France before we expressed profound disagreement with the attitude that France took.

Nor do I believe it was necessary for us to talk in dulcet terms, or even submissive terms, to the Government of Spain over the fisheries question. As noble Lords will recall, after some persistent questioning in which the noble Lord, Lord Campbell of Croy and myself were involved, when we discussed the enforcement of fisheries policy, it was found that, although we were being reproached by other member states for being non-communitaire, we had gone to the length of appointing 59 inspectors at our own fishing ports in order to check enforcement whereas the Government of Spain appointed 12, who stayed in Madrid. We are not required, as I said, to agree submissively to such things.

I put it to noble Lords that it is permissible for a British Government to dissent from the attitude that was taken by the Greek presidency towards Macedonia. Surely we do not have to agree and try to be popular the whole of the time. A British government would not be worth the name, whichever party were in power, if they did not express in forthright terms exactly what they felt on such matters.

Indeed, I believe that we were very muted in this country when, at the beginning of the Yugoslav problem, there was a sudden unilateral recognition of Croatia by one of the member states. Even governments are not necessarily all the time in the wrong. The important point is that we do not allow the press and the media to project such criticisms into the ordinary sentiments of the public towards nationals of other member states both in the European Community and in other countries. That point can be over-stated.

If any government of whatever political persuasion —hopefully, in the future my own—make criticisms or (shall we say?) make themselves unpopular, why should I not support them without running the risk of being called a "little Englander" or something of that kind? After all, we have a country of which we are members; we owe our existence to it. We owe, I believe, some allegiance to it. What we have to avoid is being narrow-minded.

To return to the relationship between governments, I well recall—I have been alive a long time—that the Queen's Speech annually, before the coming into being of the European Community, always contained the words, "My relations with foreign powers continue to be friendly". Some noble Lords will remember the phrase. It seems to me that at the moment, within the Community at any rate, it is a little difficult to remain friendly the whole of the time. There are bound to be points of difference.

No one is complaining, I take it, of our contacts at ambassadorial level or even for that matter in COREPER, where, I understand, relations are remarkably harmonious—not always, I might say, to my own satisfaction. What we are talking about are relations essentially at Council level. It must be agreed that members of the Council are all Ministers in their own countries. It was one of the requirements.

I promise that I shall not go into Maastricht again because noble Lords have heard me address the House on that subject. However, Article 146 of the Maastricht Treaty states: 'The Council shall consist of a representative of each Member State at ministerial level". That is a new requirement. It did not feature in the old Treaty of Rome. The "ministerial" requirement was inserted in the Maastricht Treaty. So it is that Ministers meet from month to month. It may surprise noble Lords to know that Ministers, in addition to all the duties they have in their own countries, all the decisions they have to make and all the domestic responsibilities that weigh heavily upon their shoulders, from time to time have to go to Brussels, Luxembourg, Strasbourg, or wherever it may be.

The more Ministers meet, the more opportunity there is for disagreement among them. I am all in favour of people keeping at a distance unless they are in agreement or are prepared to agree with each other. But here they are, literally forced to meet. In the three months, March, April and May, no less than 29 days of Ministers' time was spent in Council meetings. That gives an annual rate of some 116 ministerial days. We know perfectly well that Ministers cannot possibly read all their papers. They rely very heavily—probably necessarily—on their civil servants. But they have before them proposals from the Commission which the Commission knows, in the majority of cases, will be decided, after dissent, by qualified majority. So it is in the interests of the Commission to keep the member states fighting one another. That is the only way it can maintain the integrity of its own position. The Mediterranean states are the net recipients of Community funds, including funds provided by Germany and, very rarely mentioned, by the United Kingdom. We know perfectly well that there is a difference of interest between the Mediterranean states and other states which the Commission does not hesitate to use whenever it thinks fit as a means of maintaining the continuity and power of its own institutions.

That situation, above all, will have to be remedied at the next inter-governmental conference. Time does not permit me to say more, except to observe, in advance of possible criticism, that I am glad that there is unanimity in the House, which I trust will be expressed from all sides of the Chamber, against a super-state. Indeed, my noble friend Lord Healey said that he was against a super-state. All that is required is confirmation from my own Front Bench and confirmation from the other side. Then we are all in grand coalition again, as we were at the time of the Maastricht Treaty.

Noble Lords have laid claim to flexibility of mind. Indeed, my own party was with me until 1986. It then changed its mind. I have remained constant. But we shall all have to address ourselves to one issue. Sooner or later we shall have to express loyalty to our own people in this country and a larger loyalty also to Europe and the world. We should never pledge unquestioningly our loyalty to a self-perpetuating bureaucracy that has no democratic responsibility to anyone or anything.

5.31 p.m.

Baroness Park of Monmouth

My Lords, I welcome, as we all do, the stimulating nature of the approach to Europe in this debate. For my part I am concerned, in considering the positive things that must be done to strengthen and deepen our relationships, lest we confuse friendship with appeasement while conversely failing to offer true reassurance to those who need it.

Confusion is arising between the economic and political entity of the European Union and the defence and defensive alliances that the Western European Union and NATO constitute. While there must be many arguments for establishing political and economic ties with the Visegrad countries as close as their resources justify—for only in that way shall we offer them a genuine alternative to the return to Comecon, which Russia is now urging on them—we should not dilute the strength of NATO by pursuing the largely cosmetic formula of the Partnership for Peace. That was largely set up under the aegis of the newly created North Atlantic Co-operation Council at the initiative of the US, which is not at present notable for clear or consistent strategic thinking in its foreign and defence policies. It absorbs far too much of the time of our over-stretched NATO staff. To what end? NATO's professional skills and scarce real resources should not be deflected to support a series of largely artificial and meaningless special relationships with such unlikely contributors to the stability and peace of Europe as Kyrghyzstan or that doughty champion of peace, Azerbaijan, led, as it is, by one of the most unreconstructed old communists of all, Aliyer.

One may ask what is the relevance of that to a debate on our relationship with other members of the Community? It is as follows. The Defence Estimates quote the third role of our armed forces as: 'To contribute to promoting the UK's wider security interests through the maintenance of international peace and stability". NATO and the Western European Union have been told to establish the capability to work on the concept of combined joint task forces, to strengthen the European pillar of the alliance by facilitating the use of our military capabilities for NATO and European/Western European Union operations, and to assist the participation of non-NATO partners in joint peacekeep-ing operations as envisaged under the Partnership for Peace.

The North Atlantic Council is to work with the WEU to provide, separable but not separate military capabilities to be employed by NATO or WEU. I give the key words in the communiqué from the North Atlantic Council in January this year: The new programme [Partnership for Peace] goes beyond dialogue and co-operation to forge a real partnership. Active participation in the partnership will play an important role in the evolutionary process of the expansion of NATO. The partnership will forge new security relationships. Partner states will be invited to participate in political and military bodies at NATO headquarters with respect to Partnership activites". I turn now to the Western European Union/NATO/ North Atlantic Council relationship. WEU now has nine members, two observers, three associates and nine members of the Western European Union Forum of Consultation consisting of the Visegrad countries. NATO, through the NAC, now has 12 partners for peace, all ex-CIS and not yet including Russia. The CIS countries will now have, under the partnership, a permanent representative at NATO. WEU, which is tasked to formulate a European defence policy and report by 1996, and NATO are required to develop their relations on the basis of transparency and complemen-tarity. For all practical purposes the CIS countries and Russia will now have access to a highly porous and vulnerable organisation. Thus the Russians, whether or not they succeed in negotiating their own special protocol or agreement with NATO on 24th May, will have a Trojan horse within the walls. It is difficult to see how NATO, penetrated to that degree, can continue to operate as a credible power to deter in the event of a less friendly Russia in the future.

In any case, by the time we have dissipated our efforts in the proliferation of committees and work required for the Western European Union Forum, the partnerships and the CSCE, and run some probably perfectly useless cosmetic training exercises in, say, Kyrghyzia, when our own troops are already too overstretched to conduct genuinely essential training exercises at senior level, any serious capacity to deter or to be a credible defence alliance will, in my view, have vanished.

So what should be our European agenda in the field of defence and security and how should we promote it with the other members of the Union? It has to be recognised that the Russian agenda is going very well. Through the inertia of the Community, the Russians have abolished COCOM while they are still producing and will be selling sophisticated new weapons. They are producing more sophisticated, state of the art submarines than all the NATO countries put together. They are likely soon to be signing a very favourable economic agreement with the Community. Unless Japan foils them, they have strong hopes of turning G7 into G8. They have been encouraged by both the Germans and the French to believe that they will secure a special protocol with NATO, tailored to their needs. Those requirements include, it is said, a revision in their favour of their heavy armament quotas on the Caucasian and Turkish borders. That has caused considerable anxiety in Poland, Slovakia and the Ukraine.

It is reassuring that it has been publicly said by both our own Secretary of State and NATO that NATO will not afford Russia a veto. Nevertheless, it must be clear that there will be a strong European lobby to bind Russia to NATO, as they see it, on any terms. I believe that we shall have to fight that.

The Russians, having achieved a special status in (he context of Bosnia and the Serb alliance, will know well how to exploit and manipulate the Europeans. For their part the Germans and French have both set up hotlines to the Kremlin, and both are manoeuvring (the Germans with heavy investment and a defence agreement and the French through a series of trade negotiations, for instance with Turkmenistan) to be seen as Russia's and the CIS's best friends in Brussels. The Germans know that the Russians will support them for a Security Council seat and there has been much talk over the past year of a German-Russian axis. The Russians, for their part, hope to discharge part of their debt to Germany with MIG 29 fighter aircraft. One wonders what will be the knock-on effect for continued German support for the Eurofighter.

We must therefore have our own agenda and secure allies for it, for instance the Scandinavian countries. And we must cut through the jungle of interlocking institutions to make things work and work well. First and foremost, we need to reassure the Visegrad countries, already growing doubtful, of the extent to which they can count on having a genuine choice about not being drawn back into the Russian orbit, as the CIS countries have been. They cannot but observe that Russia is not only being given a free hand to conduct her version of peacekeeping in the Caucasus, with many deaths, but that it is doing so in the name of the UN with the blessing of the UN Secretary-General and the benevolent but powerless observers of the CSCE.

We should concentrate, apart from our work through NATO in helping the Russians to neutralise their missiles, on strengthening economic links. We should reduce as far as we can the double or treble hatting of our limited resources in Brussels and we should at once cease our defence cuts. Once we are no longer seen as a serious military power, we shall lose all hope of exerting political influence in Europe or in the world. Russia, Europe and the US alike only respect strength. I warmly agree with the noble Baroness, Lady Williams of Crosby, about the fragile and volatile situation in the CIS, and particularly in Russia. That is why we must make sure that we combine effective outreach diplomacy with a steady attention to the need to retain our capacity to deter should deterrence be needed.

5.41 p.m.

Lord Howell

My Lords, like other Members of this House, I am grateful to my noble friend Lord Healey not only for introducing the debate, but for doing so in a typically pugnacious but always relevant style.

This is a debate which it seems to me has to proceed from a conclusion. That conclusion is inescapable; that is, that the United Kingdom is totally committed to membership of the European Community and it is in our interests, both politically and economically, to sustain that membership by full-hearted and genuine political partnership with our fellow members. In fact, we are undermining those interests by carping at every proposal that comes up, adopted by 11 other nations even though it might emanate from the Commission, and insulting our most important allies such as Chancellor Kohl and the German Republic by suggesting that they are wild, irresponsible Socialists. We all know that they are none of those things.

Politically no one can doubt that the European Union has created greater harmony and more peaceful co-existence in western Europe than has been seen for many years. No country within the European Union would now wage war against any of its neighbours, which is a tremendous achievement. The Union will soon expand further; four more countries will join, making it a Union of some 360 million people. Also waiting to join, as we heard, are Poland, Hungary, the Czech Republic and Slovakia.

We need to spell out throughout this land the political advantages and the security that has been achieved as a result of the European Union. In political terms there is nowhere else for Britain to go. We have to remain in Europe. In terms of foreign policy and security the Maastricht Treaty was a significant advance. The economic case for being wholeheartedly European is equally strong. As we all know, 50 per cent. of our trade is now with Europe; 60 per cent. with a wider Europe, much of it with Germany. Inward investment into this country, especially from Japan, is based on the fact that Britain is a member of the European Union; that is critical. We should therefore be embracing the concept of the Single Market and the development of regional policy.

In my part of the world—the West Midlands—we know those truths only too well. In 1977 we employed 750,000 people in manufacturing industry and engineering. Thanks to the leadership of the Conservative Government, that number is now well below 500,000. Even the noble Lord, Lord Prior —one of the more enlightened Ministers of the previous Prime Minister's administration—came to Birmingham and told us that we must now become a "service orientated city". We have now lost 300,000 manufacturing jobs in the West Midlands and gained 45,000 service jobs, which seems to me to be a pretty dismal balance sheet.

Since 1988 the European Regional Development Fund has provided us in the West Midlands with over £300 million of assistance, creating 30,000 new jobs, in stark contrast to our own Government's policy, which is a total lack of effective regional policy. One would think that the political and economic facts of life would cause the Government to be the most constructive and understanding of all partners, if that is the only way to encourage regional development. But, as we all know, to the dismay of our friends and in the betrayal of our real interests, the Government have isolated themselves within the Community. At best we are treated with disdain, at worst with contempt.

The Government have reached that position not in order to serve any national interest but totally to preserve the Conservative Party from disarray. Never has party political survival triumphed so wildly over national economic interests as we see happening today. Ministers are afraid to say a good word about Europe —they rarely do and we have not heard much today. But £9 billion of Community money has come here for regional development in the past seven years and it has been received in total Ministerial silence. As Thomas Hardy once remarked, "The silence is wonderful to listen to".

We go from disaster to disaster. Time allows me to give your Lordships only two or three examples. Perhaps the most blatant of all was the attempt to rig the voting procedure upon the entry of the four new members. The Community was appalled. The new members, all traditional friends of ours, were dismayed; a lifetime of trust was endangered by the imperative of keeping the party united.

Now we have floated the possibility of a referendum —about what or when we do not know. It may salvage a few votes—that is what the Government must think —so they may well include it in their next election manifesto. Incidentally, I am sorry to learn that the Liberal Democrats may do the same thing and I hope that some of my good friends with greater wisdom who sit on those Benches will make it clear that they do not want to give house room to any such proposal.

Incidentally, I have always opposed the idea of a referendum and I opposed it when it was announced by my noble friend Lord Wilson when I was a member of his administration. But at least on that occasion it was the desire of the government to advise the nation to vote "Yes". Some of us campaigned successfully on that recommendation. I predict that, if the Conservative Government are foolish enough to go for a referendum, which they may think is their last hope, they will certainly not be advising the nation to vote anything, either yes or no, for the simple reason that, if they did so it would totally destroy the facade which they were seeking to create. In my view, the only possible question which could be understood by the people at large on any such voting paper would be, "Do you wish to remain in the European Community?"; and since a No answer to that question would bring about economic and industrial ruin on a scale that is incomprehensible, it is a fraudulent question to put to the British people. I hope therefore that the idea will meet an early death.

Finally, there is the charade of the social chapter, which has already been mentioned by my noble friend Lady Lockwood. The social chapter has been endorsed by every other nation in the Union. It is endorsed by every other candidate nation for membership of the Union, whether they be nations of the Left, the Right or the centre. Britain stands in splendid isolation. On television the other evening I heard the noble Lord, Lord Tebbit, say, "We cannot avoid the social chapter. We are already in it". If that truth has percolated through to the noble Lord, Lord Tebbit, it is a source of great regret that it has not percolated further down to the Front Bench of his party, because in large part he is right.

I have said previously in the House that the rules of harmonisation will not allow inferior wages and conditions to be foisted on the British people if they are going to undermine our competitors in Europe. When such a case reaches the European Court, we shall lose. In any event, why are the Government making themselves look so ridiculous? Why do they believe that, distinct from our 15 partner nations, as we shall become, we alone must deny proper holidays and rest periods to work people; we alone must deny equal rights to part-time workers; we alone must deny fair wages to low-paid workers; we alone must deny a safety limit for the number of hours worked; and we alone should deny the workers rights of consultation and trade union negotiation when their livelihoods are involved? It is an insult to the British people and to British industry for the Government to say that Britain alone in Europe cannot provide civilised working conditions for its people. I know there are problems about dealing with the Pacific Rim but they have to be dealt with strategically by Europe as a whole, not by any isolated attempt by the British Government.

I conclude by saying that during all my political life I have been an internationalist. I embraced the European cause as the most practical way to give expression to that ideal and because I am proud of the heritage and experience of the British people, which could contribute so much. For some years I have been chairman of the Labour Movement in Europe and the European Movement. As the noble Baroness, Lady Williams, mentioned earlier, some of her present colleagues, including the noble Lord, Lord Jenkins, and some of my friends, including my noble friend Lord Richard, and myself found it necessary, as a matter of principle on a Three-Line Whip—69 of us—to vote against our own party. That number included our dear friend John Smith. The disappointment of that day has been splendidly overtaken by the realism of today's Labour movement. I fervently believe that, when this Government have passed away, as they soon will, they too will come to their senses and play a wholehearted part in Europe.

5.54 p.m.

Lord Gallacher

My Lords, I want to say something about relations as regards the common agricultural policy within the terms of the Motion before the House this evening. The first point which needs to be made here is that Britain has larger farms than the other 11 member states and, inevitably, that makes for a basic difference of approach to the CAP. The original proposals by Commissioner MacSharry in 1992 for common agricultural policy reform penalised the United Kingdom because they were designed to ease the pain of small farmers in subsequent GATT negotiations. United Kingdom Ministers fought hard and achieved some success in reversing that, but common agricultural policy excesses, though reduced, remain. It is still a high-cost food policy, and a switch to a more environmental protection outlook still means that overall costs of food remain high.

Set-aside of farmland of 15 to 18 per cent. means in many cases payment for doing little. The best land is still in production. Sales to intervention in the member states continue, and even if the GATT accord, which we welcome, means that the disposal of CAP surpluses are less disruptive on world markets, little fundamental change to the common agricultural policy has been made. Agriculture represents 5 per cent. of the Community's gross domestic product yet it continues to account for 50 per cent. of the European Community budget. We are entitled to ask, I think, how long this can continue and whether other member states are prepared to see major change. I doubt it. The reform process, started in 1992, excluded sectors such as sugar, wine, olive oil and fruit and vegetables. What hope has the United Kingdom of support for fundamental reform in these sectors from those member states who benefit substantially from the status quo? For example, the sugar regime now costs £1,722 million per annum.

Common agricultural policy fraud has rightly engaged the attention of Her Majesty's Government, and your Lordships' Committee on the European Communities has pressed long and hard for action in all member states. The complex nature of the common agricultural policy rules lends itself to fraud. Unfortunately, CAP reform has made procedures even more complex. An integrated administration control system means a new regime of control, yet no one can dispute its necessity, under present CAP cereals and livestock regimes, if fraud on an even greater scale is to be avoided. United Kingdom farmers suspect, I think with justification, that CAP enforcement in other member states is not as strong as it is here. They ate probably right in that. We are entitled to ask how effective is collaboration between member states to detect fraud.

Milk quotas are a good example of rewards for non-observance of Community rules. These quotas, which have applied in the United Kingdom since their inception, have not been similarly regarded in other member states. Yet increases in milk quotas for 1993–94 were granted provisionally to Italy, Spain and Greece at the same time as the Commission made a parallel proposal for a 1 per cent. cut in all member states' milk quotas. Since then Italy's progress in reducing milk production has been unsatisfactory and there is a reported lack of central quota control in Greece. Spain has made some progress towards implementing the dairy quota system. How long can other member states tolerate this single example of failure to observe common agricultural policy rules?

Having given the UK due credit, we must now look at the debit side of our performance. The importance of Community markets for United Kingdom exports is well understood and partly justifies the net cost of membership of the United Kingdom in the European Community. However, when we look at our export/import balance in food and drink with other member states, a daunting deficit is revealed. Food From Britain, a semi-government organisation, pro-duced detailed figures over several years, ending with 1992 when the balance of food and drink imports over exports was £4,151 million. Only our fish exports, at £241 million, and cereals, at £31 million, were greater than our imports. On a member state basis, some of the largest adverse balances were with small EC countries whose climate was about the same as ours. Thus in 1992 adverse balances with Belgium and Luxembourg were £234 million; with Denmark £791 million; with Holland £1,120 million; and with dear old Ireland £636 million. Yet these are small farm countries.

Taking some of those commodities which we ourselves produce, imports exceeded exports in 1992 on the following basis: meat £843 million; dairy products £558 million; groceries £286 million; fats and oils £196 million; and animal feedstuffs £185 million. United Kingdom farmers often tell us of their efficiency and they are right to do so. But they admit to shortcomings in marketing and they are even more correct in doing that. That is self-evident from the figures which are much discussed. But what we would like to know on this side of the House is what action ensues.

Food From Britain has been given an overseas sales promotion role. But who is monitoring UK imports? I am aware of the University of Strathclyde's initiative sponsored by the food company Safeway. It will doubtless reveal some of the reasons for the present position. But Her Majesty's Government must face reality. The common agricultural policy is expensive for British consumers. It has produced a nearly unsustainable imbalance in food and drink. It has not been radically altered save to get a GATT agreement. It cannot continue in its present form.

The Commission's annual economic report for 1994 forecasts only modest growth in member states for 1994, "picking up", as the report has it, in 1995. This, however, is insufficient to prevent a continued rise in unemployment to a record peak of 11.75 per cent., which is a dismal outlook in my opinion for the European Community. We must therefore not merely reform the common agricultural policy but see it against this depressing background.

6.2 p.m.

Lord Lester of Herne Hill

My Lords, some 30 years after Dean Acheson made his famous quip, we British have lost an empire, but have still not found a role for ourselves in Europe—not a real sense of belonging. The attitude of the present Government towards Europe is at best ambivalent, reflecting the deep fissures and factions among its disunited supporters. The Government claim to wish to put Britain at the heart of Europe, while appealing to chauvinist sentiment among British voters with simplistic slogans about sovereignty and federalism—those much abused words —and conjuring up what the noble Lord, Lord Healey, rightly described as the phantom of a bureaucratic, centralist European superstate.

It is a failure of leadership by successive British governments—a mixture of "muddle and weakness", in the telling phrase of my noble friend Lord Jenkins of Hillhead —and periodic pandering to anti-European Little Englanders which have left the people of this country in a state of understandably bewildered ignorance about what the European Community, now the European Union, really stands for in a real and positive sense.

Instead of working to strengthen the legal protection of the rights of the citizens of the European Union, including the rights of the people of this country, and instead of working to increase democratic accountabil-ity for the way in which the European institutions work, the Government have blocked or delayed necessary reforms. Subsidiarity has come to mean more power for Whitehall bureaucrats rather than for Brussels bureaucrats, when what subsidiarity should mean is the devolution of power to democratically controlled regions and localities and an enhanced role for our national parliaments and our national courts in giving effect to the principles of the Union.

Perhaps I may give just a few examples. For many years, in a process begun under the very distinguished presidency of my noble friend Lord Jenkins of Hillhead, the EEC Commission has sought to persuade governments that they, as Eurocrats, should be directly bound in law to comply with the European Human Rights Convention so that the Brussels Commission and the other European institutions should be liable before the European Court of Human Rights if they misuse their great public powers. The British Government have steadfastly opposed this desirable reform to allow the European Union to accede to the European Convention and so limit European bureaucratic power, probably because the Government fear that this would indirectly limit British bureaucratic power as well.

No doubt, as my noble friend Lady Williams of Crosby said, the European Commission needs to be slimmed down and made much more efficient. But whenever the Commission produces sensible and fair-minded proposals to increase the effective protection of the rights of the citizens of Europe our Government oppose them. This is true not only of the notorious British opt-out from the social chapter, to which several noble Lords have referred: it is also true of the existing rights guaranteed by the Treaty of Rome.

I wholeheartedly agree with the noble Baroness, Lady Lockwood, in her speech on this subject. She was a fine first chairman of the Equal Opportunities Commission, speaking from felt experience. The position is that the Government have effectively blocked proposals for directives to secure equal opportunities for men and women. Again and again they have argued before the European Court of Justice in Luxembourg for narrow and restrictive interpretations of the right to equal pay and equal treatment for men and women. Again and again the Government have refused to introduce legislation to translate the existing European equality rights into our domestic law. The Government have committed obscure, tortuous, unworkable procedures for determining equal pay claims to remain unreformed despite repeated pleas from our senior judges, the two Equal Opportunities Commissions and independent experts. Again and again the European Court of Justice has rescued the rights of women in this country, as the noble Baroness has indicated, just as the European Court of Human Rights has had to act as a substitute for a British constitutional court in a whole range of important British cases.

I am unaware of a single occasion on which the Government have advocated strengthening our rights as citizens of the European Union. As Sir Leon Brittan points out in his perceptive recent book, what Europe needs is a freedom of information Act laying out generous conditions under which the public could view documents of the Union institutions. Sir Leon also rightly recognises in his book that the Union needs a new legal guarantee of racial equality to combat the tide of racism and xenophobia which threatens European principles of tolerance and plural democracy. I suggest that Britain should be in the lead in advocating reforms of that kind and in preparing a new constitutional framework for an enlarged democratic Europe.

The vital principle of subsidiarity to which the noble Lord, Lord Henley, referred means, surely, that decisions should be taken at the lowest level compatible with good government. Subsidiarity was invented by Aristotle and not by Mr. Major. The Government continue to refuse to give effect to subsidiarity by allowing British judges to decide whether our fundamental human rights have been breached. The Government leave it instead, quite contrary to the notion of subsidiarity, to the European Court to interpret and apply the European Convention where our own courts could provide speedy and effective remedies.

Subsidiarity surely means that national parliaments should play a much greater role, together with a stronger, leaner and much more effective European Parliament, in scrutinising the making and execution of policies by European institutions and by the governments when they act together under the two inter-governmental pillars of the European Union. This is a subject on which this House is especially well qualified because of the work done by the European Communities Committee—a model for the whole of Europe. I suggest that our Government should put themselves in the lead in taking subsidiarity seriously by giving powers back to Parliament as has happened in Denmark and in the Netherlands. As my noble friend Lady Williams of Crosby forcefully explained, we need to give much more thought to how to make the European Parliament and the other institutions of the Union work better well before 1996.

There is also the pressing need to put Europe's national parliaments to better use in working together with each other as well as in working together with the European Parliament. As Sir Leon Brittan also pointed out, we need to consider creating a Committee of Parliaments (or something of that kind), consisting of representatives of each national parliament, with limited powers over European decision-making processes. It is; an interesting proposal which deserves to be considered carefully as a check or safeguard against greater concerted action by governments under the two pillars of the European Union.

Above all, we need to preserve the strength and vitality of our national, regional and local institutions, cultures and identities. But we also need to draw upon the resources of common democratically controlled European institutions serving us as citizens of the Union within the rule of law. We need a government who will give imaginative and wise leadership in this country and within the Union.

6.11 p.m.

Lord Ardwick

My Lords, I am a very old, moderate Europhile. The conflict around federalism, sovereignty and the veto which the Conservatives are desperately raising in this latest election campaign was already seething at the pioneer European meeting at The Hague nearly half a century ago. The conflict was between a majority who wanted a functionalist body and a minority of idealists who wanted a federal Europe. Randolph Churchill went around exercising his rough wit on the idealists, whom he called "The Federasts".

I myself was and remain a functionalist, believing that as the functions of a new Europe developed they would require universal acceptance. This was far from the federalist dream of a Europe run by an elected government from Brussels. That has never really caught on, and it is not a danger today. A recent poll showed that in only four of the 12 member states was there a majority for a United States of Europe and a single government.

Today, the French and the Germans are no more likely than we are to sacrifice their national' personality and their national interest. But we, like they, are enmeshed in Europe. And we must recognise that the attainment of the single market, the abolition of trade barriers, is not a free lunch counter. It is confusing to voters to suggest that they can enjoy the benefits of the single market without submission to agreed disciplines.

The Prime Minister spoke fairly about Europe in his party political broadcast, but on another platform he took a demagogic course accusing Labour, falsely, of being willing to trade national sovereignty, or sacrifice the veto. He has a strange view of Europe. He is reported as saying this week that he never left Britain without his spirits sinking: and that from a man who once said he wanted Britain to be at the heart of Europe. It may win him a vote or two here, but it will do nothing for his prestige in Europe.

We must never forget that the Community was an economic body which we valued also for its political status, as my noble friend Lord Cledwyn reminded us. We must never forget that the idea of European Union was conceived towards the end of war when victory was certain. What could we possibly do with Germany after unconditional surrender? It would still be a great power hoping that one day it would again be master of Europe.

It was a refugee German who assured me that we must create a democratic united Europe in which Germany would have a legitimately ambitious civil role consistent with her great economic potential. And something like that has happened.

And now the European Union faces important changes. Reunified Germany is now more powerful than ever. But the end of the cold war has also brought threatening instabilities in eastern Europe. The need for the European Union is greater than ever; and the Union has to strengthen its institutions while increasing the number of member countries, which will be a difficult task.

In this vital period leading to the inter-governmental conference, Britain should play an important constructive role. There is no sign at all yet of that constructive attitude.

The Government are involved in a long and bitter struggle about their European policy combined with a fight about the leadership of the party. That mixture is devastating for a political party—as we on this side of the House sadly remember from the distant past. More important, much more important, it is bad for the nation, bad for our international status, bad for our ability to influence our partners and a handicap generally in finding solutions to the Community's problems.

Of course, it is fashionable now for minorities in some countries to dare to voice their Euro-scepticism as the long recession saps the prestige of governments, but they are minorities. The founder members of the Community are still committed to an integrated Europe with a strong common constitution and in which member states are committed to common objectives.

In the coming years we must play a positive role in the re-creation of the Union. I strongly support the proposal of my noble friend Lord Shepherd that one of our sub-committees should start that good work of constructive thinking.

6.16 p.m.

Lord Haskel

My Lords, as the noble Lord, Lord Reay, and other noble Lords opposite have reminded us, it is central to government policy that the social rights and benefits of employees in Europe are a major threat to employment and prosperity and that Britain's opt-out of the social chapter is the crucial element in our prosperity. My noble friend Lord Richard dealt with that from the point of view of multinationals and my noble friend Lady Lockwood looked at it from the point of view of women. I should like to use the opportunity of this debate to examine it from the point of view of the industrial manager because much of our prosperity is based on his or her efforts. My many years' experience of working in industry tell me that the Government's view is wrong.

I am not alone in this opinion. When giving evidence to the Select Committee on Employment in February this year, the representative of Nissan UK said: As far as levels of sick pay, maternity leave, and holidays are concerned, we are miles ahead of the Social Chapter". Of course, Nissan can say that because of its high capital investment. Managers know, and as yesterday's White Paper reminded us, in order to survive in today's intense competition we need capital investment continuously to raise the performance of our companies. Not only do we need that to cut costs and eliminate waste by introducing lean production and new technologies, but we also have to introduce flexible manufacturing systems in order quickly to make new products. Staff have to give quicker and better service and react quickly to electronic point of sale data. Staff must co-operate to cut out transaction costs, while at the same time layers of management are being eliminated.

It will not have escaped your Lordships' notice that all these measures to become more competitive have one thing in common. They make more and more demands on the men and women working in industry. They demand increasing mental and physical resilience. They demand more flexibility and adaptability and a higher level of education. They call on people to show higher commitment and stronger personal qualities. We thought we were going to have more leisure, but for those with jobs work in Europe has become much more intense, more pressured and more stressful. So managers today are faced with the problem of how to persuade staff to bring all those personal qualities to work in order to rise to those demands and at the same time remain competitive. According to some, in today's tough world the answer is to have a brutal regime where wages, benefits and investment are reduced to a minimum and the threat of the sack and unemployment is used to focus the mind. We have learned that that does not work.

What experience has taught us is that a more supportive and caring spirit in a company produces better performance at all levels. Senior managers and directors know that. Their contracts of employment contain those terms so that the company can derive maximum benefit from their skills, experience and judgment. To maintain their competitive edge, companies now expect shopfloor workers to think and act as if they too are managers, so those more caring and supportive terms and conditions of employment must trickle down to them.

So what is the relevance of the social chapter in that? Let us have a look at it. What it does is set out objectives. Those goals are set out in Article 1 of the social protocol which says: The Community and Member States shall have as their objective the promotion of employment, improved living and working conditions, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment, and the combating of social exclusion". The article goes on to say that the European Union will establish minimum standards for gradual implementa-tion in those fields. In most of those fields Ministers must act unanimously. Until now the only legislation that has been introduced under the social chapter is that dealing with consultation between management and labour. That is why many managers cannot understand the relevance of the opt-out, because no mention is made in the social chapter of a minimum wage, a limit on working time, increasing powers of trade unions or any interference with pay.

So, in effect, we are being told that in order to remain competitive we cannot afford those goals and that they are a constraint on and a deterrent to employment. I can understand that applying to poorly run companies with low investment. But is it the Government's intention to protect those businesses with the opt-out? Surely not, because in the end many of those companies will go out of business if they do not raise their performance.

The successful conclusion of the Uruguay Round means that we shall be even more exposed to competition from low-wage countries. My noble friend Lady Lockwood reminded us of that. That makes it even more urgent for us to improve our performance and get away from the ridiculous notion that competitiveness depends purely on wage costs. Even within the European Union there are countries like Portugal which have lower wage costs than ours. I should put it the other way round—as we demand more from our work people, we must show that we value them by providing better conditions to encourage them to raise their performance.

The second argument is that the social chapter acts as a constraint upon employment. What that means in practice is that any regulation which hinders the easy hiring and firing of staff reduces flexibility. I remember that old attitude towards casual labour when I first started work. In those days labour was viewed as a reservoir of muscle power, but in today's industry nearly all those manual jobs have gone and work people have now to be viewed as a reservoir of brain power. That is why to good employers flexibility means employing educated and trained people who can adapt easily to new work, take more responsibility and show more innovation, initiative and analytic skills. It is the quality of labour that matters, not just its price.

Therefore, when we strip away the political hyperbole and examine the social chapter from the point of view of the British manager, the opt-out does nothing to help him or her become more competitive. All it does is protect poor management and low investment. It does nothing to encourage work people to become more productive. Not only does the opt-out do nothing for the manager; it is a barrier to harmony with other members of the Union because it is an unnecessary extra barrier in the way of the single market. That is where our true opportunities lie.

John Smith had that in mind when he addressed the CBI in Harrogate last autumn and said: We cannot pick and choose which European institutions and policies we will adopt and which we will not. If we are in Europe, we have to take all that European membership involves, and that includes the Social Chapter". That is why progressive British managers would support the social chapter. I am sure that they will demonstrate that support at the ballot box on 9th June.

6.25 p.m.

Viscount Mountgarret

My Lords, I am afraid that I must start by expressing sadness at the manner in which the noble Lord, Lord Jenkins, cast aspersions upon Her Majesty's Government in their choice of Minister to reply to the debate. That was supported also, I regret to say, by the noble Lord, Lord Richard. It ill becomes two politicians of such standing to sink to that level in your Lordships' House.

Baroness Williams of Crosby

My Lords, perhaps the noble Lord will give way. In the absence of my noble friend, I think he made it clear that he had every possible respect for the noble Lord, Lord Henley, but he felt that in the circumstances it would have been appropriate if someone from the Foreign Office had been able to reply to the debate.

Viscount Mountgarret

My Lords, if Hansard is read tomorrow, I hardly think that people will find that the allusions made were ones of adulation. As the noble Baroness knows well, my noble friend Lady Chalker would normally have replied to the debate, but she is in the United States for high level talks with UN agencies, the World Bank and others. Her programme is arranged months and months ahead, and certainly before the Motion was tabled by the noble Lord, Lord Healey. There may be those who do not understand quite so well the machinations of government. The noble Baroness who is to wind up for the Opposition, charming though she is, might agree that she is on a par with my noble friend Lord Henley. After all, we cannot all be distinguished or we dilute the meaning of the word. Anyway, enough of that point, although I regret it.

Since our entry into the political field of Europe, the regulatory onslaught that has hit us in the name of political affiliation is far worse than anyone had imagined. It is in fact a national disaster. I have never been opposed to, nor see any reason to oppose, the undoubted benefits to Europe in general, and to this country in particular, of the affiliation to the EEC that we joined in 1974. The noble Lord, Lord Bruce, may be of my thinking or he may wish that I were of his thinking, but I have to say that I am diametrically opposed to the extension that has existed since 1992.

Ludicrous directives come daily from Brussels. They affect the traditional way of life of this country. They are used on occasions for convenience by government departments or individuals. I shall give just two examples. Yesterday we had a Question about corporal punishment. My noble friend Lord Ferrers replied to the effect that we were guided by the practice in Europe.

Lord Richard

My Lords, I am sorry, I have done my best to restrain myself. Will the noble Viscount take it from me—undistinguished though we are on this Front Bench—that the European Convention on Human Rights which the noble Earl was quoting yesterday has nothing whatsoever to do with the European Union? Will he take that from me, please?

Viscount Mountgarret

My Lords, I am grateful to the noble Lord. He is probably quite right. I was giving an example of the sort of involvement that we get from political affiliation with Europe. Let us take another one that happened only last week. Last week there was that tragic minibus crash in which several young cadets were killed. There was an outcry as a result of that, but we were told that the Government could not legislate on having seat belts in minibuses because that was not done in Europe. We ought to be free and independent to do what we want in this country and not be ruled by those in Brussels who are not accountable to us here.

What right has an environmental health officer to give instructions to kitchen staff in a restaurant that they must use two separate knives for making a ham and tomato sandwich? It is true. The staff were told that they must use one knife for the tomatoes and the other for cutting the ham. Which knife was to be used for cutting the sandwich I cannot rightly say!

As regards waste disposal, we are told that we cannot dispose of waste from our property on our property, as used to be the case. One must now have a waste disposal licence. One cannot use surplus food, such as bread from a bakery, to feed hounds or other livestock. The bread must be taken from the bakery by a licensed waste disposal person.

The noble Lord, Lord Bruce of Donington, referred to the fishing industry. I must question whether those who issue all these directives have any knowledge of the subject. I do not believe that they do. Measures and directives intended to promote safety end up by making life more dangerous. For instance, officials at the Department of Transport's fishing vessels survey department appear to have little experience of fishing boats. The skipper of a fishing boat was one day told that he could not go out because he had only 49 bandages on board instead of the required 50. The list of safety items of which the inspectors are in possession excludes the one thing that is really important and really required; that is, a life raft.

In 1993 an inspector told the captain of a fishing vehicle that he did not like the fact that the fire extinguishers were in the wheelhouse and said that they had to be moved to the engine room. It was pointed out that that might be dangerous because if fire broke out in the engine room one could not get to the extinguishers, but no one took any notice. Sure enough, six weeks later that happened; a fire occurred, the extinguishers could not be reached, and an air-sea rescue operation was mounted to save the four men. The cost of the operation and the repairs quite unnecessarily wasted tens of thousands of pounds.

The noble Lord, Lord Callaghan, referred to the lives of farmers and perhaps I may expand on that because I agree with him entirely. As a result of our affiliation to the common agricultural policy, fanners are paid millions of pounds to grow weeds. That is appalling. Farmers of whatever ability must complete IACS forms and in order to do so they must measure every track, pond or waste area in each of their fields. If they are more than 5 per cent. in error they may suffer by receiving no subsidy from the CAP. This year the subsidy will approach no less than £100 per acre, which for this country amounts to £1.5 billion per year. For how long can that be afforded?

I return to regulations and the problems that we must suffer. It is a terrifying situation. Monsters are being released which will, like the dinosaur, become extinct, but not before they bring down everything else with them. There must be an awakening to the matter but it seems that even that is a long way off. The sooner that this country can divorce itself from any political association with Europe the better, otherwise economic ties will be eroded. The alternative is to ensure that there is a satisfactory way in which those who wish to issue directives and direct our way of life can be made accountable. Perhaps that would be a preferable approach.

6.35 p.m.

Lord Hollick

My Lords, a couple of weeks ago the Prime Minister called for a less partisan, less fractious political debate. He said that there was too much back-biting, too much personal venom. He wanted to see a more harmonious political discussion. At first blush it appeared that the remarks were directed at opposition parties but of course it soon became clear that the real target of his remarks were the divisions within his own party. It is a party split on many key issues. But nowhere is the split more apparent than on Europe, where disunity has immobilised the Government and prevented them from becoming an effective participant in the European debate. Far from being at the heart of Europe, as the Prime Minister claims, the actions of the Government have pushed them to the very edge of the debate.

The spectacle of the Conservative Party in utter disarray, in avoiding and indeed shirking positive involvement in Europe, is certainly diverting and occasionally entertaining. That is, until we realise that the deep and, in my view, unbridgeable splits in the Government's ranks are preventing the UK from being actively and positively engaged in the development of the European Union at a crucial time. A Government who must constantly appease their warring factions cannot develop a settled long-term strategy, cannot play their full part in key policy debates and therefore do not have the credibility or the clout to influence events which are vital to the future of this nation.

The Government will pay a high price for that on 9th June. But in the meantime the country is paying a quite unnecessary price as we fail to influence decisions and we miss out on the opportunity to gain the full economic and social benefit that active participation would bring. As we approach the IGC in 1996, it is vital that the UK Government help to shape events, to influence policies, and are not simply dragged along unwilling at the rear of the European caravan. A positive approach and a genuine commitment would be welcomed by our partners in Europe and would give us the credibility that we need to shape policies which will maximise the benefit to the UK and fight off some of the dafter and wilder ideas emanating from Brussels.

Many in this country and, according to recent polls, in other European countries, too, share serious reservations about the lack of accountability of Brussels, the appalling waste of the common agricultural policy and the growing tendency to centralise. Until we have a government who have a clear strategy and a real and realistic commitment to the European Union, we shall make little progress in the councils of Europe to deal effectively with these serious matters.

I wish to highlight a few examples of European industrial policy where the Government's continuing failure to take initiatives, or at least to participate in the strategy planning and policy making, could result in lasting damage to important sectors or our economy. Yesterday's White Paper on competitiveness confirms that our overall share of world trade in manufacturing and services has continued to fall and that GDP per head remains below that of many other advanced countries. The measures proposed by the Government to remedy this serious situation are feeble and platitudinous. The White Paper completely fails to recognise the importance to our long-term prosperity of defining and implementing a UK industrial policy within the context of a European market and with the active co-operation of our European partners. In its short section on Europe, there is no mention of the need to examine European industry on a Union-wide basis and no recognition that governments have a key role to play in helping to maintain and develop world class business enterprises. The absence of a coherent industrial strategy—missing since 1979—was one thing that Michael Heseltine was supposed to remedy. Well, if he does have a strategy, it is one that dare not breathe its name. Why is that? It is because of opposition from his Cabinet colleagues; and that is because it has to be a European strategy.

In a single market we have to build European enterprises in key services and industries if we are to remain competitive globally. The Germans and the French know that. For, while we confuse competitive-ness issues with labour market deregulation, our international competitors are setting in place program-mes to ensure their future dominance in the world market places at the same time as they pay lip-service to the highly theoretical doctrines—indeed, cant—of free competition.

Let us take first the defence industry. The US Government have adopted proactive measures to encourage the successful rationalisation of the US defence industry in the face of cuts after the Cold War. Those measures have the double objective of ensuring continued US dominance in the defence sector and intensified US competition in the international marketplace, as companies chase after a slice of a shrinking cake.

The United States is not alone in adopting a clear strategy. Japan has had a coherent supportive strategy for many years. South Korea has adopted a similar strategy with enormous success. But the European situation is worse than it appears because member states not only continue to deny the evidence of their own eyes regarding the state of international competition, but continue to hinder European industry in the home market through narrow national strategies which effectively prevent the kind of rationalisation that the US has witnessed in the last couple of years. The aerospace sector provides examples of at least one, sometimes more, national champion in each member state. The same is true of the defence, the automobile and the telecommunication sector.

I believe that there is a need to review industry at the European level and map out a coherent strategy. Just as the Americans have done, we need to take a hard-headed look at the industries in which we have an advantage and those in which we should remain, and marshal our forces accordingly. Unless we adopt such a strategy, we shall continue to suffer attrition of the industrial base without any means of response.

Perhaps I may give your Lordships a few examples from my own experience of how the current policies have failed us. Airbus is a European success story. Determined to secure their share of the world civil aircraft market and the associated economic, technologi-cal and employment benefits, European industrial partners, backed by their governments, have built up a family of aircraft which now commands one-third of the world market. That achievement would not have been possible without government backing of the most resolute kind. Government financial support was only part of the story. At least as important was the technological, administrative and diplomatic support provided by governments.

Just at the point when the Airbus saga shows signs of paying off, there are signs of weakening government resolve. Cowed by American bullying, in July 1992 Europe accepted a fundamentally unfair agreement to limit support to Airbus while leaving the US with its vast NASA and Department of Defense (DoD) resources quite unfettered. The response of European governments has been pitiful. In no member state is more than £70 million available for aeronautical research. Indeed, the figure in this country is far less, especially when compared with NASA's annual aerospace research budget, which stands at over 1 billion dollars.

The consequences of the UK Government's policy of not-so-benign neglect are clear in aerospace. The European future large military aircraft (FLA) pro-gramme brings together a number of European governments and associated aerospace companies. Following the all too familiar pattern, the UK, after reasonably enthusiastic early participation, withdrew from the governmental discussions in 1989. Without MoD procurement in this country of the FLA, without government participation in the programme, UK industry would be excluded from the FLA programme. If we are excluded from that programme, we shall be cutting ourselves off from a leading-edge technology programme which is the key to all successor programmes in Europe in the large aircraft section. The UK will rapidly lose prime contracting capability and be reduced to sub-contracting piecework, with major implications for jobs and exports and, in fact, for our international competitiveness at large.

On the defence side, I am personally convinced that European governments will need to take a leaf from the Americans and find ways of facilitating Europe-wide rationalisation and mergers. Another measure, will be for member states to find ways of rationalising overlapping programmes. The best way forward here will be for interested European governments to entrust the procurement of individual European programmes to a European agency. There are suggestions in the press this week that the creation of just such an agency could be announced at this week's Franco-German summit. Here again, we must at all costs avoid being the last ones to join the European initiative if we are not to be left behind and cripple what is left of the UK manufacturing base.

Finally I should like to touch on broadcasting. Those of us who participate in European discussions on behalf of industry interests know full well that, although our officials are reputed for their ability to block European legislation and to negotiate compromises, it is not the UK which sets the European agenda. At the end of next month, TV and cinema executives from every member state of the European Union will gather in Brussels at a high-profile conference to discuss a new European audiovisual Green Paper. That paper will influence the forthcoming review of the broadcasting directive and will set the legislative framework for the next few years.

Everyone in Brussels knows that the real thinking and strategy development is happening now and that the agenda will be written by the time the conference takes place. The French Government have treated the Green Paper as top priority for more than a year. In contrast to our Government, the French have already submitted proposals to Brussels, following industry consultations. The Italians are doing the same. The French take every opportunity—and I do not blame them—to dominate the media agenda at the highest level, as was evident in Athens at a recent ministerial discussion on the Green Paper where the French fielded two Ministers and numerous government officials—not to mention a substantial section of the media corps—while we sent two DNH officials!

The Government's lack of involvement in the development of European strategy in the sector before legislation is produced penalises British industry interests in two ways. First, it perpetuates the myth that the French are the champions of all that is good about European culture, while the British are seen as a "Trojan horse" for the American cultural invasion of Europe. Secondly, it means that, before public debate even starts, the direction of the legislative agenda is positioned to benefit French industry interests rather than our own.

There are, I regret, many other examples of the British Government's failure to address this country's vital economic interests and to fight for them in Europe. The Government are rightly being condemned today for having no vision, no strategy, no initiative and for showing no leadership.

6.47 p.m.

Lord Kagan

My Lords, at this late hour I shall try to be brief. I should like to speak about how our attitude to Europe appears to some of our colleagues across the Channel. A German friend of mine who is an industrialist commented to me, "Your debate is puzzling us. You are very much like a lady who has been properly married, who is heavily pregnant but who is seeking advice as to the merits and advisability of chastity". He said, "You are in Europe. The question is whether you will be happy or unhappy in it or whether you are successful or unsuccessful in it". Europe is no longer an option: it is a fact, whether or not it is desirable. How we will fare in it will depend on our economic specific gravity and nothing else.

Much has been said about the social chapter. It was interesting to note my German friend's views on the subject. He said, "We are not too worried about it". He then told me that, although the Volkswagen is now partly built in Wolfsburg, over half of it is in fact built in Czechoslovakia in the Skoda works. The wage of a German car worker is £400 a week whereas the equivalent work is carried out for £15 a week, including social costs, in the Skoda works. My friend said, "All we have to do is to train our people highly enough to enable them to perform the more important jobs, and farm out the rest".

For us to move one container the 30 miles from our coast to the Continental coast costs £1,000. To move a container the same distance, 30 miles, from either Wolfsburg or from Munich to the Skoda works in Czechoslovakia costs £42. Those are the differences in costs that we are up against. The Germans are not worried about the social chapter because they will be able to ignore it. In addition, the Germans have 5 million guest workers who are not German citizens and whom Germany is not obliged to retain for ever. However, Germany tries to be humane and she teaches those guest workers skills, provides loans for them and then ships them off to Turkey to set up subsidiaries of German firms there and thereby introduce German products. That is what we are up against.

As the noble Baroness, Lady Park of Monmouth, has pointed out, there is already an active Russian/German co-operation or a de facto alliance working. Up to press, more direct investment has gone from Germany into Russia than from all the other countries put together. The Germans are just waiting for the political situation to stabilise. Co-operation between Germany and Russia is historic, as I have said before in this House.

Germany has access to reasonably cheap labour. The basic wage for a skilled worker in Romania is 10 dollars or £6 a week. They are trying hard to negotiate a 50 per cent. rise but they will receive only a 25 per cent. rise. Therefore they will receive £7 a week, which is less than what a similar worker would receive in this country for an hour's work. But while we are discussing all this we are missing one point. Our effort is put into discussing whether we should or should not be hypothetically in the marriage bed behaving like a reluctant bride when the situation is already a fact. Further—this is even more important—much of the energy, guidance and inspiration given by our politicians is not being used to try to solve our national problems but rather to influence the results of the next election.

History is not patient. We need to take urgent and painful steps which I sincerely believe are beyond any one party's abilities to take. We are behaving like local councillors who imagine they wield power at a national level when they do not. We must study and identify what needs to be done. As I have said, I believe painful decisions will have to be taken. I believe that much investment will have to be redirected away from the welfare state. Unfortunately, such a move would influence the outcome of an election. Nevertheless I believe that steps may need to be taken to transfer the investment towards industry and education in industry. It may be necessary to limit the welfare state. If we do not do that, we may have to reconcile ourselves to slipping slowly from being the top power to being a second rate power and from being a second rate power to being a third world power. I do not believe that any single party has felt ready to deliver this honest message.

We must also take into account a further point. The Germans work as a team rather than as party politicians. The Germans are working steadily towards realising their opportunities which lie largely in Russia and in the East. However, as an English-speaking people the most important facet of this situation from our point of view is that the Americans are supporting that position. The Americans do not want a squabbling Europe. They want a continental power that is strong enough to stand up to the threat from the Far East which America foresees will arise in the third millennium. Therefore whatever the Germans are doing now has the full approval and the full support of the United States. If we ignore our problems, if we are not honest with the electorate and do not tell them exactly what the problems are, Britain risks becoming irrelevant in the current situation.

6.56 p.m.

Lord Bonham-Carter

My Lords, I would like first of all to thank the noble Lord, Lord Healey, for initiating this debate. I apologise for having arrived a little late and I regret that. We have had a number of extremely interesting speeches today, not least the latest contribution from the noble Lord, Lord Kagan. I may not always agree with him but he always has something interesting to say and I thought that what he said today was well worthy of our attention.

We have also had from the noble Lord, Lord Bruce of Donington, one of his placid, moderate, uncontrover-sial speeches to which we all look forward. I hope we shall hear more of them in the future. From the opposite Benches we have had a series of good electioneering, knock-about speeches. If we are to believe the noble Lord, Lord Campbell of Croy, Britain is not merely at the heart of Europe but at the head and everyone is following our lead. If we are to believe the noble Lord, Lord Reay, our economic policy is the envy of our neighbours and they are rushing to imitate it. In particular he gave the example of Germany. I wonder whether the noble Lord has read the article in the Economist today which points out, quite rightly, that: Germany's labour market is based on a set of assumptions fundamentally different from those of post-Thatcher Britain and post-Reagan America". Nonetheless, the long-term performance of the German labour market is no less impressive. Since 1979 unemployment has averaged 5 per cent. in Germany and 9 per cent. in Britain, which has a free labour market. German unit labour costs have fallen 5 per cent. while Britain's have remained the same.

I think that the noble Lord, Lord Reay, in telling us how infinitely successful our policies have been should take these hard facts into account and he should also bear in mind that in addition the Germans are spending 180 billion deutschmarks a year on East; Germany; that they are the largest contributor by far to eastern Europe —they contribute 60 per cent. of the EC total—and their contribution to EC funds is much larger than that of anyone else. That is a record which it is difficult for us to equal. Our balance of payments deficit is hardly a triumphant example of the success of our economic policy.

The noble Baroness, Lady Elles, raised the ugly spectre of federalism. Since that plays a large part in the Conservative Party manifesto we must deal with it head on. On page 40 of the manifesto the Liberal Democrats are accused of having: plans to centralise power through the creation of a European federal state". I have no doubt that the same accusation will be made against the Labour Party.

The key to that charge is that a federal state is a centralised state. That is the basis of the charge. It is true that when Jean Monnet founded the European Community he was very wary of using the word "federal" and preferred the word "communautaire" because he rightly feared that opponents would accuse him of trying to make a replica in Europe of the United States. Such was never his intention. The histories of the six European states which were the original members of the European Community made such an idea ludicrous. What he was creating was something totally new, sui generis, something that would reflect and did reflect the history, tradition and experience of Europe.

Nonetheless, that having been said, it is true that the Treaty of Rome, together with the Single European Act and Maastricht, have created a Community which has some of the characteristics of a federation. The powers are distributed between the centre and the parts. European law overrides national laws. Those are quasi-federal if not federal characteristics.

It is also true, as Monnet predicted, that opponents of the European Union, in all their various shapes and colours, which are many and various—and all can be found, but not exclusively, within the ranks of the Tory Party—have thought it useful to try to make the word "federal" a bogey word and totally to misrepresent what it means. It is odd that this country, which has set up more federations throughout the old world than any other country, and tried to set up several others which did not come off, should find the whole idea so terrifying. To pretend that to federate means to centralise is false. It is not the case, and no amount of repetition of that accusation will make it. so.

The internal Conservative Party memorandum which was leaked to the Guardian this morning revealed the commitment to federalism of the Conservative group in the European Parliament. It is interesting that it says of the word "federal": When the Prime Minister subsequently did use the word in the House of Commons in July during the Social Chapter debate, he added the rider that he was referring to federalism in a British (centralist) rather than continental (decentralist) sense". That is rather like saying that I am black in the British sense (which means white) rather than in the continental sense (which means black). You cannot change the meaning of words merely by repeating them, even if you are Prime Minister.

That led me to look up the definition of "federal" and "federalist" in the Oxford English Dictionary. The definition of federal is: Of or pertaining to, or of the nature of that form of government in which two or more states constitute a political unity while remaining more or less independent with regard to their internal affairs". That seems to me a very good description of the present position.

To pretend that that is not the present position is simply one more attempt to appease those within the Conservative Party who are frightened of the whole European idea. The 21 Conservative MEPs who in July 1990 voted for a resolution advocating a European Union of a federal type were honest enough to recognise that simple fact.

That is not to say that there will not have to be institutional change with the enlargement of the Union, as my noble friend Lady Williams has already pointed out, and that that will, and should be, the chief item on the agenda of the IGC in 1996. Before then, contrary to what the Tory manifesto implies, it is most unlikely that the veto will be touched in any way, as the futile and humiliating attempt in March to change the rules governing the veto demonstrated.

We on these Benches want change. We believe that with enlargement institutional change is inescapable. We want European institutions to be more democratic, and we want them to be more transparent. The Tories complain about Brussels bureaucracy. The way to control bureaucracy is to give more powers to Parliament and to have a more democratic Parliament. The manifesto says: 'Today we have the wrong kind of Parliament—a Socialist Parliament". It would not be if there were PR.

The manifesto further states: We want less interference from Brussels", by which it presumably means the Commission. The noble Viscount, Lord Mountgarret, might wish to note that point. It does not say that although the Commission proposes, the Council of Ministers disposes, and that almost all the interference to which the Tories object has been agreed to by a British Minister in the Council of Ministers. The trouble is that we do not know what he has agreed to or how he voted. That is what is wrong. The Commission is blamed, but it is the Council of Ministers which in the end is responsible. Therefore, as an urgent and necessary reform the Council of Ministers must open up its proceedings so that we know what happens. Despite Edinburgh, that has not happened yet.

The debate on the changes to be made in the 1996 IGC, as my noble friend Lady Williams said, should be taking place today. Between now and 1996 we should hammer out a clear, and I hope positive, British position for changing the institutions of the Union for the better and making them more transparent and democratic. That should be a British initiative. We should not aim for opt-outs or sulk on the sidelines.

With 16 members, increasing later to 20, it is inevitable that there will be more qualified majority voting, even as there was after the Single European Act. Otherwise, the Union will be reduced to paralysis.

I say to the noble Lord, Lord Gallacher, that there is no possibility of reforming the CAP until there is more qualified majority voting. That is the only route to radical reform of the CAP. The trouble is that some people would like to reduce the Union to paralysis by insisting on unanimity.

Lord Bruce of Donington

My Lords, the noble Lord mentioned in particular change to the common agricultural policy. Is he aware that the Council of Ministers cannot change the common agricultural policy save on a proposal from the Commission; and the Commission has already indicated that it wants no change?

Lord Bonham-Carter

My Lords, the noble Lord has always taken the view, which is literally correct, that the Council of Ministers has no powers to initiate. Formally that is true, but in effect it is not true. The Council of Ministers can make its views known and generally the Commission has to some extent to conform with those views. That is my view, and in that respect I differ from the noble Lord.

It is important that in the IGC the British come forward with positive views. Those views should be to democratise and make transparent; and we should take the lead in trying to make the institutions of the enlarged Community more appropriate.

7.8 p.m.

Baroness Blackstone

My Lords, I rise with some trepidation in the light of my lack of distinction in the eyes of the noble Viscount opposite. Clearly I must work harder and try to become more distinguished.

We have had a good debate, even though it was not led by the Leader of the House on the Government side in the absence of the noble Baroness, Lady Chalker, abroad. That is what my noble friend Lord Richard suggested might have happened given the importance of the debate. There has also been somewhat of a shortage of speakers from the Government side. I wonder whether the well-known European sceptics on the Government Front Benches—of whom, as we remember from the Maastricht debates, there are quite a number—have been locked up today or whether they are out and about in the country campaigning against the Government in the European elections. However, I assure noble Lords that I do not believe their absence today means that we shall not hear more from them. They utterly refuse to compromise, leaving our Prime Minister either weakly wringing his hands or trying to mollify them and failing to do so. The problem for the Prime Minister is that the anti-European mutineers are not confined to the ranks. There are numbers of them at very senior levels in the officer classes. The Prime Minister seems to be quite incapable of exerting the necessary discipline to bring them into line, as a result of which not only the Conservative Party but also the Government remain deeply and damagingly divided on these matters.

Perhaps I may say to the noble Lord, Lord Campbell of Croy, that the Labour Party is not split today. It is united—united in the Shadow Cabinet and united on the Front Bench and far beyond it. A few dissenters do not make a divided party. I suspect that the Minister will not be so foolish as to pretend that the Cabinet, the Government and the Conservative Party are united. If he does, no one will believe him. If he is honest enough to admit that there are serious divisions no doubt he will seek to pretend that they do not affect our position in Europe. Again, no one will believe him.

Only a few weeks ago we saw the Prime Minister being pushed by his Euro sceptics in his Cabinet into what is now known in political circles as the majority voting fiasco, to which the noble Lord, Lord Jenkins and others have referred. Can anyone really believe that the ludicrous stand taken by the Government, from which they had ignominiously to climb down, had no effect on our European partners or with the four countries coming into the enlarged European Union? The next time that there is an issue on which Britain's interests really are involved other European Union members will believe that we may not be serious, that we will climb down again, and they will refuse to concede.

Does anyone seriously believe that all the talk about a referendum again is anything other than another attempt by the anti-Europeans to affect the debate in the European election campaign? We had a debate in both Houses of Parliament last summer on whether we wanted another referendum on Europe. The answer was, no. Surely all Ministers should dismiss the idea at this juncture, as my noble friend Lord Howell has already said. It is a side show to take us away from serious consideration of how we take forward the integration process which derives directly from the Maastricht Treaty.

As Sir Edward Heath said in another place last week, Instead of constantly explaining why we are not going to do things, and trying to do less and less—which does not benefit the people of this country anyway—we must show that we want to make the utmost contribution that we can to the European Union. When we can show the world that, the world will respect us again and we shall have influence in our own continent".—[Official Report, Commons, 16/5/94; col. 574.] Let me now turn to some of the policy issues where the former Prime Minister's comments seem particular-ly pertinent. I start with the environment—a subject which has not been mentioned in the debate. It is one of those issues beyond the nation state to which my noble friend Lord Healey referred. It is par excellence a European matter. We cannot protect our environment by national action alone. We may live on an island, but even islands can be damaged by either short term greed or the folly of others. It is an area where members of the European Union have a collective responsibility to agree joint environmental standards and to help those to the east of us to bring theirs up to a more acceptable level. All of us will suffer in the end if some countries try to evade those standards with competitive downbidding of recommended levels of environmental protection.

Regrettably, the Government's record has been as bad on the environment as it has in other areas. In their manifesto for the European elections in 1989 the Government made all sorts of promises on which they subsequently reneged. In their manifesto for these 1994 elections they repeat and embroider on those promises. But the electorate is now wise to Tory promises which turn out to be Tory lies, as we shall see when the results come in on 12th June. Last time round, the Government claimed that they would apply tough new controls over the quality of drinking water, including stringent limits on the level of nitrates. What tough new controls? No, instead the Government have been found guilty of non-compliance by the European Court of Justice, and instead of accepting that and trying to clear up our people's water the Government's response was to try to have standards lowered.

The Conservatives also promised to improve our air quality. What have they done since? They have tried to repeal or amend the directive which sets legal limits on nitrogen dioxide in the air. No wonder more and more of our children suffer from asthma. No wonder the problem of acid rain has not been resolved. The noble Lord, Lord Henley, says that we do not seek popularity in Europe. More's the pity, my Lords, on this matter where our stance has damaged our relationships with other countries.

It is also utterly disreputable that the UK is the only member of the European Union which refuses to set a target for carbon dioxide emissions beyond the year 2000. Does it not also make a mockery of the Prime Minister's claim to be in favour of more open government when we have failed to implement properly the European Union's rules on freedom of environmental information because of our continuing obsession with official secrecy?

A number of my noble friends have referred to the social chapter and the Government's ill-judged decision to opt out of that part of the Maastricht Treaty. I shall not repeat the arguments put so well by my noble friends Lord Richard and Lord Howell. I say only that the Labour Party categorically rejects the sweatshop economy mentality of the Government. It does so not just for reasons of social justice but also because this is an ill-fated route to take if we wish to succeed in the present international economic environment. Ministers are deluding themselves if they think we shall advance our position by going for short-term competitive advantage over our European partners. In the long term, we shall be the losers by pursuing that short-sighted policy.

Our future depends on having an economy based on high-tech industry where innovation is at the centre of its operations and where its labour force is highly skilled and capable of adaptation. Why ever should inferior working conditions make for superior economic performance? It is utterly defeatist to believe that the only way in which we can compete is to exploit people in relation to their counterparts in Europe; and it shows a sad lack of confidence in Britain's industry and British workers to assume that that is the only way in which we can be a successful trading nation. In any case, good employers in successful companies are already meeting the requirements of the social chapter, as we heard recently from senior managers from Nissan when giving evidence to a House of Commons Select Committee.

The Government's position on employment policy in Europe has been entirely negative and has been perceived as such by our European partners. That was revealed only too clearly in their response to the Delors White Paper when it was published. The knee-jerk hostility displayed by the Chancellor of the Exchequer to co-ordinate policies to tackle unemployment in Europe is a fine example of the Conservative Party's ostrich-like approach to European economic policy—an approach which I regret to say was all too clearly revealed in the speech today by the noble Lord, Lord Reay. Instead of working towards a concerted European strategy the Government prefer to lecture our European partners on employment policy, claiming that all that is needed is the "deregulation" of the labour market.

In support of that position they point to the employment record of the United States. Let me say to the noble Lord, Lord Reay, that what he and his Government fail to see is that the ability of the United States economy to generate jobs and to sustain levels of unemployment significantly below European levels rests not, as is claimed by the Government, on low wages and flexibility but on very low productivity growth, particularly within the service sector.

Instead of trying to bully our European partners into a policy which in the United States is manifestly ineffective, how much better it would be if the Government were prepared wholeheartedly to be part of the European strategy for reflation and growth, which we all so desperately need.

As my noble friend Lord Gallacher made clear, one of the biggest failures of the Government in Europe is that they have not succeeded in bringing about reform of the CAP. My noble friend Lord Bruce of Donington is, of course, right when he says that there are issues where we must disagree with our European partners. The CAP is one such issue. It continues to eat up a huge share of the European budget; it has done little to foster more efficient farming; it is open to fraud, and it does not encourage the protection of the environment. I accept that the Government share that view, but they have been in power for 15 years and must take some of the blame for the totally unsatisfactory situation that still prevails. Were they not so busy opting out of the central elements of the strategy for continuing integration in the European Union they might carry a little more weight on issues such as the CAP.

That brings me to the question of monetary union. The noble Baroness, Lady Elles, asked what the Labour Party's position was on that issue. I shall explain it to her. We support constructive moves to establish a stable monetary framework for economic growth in Europe. That framework can be provided by monetary union if there is real convergence in the European Union countries' economies and if institutions are developed which give the British Government a real voice in European monetary policy.

The Conservative position on this important topic remains obscure to us and also to our European partners. Perhaps the Minister would answer the question as to whether the Government are in favour of a single currency when greater convergence has taken place. A simple "yes" or "no" answer is all that is needed. Perhaps the Minister would also say whether the Government accept the CBI position that we should eliminate those things that hinder the flow of free trade.

Does he agree that fluctuating exchange rates and all the uncertainties that they imply are a factor in restricting this flow?

My noble friend Lord Hollick referred to the possibility of greater co-operation on research and development. I strongly endorse it. There are particularly important benefits from co-operation in the defence industry, including co-operation in defence production where a country with comparative advantages becomes the European producer of a particular weapon or type of equipment and other countries do likewise for other weapons or equipment.

The EU's framework programme on R&D should be welcomed and I am only sorry that the Government have not been more positive about it. There is surely scope for further development here and I would welcome the Minister's views on it.

I end by touching on the issues that were raised by my noble friend Lord Shepherd and say something about European institutions and the problems of bureaucracy that have beset the European Union for some years—a subject on which my noble friend Lord Bruce feels so strongly. He is quite right to draw our attention to them, even if he sometimes exaggerates a little. There is clearly a need to open up decision-making in Brussels and make it properly accountable and clearly under democratic control. The Council of Ministers is still far too secretive; and the Commission and the European Parliament are still too inefficient in the way that they operate. For how much longer, for example, will the Parliament continue with the absurdly wasteful practice of meeting in more than one place?

The principle of subsidiarity is one that we strongly support. No doubt the Minister will say that the Government also support it. What a pity they do not practise it in the way they govern Britain where, as my noble friend, Lord Healey, said, they have been hell-bent on more and more central power for at least a decade. It really is a bit rich for the noble Baroness, Lady Elles, and her friends in the Government to go round accusing the Labour Party of wanting a centralised, federalist Europe in the light of their own record in Britain. Moreover, this is just another Tory lie about the Labour Party's position on Europe, just as the Tory claim that we would give up the right of veto, repeated today by the noble Lord, Lord Henley, is also untrue.

Baroness Elles

My Lords, I am grateful to the noble Baroness for allowing me to intervene. Will she kindly say what is the Labour Party's position on a federal Europe, since the Labour Party has signed the European Socialist manifesto? As I read it, there are indications that that is the kind of structure that the Labour Party sees in Europe. If I have lied to the House then I apologise, although I do not accept the remark made by the noble Baroness. It would be most helpful if she could clarify the Labour Party's position on that.

Baroness Blackstone

My Lords, the Labour Party's position is perfectly clear. We are in favour of moving towards greater integration in Europe, as is implied by the Maastricht Treaty. We believe that the decisions were right that were made during those debates on the treaty to move towards the system in which there would be some central organisation in Europe, but with considerable devolution and subsidiarity to member countries and to the regions. I believe that it was rather well put by the noble Lord, Lord Bonham-Carter.

The points that were made by the noble Lord, Lord Henley, about the Labour Party's position on the whole question of the right of veto were also quite wrong. While we have long been in favour of qualified majority voting in certain areas, we have consistently stressed the importance of maintaining the veto on foreign and security policy and on fiscal and budgetary policy, as well as on any constitutional changes to the Treaty of Rome.

Distorting the Opposition's views is merely another tactic deployed by the Conservative Party to distract attention from its own deep divisions. Why should we care about those divisions? There is only one reason why we care: it is that they have led a weak and dithering Prime Minister to concentrate more on patching up difficulties in his own party than on pursuing the national interest in Europe. The electorate know very well that that is what is happening. That is why on 9th June they will not vote Conservative and the Tories will be reduced to a pathetic rump in the European Parliament.

7.28 p.m.

Lord Henley

My Lords, I am reminded of Emerson's remark about honour and counting the spoons. But on this occasion perhaps it might be rephrased: the louder they complained about elec-tioneering, the more they did of it. Being a mere political innocent, I do not intend to indulge in any electioneering. However, perhaps I may pick up one point that the noble Baroness made in her closing remarks. She said that I accused the party opposite of desiring the abolition of the veto. I did no such thing. What I said was that the members of the Labour Party in the European Parliament voted for just that. Whether it is part of official Labour Party policy I do not know. They voted for it in the vote on the Herman Report.

As my noble friend Lady Elles pointed out, it is difficult to find out exactly what are the Labour Party's views. I have a copy of the Labour Party manifesto, bought, I understand, at a cost of £3, compared with our own manifesto at £1.95. The document states clearly on page 12 that,

"we will not introduce legislation to enforce a 35-hour week". That is exactly what they agreed to when they signed the manifesto of the party of the European Socialists. Which do they believe? Do they believe that they will introduce that or not?

Perhaps I may get back on the main tack of my non-electioneering speech. I believe that our relation-ships with the other member states of the Union are better than ever. I believe that the picture painted of our isolation by noble Lords opposite is fanciful and—to use the noble Baroness's words—a bit rich from a party that changed its mind something like six times over the years on the European Community. The Labour Party, as my noble friend Lord Campbell of Croy made clear, was far, far more divided than the party of which I have the honour to be a member. Obviously, we have our disagreements within the party; just as, obviously, as I made clear in my opening speech—as did the noble Lord, Lord Bruce of Donington—we have our disagreements with our partners in Europe. But that is only natural. What is important is that we have a vision for the future of Europe which I believe is increasingly shared by our partners.

Lord Jenkins of Hillhead

My Lords, I do wish that the noble Lord would not keep saying that. If he wishes his argument to be taken seriously, to say that we have a leadership role in Europe really is most unconvincing. Some of us—perhaps for historical reasons—inevitably have a very wide range of contacts across governments and across policies, and that is just not so. If he believes that it is so, will he explain why Sir Leon Brittan, with all his great achievements, as has been mentioned before, is not a serious candidate for the presidency?

Lord Henley

I shall come to the question of the successor to M. Delors in due course; and I shall explain that we shall support the role of Sir Leon. If the noble Lord will allow me, I will come to that in due course. What I was trying to make clear is that I believe that the picture being painted by noble Lords opposite and by noble Lords in his own party is one that goes too far. It serves this country no valuable purpose to say that we are quite so far out at the edge in the European debate. I believe that we are at the centre of the debate. We want to be at the centre of the debate, and we shall continue to be at the centre. Obviously, I have only a limited amount of time to answer the various points that have been put to me. I will answer as many as I can, but I aim to address some of the main themes arising from our discussion.

As I explained earlier, it is very important to remember the positive contribution that we have made to shaping the agenda and policy in Europe. We have pressed hardest among member states, as I made clear in my opening remarks, for trade liberalisation and better relations with central and eastern Europe. A package of trade liberalising measures has been agreed, as have association agreements with Poland, Hungary, the Czech republic, Slovakia, Bulgaria and Romania. Our efforts to secure full compliance with EC legislation has led to the increased powers under the Maastricht Treaty, including the power to fine member states for non-compliance. Our efforts on the structural funds helped to establish important provisions on value for money in the revised regulations. It was pressure led by the United Kingdom, in alliance with several other member states, that ensured that a liberalised regime for financial services was established within the single market. Those successes—and obviously we could list many more—show that by having a clear vision of what was best for Britain and best for Europe, and building alliances with our partners, we achieved our objectives despite, in many cases, the strong opposition of some other member states. Our efforts on subsidiarity, which I mentioned in my opening remarks, with the French and the Germans for example, are further examples of the importance that we attach to working with our partners to achieve shared goals.

The noble Lord, Lord Jenkins, mentioned, as did other noble Lords, negotiations on qualified majority voting as an indication of our inability—if I paraphrase him correctly —to get to the heart of Europe and influence matters. I believe that the noble Lord is mistaken. I really do not believe that the debate has damaged our standing with our partners or with EFT An applicants. I believe it was nonsense, as the noble Lord, Lord Howell, said, to argue that it endangered a lifetime of trust. Obviously, there were some tense moments when it looked as though we might not reach agreement in time for the vote in the European Parliament. But we did reach an agreement. We and the Spanish, I believe, had legitimate concerns which could not simply be ignored by our partners. Nor did they ignore them. The agreement that we reached shows that the differences between member states can be settled while protecting important national interests. That should be of some comfort to new countries coming in, as well as to the existing members of the Union.

The noble Baroness, Lady Williams, called for much greater openness in the Council. That was echoed to some, but only a limited, extent by the noble Lord, Lord Shepherd. Obviously, we have strongly supported efforts that have been made to increase openness in the Community, and we have taken the lead in pushing for greater transparency, culminating in the key decisions of the 1992 Edinburgh Council. As a result, a number of Council sessions are now held in open session, votes are routinely published, and briefing on Council decisions has improved. A code of conduct on access to documents held by the Council and the Commission has also been agreed. The code affirms the principle of widest possible access combined with a number of necessary safeguards.

As the noble Lord, Lord Shepherd, made clear—I agree with him on this point—total openness would be rather difficult and might on some occasions reduce the quality of discussion and damage effective decision making. That would be in no one's interest. But I believe that it is possible to find the appropriate balance.

A number of speakers, including the noble Baroness, Lady Williams, the noble Lords, Lord Cledwyn and Lord Shepherd, and others, asked about our planning for the inter-governmental conference which will convene in 1996. Obviously, 1996 is two years away; and two years, as we all know, is a long time in politics— particularly in European politics. But we are already thinking about the issues and will take note of all the comments made by noble Lords today. We shall consult widely with our partners and others.

The Maastricht Treaty and the enlargement negotiations specified a number of areas which will have to be reviewed in 1996: the operation of CFSP; qualified majority voting; the number of Commissioners; and so on. But it is not yet clear what will be the exact scope of that IGC. It is clear that it will be only one element in the debate about the future development of the Union, including the crucial question of its future enlargement. I do not think that we should become over-fixated on the date of 1996. We must and will ensure, however, that we remain at the forefront of discussions and in shaping the debate, as I believe we have done in the past.

The noble Lord, Lord Cledwyn, asked about a successor to M. Delors. As I made clear in response to the noble Lord, Lord Jenkins of Hillhead, we believe that Sir Leon is the best man for the job. But obviously he is his own man. He is not a creature of the British Government, as anyone who has read his recent book would be the first to accept. Obviously, the decision on a successor to M. Delors will have to be taken collectively by all heads of government. We are confident that we shall be able to work closely with whomsoever is appointed at the next Commission. I reject the suggestion that there is a negative perception of Sir Leon's position purely because of his nationality. Many people accept the fact that he is very much his own man.

Perhaps I may say just a word or two on British-German relations. The noble Lord, Lord Cledwyn, talked about the importance of our relations, particularly with Germany as the other major contributor to the budget of the Community. The noble Lord was absolutely right to stress the importance of that. He will be aware of the Anglo-German summit that took place on 27th April this year. It embraced talks between five departments, as well as between Chancellor Kohl and the Prime Minister. It was clear afterwards that the Anglo-German relationship was in very good heart. Too often the relationship is viewed from the perspective of the rare issues that divide us rather than from any analysis of the close and widespread ties that join us. Again, the noble Lord was right to stress the large number of German students at United Kingdom universities. I am advised that the number is in the order of 6,000 to 8,000. Britain was the biggest investor in Germany in 1992, much of that investment being in the new eastern Länder. There is also the strong legacy of the close military ties and co-operation arising from many years of allied presence in West Germany.

Perhaps I may say a word or two about ERM and EMU, a subject pressed by the noble Baroness, Lady Blackstone. The United Kingdom Government fully support monetary and economic co-ordination and the need for greater convergence. A stronger European economy is obviously in all our interests. To that end we shall play a full part in stage two of EMU and at an appropriate stage we shall make a decision—but only at that stage—on whether participation in stage three would be in our interests. I believe that that is one of the benefits of the United Kingdom protocol. Our views on ERM are well known. We shall not join in the foreseeable future and certainly not during this parliament.

I turn now to matters relating to social policy, which have been at the forefront of the minds of many noble Lords, both on the Opposition Benches and on my own. We believe that Europe faces a crisis such as we have not seen since the 1930s. Throughout the Community there are now some 20 million unemployed and the figure is rising. But in this country we are now creating jobs. The United Kingdom has a higher proportion of its working-age population in work than any other major EC country—some 70 per cent.—and virtually the highest level of female participation in the workplace. I stress that point to the noble Baroness, Lady Lockwood. Our unemployment rate is now below the EC average —below 10 per cent.—and falling. It is falling far earlier than any of the pundits ever predicted. We are the only EC country in which that has happened, apart from Ireland, where unemployment has fallen in the last year. The April statistics show that unemployment fell by some 36,000. That confirms how unemployment continues its downward path, bringing the total fall to 289,000 since the recovery in the labour market began just over a year ago. The latest fall in unemployment is clear evidence that Britain's policies to promote enterprise and employment are working.

Lord Bruce of Donington

My Lords, I am obliged to the noble Lord for giving way. Will he make clear that his remarks and figures concerning unemployment relate to those unemployed and claiming benefit and do not necessarily reflect the total of real unemployment in the United Kingdom?

Lord Henley

My Lords, we have two means of counting the unemployment figures. We have the unemployed and claiming benefit figures—the ones that come out once a month. We also produce figures which come out every three months, based on ILO agreement, which I believe the noble Lord will accept. Those show more or less exactly the same pattern: unemployment falling and falling at a much earlier stage in the recovery than anyone predicted. Both the LMS and the claimant count figures show a figure of somewhere a little under 2,700,000; in the case of the other, the figure is around 2,800,000. What is important is that both figures have dropped. I shall not give way again to the noble Lord. I have already given way twice. There is only a limited amount of time and I have a certain amount to say.

Low inflation has provided certainty for growth and investment. Our labour markets are flexible and productivity is rising. A recent United States' survey showed that during the 1980s the United Kingdom had the highest rise in productivity of any G7 country at 4.8 per cent., significantly ahead of France at 3.5 per cent. and Germany at 2.3 per cent. We have systematically reduced the burdens on business and kept the lowest business taxes in Europe. As a result, the United Kingdom attracts more inward investors than any other country.

The noble Lord, Lord Richard, claimed that the banks did not come here. But what about the industry that is coming here? What about that 40 per cent. of all inward investment into the European Community which comes to the United Kingdom? I refer the noble Lord, to factories he may like to visit, factories such as Nissan in Sunderland or Toyota in Derbyshire, to see what that investment means and means in jobs. We were the largest recipient of foreign direct investment in the OECD in 1992 for the second successive year.

Furthermore, investment does not come—whatever the allegations of the party opposite—because we have a low wage, sweatshop economy. Generally speaking, take-home wages are broadly comparable in this country and most European countries. But what are much lower are the non-wage labour costs. It does not cost as much to employ someone in this country.

Decisions to locate in the United Kingdom are also an endorsement of the skills and productivity of United Kingdom workers and a recognition that the United Kingdom is the best place to do business. As I said, the United Kingdom has the lowest main corporation tax in the EC and G7. We have a much improved industrial relations record. In 1993 the number of strikes was the lowest on record. Our enterprise culture, open trading system and secure industrial infrastructure make the United Kingdom an attractive place in which to invest.

There is no doubt that our opt-out from the social chapter has strengthened the business view that the United Kingdom is the best place to invest. I believe that the social chapter, supported by the party opposite—I see on page 12 of its manifesto that there is now a commitment to sign the social chapter—is a throwback to the past. Our opt-out was a triumph.

Baroness Blackstone

My Lords, I wonder whether the Minister can comment on the recent evidence given by Nissan to the Select Committee in the other place in which it said that there was absolutely no problem with the social chapter so far as Nissan was concerned. It was already implementing all the requirements of the social chapter.

Lord Henley

My Lords, I quite accept that. There will be a great many companies which do that; there will be other companies that cannot. The noble Baroness will know that we have been discussing of late the Sunday Trading Bill. It was proposed by some people, particularly by the party opposite, that certain protections should be brought in for employees in large shops. But noble Lords opposite were quite prepared to accept that people in smaller shops would not necessarily have to be covered and would not need the same protection. We cannot have the same degree of protection for everyone in the way the noble Baroness claims.

I want to get over very firmly to the noble Baroness that, although we have opted out of the social chapter, I do not believe that our level of social protection is any lower than what one would have in the rest of Europe. In fact we have a record to be proud of, which I shall go on to explain shortly. I want to get one or two points over before doing so.

We are the only country to have opted out of the social chapter, but obviously we are not the only country to have looked at it with a sceptical eye. I notice that the new Italian Foreign Minister has said that he will be studying it carefully before taking a view. In his view it is potentially dangerous to try to impose the same standards on labour markets all over Europe. I can only agree. The social chapter does not take account of subsidiarity or member states' own traditions or practices. We did not sign up to the social chapter because we believed that it would have had a negative effect on jobs. It would have led to damaging EC laws imposed on the UK which would have added to costs and cut competitiveness. I believe that the Prime Minister's stand at Maastricht was welcomed by United Kingdom industry. It means that the UK will continue to be the most attractive EC location for investors.

As I said to the noble Baroness, that does not mean that we have opted out of the EC's social dimension. On the contrary, we remain committed to sensible EC social policies on the basis of the existing treaty. We have played and will continue to play a full part in all negotiations under the social action programme.

The latest Commission report on the implementation of agreed social measures shows us at the top of the league with 32 out of 33 measures implemented. This commitment reflects the fact that we have a very high level of social protection, as good if not better than anywhere else in the EC, whatever the noble Lord, Lord Howell, said in his long diatribe, claiming that there was no social protection at all for our workers.

Few member states have a health care system as comprehensive as the National Health Service, which is open to all residents regardless of nationality, means, employment status, or payment of social security contributions. Few countries can match our social security safety net system in terms of its generosity and comprehensiveness. That was a point rightly stressed by my noble friend Lady Elles. Going down to individual benefits, no other EC country has a scheme equivalent to family credit, which covers both the employed and self-employed. Universal child benefit is payable to every child in the United Kingdom.

I could go on, but let me conclude with a brief word on the draft directive on part-time work. That matter was raised by the noble Baroness, Lady Lock wood. Again, we believe that the draft directive would dramatically increase the costs and administrative burden of employing part-time and temporary workers. It would deter employees from recruiting those workers. Part-time and temporary working patterns are well established in the United Kingdom and becoming increasingly popular. Recent research shows that only around 14 per cent. of those in part-time work are actually looking for full-time employment, and they currently constitute some 30 per cent. of the workforce. That is a trend that the United Kingdom Government support.

Our vision of Europe is guided by a number of key principles. First, we want a Europe where businesses are able to compete effectively in world markets. That means reducing burdens through deregulation and minimising social costs. They are policies which we believe are already working and they must be applied throughout the Community if business is to compete internationally.

We want a European Union that is open and free-trading. Protectionism has had its day. The successful conclusion of the Uruguay Round of GATT paved the way for a huge increase in the volume of world trade to the benefit of all. The Union should also be outward-looking. We must be ready to admit others when they are ready. Those are the aspirations and values that we shall be upholding when we go to the polls in two weeks' time. They are values which are shared by many of our partners and values, I believe, that will be supported by the majority of the citizens of this country.

7.51 p.m.

Lord Healey

My Lords, this has been a good debate and I am grateful to all noble Lords and Baronesses who have taken part. Let me say that I do not share with the noble Lord, Lord Jenkins, his criticism of the Government's choice of spokesman. I confess that I found the opening speech a little too redolent of the Foreign Office word processor, particularly when the noble Lord came out with phrases like, "These are early days". I believe that was first introduced before the days of word processors, around 1830. But the Minister was in much better form in his wind-up.

In fact, the Minister and I have a great deal in common. I am not, I am afraid, a political innocent. But then I doubt whether the noble Lord is either. I think that he was being a little economical with the truth in that regard. But we have an enormous amount in common. Five out of the six letters in our names are exactly the same and in the same order. The only thing dividing us is the marginal difference between the letter "a" and the letter "n", which in manuscript are often so close together that the Post Office regularly directs his correspondence to me and mine to him. So I expect that we probably know more about one another than any other two noble Lords from opposite parties. Fascinating it is too!

I am tempted to speak for several hours to take up many of the points raised. I wish that we had had a little more time to discuss the German problem and I am grateful to those speakers who dealt with that. But I am conscious that our steamer is shortly leaving Europe for the Antarctic and I do not think we should delay it. So simply let me say that, in view of the brilliance of the contributions made to this debate, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.