HL Deb 12 December 1995 vol 567 cc1171-256

3.9 p.m.

Lord Tordoff rose to move, That this House takes note of the Reports of the European Communities Committee on the 1996 Inter-Governmental Conference [21st Report, 1994–95, HL Paper 105 and 18th Report (Minutes of Evidence), 1994–95, HL Paper 88].

The noble Lord said: My Lords, the report that we are discussing this afternoon was produced by an ad hoc sub-committee of the Select Committee of your Lordships' House, which started work in February this year. Its broad terms of reference were, To consider the matters which are to be reviewed at the Inter-Governmental Conference which will be convened in 1996".

The particular issues on which we were asked to focus are spelt out on page 6 of our report. However broad they were, the potential for extending the scope was endless, but we managed to restrain ourselves and finished hearing evidence in July, which was published as a separate document. In spite of it being 429 pages long, I hope that it will be read because it contains a considerable amount of interesting discussion and information.

The report was the result of a large number of people who deserve the thanks of your Lordships. Perhaps I may thank first members of the sub-committee whose names are to be found on page 80. It says a lot for the ethos of your Lordships' House that such a disparate group—I say "disparate" rather than "desperate"—was able to produce a unanimous report on such a subject as this. I am particularly grateful to them for their tolerance and good humour throughout the period of the inquiry.

The sub-committee will want me to thank three people without whom the report would not have seen the light of day. I should thank first our Clerk, Mr. Tom Mohan, for guiding the sub-committee so ably. I owe him a personal vote of thanks for keeping me on the straight and narrow and for guiding me through my first experience as a chairman of one of your Lordships' sub-committees. It has been a great learning experience for me.

Secondly, I must thank Sir William Nicoll, our specialist adviser, whose experience as a former deputy UK representative in Brussels proved invaluable in preventing us from exposing our ignorance on a number of occasions.

Thirdly, I thank Mrs. Eileen Denza, whose support as the Select Committee's legal adviser over the past eight years deserves special recognition. Her many years' experience in all aspects of the European legal jungle will be sadly missed now that she has retired, as will be her folk memory which made such an effective data base for our study and for many previous studies. The really extraordinary amount of hard work done by those three people during the summer recess is the major reason that we are able to meet our deadline and to bring the report before your Lordships today.

In passing, I must offer my thanks to the Clerk to the Committee Office, Mr. Michael Pownall, who has now moved on to other things and who saw me through my first year as Chairman of your Lordships' Select Committee.

In addition, thanks are due to those who gave evidence, both written and oral—as I have already said, there is a considerable amount of that—and to a variety of people, including the Foreign and Commonwealth Office, Members and staff of the European Commission and the European Parliament, as well as the UK representative and his office in Brussels. We wish Sir John Kerr well in his new appointment as our ambassador in Washington.

It was decided not to set up a joint inquiry with the two committees in another place, but we have had full co-operation and have maintained a useful exchange of evidence as well as generally avoiding an overlap. Again, we thank those committees and their staff.

It should be borne in mind that we are at a very early stage in the IGC process. We face what is essentially a moving target. The IGC will not start until the spring of 1996 at the earliest and may go on well into 1997, so we have tried to make the report as informative as possible. For that reason, we hope that Parts 1 to 3 can be useful to your Lordships as a handbook for reference as events unfold. The report of the Reflection Group has been published in the past week and the shape of the agenda is now beginning to emerge although positions are still not formally defined.

Part 4 of the report provides a summary of the conclusions of earlier Select Committee reports, from which your Lordships will see that there has been a continuity of the direction taken by our predecessors. Although we have not in any way slavishly followed their conclusions, I hope that your Lordships will find that common threads run through their reports and ours.

Part 5 of the report, the summary of evidence, represents a miracle of textual selection and compression. Although I hope that the actual evidence will be read, I think that it is true to say that all the important arguments have been fairly summarised.

I turn now to the Opinion of the Committee in Part 6. Your Lordships will notice that, perhaps unusually, there is no summary of recommendations in this report. That is deliberate—not in an attempt to prevent your Lordships reading the page of recommendations and nothing else, which is the way that most of us do it, but because in this case it is our opinion that the matters on which we did not make up our minds, the unresolved issues, are as important as those on which we have made clear recommendations.

Your Lordships will also see from paragraph 308 that we deliberately did not go into any detail on enlargement although, as I indicated, it was very much in our minds in relation to other matters; nor, important though they are, did we discuss EMU, the new financial perspective or indeed the social chapter. Those are matters outside the IGC, so we touched on them only peripherally. I trust that today's speakers can exercise the same self-discipline and concentrate on matters in the report. Reading the report of the proceedings in another place last Thursday, I fear that many right honourable and honourable Members were led into areas which have no direct relevance to the IGC.

We concentrated our inquiry on two main areas. The first was the future of decision-making and the future form of the institutions in an expanding Union. Although we did not specifically seek evidence on enlargement, coming events cast their shadows before them and there hangs over the whole IGC the shadow of expansion, so that, even though in many cases it will not be necessary to make treaty changes, the problems which will arise from expansion need to be thought through now.

The second area was the functioning of the two "pillars" added by the Maastricht Treaty; the second pillar being the common foreign and security policy and the third pillar, justice and home affairs.

Beyond those major areas there were other important topics which needed examination and we were greatly assisted by other sub-committees which were good enough to allow us to contract out certain specialist matters where their expertise could be brought to bear. For instance, the sub-committee of the noble Lord, Lord Middleton, undertook a very quick inquiry into the possible need for treaty changes in relation to the reform of the CAP. The sub-committee of the noble Lord, Lord Elibank, carried out an inquiry into energy policy and is currently carrying out an inquiry into the tourism Green Paper, which is a subject predicated for the IGC by the Maastricht Treaty. We also invited the sub-committee of the noble and learned Lord, Lord Slynn, to exercise its legal expertise to consider the section of the report dealing with the European Court of Justice. We were most grateful for that additional expert help. I have no doubt that the noble Lord, Lord Middleton, will deal with his inquiry when he speaks later this afternoon.

On the institutions, our conclusions were that, while we did not recommend drastic changes now, it would become essential, in the light of enlargement, for some changes to be considered at an early stage; otherwise improved efficiency, transparency and accountability should be the order of the day. Looking forward to an enlarged Union we recommend, for instance, that each member state should have no more than one Commissioner. There should be a restructuring of the portfolios. Already one wonders if there are enough full-time jobs to go round, but with a Community of 20-plus, including some very small countries, the current arrangements would appear to be ridiculous.

For the same reasons, the Presidency will have to change; otherwise it will come round only every 12 or more years and some small states will simply not be able to handle it in the way in which it is done at the moment. We conclude—but without great enthusiasm—that some form of team Presidency may well be necessary. We set out the pros and cons of this debate in paragraphs 236 to 242 and I have no doubt that the noble Lord, Lord Hunt of Tanworth, when he comes to speak will articulate some of the hesitations he has on this subject.

On the question of qualified majority voting, we were not convinced by the arguments we heard that an extension was a necessity, at least at the present time—and I emphasise "at the present time". There was evidence to suggest, however, that the Government should not close their mind completely to the possibility in the future. Nor did we find the case made out with any conviction for the extension of the European Parliament's powers of co-decision. In general I believe, perhaps sadly, we felt that it had yet to learn to use its existing powers in a more mature way—although there were some signs of improvement.

We heard conflicting views on the European Court, but concluded on the clear balance of evidence that the criticism that it was indulging in "judicial activism" was largely unfounded. We do suggest that the time has come, however, particularly in view of its workload, that a comprehensive study of the work of the Court should be undertaken.

The Court of Auditors is mentioned in paragraph 303 during the discussion on budgetary procedures and controls. I hope that the noble Lord, Lord Hunt of Tanworth, will touch on that point later. We firmly reject any suggestion that the Court of Auditors should be interfered with by the European Parliament because its own expenditure, as the noble Lord, Lord Bruce of Donington, has frequently reminded us, is very considerable. I must say that I find the Government's response to paragraphs 301 and 303 a little over-dismissive.

On the second major area—the inter-governmental pillars—the overwhelming feeling was that having been in existence for such a short time it was too early to make fundamental changes. Accordingly, we reject both the idea of collapsing them into the first pillar and of introducing QMV in those areas. In any case, we had evidence that the requirement to achieve unanimity in inter-governmental negotiations is not without merit.

The resulting detailed and painstaking scrutiny of drafts can be seen as having benefited those texts agreed so far, and minority views are not automatically brushed aside. We do, however, argue strongly that the treaty should provide explicitly that decisions should not be taken on third pillar instruments before national parliaments have had the opportunity to perform their task of scrutinising them.

On the second pillar, while we acknowledge that there have been some unheralded successes, we urge that national parliaments should have greater scrutiny opportunities. If the democratic deficit is to be filled it has to be done by properly informed national parliaments, or the European Paliament will believe itself entitled to demand the right to carry out the task, which brings me to the role of national parliaments, which is dealt with in paragraphs 304 to 307.

If we are to tackle the so-called "democratic deficit" the role of national parliaments must be made more effective. While we feel that the Danish answer of insisting that Ministers are mandated prior to Council meetings cannot be the answer if decision-making is not to be delayed unduly, I nevertheless quote our quite powerful view from paragraph 307: national parliaments can most effectively contribute to the legislative processes of the Union by exercising timely pressure on their own Governments in advance of Council meetings. The Declaration on the Role of National Parliaments in the European Union stated that 'the Conference considers that it is important to encourage greater involvement of national parliaments in the activities of the European Union'. It went on to declare that 'the governments of the Member States will ensure … that national Parliaments receive Commission proposals for legislation'".

As the other place has said, that has been routinely ignored.

Now I know that in principle the Government agree with carrying through the meaning of that paragraph, but we still have problems, and serious problems. I should tell the Minister that since the publication of our report we have been keeping a particular eye on the situation and we are building up a large dossier of items where we have been kept in the dark until the very last minute or in some cases even later.

We have in recent weeks received a mass of requests for documents to he cleared through the scrutiny process in time-scales that are totally impossible. For instance, the sub-committee chaired by the noble Lord, Lord Middleton, was asked to clear a document on the fruit and vegetable regime within a few days of receiving the final document in order that the Spanish Presidency could get it through before its period of office finished with the Council meeting at the end of this week. These matters are too serious to go through on the nod and I am glad that my colleagues are being robust on those matters.

A less serious but glaring example was in the pile of documents before me in yesterday's sift. Council document 10406/95 started on its merry way on 28th September from the Commission, arriving in Brussels on 5th October. The explanatory memorandum submitted by the Foreign and Commonwealth Office is dated 4th December. That is far too long for a document to come through, although, as I say, that document is not of desperate concern.

The final indignity is the last line of the explanatory memorandum which tells us that there is no defined timetable, but the Commission does not want to delay putting this to Council as soon as possible. That comes close to being an insult to the job of your Lordships' Select Committee.

I realise that the delays are not all the fault of Whitehall, but we do need the commitment of governments to maintain the scrutiny reserve so that national parliaments can do their proper job and if government Ministers would press this need not only on the Commission but on their colleagues in the Council then we would begin to make some progress.

However formal changes are, we believe that they are less important. There is a lot of pressure especially from the French for some so-called "representative body" of parliamentarians. In my view, no such thing is possible, certainly not if only two or three people are sent from each parliamentary chamber. Nor, I fear, do we accept the idea of a "second chamber", which will disappoint the noble Lord, Lord Finsberg, who gave evidence to us on that subject and whose leadership of the delegation to the Council of Europe we all admire, but there was a unanimous feeling that the work-load of a dual mandate would be far too large to be manageable. We note that both the Government in their reply, and the Reflection Group in its final report, agree with us.

We very much support informal linkages with other national parliaments and with the European Parliament through such meetings as the Conference of European Affairs Committees where information, views and experience can be exchanged, but I believe that formal decision-making at such fora is not sensible or acceptable.

Let me then say that we are grateful to the usual channels for this opportunity of a major debate on the report before the Madrid Summit at the end of the week and I greatly look forward to the many contributions which are still to come. It is a matter of regret that I have received a note to say that the noble Lord, Lord Cockfield, has to apologise for not being with us today. He has been advised by his medical specialist not to turn up on this occasion. We shall miss his contribution.

Thanks are also due to the Government for their prompt response to the report. It contains so many items where the Government agree with us that I have to say that I fear for my political street credibility. I must also repeat the request for a White Paper contained in both our report and that of another place. It needs to be produced before the conference convenes so that we can have a chance to put an updated parliamentary input into the process.

In conclusion, let me say that, above all, the need to make the workings of the Union more understandable to the average citizen, more transparent, simpler and more efficient seems to us to be the overriding imperative for the 1996 IGC. I hope that our report goes at least some little way towards assisting that process.

Moved, That this House takes note of the Reports of the European Communities Committee on the 1996 Inter-Governmental Conference [21st Report, 1994–95, HL Paper 105 and 18th Report (Minutes of Evidence), 1994–95, HL Paper 88].—(Lord Tordoff)

3.27 p.m.

Lord Richard

My Lords, I must apologise to the House for not being the noble Lord, Lord Cockfield. I know that the House wished to listen to him. I certainly wished to listen to him. I hope, as the noble Lord, Lord Tordoff, said, that he will soon be recovered and back with us.

Listening to the noble Lord, Lord Tordoff, one cannot help but be struck by the large number of issues the Select Committee endeavoured to cover in its report. I hope that your Lordships will forgive me if I do not try to go through them all one by one as if I were ticking off a check list. Perhaps I may concentrate upon one or two matters that seem to me at any rate to be of the greatest significance.

The House is indebted to the noble Lord, Lord Tordoff, and to the committee. It is a timely report. To have a debate at this stage in the run-up to the IGC is helpful. It is no disparagement for me to say that I found the evidence a shade more exciting than the report's conclusions. The number and diversity of those who gave evidence before the committee are impressive. Save for one or two eccentrics such as Mr. Michael Spicer, MP, there seemed to be a surprising degree of consensus in the face of questioning by members of the committee which, if not hostile cross-examination on occasions, could fairly he described as verging on the aggressive.

What seems to emerge is an understanding that the forthcoming IGC should not be seen as an opportunity for a major review of European Union policy along the lines of a second Maastricht but should be confined to the mandate expressed in the Treaty on European Union.

The report of the Reflection Group said: We have tried to identify the improvements needed to bring the Union up to date and to prepare it for the next enlargement. We consider that the Conference should focus on necessary changes, without embarking on a complete revision of the Treaty". I agree with that. This is not a conference at which grand gestures are going to be made or should be made. It is not one at which some of the more difficult aspects of European policies—for instance, monetary union, the common agricultural policy or the future of the structural funds—should be discussed in too much detail. Of course, it is against the background of those policies that many of the issues will be considered but if the conference were seen as one at which those difficult questions must be resolved I fear that it would not succeed.

It seems to me essential that Britain goes into the conference intending that it should succeed. The opportunities for creating road blocks are great, but they always are and always have been. For this country to be seen yet again as trying to obstruct progress in the directions pointed to by Maastricht would be disastrous for us.

On the other side of the argument, I am quite prepared to give the Government credit for wanting the IGC to succeed. But they will have to prove that during the course of the next 12 months. Reading the report of the Reflection Group, I was depressed to discover how often it stated that one country took a different view from all the others. There are no prizes for guessing which country that is, despite the touching reluctance of the group to name us in the report. I therefore believe that the success or failure of the IGC will depend upon a series of severely practical decisions and that the test should be whether those decisions will make enlargement easier.

The issue of qualified majority voting in the Council of Ministers is bound to be one of the most difficult the conference must face. I do not see how one can conceivably envisage major enlargement of the Union without at the same time calling into question the present voting system. If the next countries to join are to be Cyprus and Malta, what then? Merely to pose the question almost answers itself. The idea that Malta should have a veto on the future development of the whole of the European Union seems to me, with respect to that country, ludicrous. We must devise a system that is sufficiently flexible to allow the Union to work properly but which at the same time goes as far as one sensibly can to preserve the rights, dignities and aspirations of the smaller countries. A "duel key" system in which majorities are counted not only in terms of the number of countries voting but also with attention being paid to population seems to me to be one thoroughly worth exploring.

The dangers of decision-making sclerosis are here now and will become even more apparent when enlargement takes place. If that is so with the Council it is even more so with the Commission. At paragraph 254 of the report the committee concludes that, considerations of efficiency suggest that there should be one Commissioner per Member State". How that will be received by some of the larger states is somewhat doubtful. I perceive a feeling that the major countries in the Union deserve to have that fact recognised at the heart of the Commission itself. But in the event that the Union expands to 20 or 25 members that would mean a college of perhaps 30-plus commissioners. Frankly, that is quite unworkable.

It has already been said that there are not sufficient portfolios to go around now. Even in my day there was some doubt as to whether there were sufficient portfolios to go around. The idea that the work can be spread among 25 or 30 commissioners, each with their own portfolio, does not make sense. Even if the number were reduced to one per state one would still end up with a Commission that was too large and with a number of commissioners for whom there would be no proper portfolio. One way out, as the report suggests, might be to create teams of commissioners so that there would be, so to speak, a Secretary of State commissioner and a Minister of State commissioner behind him. That possibility is worth considering.

Another possibility, which I am surprised was not considered by the Reflection Group or the Select Committee, was hinted at by the noble and learned Lord, Lord Howe of Aberavon, in his evidence to the Select Committee. It is that the Commission could be organised more along the lines of the United Nations Security Council with some members being permanent and others serving a fixed term. One would have permanent members and non-permanent members each of whom would serve perhaps three years. That is another possibility worth exploring. It may give us the necessary elbow room for further enlargement.

If the composition of the Commission causes problems for the future I do not believe that the scope of its powers does. I note that the Reflection Group and the Select Committee, with which I am bound to say I agree, take the view that broadly the powers of the Commission should remain much as they are at present; namely, that it should have the power of legislative initiative within the Community institutions and that it should have the executive powers given by the treaties and by the Council.

Enlargement will not happen overnight. There must be detailed negotiations with each of the applicant states and in each case there must be transition periods. In those negotiations one of the crucial points will be the impact of the common agricultural policy on those applicant countries. It is inconceivable that the CAP in its present form can survive the strains put upon it by any major enlargement of the Union. It would be as well therefore if more detailed work were done, perhaps by one of your Lordships' committees, on the reforms of the common agricultural policy which would be necessary in the event of major enlargement. I am glad to sec that the Government are proposing that the Commission should be mandated to carry out a similar study.

There seems to be a fair degree of agreement as regards the powers of the parliament. I share the view that it is too early to consider any major extension of the parliament's powers. After all, the co-decision procedures introduced after Maastricht have hardly had time to settle down. I also share the view that common foreign security policy and defence should not at this stage be brought within the full competence and procedures of the Union. Here we go to the very heart of national sovereignty. In my view, it is much too early to contemplate their absorption into the competencies and institutions of the present Union. The relationship between the Western European Union, NATO and the European Union itself must he worked out at a practical level over a longish period of time. I hope that the IGC does not get bogged down into too detailed a discussion of these issues.

Finally, there is in the Select Committee report a plea for greater transparency. I am sure that that is right. For far too long countries have been able to shelter behind the anonymity of Council procedures. Invariably, when there has been an agreement hammered out in the Council after lengthy discussions, individual national spokesmen then emerge, hold a press conference and put their own peculiar national gloss on what has been agreed. Frequently, the only common factor is that they all blame the Commission.

It would also be healthy if far greater publicity were given to those things that countries actually agree to rather than allowing them to shelter behind the plea that it is all the fault of Brussels when, in fact, if fault there is, it is almost invariably that of the national government having agreed to it. If transparency means that the Commission will cease to be the whipping boy of national governments I am all in favour of it. I could not help but be struck by the exchanges which took place at Question Time today about tooth whiteners. That was a good example of precisely the point I am now trying to make: there is a directive; the Government agree to it; people do not like it; and somehow or other it becomes the fault of the Commission.

Paragraph 91 of the Reflection Group's report states: There are many issues in the Select Committee report and the report of the Reflection Group which need to be addressed at the IGC. I take merely one other example which was raised by the noble Lord, Lord Tordoff, when he introduced his report.

The Group considers that the national parliaments' principal role in relation to EU decision-making lies in the monitoring and control that each parliament exercises over its government's action in the Council". I very much share that view and support the recommendation that the role of national parliaments be fully respected, together with the consequential opinion that, each National Parliament receives clear and complete documentation in its own official language adequately in advance of every substantial Commission legislation proposal". I believe that there is a suggestion that that should be a four-week period.

If every country had the mechanism to scrutinise European activity which your Lordships' House provides, perhaps some of our problems might have been avoided. Noble Lords will therefore appreciate that my expectations of the IGC are relatively limited. If it produces reform of the existing institutions and a greater transparency in their workings while making it clear that issues such as the reform of the CAP and the structural funds must have a high priority in the immediate future, then I shall be satisfied.

I conclude as I began. The Government must enter the discussions determined to make them a success. We have a long way to go to recover even a part of the influence which has been thrown away in recent years. I hope that the IGC will help us to start on that process.

3.41 p.m.

Lord Bridges

My Lords, I begin by asking the indulgence of the House. Because of a commitment that I made some time ago, I regret that I shall have to leave the Chamber before the conclusion of the debate. I apologise for that departure from our custom and I apologise in particular to the noble Baroness, Lady Chalker, who is to wind up the debate.

With this debate, we return to the large and difficult issues of European policy. In the judgment of many, which I share, it is really too soon after the last revision of the treaty to undertake that task. I hope that when the time comes to settle the text of this coming revision, whenever that may be, there will not be another clause fixing the date for a subsequent revision. That should be settled by objective need and experience rather than determined by a timetable laid down in advance. We do not wish to see another clause of that kind.

I expect that the conference will be particularly difficult for our country. That is partly because of the division of opinion which exists here, more perhaps within political parties than within the nation as a whole, and because of the timing of our general election. It looks as though we may be on our own again on some of the key issues. Therefore, the pressure will be on Britain at the conference, and the Government have an unenviable task before them.

The report of the committee chaired by the noble Lord, Lord Tordoff, seeks to analyse the key issues in a careful and dispassionate way. We did not presume to arrive at precise recommendations, but I believe that the analysis and commentary present a helpful quarry of material for anyone seriously interested in the many topics that we examined. As a member of the committee, I should like to thank our chairman for the admirable way in which he fulfilled a particularly difficult task.

From what I have read of the deliberations of the Reflection Group, it sounds as though there is a divergence of opinion between member states on customary lines. One group favours further institutional advance by extending the powers of the European Parliament and by changing rules for qualified majority voting. Our own representative, it seems, has opposed such changes, This is an old battleground, like one of those bloodstained fields in Flanders which has seen so many battles; and it looks as though we shall be there again in 1996.

On the powers of the Parliament, my sympathies are with the Government, if only for the reason that the Maastricht innovations are so recent and little tried that we need more experience of them before introducing further change. Qualified majority voting is a different matter. Some change may be desirable here to take account of the last enlargement and to prepare for the next. It is a pity that in the Reflection Group the Government have apparently opposed that. I listened with much interest to the remarks made by the noble Lord, Lord Richard, on that subject. They contained much good sense.

We all know which states favour extending the powers of the Parliament and the mixture of national motives which lie behind their views. The key to what happens next on this central issue—and on much else—will be the extent of an agreement between France and Germany. Some clues appear in the joint letter from Chancellor Kohl and President Chirac sent to the Spanish Presidency last week. As far as I know, the text has not been published, but to judge from the press accounts, the Franco-German plan does not specifically ask for substantial new powers for the European Parliament. But it apparently seeks to extend qualified majority voting to new areas.

While the committee's report supports the Government's view that we should not allow foreign and defence policy to depart from the unanimity rule, this joint Franco-German position appears to be a less ambitious constitutional proposal than in the past and seems to offer the opportunity for further negotiation.

But it is difficult to say more without seeing the text of this important letter and until we know the outcome of the events now taking place in France. We cannot yet be sure whether it is right to compare December 1995 with what happened in France in 1968, which cast such a long shadow over French politics for years afterwards; or whether the current events will more closely resemble the sort of confrontations we have experienced in this country between a Right-wing government reforming in its own direction and the entrenched trade union establishment. Until the dust settles, we cannot really estimate the Franco-German position on the crucial timetable for economic and monetary union; and nor can they.

As the noble Lord, Lord Richard, reminded us, formally speaking this item is not on the agenda of the IGC, since the Union has already set out the necessary provisions and timetable in the treaty. But the agenda of the conference is open-ended and as the difficulties of keeping to the original timetable become more and more apparent, it seems to me that this subject will surely be in the minds of all the participants at the IGC.

I incline to the view that the weakness of the French economy is often overstated. In particular, the external account of France is in healthy balance and has been for some time, which is more than we can say of our performance. So if the current political and social problems in France can be overcome—and they are clearly serious—it is not difficult to see Germany and France arriving at a new, feasible timetable for economic and monetary union. That might, indeed, be the centrepiece of the agreements finally reached at the IGC. I hazard the thought that that position might not be very far from a position acceptable to our own Government.

To my mind, therefore, the nature of the joint understanding between Germany and France will be the central matter at the IGC. There is nothing surprising about that. For the past 20 years at least close understanding between Bonn and Paris has been the binding element in all significant change to the European treaties. I believe that that is still the case, given the commitment which both countries make to finding a common position and the priority they give to the objective. It is important to note that the possibility of negotiation by others is correspondingly reduced.

But circumstances are beginning to change, given the greater weight of a unified Germany in Europe, and the outcome of the negotiations this time will be of particular interest and importance. My hope is that as the Franco-Germanentente is now so widely accepted as part of the essential foundations of the European scene, we shall be sufficiently flexible and understanding in our approach so that over time a more diverse pattern of relations can develop in Europe. Enlargement of the European Union, which we all hope will follow the Inter-Governmental Conference, will encourage that sort of change. Stony insistence on standing still or going backwards will not.

I should like to say some brief words on enlargement. It is necessary that existing policies and institutional arrangements are looked at in the IGC to ensure that they are compatible with the next enlargement. However well it is managed, enlargement will cost money and room must be found within the financial envelope to accommodate what cannot be avoided. Of course existing policies, and notably the CAP, must be scrutinised and adapted with that in view.

I am concerned by two recent developments. First, agreements reached for the new Mediterranean programmes at the recent Barcelona conference will cost 4.7 billion ecu, which I believe to be about $6 billion. That is a massive sum. It will be recalled that, when the Select Committee reported a few months ago in favour of a quite different approach to the Union's relationship with the countries of North Africa, I believe that it was accepted as a reasonable approach by the House. But that is not what was agreed at Barcelona.

Secondly, I have read in press reports of a recent statement by the Commission that enlargement will have to be postponed because we cannot now afford it. Well, there is a question of priorities here. I cannot bring myself to believe that the Barcelona conference wittingly postponed the next enlargement sine die by spending all the available cash on new structural funds for the Mediterranean, North Africa and the Middle East. While I do not dispute the need to pay attention to that area, we must surely remember that the mission of the European Union lies in Europe and not in Africa or in Asia. That is where our attention and resources should be primarily directed.

I conclude by suggesting that the Inter-Governmental Conference will present us with some very awkward decisions in a pre-election period. I greatly hope that the Government will keep a steady, long-term view of their responsibilities. We must resist the short-term temptations offered by a two-tier structure of the European Union. We have already opened the door in that direction with the social chapter and the EMU opt-out. But if we go further in that way I believe that we shall come to rue the consequences. The right course is surely for us to stick with the Prime Minister's commitment to remain at the heart of Europe. If the Government do that, I shall be glad to support them.

3.52 p.m.

Lord Hooson

My Lords, I should like to add my congratulations to those already expressed to the noble Lord, Lord Tordoff, and his committee on the general excellence of the report and to thank members of the committee for the obvious time and hard work that they put into it. It is very beneficial for the rest of us; and, indeed, we know that such reports are widely read in Europe. It is extremely helpful for all who are concerned with the development of Europe. I should also like to thank the Minister of State for publishing her response, because that is also most helpful, although I am bound to say that I received my copy only this morning and I wish that I had done so a little earlier.

My general approach to the committee's report has been governed, and changed rather, by my reading of the report by the Reflection Group and an appreciation of the degree of isolation which now attaches to this country within Europe. That is a most important factor to bear in mind at the coming Inter-Governmental Conference which, as the noble Lord, Lord Bridges, pointed out, is really open-ended in its scope.

With the increasing expression of extreme nationalism in England, Germany, France and elsewhere over the past few years, and with the example of the former Yugoslavia before us to remind us what that can lead to, it is surely time to look at what we are trying to achieve in Europe and why. Lest we forget, the Inter-Governmental Conferences are a means, and only a means, to an end. We would do well to remember that when conducting debates about the European Union and Inter-Governmental Conferences which so often express painful symptoms of growing pains in what is, after all, an ever-developing Europe.

It seems to me that too little attention is paid these days to the ideals of European integration. I should like to remind the House of the Schuman Declaration of May 1950 that: World peace cannot be safeguarded without the making of constructive efforts proportionate to the dangers which threaten". Latterly, I believe that we have been too naïve in thinking that the dangers have subsided.

The Inter-Governmental Conference will need to address the uncertain times ahead. The results of the Russian election will be apparent in time for the conference and that might change views. We have no right to be complacent. We should, therefore, be seizing the opportunity further to enhance our security, protect the interests of our citizens and provide a firm footing for economic prosperity. Timing is crucial only in the sense that the people of Europe must see true progress; otherwise nationalism will be presented with a definite breeding ground.

Facile beating of the nationalist drum—and we have had some nauseating examples of that in our own country in recent times—has caused only difficulty and embarrassment; and, indeed, has done so in Germany, France and elsewhere in Europe. It causes difficulties for ourselves and for our European colleagues. Where does it lead? It now occurs more frequently because of the failure of positive European leadership. I believe that that accounts for Chancellor Kohl, who appears to me to be the only statesman in a leading position in Europe these days, and his speech on 9th December to the German Parliament when he said that European integration had become a matter of war and peace.

When I first read those words it seemed to me that they were very extreme. But on reflection, and in the long term, I believe that he is right. Surely we should constantly remind the people of this country and of Europe generally that the aim and objective of the inspirers and architects of the European movement were to provide a form of European Union which would provide for future prosperity, democracy and security for all the various nations and countries of Europe.

It seems to me that the great failure of the Government and their response—which to a degree is reflected in the committee's report and, indeed, has persisted for many years now—is the failure to give a clear leadership, for example, in favour of the EMU, however long or short a time it takes and whatever the temporary drawbacks or problems of the means. After all, the EMU is only in itself a means en route to an end, but a vital means.

In their reaction the Government seem to me to give the impression of lacking a strategic vision; they give the impression of concentrating on tactical manoeuvres as though they were still trying to play a balance of power game in Europe. Indeed, they are widely thought to be doing exactly that in certain European countries—on their own in so many of the subjects touched on in the report of the Reflection Group. On reflection, they might note that if, as Chancellor Kohl has suggested, there ever was an internal war in Europe again—and after Yugoslavia who can say that that is impossible—it is pretty certain that the United States of America, which eventually decided the outcome of the last two European wars, would not be taking sides.

With that background, I wish to make a comment on just three of the topics touched on in the report of the Select Committee and in that of the Reflection Group. The first topic is the European Parliament and its present and future roles, especially in relation to its lack of powers over the common agricultural policy. The implied criticism—and sometimes not so implied—of the European Parliament by the Select Committee is, in my view, over the top and unjustified. We help create European institutions but then we criticise the only genuinely elected legislature, leading the opposition to any attempt to give it real powers. We, the mother of democracy, do that! We condemn the Commission for entertaining faceless, unelected bureaucrats but we deny the European Parliament powers to scrutinise legislation, refusing it the means to fulfill its mandate as the sole directly elected democratic European institution. Why do I say that? It is because I feel that basically this Government oppose anything which smacks in the vaguest sense of European political integration.

Can the Government confirm, as we have all assumed, that in the Reflection Group's report at paragraph 86 the reference to the "one member in principle" who opposes any extension of the co-decision procedure refers to this country? Much energy and time are engaged on the issue of fraud, which is touched upon in the committee's report. We deplore fraud at any level, whether local, national or European. However, much of the powers for the effective control of "Euro-fraud", as it has been dubbed, are in the hands of national governments and parliaments and not of Brussels or the European Parliament. Let us not allow ourselves to be taken in by this tendency immediately to attribute blame to Brussels.

I wish to make one further comment on a subject raised by several of the committee's witnesses; namely, the matter of a uniform electoral procedure as enshrined in Article 138(3) of the Treaty of Rome. Some members of the Reflection Group proposed that the legal status should be changed to help achieve this objective and that a final date should be established for its application. I sincerely hope that the Government take this on board. There could be no more dramatic way to redeem the United Kingdom's reputation and end its isolation than to enhance the representative capability of the European Parliament by ensuring that seats won are matched by votes cast.

I wish to make a suggestion which came to mind when reading the note of the sub-committee at page 101 of the document of the noble Lord, Lord Middleton, concerning the meeting with the noble Lord, Lord Plumb, on Thursday 29th June. The noble Lord, Lord Plumb, observed that most other national governments were in favour of greater powers for the European Parliament in agricultural matters and that treaty change was necessary to allow the European Parliament to play its part in bringing about fundamental reform of the CAP. Government after government and every party in the UK have said at election times that they will seek radically to reform the CAP, but the truth is that little progress has been made. If this Government refuse on principle to allow an extension of the co-decision procedure and to give the European Parliament powers over agriculture, they will allow an opportunity for CAP reform to pass by.

The noble Lord, Lord Plumb, cited the example of the powers and influence of the European Parliament over transport policy and the workings of the internal market. If the same powers were granted to the European Parliament on the CAP, he suggested that reform was sure to follow. I think that that is correct for the following reason. It is Germany which is the foremost advocate of the extension of powers to the European Parliament and yet it is Germany which also bears the greatest financial burden of the CAP. The occasion for the UK to realise its goal of reform is to strike a deal with Germany for reform quid pro quo—an extension of the powers of the European Parliament to cover agriculture and a chance for Germany as it were to reap the benefit of that and this country to reap the benefit of a really democratic debate on the agricultural policy.

Furthermore, by allowing the European Parliament to have powers to influence decision-making, a welcome element of democracy would be introduced into the decision-making process of this Titan of supranational policies, thereby closing a little the oft cited democratic deficit. Of course, modification of the CAP is essential if we are to bring on board within the foreseeable future those countries of central and eastern Europe. It seems almost certain that qualified majority voting needs to be extended to take account of further enlargement to the east, which in turn will demand a greater degree of co-decision. It is quite clear that the whole process of extending the European Union to the east will not happen overnight but will be long, drawn out and complex. It should not be allowed in the meantime to hold up progress among the existing members.

I ask the Government to confirm that in the Reflection Group's report at paragraph 100, the one member which sees no case for extending qualified majority voting on the extraordinary grounds, that it would not mean more effective decision-making in comparison with unanimity", is again a reference to this country? Again, one is privy to the anomaly of this Government's policies. On the one hand they advocate expansion, while on the other hand they refuse to allow progress towards a more efficient decision-making mechanism befitting a larger Union.

I might be cast a cynic but I confess to having grave reservations about the true reasoning behind the UK's desire for expansion. The Inter-Governmental Conference must not be sidetracked and must not become wholly concerned with enlargement, which should be considered as a long-term objective. We should welcome these countries as they are a part of that shared Western tradition. We encourage them into the fold, but before we do so we should surely get our own house in order. Bearing in mind where they come from and what they aspire to, I believe that we should not oblige the countries of central and eastern Europe by bringing them into a half-baked, unaccountable, undemocratic Union. Enlargement should, by definition, require extremely small change.

Beyond the conference is a crucial period in the evolution of the Union. It would therefore be inappropriate and misguided for the Union at this juncture to be drawn into another round of accession negotiations. The whole thing must be planned ahead of time. The Reflection Group identified subsidiarity as a means of bringing the Union closer to the citizen. This means that it and the member states must respect the principle of subsidiarity. It should not be construed—as the report reminds us—as justifying the inexorable growth of European powers nor as a pretext for undermining solidarity or the Union's achievements. There are two interpretations of subsidiarity and the report suggests that correct application and appropriate recognition of the principle of sufficient means could facilitate the transition from unanimity to qualified majority in areas such as education, the environment or social policy. What interpretation do the Government put on subsidiarity? I noticed that the Minister of State implied in her response that subsidiarity is a legal as well as a political concept. Would she accept a definition by the European Court on the meaning of subsidiarity?

I conclude by saying that the Inter-Governmental Conference is therefore a chance for the member states actively to pursue the subsidiarity principle not just at the European level but within the member states of the Union. Subsidiarity is a principle which the Government are willing to apply in Northern Ireland and which I would care to see in my own land of Wales, in Scotland and in the regions of the UK. It seems to me that the greatest possible benefit that the Government can confer on the next Inter-Governmental Conference is to reassert their belief in progress in Europe, to cease their isolation in Europe and to give a lead.

I read in an article by Mr. Garel-Jones in The Times recently that the new Secretary General of NATO was a great-nephew of Salvador de Madriaga. Salvador de Madriaga spoke in 1947, only two years after the war, in a speech which inspired me and everyone who listened to him, of the ideal of a Europe to provide democracy, prosperity and security for all the "quarrelsome" nations of Europe and to save them from their tendency, manifested in two world wars, to eventual self-destruction.

In this country and elsewhere in Europe we have lost sight of the goals and what we are trying to achieve. We are paying too much attention to the means of achieving the goals. There are bound to be pain, misconceptions and mistakes in the means whereby we seek to achieve a certain end. The present generation in our country and in Europe needs to place more emphasis on the ends.

4.10 p.m.

Lord Tebbit

My Lords, I will not be tempted into following the noble Lord, Lord Hooson, over quite such a wide sweep of European affairs, but rather will confine myself more closely to the matters which are scheduled for debate today. However, I say in passing that I shall keep with me in future a copy of his speech to explain to anyone who may care to ask what it is which is causing a resurgence of nationalism in Europe. It is precisely those who seek to construct a federal Europe of the nature which the noble Lord supported who are causing that reaction of nationalists across Europe. The lesson of Yugoslavia is there for all to see. The tragedy of Yugoslavia is not a tragedy of people fighting to come together in a federal state, it is a tragedy of people who are fighting to escape from a federal state because they wish to be governed by those who speak their language and share their religion, within their own borders.

I am glad that in our sub-committee we were more constrained in our considerations, for it enabled me to enjoy that committee, despite the onerous nature of the work involved. I should like to pay particular tribute to the chairmanship of the noble Lord, Lord Tordoff. It was a masterpiece of chairmanship to keep us all together. If at times there are sections of our report which are a trifle like a report from the CBI, just a little pale beige, that is a consequence of our differences of view, which somehow or other we managed to bring together to produce a unanimous report.

The noble Lord, Lord Richard, made a very interesting speech. Near the beginning of his speech I thought that he was suggesting—and I should like to look back at his words—that the test of whether the IGC is successful will above all be whether it opens the way to the future enlargement of the Union to our fellow Europeans in central, and eventually eastern, Europe. It is to that point that I should like to address some of my remarks.

The challenge is to find terms on which we can admit those nations. Their economies are fragile and their democracies are fragile. Their democracies are at the greater risk if their economies do not succeed. The one thing which we in the European Community can do is to open our markets to those nations as early as possible.

What are the obstructions in the way? The first, of course, is the common agricultural policy. The idea that the European Parliament should be entrusted with the reform of the common agricultural policy is a matter so laughable that it could entertain us for days. I can imagine that it would be reformed, but would it be reformed in a direction which would bring us cheaper food? Would it be reformed in a direction which would end the monstrous misuse of fertilisers across Europe to force up yields on ever smaller acreages while more is put to set-aside—causing more environmental damage—to produce more high-cost food to be dumped, and to cause the Commission to introduce measures not to keep down the price of food but to keep up the price of food? Although I have great reservations about the Council and the Commission, I would sooner entrust the reform of the CAP to them than to the European Parliament.

Certainly, the CAP has to be fundamentally reformed if those nations are to be admitted. I hope that the IGC will at least set in train the machinery for that reform to be undertaken. It will be a difficult task. For me, the only satisfactory reform would be a prohibition on any subsidy for the production of foodstuffs. In that way we would rid ourselves of most of the corruption in the European Community, and we would rid ourselves of the monstrous burden of the costs which force up the price of food and result in so much environmental damage.

There are other obstructions to the admission of the nations of central and eastern Europe, as the noble Lord, Lord Richard, mentioned. One is the very structure of the Community's institutions. Those of us who have represented this country in the Council, even when it was a Council of but 12, realised that it was a construction which was suited to nine members and not 12. The idea of 20, 25 or 27 around a table, with the problems of translation from Portuguese to Finnish or Greek to Spanish, is absurd. It is an absurd structure. It cannot work, with the extent of the responsibilities and the powers which now fall upon the Council and the Commission. There is the prospect of 30, 38 or perhaps 40 commissioners, all looking for work. As we know, the Devil makes evil work for idle hands to do. As the number of commissioners has increased, so we have been more assured of the truth of those words. So the Commission has to be reformed.

Then there is the suggestion in the report of the Reflection Group that the whole of theAcquis Communautairemust be swallowed by new entrants. It is just not going to happen. It cannot happen. The group suggests that in future there should be no permanent opt outs of any kind and that we have to have a Europe which is standard. There is to be a standard Europe for Latvians, Poles, Hungarians, Finns, Portuguese and Irish. That is an absurdity. I sometimes think that that is intended as an obstruction to the entry of new members, because some of those in that cosy organisation in Brussels which calls itself Europe, but which today probably excludes most Europeans, do not want change. They would rather keep their structures than create a Europe for all Europeans.

The final obstruction in the way of admitting those countries is the very depth of the powers which are wielded at the moment by the European Community. There is no need for a European structure which dictates whether sex discrimination should be allowed in the Armed Forces of the United Kingdom. Let us get rid of that kind of thing. That would be a price well worth paying for the admission of our friends in eastern and central Europe.

I hope that the IGC will see its role as beginning to clear some of those roadblocks to the widening of our European Community.

I do not wish to detain the House long, for there are many others who wish to speak, but I should like to say a word or two about the Court of Justice. There are some comments on that subject in paragraph 120 on page 47 of the Reflection Group report, where it states: The Group agrees on the need to strengthen the Court's role, highlighting the part played by the Court in watching over a Community based on the rule of law, in ensuring legal uniformity in the interpretation of Community law and in guaranteeing the protection of individual citizens' rights". It would be difficult for people to declaim against such a noble sentiment. However, I hope that the Government will consider carefully those sentiments in their negotiations in the IGC, for one of the things which became quite clear to us in our sub-committee was that the court is eager to extend its role and eager to take on new responsibilities.

In the Maastricht Treaty pillar on home affairs we have a number of new aspects of Community law. The question asked is this. How can that Community law, the rights and obligations inherent upon the citizen through that pillar, be uniformly applied across the whole of the European Union? Will a court in Germany give the same interpretation as a court in Greece or in the United Kingdom? Quite probably not. Then we have a new grievance—that Community law is being unfairly applied in one country or another; and here we see stepping forward, eager to solve the problem, the European Court of Justice which the Government had carefully kept out of that pillar of the Maastricht Treaty.

Some noble Lords may remember, probably most may not, that during some of those debates I referred to the number of hooks which were concealed in that treaty—hooks on which sooner or later would be hung new powers for the authorities in Brussels. I hope that Ministers will profit from this experience and will not allow themselves to be caught out again.

Finally, the noble Lord, Lord Tordoff, spoke about the inability of this Parliament to participate effectively in the process of European legislation. One has to think at times that the process must be deliberate so that national parliaments are not able to participate. The volume of material which is sent to us and the absurdly short deadlines offered for consideration by Parliament, in contrast with the meandering, time-wasting procedures in Brussels, are an affront to any democratic system. This Parliament is treated with contempt in this matter. It is not a new factor; it is not a new issue. It has been happening for years. The only new aspect is that it is becoming worse. Alongside the steady increase in fraud that is uncovered every year, it is one of the great scandals of the European Community. I hope, again, that in the negotiations in the IGC, Ministers will point out to their colleagues that in this country we have a long-established democratic tradition which requires that Parliament scrutinises legislation. Indeed, we had, until comparatively recently, a tradition that supply would not be granted before grievances were redressed. Alas, that is no longer so; and I hope that Ministers will not allow any further erosion in that area at the IGC.

4.24 p.m.

Lord Stoddart of Swindon

My Lords, the noble Lord, Lord Tebbit, and I were often, indeed almost always, on the same side during our deliberations on the IGC sub-committee. It is true that he is rather to the right of me in more modern political parlance, although in the 1970s he would have been to the left of me. However, we managed to agree on many things. I certainly agree with him, and join him, in congratulating the chairman of the committee, the noble Lord, Lord Tordoff, who pulled off an almost impossible coup in obtaining a unanimous report from such a disparate committee. I shall let him into a little secret now. At the beginning of the exercise, I did not believe that we could have a unanimous report and I was already preparing my minority report. He has indeed achieved a remarkable success. I also congratulate the noble Lord and thank him for his lucid presentation of the report. It is a useful document; I hope that all noble Lords will read it.

The essence of the report is that it is too soon to make any major changes following the Maastricht Treaty which has been in operation for only two years. There has not been time for proper experience of the treaty. It would be completely wrong to make any fundamental changes to it. That is the basis of what we say. The Government would do well to heed our arguments and to adopt the minimalist policy in relation to the IGC recommended by the committee. It is much too early to consider major steps towards further integration.

The noble Lord, Lord Hooson, accuses the Government of being isolationist. I used to share a room with the noble Lord. He was a Liberal then and is Liberal now. During the whole of my political life, the Liberal Party has been isolated. Has it been wrong in everything it suggests? Has it been wrong in its isolation over such a long period of time? I am sure that the noble Lord will agree that if you believe that isolation is the right policy, that the isolationist approach is the best policy for Britain, then you should follow that approach. I sincerely hope that the Government will adopt a minimalist approach as regards the recommendations of the Select Committee.

I was surprised to hear the noble Lord, Lord Hooson, congratulate Herr Kohl who threatens us that if we do not go along his line of thinking and development, the issue could be peace or war. I sincerely hope that the noble Lord will reconsider his position in relation to Herr Kohl.

I was glad to have the opportunity to serve on the sub-committee. It meant that I had to deal with much detail and hear the arguments, aspirations and ambitions of those closely involved in and with the European Union. The exercise of examining closely the issues involved served only to strengthen my long and deeply held conviction that the British people were deceived into joining not a free trade area, or a common market as it was called, but an organisation dedicated to building a federal or unitary state in Europe. That is an organisation which, I believe, would be inimical to Britain's best economic and political interests and her continuation as an independent democratic sovereign state.

That view has been dismissed in the past as fanciful. It can no longer be dismissed in that way because the drive for a federal union, far from abating, is intensifying, driven by Germany and her junior partner, France. The institutions of the EU are geared towards the creation of the Euro-superstate. Herr Lammers and Herr Brok make no secret of their belief that the nation state is an anachronism and that their aim is a country called Europe. We saw that not only in the evidence of Herr Lammers; we heard also Herr Brok telling us on British television that his vision was for a country called Europe.

So we can no longer dismiss as fanciful the fears many of us had that when we joined the Common Market we were really joining an institution which would be a federal state of Europe. Any possible doubts must have been dispelled by the meeting last Thursday between Herr Kohl and M. Chirac. They made it absolutely plain that their ambition is a federal European state and that those who do not agree had better fall by the wayside or move into line. The European Parliament is clearly in favour. Its demand is for more power, equality with the Council, even taxing powers. As the noble Lord, Lord Tordoff, said, it has not even absorbed or implemented the powers given under the Maastricht Treaty. But now it demands even greater and more significant powers. Fortunately, the Select Committee saw the implications of those demands and believed them to be premature, if not divisive. It recommended accordingly; I agree.

It is also clear that the parliament and the Commission wish to collapse the foreign, defence and home affairs pillars into the Community and, with that, to abolish the veto and widen the use of qualified majority voting. Thus the argument now is that you cannot have widening or deepening; it is that you cannot have widening without deepening. That is what it is all about, as we heard from the noble Lord, Lord Tebbit, and others. In other words, what is being said is that if there is no movement towards further integration and centralisation of powers, then there shall he no widening. Of course, for the set-up envisaged by the "Europeanists", that is true. But for me and, I guess, most people in Britain, it is a nightmare scenario which must be prevented at all costs. Indeed, if enlargement means additional powers for the European Union, centralisation, more qualified majority voting and the loss of veto, then we had better not have it.

My noble friend Lord Richard said, "How can you not agree to abolishing the veto?" He instanced Malta and said, "How can we allow Malta to have the veto?" My memory is that Malta helped us to fight the last war. It was awarded the George Cross for doing so. I do not know where Luxembourg was at that time. Luxembourg's population is 365,000; the population of Malta is 369,000. Yet we have managed, over the past 25 or 30 years, to run the European Community on the basis of Luxembourg, with a veto, having a population only the size of Malta. I hope that my noble friend will reconsider what he said about Malta and the veto.

It seems to me that the only enlargement that can be achieved—and here I disagree slightly with the noble Lord, Lord Tebbit—is on the basis of a free trade area. If we go any further, the whole structure will collapse within itself and do enormous damage to any unity in Europe.

We also discussed the position of the European Court of Justice. While I agree with the Select Committee in its recommendations, there are serious implications in what the ECJ actually does for this Parliament, its powers and its taxation powers. Perhaps I may give two instances. In the case of the Spanish fishermen, the protection that Parliament tried to provide in merchant shipping legislation passed in 1991 was set aside by the European Court and we had to repeal it. That was bad enough. Now, we understand, because of the court's ruling, Spanish fishermen may sue the British Government and it may cost the taxpayers of this country £30 million.

There was also the recent decision concerning free prescriptions. Under the court's ruling, they are to be extended to men aged 60. The implications are enormous: it will cost the Government at least £42 million per annum. This Parliament has to raise it. Yet when Directive 79/7 was discussed in another place, there was no mention that the directive would extend free prescriptions to men aged 60. The House of Commons is being forced into raising taxation which it knew nothing about and with which it might not agree. I believe that the Government and Parliament must look at the operation of the European Court of Justice because the implications will become more serious as time goes on.

As I said earlier, I believe that membership of the European Union is inimical to Britain's best interests. Our history, our experience, our industry and our place within the Commonwealth demand that Britain's place is as a world power not confined to a subordinate role in a regional and increasingly moribund bloc representing a mere 6 per cent. to 7 per cent. of the world's population. We are told that everything is increasingly global. Let us then attune our policy in this country to the world and our position in it. I am glad that even the Foreign Secretary is perhaps coming round to that view. It is also encouraging that only yesterday the chairman of the House of Commons Select Committee on Foreign Affairs, David Howell, extended his support for that view.

Finally, I wish again to congratulate the chairman of the sub-committee and say to all its members that despite our differences it was a pleasure to serve with them.

4.38 p.m.

Lord Renton

My Lords, I am glad to be able to follow the stimulating speech which we have heard from the noble Lord, Lord Stoddart, although I do not go the whole way with him. In view of his comments about the compatibility of membership of a nation state in the European Union, we should make it clear—and I personally feel this way—that membership of the European Union, while preserving the sovereignty of our own country, has been at risk but could be put right very soon. It could be put right at the IGC. I shall come to that point in a moment.

The first four speakers in this debate all said that it was too soon after Maastricht to make any fundamental changes. I am glad to say that the Foreign Secretary does not seem to take that view. I wrote to him on 24th October and took the liberty of sending him a copy of a speech—a rather long speech, which I shall not inflict upon your Lordships—that I made at the annual conference of the Statute Law Society which was held in Dublin Castle, where the IGC will take place. After reading the speech, he said: I intend that Britain should make a number of proposals at the IGC designed to improve the legislative process". Despite what the noble Lord, Lord Hooson, said, my experience among lawyers is that most lawyers consider that we should remain in the European Union and that the European Union can succeed but will fail unless the scope of its legislation is reduced and the quality improved. Along with one of the Clerks of the House and a representative of the Foreign Office, I attended the European Law Congress in Rome in March this year, where Herr Wagenbauer, who has been the chief legislative draftsman of the Commission in recent years but is now retiring, said just that; namely, that the European Union has to legislate less and do it better. Perhaps I may say in passing that the Select Committee, as always, did most valuable work. But I find it disappointing that it did not consider in depth the question of the scope of the legislation of the European Community.

As things are now, we have a Community of 15 nations and it may be enlarged still further. They are mainly governed in their legislative power by treaties designed for only six nations. I suggest that the Rome Treaty is now an unworkable anachronism. It simply was not designed for a Community of 15 nations. Even with some fairly full amendment, we cannot go on in that way. Even under the Rome Treaty the six nations found law-making arduous enough, which was overcome to some extent by giving sweeping powers to the Commission of the day—powers which have not yet been taken away or modified. The Commission now has a very difficult task. It not only deals with 15 different countries which have various kinds of constitution but it does so in 11 different languages.

Another point to consider is that every one of those 15 countries has its own methods of drafting legislation, scrutinising and amending it and fundamentally approving it when its parliament has the chance to do so. It takes a very long time to reach agreement among 15 countries about a proposed regulation or directive. Because of the different attitudes and different constitutions, the negotiations often result in compromise and the ambiguity that compromise sometimes produces. It is rather interesting to note that when dealing with countries which have a federal constitution, as I understand five of the 15 countries have—certainly two of the original six countries do—the negotiators are faced with the difficulty that sovereignty in all those countries is divided between the regions and the centre. So, when negotiating with a representative of the central government in any one of those countries, the representative must say, "I am sorry but we shall have to consult the regions." That may mean months more of delay.

In the 38 years since the Rome Treaty was signed, the quantity of Community legislation has become immense, mainly because it covers such a wide range of subjects, some of them of little importance. Attempted harmonisation was, and still is, largely the cause of that mass of legislation and of much of its complexity. It has led to many detailed directives on many matters and on matters which, as was recognised at Maastricht, each country can deal with much better on its own.

When the subsidiarity rule—splendid as it is—was introduced under Article 3b of the Maastricht Treaty, it did not modify harmonisation except by implication. So we now have two conflicting principles for the Commission to work on. We must not let that go on. The problem has to be dealt with and preferably at the IGC. Subsidiarity under the Maastricht Treaty was, as I said, a splendid idea, but it has been befogged by 22 pages of amazingly complicated guidance issued by the Commission. Having studied those 22 pages—I can give any noble Lord a copy, if he wishes—it seems to me that that guidance was intended to frustrate the purpose of subsidiarity.

However, I am glad to say that in June 1993 the Council of Ministers agreed on a resolution on the drafting—not the subjects—of European Community legislation, which was intended to achieve some of the clarity that is certainly needed. I have read that text and found it very interesting. It contains 10 guidelines which I understand are known among Foreign Office lawyers as the Ten Commandments. They are wise and unobjectionable rules. They are the kind of rules in drafting that any country would wish to have. Unfortunately, they do not mention the need for enacting statements of principle and purpose, except in the Preamble, which has to give the reasons for each enactment. But those statements of principle, as many noble Lords will agree and as I have sometimes said, are vital, whether or not the detail is needed.

Another problem—for dealing with it we should all be grateful to the Select Committee—has been the lack of compliance with European Law and its enforcement. Much of the European legislation is ignored and it simply becomes a dead letter. It is notorious, especially in the enforcement of the common agricultural policy, that Greece, Italy, Portugal, Spain, France and even sometimes Belgium, often fail to comply with European Community Law.

National courts are under no obligation to enforce European Community law unless a case happens by chance to be brought before them. So a heavy burden is placed upon the European Court of Justice to enforce the law when the Commission brings cases before it, as it often has to do, and properly so. That court does vital work and I am glad that the Select Committee agreed that that work should continue and not be interfered with. Until recently there was no way of enforcing its judgments, which is rather strange. But now the Commission deducts the amount of penalty, plus interest if necessary, from any monthly allowance made to a member state to finance its share of the CAP.

It has been discovered, and decided rather late in the day, that under Article No. 155 of the Treaty of Rome, which says that the Commission shall ensure that its provisions are complied with, it is possible to enforce many of the judgments of the Commission.

One could continue with a somewhat negative attitude, criticising what is happening. But let me try to be constructive. Mr. Malcolm Rifkind said in a letter to me that at the IGC the Government intend to put forward proposals to improve the legislative process. I suggest that the treaties should be fundamentally amended and consolidated. Better still, scrap the lot and start again with one treaty and then everyone will know where they stand.

Secondly, there should be massive repeals of those many regulations and directives now theoretically in force but which in practice are found to be unenforceable or irrelevant to the real purposes of an enlarged Community. We should scrap them by massive repeals. Thirdly, new law-making should be confined mainly to matters of principle—those matters which are essential for supporting agreed general policies in an enlarged Community. They come under five headings.

First, there should be freedom and safety of movement of people, goods, capital and services between member states. Secondly, there should be economic co-operation in the broad—as the noble Lord, Lord Stoddart, rightly said—including a much simplified common agricultural policy (as our Government, I am glad to say, are proposing to do) and a much simplified and better enforced fisheries policy. Thirdly, legislation should deal with crime prevention and suppression of terrorism. Fourthly, there should be freedom of the press and of broadcasting. Finally, there should be prevention of unacceptable immigration into Europe as a whole.

One could add co-operation on foreign policy and defence but so far, in practice, we have needed scarcely any legislation at all on foreign affairs or defence.

Unless we do some of those fundamental things, the Community will fail and we shall all suffer.

4.55 p.m.

Lord Hunt of Tanworth: My Lords, as a member of the sub-committee I too should like to pay tribute to the chairman, the noble Lord, Lord Tordoff. Several speakers have referred to his skill in steering members of the committee who held very different views on Europe to a unanimous report. He also showed another skill; that of keeping us within our terms of reference when there were so many attractive blind alleys down which some wanted to run.

My position on Europe and the IGC is one of being strongly in favour of our having an active and positive role in the Community while being severely critical of a number of its present manifestations. I should therefore like to see the IGC take a proper grip on the whole budgetary process, not only removing the distinction between "compulsory" and "non-compulsory" expenditure, but also getting rid of the way in which the budget is compiled on a "top-down" basis, starting from the ceiling established by the financial perspective. I am all in favour of a ceiling, but it is not a ceiling which is a target to spend up to.

Below that ceiling there are other ceilings. There are the agricultural guidelines and the structural fund allocations, all of which set out targets and develop a culture of expenditure where performance in the Commission is seen to be satisfactory if one's target is achieved. That is ludicrous at a time when member states are seeking and the EU itself is encouraging member states to reduce public spending as a proportion of GNP. Not only should bids for EU expenditure be properly examined to ensure value for money, but the timetable of the EU budget exercise should be adjusted to allow national parliaments proper opportunity for scrutiny of the proposals before the Council makes its recommendation to the European Parliament. That is what I should like to see. I fear, however, that reform of the budget process may be relegated to the IGC's tray marked "too difficult". The conference may cast around for things which sound good and are less difficult and controversial.

I want to address one of those possibilities because I fear that a seemingly innocuous idea could store up great problems for us for the future. I refer to the question of team presidencies, dealt with in paragraphs 236 to 242 of the report and, briefly, in paragraph 108 of the final version of the Reflection Group's report. At present with 15 member states and a presidency of six months the job comes round every seven-and-a-half years. With 20 member states it would be every 10 years and with 30 member states, every 15 years. It is argued that it is bad for the prestige, for the amour proper and so forth, of countries, for it to come round so rarely. It means that lessons learnt from the organisation of previous presidencies will be forgotten when the turn comes round again.

The idea has been put forward by a number of people for team presidencies made up of three or four member states which would make the turn come round faster. In fact, that is an illusion. It is usually coupled with another idea: that the presidency should last for one year instead of six months. Indeed, if we had a team presidency, a term of one year would almost certainly be necessary to allocate the responsibilities and get the thing up and running with any degree of effectiveness at all. The time saving therefore would be minimal and almost certainly when the term came round again one would find different Ministers in key positions.

There seem to be some fundamental objections. It is in the interests of all member states that the presidency should be effective, efficient and fair; all the more so since the coming into force of the Single European Act, the setting up of the second and third pillars, and the general feeling that member states acting together should oversee the future development of the Union rather than be led by the Commission acting in its old role as the motor of integration.

If you accept that, it requires two things of a presidency; first, the efficient organisation of business and, secondly, the ability to play the part of honest broker when there are conflicts of view. How would a team consisting of three or four countries measure up to those two demands? In an average year there are more than 100 meetings of the Council at ministerial level and approaching 3,000 meetings of working groups, all chaired by the presidency. The chairmen of the different Councils and the groups, including COREPER 1 and COREPER 2, would have to be shared out between the different capitals participating in the team presidency. How then would there be any consistency or sense of purpose?

We all know that even at present agriculture Ministers collectively conspire against their financial colleagues, but a single administration can at least attempt to establish and adhere to making a unitary presidency policy, particularly if it is supported by adequate inter-departmental machinery. But this sharing of responsibility would be all the more chaotic when it came to representing the Union to third countries. There would not just be the need to settle who would be the team captain but he would have to find a way of ensuring that the team played the same sort of strokes. As it is an American observer, writing recently about relations with the Union, described it as "shaking hands with a multi-headed octopus." But how would he describe a team presidency with different aspects shared by different countries and serviced by different groups of officials in different capitals?

Team presidencies would serve none of the aims of clear leadership, flexibility in negotiation and pinpointing of responsibility. I believe that they would also make the role of honest broker that much harder. On the one hand it would be more difficult for a team presidency to fashion the sort of compromise proposal which it is so often the role of the presidency to float. On the other hand, if agreement between three or four countries was reached behind the scenes on a compromise proposal, it would carry disproportionate weight and be very much harder for other countries who disagreed to block.

For all those reasons I believe that the idea of a presidency with different policy teams based in several European capitals and possibly pursuing contradictory aims does not make sense. The Government would be well advised to avoid getting committed to anything like it.

Of course, this is a problem which will increase with enlargement. There are, however, alternatives which the sub-committee did not have time to examine in any great detail. One could continue with the present system, at least for the next wave of enlargement, which is likely to be a very small wave. One could have the presidency divided between two countries, mirroring COREPER 1 and COREPER 2. One could have a presidency elected by the Council. One could have a presidency combining a big country with a small country, with a sharing of the prestige but the big country, in effect, doing most of the servicing of the machinery.

The essential point is that this is not an immediate problem. The present system works. There is already an agreed and established batting order of presidencies up to the end of the century and it is an open question when new members will join and whether they will do so individually or in waves. There is plenty of time to work out how best to accommodate them in the presidency. I believe that the IGC should avoid taking a decision now which might seem democratic and sensible but which, I believe strongly, would conflict with the principle of "doing less but doing it better".

5.5 p.m.

Lord Finsberg: My Lords, perhaps I may start by complimenting the noble Lord, Lord Tordoff, and his committee. I much enjoyed giving evidence, although I am not at all sure that I like the result of what I said to them. That is in interesting contrast to what was expressed in the other place on my same comments, so I still have some hopes.

What I should like to do today is deal with two aspects of the IGC. The first is defence and the second is the democratic deficit. I have had the great privilege of listening twice to Mr. Westendorp in his capacity as chairman of the Reflection Group. I think I can say that those of us who heard him were very impressed by his grasp of the subject but were disappointed with the result, which turns out to be a very flabby document and, frankly, of little value to anyone except for its continual highlighting of the view of one country. Like the noble Lord, Lord Tordoff, I would guess at its identity but I shall not actually name it. But I support it.

Defence must remain a national responsibility. On that I am delighted to say that there is no division between the Government and the Opposition. We made it very clear to Mr. Westendorp and we have made it clear on many occasions that there are those who would like to draw out the IGC in the hope that there will be a change of government in this country and a change on defence policy. That has been repudiated on behalf of the Labour Party by the leader of the Labour delegation to the Western European Union and to the Council of Europe and by the noble Lord, Lord Judd, when we debated the issue. But it still lingers there. I hope that again today the noble Lord, Lord Clinton-Davis, will confirm that view.

We cannot allow defence to be dealt with on a majority voting system because it is not practicable for the national interest to be dealt with in that way. Of course there must be close co-operation but we have to remember the knock-on effect for NATO and the United States. When I was in Washington about three months ago real anxiety was expressed by those to whom I spoke at the prospect of the European Union having something to do with defence. I was able to reassure them that I thought it was highly unlikely, certainly in the foreseeable future, which I put at 25 years.

Western European Union is in existence. Why do we not build on it and make more use of it in these coming years? As I have said, the Commission and the European Parliament in particular must have nothing to do with defence. That view is strongly expressed by many of the new democracies which are in the Council of Europe and which do not want to see the European Union dealing with this subject. It was expressed extremely strongly by Norway. I found that a particularly interesting concept. My noble friend the Minister may know that she can rely on the stout support of Norway on many of these issues when they come to be discussed outside the EU.

If we really intend that WEU shall be the European arm of NATO it must include all European NATO countries. I was interested in paragraph 32 of the Government's response, which says that, the Government attaches importance to the principle that all Full Members of WEU should also be members of NATO". I suggest that the reverse of that is also true. To me it is sheer lunacy that a country that has done so much for NATO over the years, Turkey, is merely permitted to be an associate member, as is Norway which has given immense help in the training of British marines over the years. But because of a certain amount of blackmail that took place at Maastricht, one country was allowed to join, Greece, as a full member, but Turkey was only allowed to come as an associate member. Therefore, I hope that the Government will try to ensure that full membership of the WEU will be open to all members of NATO who want it.

After all, what is the European Union as far as defence is concerned? The Foreign Secretary said in another place on 16th November: The European Union is not a defence and security organisation. It cannot defend the citizens of its member states. For that, we must look to both NATO and the WEU, especially NATO. That is the political reality and we would be foolish to ignore it".—[Official Report, Commons, 16/11/95; col. 139.] I now turn to the democratic deficit which exists and which has not been filled by the European Parliament. I believe that it is unlikely, with the best will in the world, to be filled by that organisation. I am quite sure that some MEPs work extremely hard but the institution itself—and this is important—is not held in high esteem throughout Europe. We are not alone in having a very low voting turn-out and co-operation between MEPs and the national parliaments is sadly lacking. So far, nobody has found a way of putting that right. National parliaments must have a bigger say in what goes on but, of course, we all have different methods of scrutiny. Here in this House we have a superb method, as do the Danes, but the trouble is that so many countries have a different basis and countries like France almost nod through everything because the National Assembly has so little power in these particular instances.

I come back to my case: what would a second chamber do? I want to try to refute some of the things that the Select Committee said and some of the things that the Government have said in their response. First, what would it do? It would have members or delegates coming from the Council of Europe, and I shall explain why in a moment. A double mandate would be perfectly sustainable because its powers would be limited. Of course, it would not duplicate everything being done by the European Parliament itself. One of the major things it could do is deal with the monitoring and review of subsidiarity.

Would it be weak? No, it would not be weak because it would be drawn exclusively from members of national parliaments, which is the position at present. It would have the great advantage of containing very many of the countries who have association agreements with the European Union and countries that have applied to join the European Union. As they progress to becoming full members, they would then turn from being observers in this new second chamber to being full members with no difficulty at all and they would have the opportunity of having their views heard during the intervening period.

I do not believe that it would make the matter more complicated because it depends entirely on whether we believe that something else is needed. Mr. Westendorp, who dismissed the view that there should be a second chamber, then goes on to say that we do need something like a high council. What is a high council but a second organisation, and a far less democratic one, than one composed of members of national parliaments throughout Europe?

I am sorry that the Select Committee of your Lordships' House did not like the idea. I do not believe that it found a good reason. The basic reason was that it does not want any more bodies to be created. But if we accept that there has to be something else to fill the gap, then surely it is better to build on what we have, which will save creating something new. What we have has 40 years plus of democratic experience; it has 40 years plus of working together with members of national parliaments. It seems to me that we are not prepared to experiment and we shall allow the IGC to come and go and still be complaining, I am perfectly certain, about the democratic deficit. I have a little hope that Her Majesty's Government might think again. That appears to be the tenor of at least one letter I have had from the Government—that they have not totally dismissed the idea. It is a novel idea which looks different.

I hope that it can be properly examined for this reason. As the noble Lord, Lord Tordoff, and, I believe, one or two others said, there is a division inside the parties and inside the country on European aspects. But there is something that has never upset either the Euro-sceptics or the Euro-fanatics; that is, the Council of Europe and the Western European Union. In the few years that I have been in your Lordships' House and in the 22 years I was in the other place, I never heard anyone say that they are an evil organisation designed to do down the United Kingdom; nor has anyone said that they are magnificent and that we should get rid of the House of Commons and the House of Lords and just have the Council of Europe and the WEU. They have been recognised and accepted as something valuable.

So there it is. I believe that we are going to have an IGC which is certainly going to last well beyond 1997. I believe that it will achieve very little because I do not believe that the guidelines that are set out in the Westendorp Report really are what is wanted. The report does not tackle the fundamental issues of democratic deficit and it does not tackle the fundamental issue of where the European Union goes. It does not tackle the real danger, which again has been referred to, of the European Court of Justice which, it seems, every time it has to deliver a judgment, expands the area that was originally put into legislation by the European Union. That is what I find dangerous and I hope that that matter will be addressed.

5.17 p.m.

Lord Pearson of Rannoch

My Lords, for the first time in one of your Lordships' debates I have to ask your indulgence if I am not here for the closing speeches, owing to a long standing engagement this evening. I shall therefore speak quite briefly and confine myself to a few general but difficult points about our negotiating position at the next IGC. Before doing so, I would like to join other noble Lords in congratulating the noble Lord, Lord Tordoff, and the other noble Lords on the sub-committee who produced this report, first, on its unanimity and, secondly, on avoiding the more obvious blandishments of further political union with Europe, at least for now.

In any negotiation one is weak if one does not know how much ground one is prepared to cede before one gets up and leaves the table. To know that, one has to know pretty accurately how uncomfortable life would be without the deal in question. Success often turns on being able to guess the answers to the same questions in the minds of the other party.

These are, of course, basic facts in business. But I am not sure that they are so readily understood in politics or that the United Kingdom representatives have always taken them fully on board in their various renegotiations of the Treaty of Rome. Perhaps politicians and bureaucrats can afford to pay less attention to them than businessmen, who suffer in a much more personal way when they ignore them or when they get the answers wrong. So I would like to take this opportunity to remind the Government of the strength of our general negotiating position at the next IGC.

Particularly, I remind them of Article N of the Maastricht Treaty which states that amendments to the treaties shall enter into force only after being ratified by all the member states in accordance with their respective constitutional requirements. This means that the United Kingdom—or any other country for that matter—has not merely the ability to opt out of any policies which it does not like. We can prevent the others from following them too unless they set up entirely separate funding and bureaucracies to run them.

Looking back on it, I think that that means that we could have prevented the others from espousing the Social Chapter and, indeed, the plans for monetary union unless they set up entirely separate, and no doubt expensive, machinery to do so outside the Treaty of Rome. Would they have done that? Many of us did not think so at the time. But we have never understood how much objective analysis went into our allowing the others to have them anyway.

Far from being strengthened by objective analysis, it seems to me that our negotiating position seems too frightened of upsetting the European apple cart. It seems to pay too much respect to what I have come to call "Euro-slogans" such as: We get our vital inward investment because we arc members of the Union", which has not been objectively examined and which seems palpably untrue to many of us. There are other Euro-slogans, of course, all of which seem shallow or inaccurate to put it mildly (as slogans usually are) and all of which undermine our position when our negotiators take them too much at face value. Examples of those would be: The Union has kept the peace in Europe for 50 years". Another is: The UK voted to join the Union in the 1975 referendum", and another is: We must get in enthusiastically and persuade our partners to change direction"— I put in brackets "(with 10 per cent. of the vote)".

There is now a new one which comes from no less a personage than my right honourable friend Sir Leon Brittan: If monetary union doesn't happen, the single market will collapse". I do not have time to examine each of those Euro-slogans with the care that they deserve.

However, perhaps the most beguiling, and therefore probably the most dangerous, Euro-slogan is also the best known: We need our membership of the Union for our commercial survival". On that one, I would just comment that some 80 per cent. of our global assets and 75 per cent. of our overall investment are outside Europe. Our total earnings from outside the European Union are at least 50 per cent. higher than those from within. So Europe is a minority interest for us—it is a hugely important one, but it is a minority interest.

I fear that the same doubts arise about inward investment into this country, which the Government allege has brought us some 650,000 jobs, thanks to our membership of the Union. But has anyone ever looked closely at this? For instance, have the jobs lost through too much and misguided regulation from Europe been counted and set against that figure? Has the inward investment come to us because we have an attractive tax regime, low inflation, good labour relations with a skilled labour force, because we speak English and because we have access to the single market, rather than because we carry the additional burdens of Union membership? Would we lose that access if we withdrew from the Treaty of Rome and retained our separate membership of the European Economic Area? In attempting to answer that very difficult question, which is also perhaps the most important question of all, we should remember that we trade in deficit with Europe and that we signed the GATT both collectively with our European partners and individually as sovereign states.

The trouble is that as far as I am aware no serious objective study of those questions has been made, and nor is it planned. The Government merely intone that the benefits of our membership of the Union are "self-evident". To go back to where I started, that seems to me to be a very dangerous frame of mind in which to enter the next IGC and any other negotiations which may follow.

Until an objective cost-benefit analysis is undertaken, which should set any advantages we get from our access to the single market against the disadvantages we sustain from our membership of the Union, until such a study is made, I fear that we shall continue to sleepwalk into the sinking, socialist, siege economy that is Europe.

5.24 p.m.

Lord Bruce of Donington

My Lords, as I am quite sure that your Lordships are aware, one of the advantages of taking an active part in the proceedings of a Select Committee or one of its sub-committees is that one is drawn into examining documents in detail, and one becomes accustomed also to arguing in detail, not necessarily from a political partisan standpoint, but according to one's intellectual appreciation of the evidence that is before us, both verbal and in writing.

It is clear from the report that was presented to us this afternoon by the noble Lord, Lord Tordoff, that that process has undoubtedly happened. Before the proceedings of the sub-committee dealing with this matter took place, there were a lot of wide assumptions within the House as to what the Treaty of Maastricht contained. Indeed, we are well aware that the Chancellor of the Exchequer, who is after all only a minor official, had not even bothered to read it. Your Lordships may be aware that even today, nearly four years since the treaty was signed—it was signed on 7th February 1992—there is no official British publication of the consolidation of the treaty. There were some promises that that was being considered, but I observe that the European Commission, as usual, came to our aid and issued copies to Her Majesty's Stationery Office which are now available to the general public at a price of £18, which is not exactly conducive to popular consumption of the treaty or to a study of its contents. Even local authorities with their restricted funds would think twice before buying one or two copies to put in their libraries.

Therefore, it must be assumed that outside the Select Committee, government circles and the Civil Service, knowledge of the treaty is not exactly wide at present. That being so, the report is all that more welcome. I for one took a sporadic interest in the sub-committee's affairs, despite some technical complications about my right or otherwise to attend. But I am bound to say that the proceedings are excellent and that the results have been most constructive.

Before I embark on a consideration of the process, I should like to take this opportunity to congratulate the noble Baroness, Lady Chalker, on the very helpful memorandum that she sent out. I am happy to say that she always does such things. Indeed, at her insistence, her department is one of the few to provide adequate particulars on which we can arrive at some reasoned conclusions. I congratulate the noble Baroness and I sincerely hope that I may continue to congratulate her on those and other grounds for some time to come.

One of the difficulties that we all have about the whole question of the European Community is that we are unable to know upon which particular points to focus. The noble Lord, Lord Hooson, was quick to say immediately that we must back every government except our own, or every other policy against those developed in the United Kingdom, and that we shall then all be sanctified by the Liberal Party. Most of us will hope to aspire to that in due course in our advancing years, but not for the time being.

What we really have to do is to look at the whole European set-up with completely fresh eyes rather than being carried away by the slogans which have been so adequately perpetrated over the years, commencing with the right honourable Sir Edward Heath who produced the first somewhat dubious White Papers on the subject.

What we have to grasp—it was borne on me even more when I listened to the words that fell from the lips of the noble Lord, Lord Renton, to whom I pay tribute for his speech this afternoon—is that we may be looking at the whole thing upside down. What we are saying at the moment—I hope that it will not last for ever—is that one can impose a change of regime from the top downwards to the people themselves. You can, if you establish sufficient power at the centre, power to legislate and power to influence legislative interpretation decisions, by sheer force majeure, combined of course with a good deal of subsidised propaganda, ultimately organise a state, the emergence of a new state or the emergence of a new order from on top.

I invite your Lordships to consider that history teaches us the reverse: that unless a demand for a change of regime—a fundamental change of policy—comes from the people themselves, and is agreed to, even in general terms, by the people themselves, no policy imposed from on top stands a cat in hell's chance of success.

That is the thought I want to put before your Lordships this afternoon, because it seems to me that, following Maastricht, which I take it rather a larger number of people, including members of the Cabinet, have now read, we are faced with two fundamental contradictions. The first is that within the organisation that we now have there is a common agricultural policy which is completely at variance with what is alleged to be the main purpose of the European Community itself, which is to establish, albeit within a given area, free trade based upon free competition.

Manifestly that cannot be applied—the noble Lord, Lord Tebbit, underlined the matter with his usual felicity—to the common agricultural policy. It is no good saying in enunciating a policy that we will take steps to do it. The answer to that is, what steps, in view of the fact that the CAP can be changed by unanimity only? Only one state has to disagree with a fundamental reform and it cannot be reformed. Moreover, the European Commission has gone on the record in most emphatic and, some might think, arrogant terms about the prime necessity of preserving the acquis communautaire. I have in front of me the proceedings of the European Parliament when the President of the Commission addressed it. Among other things he said: Mr. President, the European Union is the foremost economic and commercial power in the world". He continued: The European Union is an economic giant. Nevertheless, it does not play a political role commensurate with its economic position. That explains the attempt at Maastricht to lay the foundations for a more ambitious approach in this respect by developing a common foreign and security policy". He then continued: I wish to make one thing quite clear: the Commission will never endorse, on the pretext of enlargement, a retreat in respect of the acquis communautaire. The applicant countries must fully accept the acquis communautaire". He repeats the point: The adoption of such an approach must not, under any circumstances, be used as a pretext for calling into question the acquis communautaire, or weakening the Community institutions". Written right at the heart of the acquis communautaire is the CAP. When he comes to reflect upon these matters, the noble Lord, Lord Shaw of Northstead, will, I am sure, confirm that that is the case.

Unless and until people understand just what the European institutions are at, there will never be any comprehension of what is likely to happen to the European Union in the future. I deal en passant with the European Parliament, about which there is some suggestion that it should be given increased powers. Only today the press reports are out with yet another report from the Court of Auditors—a short one at that—which stigmatises the grossly excessive expenditure by the European Parliament, on its own authority, on establishing a new building in Strasbourg. It denounces it as irregular.

The European Parliament should have more powers! It has powers enough already. It can, in defiance of the Council and in respect of what is termed "non-compulsory expenditure", establish its own will to expend more money within the overall limit—established at Edinburgh of course. It can spend exactly what it wishes. In case the noble Lord disagrees, I have correspondence from Her Majesty's Government which confirms that—that it does in fact have that power. We all know very well that one of the first things that happens in the European Parliament with a new assembly is that there is an immediate representation to the College of Questors, which is the organisation set up by the Parliament itself to increase its own expenses and allowances, without any control by the Council of Ministers or by the Commission. Those matters are incontrovertible. All one considers now, as one must consider, are those powers of the Commission.

One of the reasons why there is all this dissertation about the goings on at the Council, and all the complication arising from the revolving presidency, is the assumption that the number of proposals coming before the Council from the Commission—the Commission has sole powers to make proposals—will continue at the existing rate. There is one way of avoiding an overload on the Council, and that is not to put so many proposals, particularly those which have an adverse effect upon the UK and others, before the Council.

Yet, despite all the hoo-ha there has been about a reduction in the number of proposals coming from the Commission, I have to tell your Lordships that I have the Weekly Information Bulletin of the other place for Saturday 21st October. It lists the number of proposals received from the Commission during the first two months of the Recess. I know because I have looked at most of them.

During that period no fewer than six consultative documents were sent and there were 179 items of proposed legislation. The Commission deliberately overloads the whole machinery of government on the basis that that will put Ministers in a tizzy. One must remember that Ministers have responsible domestic departments—and in the case of the Foreign Office overseas matters too—to deal with without a spate of European legislation. Unless there can be some control over that, the whole system is bound to jam up and the Commission will ultimately get its way.

The noble Lord, Lord Hooson, mentioned the attitudes of Herr Kohl and M. Chirac in connection with the deadline for the establishment of a single currency. I too was rather worried about the terms used by Herr Kohl. I do not like arrogance from anybody, in particular when they refer to my country, and I trust that I share that with your Lordships. Yet here is this man daring to mention the possibility of a return to a violent situation. That was the kind of voice that we listened to across the Channel when Germany and Vichy France were united in war. It is not the language of peace; it is not the language of democracy.

I therefore invite your Lordships to consider the possibility that we may have to think again about all this. As one noble Lord said, we may have to have a cost and benefit analysis of the situation in which we find ourselves. Then, perhaps after more mature consideration, we can arrive at a more balanced judgment.

5.42 p.m.

Lord Beloff

My Lords, many of your Lordships—fewer than used to be the case—are men of property. I invite you to consider what would happen if you owned, say, a dwelling house at the edge of a cliff which was subject to erosion from the sea and that you were told by your surveyor that it was likely that in a brief time your house would disappear beneath the waves. I suspect that if any of your Lordships were in that position you would not consult a firm of interior decorators about renewing the wallpaper in the drawing room. What you would do would be to find out what you could get from your insurance company so as to build a new and safer dwelling. The European Union is in that position. It is in crisis. It is on the verge, in measurable time, of disappearing as a result of its own arrogance and failures and the original impossibility of the conception that inspired it.

I have learnt much about the wallpaper from the report of our sub-committee. I agree that it is an admirable piece of work with many interesting points raised and discussed. However, it assumes that somehow or other the whole thing is going on and we must make the best of it. But when I turn to the more important and, if I may say so without offence, authoritative document, the report of the Reflection Group, I have quite a different picture, not merely the references to Britain's self exclusion on some matters to which many noble Lords have referred. It is an interesting thought—I do not know who thought of it—to call the body which drew up the document the Reflection Group because reflection has two quite separate meanings. One may say, "John Stuart Mill indulged in reflection on the meaning of liberty"; or one may say, "John Stuart Mill looked into the mirror and saw a reflection of his own Victorian whiskered face".

I believe it was intended that we should believe in the first; that this would be the outcome of serious consideration from first principles of the way in which Europe ought to be organised; how, if it were agreed, institutions should be changed and how, above all, it should cease to be an organisation for part of Europe and become an organisation for the whole of Europe. Like the noble Lord, Lord Tebbit, I put the unity of Europe at the top of my desiderata and regard the European Union as the main obstacle to that unity.

Instead, we get reflections of what have been the standard approaches of those concerned at Brussels, Strasbourg or Luxembourg in running the show and, in following up what the noble Lord, Lord Hooson, rightly reminded us of, the initial pre-suppositions. What were those pre-suppositions? They were—and I am afraid that I have said this previously to your Lordships, but I must repeat it—a design for a federal system. The Treaty of Rome, even without the Single European Act, and the Treaty of Maastricht are federal institutions. They are federal documents. Someone who has spent much of his life studying federations could not fail to be affected by this.

It is a very unusual form of federal structure, which is one of the reasons why it may collapse; no other federal structure tries to merge the governments of the units and the government institutions at the centre in this particular way. Strains were bound to develop and, as other noble Lords have pointed out, the thing was bound to become largely a vehicle for a Franco-German collaboration.

That meant, of course, that the authors of the Reflection Group report simply went on to say, "Since we are involved in building a federal system here are ways in which we can make it still more federal. We can remove"—and this they propose—"the whole three-pillar structure created at Maastricht because the two pillars other than the communities were intended to be outside the federal structure". That was the whole point of Her Majesty's Government pressing for that particular arrangement.

They propose to endow the European Parliament with additional powers. In what world the noble Lord, Lord Hooson, lives—in which he regards the European Parliament (that over-puffed up boondoggle) as the only representative body in Europe—passes all understanding! There is no parliament in Europe which cannot claim a democratic mandate superior to the European Parliament. More people have voted for its members; it has been elected in the course of more controversial campaigns. Most European parliaments consist of people who have practical experience in government or local government and who perhaps hope to be, in their turn, Ministers.

The European Parliament has none of those characteristics. Nobody knows who those people are until their names appear in public prints. Indeed, the reason for suggesting that they have more power is not that they would use it more wisely. The noble Lord, Lord Tebbit, has already shown that the chances of the Parliament improving the common agricultural policy are negligible. It is because, obviously, if you are building a federal structure and someone comes from Mars or Australia or wherever it may be and says, "Show us your legislature", it is better to show a Parliament than to show a group of Ministers.

Therefore, it is not surprising that that is the line which is taken. On the other hand, what is actually happening in Europe is a steady and perhaps rapid discovery of the fact, to which the noble Lord, Lord Bruce of Donington, alluded in a rather different way, that the peoples of Europe are beginning to see that they derive no benefits from that structure and call into question the extraordinary unanimity of praise for its achievements. In this House, we get those from ex-commissioners who adorn our debates, while the general public gets that from Sir Leon Brittan and others of that ilk. As a historian I wish that I had another 100 years to live so that I could write the history of this. But future historians may ask at which point the balloon was pricked and who pricked it. They may decide that it was Mr. Neil Kinnock. When Mr. Kinnock said publicly that the idea that 15 countries could have a single currency on 1st January 1999 is a patent absurdity, and was reproved by M. Santer, it began to be obvious that in order for the thing to last it was essential that a myth should be perpetuated. Once institutions depend upon a myth, their fate, sooner or later, is certain.

There is an interesting point about M. Santer. As I think most people would admit, the European Union has been a signal failure in the most important task facing Europe at present; namely, to bring down the numbers of unemployed. It has failed in that. The proposed measures would, on the whole, more likely increase the numbers of unemployed rather than diminish them. However, it has been very good at finding jobs for the Luxembourgers, but that is a fairly restricted achievement.

We turn then to current events in France. None of us knows what will happen, but at present the French are beginning to discover that they are being subjected to social misery, to a fall in living standards and to an interruption in their Christmas festivities because they have committed themselves to following German policy. That is a policy which in Germany's case might quite well be defended in terms of German national interest because Germany is in a very particular position, having to absorb East Germany. But that really has nothing whatever to do with what anyone would have counselled for the French if their angle of vision had been French.

My sympathy for France is enormous. My sympathy for the French ruling class in recent years is a little more limited. It has entered into that partnership on the absurd assumption that because Frenchmen are cleverer than Germans they would run the show. They have found that that is not the case and they are paying a rather high price. I believe that they are extremely muddled about that at the moment because they have a president, President Chirac, who claims to have inherited the mantle of General de Gaulle while pursuing the policies of Marshal Petain. No doubt it is very difficult for the Frenchman in the street quite to know what is going on.

Whatever the outcome of the current problems of France, the thing cannot be made credible again. Herr Kohl has been the subject of some criticism, to which I shall not add. But the reason that he is so desperate to push that absurd date—as Mr. Kinnock said—of 1999 is because the ground is being removed from under his feet by the rebellion of the Germans against the notion of a single currency. That will no doubt be stimulated at Madrid next week when the name of the new money is discussed and the Germans begin to feel that there will not be a deutschmark tomorrow.

We do not know, and we cannot know, how it will work. It is perfectly reasonable to say that we shall have to go to the IGC and take up the positions set out by the noble Baroness in her reply to the sub-committee, all of which are in themselves incontrovertible except for the fact that they make no reference to the wish of the current majority of governments—not peoples—as represented in the document of the Reflection Group.

For some decades, perhaps since the first renegotiation, as it was called by the late Lord Wilson of Rievaulx, we have tried to remould the institutions of the Community in a direction which conforms far more closely to our own views of how government should be run. We have found that we cannot do it. Each time, we may build up a few barriers, as with the two pillars at Maastricht, but, sooner or later, you cannot have both a federal government and a Europe of nation states freely trading with each other and freely co-operating in relation to those things which they do need to do in common.

It is quite correct to say, as one noble Lord said, that one of the problems created by the European Union is nationalism. When people feel that their destiny and livelihood is being decided by bodies over which they have no control whatever, it is natural that they should come to dislike those who appear to profit by that. I do not suppose that 40 years ago the fishermen of Newlyn regarded Spaniards as devils incarnate. They do now because their livelihood has been taken away by the so-called European common fisheries policy for the benefit of the Spaniards. That is bound to create trouble. That will happen wherever compression is exercised and wherever nations which remain the core of Europe are denied the full possibility of self government. You can have a federal system in a single nation but Europe is not a nation and therefore is unsuitable for a federal structure.

6 p.m.

Lord Kingsland

My Lords, as a former member of the "over puffed-up boondoggle", to which my noble friend Lord Beloff referred, noble Lords will understand that I rise to speak with a certain degree of trepidation. I should like, first, to congratulate the noble Lord, Lord Tordoff, on a quite outstanding report. I believe that he has wielded Occam's razor in the dense undergrowth of contradictory evidence with enormous skill. Having heard a number of the speeches made by your Lordships this afternoon, I also believe that it is a great achievement to have put together a unanimous report.

When listening to today's intensely interesting debate, I found that I was having to remind myself that we joined the European Community by voluntary decision of the Queen in Parliament in 1972. That voluntary decision was reinforced in 1986 and again in 1993. We are constitutionally members of the European Union by virtue of the European Communities Act 1972. The Queen in Parliament can at any stage, even in as short a space of time as a day, repeal that Act and remove the effect of European Community law on our territory.

There is nothing imposed upon us: it is entirely a matter for our nation as to whether or not those institutions—that is the Court, the Parliament, the Council and the Commission—have powers on our territory. Those powers are delegated powers; they are delegated by us to them. What we have given, we can take away. So none of your Lordships should feel oppressed by the situation. It is something which is in our own hands.

I entirely agree with a number of constitutional observations made by my noble friend Lord Beloff. As a result of those delegated powers, we have created a supranational court. Moreover, as a result of the Single European Act 1986, we have also created a supranational legislature—a legislature which takes decisions by majority. The reasons for taking those steps were to create a single market. You cannot have a single market without a single and ultimate source of legal authority. If you take that single source away, you destroy the single market.

I happen to believe that the only chance that Europe has of remaining competitive in the world economy into the next century is to make a real success of the single market. You cannot have the market without the court. I was delighted to see the committee of the noble Lord, Lord Tordoff, underline the position of the European Court in the Community.

Contrary to what certain speakers have said, I believe that the European Community operates on an extremely decentralised basis. Of course the European Commission has a number of powers. It is the sole initiator of legislation; it acts in some respects as a director of public prosecutions, because under Article 169 of the treaty, it can bring a member state which breaks the law to book. But it is not an executive, save in one area only, namely, the management of competition powers where it has powers similar to that of a nation state. There is no federal executive in the Community yet and, if there ever were, I would follow those who wish to take us out of the Community.

It is crucial that such a decentralised system should operate effectively in each one of the member states. My noble friend Lord Tebbit made that point much more eloquently than I can. It is crucial that the writ of the court runs equally in every state. If it does not do so, the people who create wealth in Europe—that is, the entrepreneurs—will lose confidence in the single market. Some businessmen in some countries will have to obey obligations that other businessmen in other countries do not have to obey.

Therefore, it is vital that the remedies available to each citizen in each one of the 15 states are equal. It is vital that each citizen can get damages for a wrong done to him under Community law. It is vital that each citizen can get specific performance for a wrong done to him and vital that he can get an injunction as well. If I may say so, the biggest single gap that I find in the Select Committee's report is that there is no recommendation to harmonise the remedies available to individual citizens in their own local courts for breaches of Community law by member states who are not free-market minded.

The latter problem will become even greater when the Community extends to central and eastern Europe. I say that because those countries have had no market economy for the past 40 years; they have been run by centralised edict and the incidence of profit and loss has been a matter of the central planner's whim, not the enterprise of entrepreneurs. You cannot have a market system unless you have a law of contract—that is, a law of contract whereby people make bargains and are compelled to stand by them even if they lose money as a result. The culture of the free contract does not exist in central and eastern Europe. Indeed, it is something that has not existed since before the Second World War. We will not have an effective market system in central and eastern Europe unless we first have a law of contract there. That is a matter to which I hope your Lordships will pay some attention when the next report is considered.

I would go even further. Having placed so much emphasis on the rule of law, I should point out that in many of those countries in central and eastern Europe it is seen not as a friend but as a foe. That is because the law is still seen as an instrument of oppression by foreign invaders. It will take time for those countries to see the rule of law in the same light that we do. Therefore, developing the culture of the rule of law and the law of contract are matters which will be of profound importance if we are to bring the countries of central and eastern Europe into the single market system, which we must do to make Europe a success.

However, the law will only be respected if it is made transparently and democratically; and if the institutions that have made it are accountable to the people. I share many of the concerns and reservations expressed by your Lordships about the defects in the current system for making law. I was particularly struck by those speakers who laid stress on the lack of transparency in the procedures of the Council of Ministers. How can national Parliaments really get a serious grip on what their ministers are doing in the Council if the procedures are totally opaque? It is not just a matter of public proceedings; it is also a matter of timing.

I hope that the IGC will consider strict rules whereby Bills are brought forward and readings are held in accordance with timings laid down well in advance. I believe that the report of the noble Lord, Lord Tordoff, suggests a month in that respect, but I think that it ought to be much longer. Otherwise, national parliaments will have no chance of getting to grips with the decisions made by their Ministers in the Council.

I have heard many comments made by your Lordships this afternoon about the European Parliament, most of which have not been very complimentary. There are great defects in the European Parliament, but I hope that noble Lords will recognise the fact that the Parliament is about 700 years younger than the Parliament in which we are sitting today. Therefore, Westminster has had something of a head start.

One of the great defects of the European Parliament is not so much its lack of power; indeed, in some respects, its powers are very great. After all, it can veto all international treaties made by the European Community. It also has codecision over much legislation. However, what it often lacks is the political will to be a really effective force in pursuing democratic decision making in the Community because it has a very diffuse and dispersed party system.

The word dispersion brings me to the final institutional point that I wish to make. It relates to delegated legislation. I had the great privilege of being the rapporteur in the European Parliament on two occasions to adjust the Parliament's rules of procedure in order to conform, first, with the contents of the Single European Act and, secondly, with the contents of the Maastricht Treaty. On both those occasions I tried to introduce the kind of procedures for delegated legislation proposed in the report. I was very struck by the fact that most of our continental colleagues regarded the making of delegated legislation not as a legislative act but as an executive act and, accordingly, nothing to do with parliaments.

I wonder whether a radically different approach ought to be pursued. Most of the primary legislation for creating the single market is now on the statute book. All the really important legislation in the future will be made by delegated measures. Getting the legislation wrong will cost European business billions of pounds in the environmental, social and technical fields. Therefore it is worth some careful attention.

If it is to be regarded not as an act of the legislature but as an act of the executive, I wonder whether some thought ought not to be given to an approach involving a role for the courts in reviewing the making of this legislation, rather along the lines that are pursued in the United States whereby certain types of delegated rule can only be made after all those interests which will be adversely affected have been formally consulted and given a hearing. If those procedures are not respected, the matter can be judicially reviewed. Judicial review is not the most popular constitutional subject at the moment in certain quarters; but nevertheless I can see its value in this area. I urge your Lordships at a future date to give some consideration to that matter.

Indeed, I go further in recalling the remarkable speech that my noble friend Lady Thatcher made at Bruges in 1988 when she stressed not just the importance of decentralisation of the Community and of decentralisation of power, but also the importance of the dispersion of power. I am keen on dispersing some of the power that the Commission has already accumulated. I put it to your Lordships that, for example, taking the monopolies and mergers and state aids function out of the Commission and creating an independent agency would achieve much more effective decisions in this area, uninfluenced by political considerations. That is particularly important in the field of state aids. There are other functions, too, where I think the dispersion of power away from the Commission could create a much better balance of power from the point of view of the nation state.

I am coming to the end of my observations but I wish to mention one other subject and that is the question of foreign policy. I share your Lordships' view—I take it to be the view of the vast majority of your Lordships—that it would be wrong to move foreign policy decision making into the Community pillar. Then indeed we would have the centralised federal state mentioned by the noble Lord, Lord Beloff.

Indeed, having watched the cynical way that Mr. Milosevic has sought territorial aggrandisement, and, I am afraid to say, the abject response to what he has done by many of the western democracies, I wonder whether Europe is the right focus for foreign policy at all. It is crucial to our interests that the United States remains committed to European security. In terms of action by this country, certainly since the time of Suez, it has become an absolute sine qua non that the United States is with us if we are to make a major foreign policy initiative. I do not believe that that situation will change in the future. Therefore, I wonder whether this whole area of a European foreign policy will not have to be fundamentally reviewed.

6.13 p.m.

Baroness Park of Monmouth

My Lords, after so many brilliant speeches I feel my own will be all too pedestrian. I read the committee's report with great respect and interest and I am reassured by its clarity of vision and by the equally clear cut and positive government response. I was most grateful too to receive the Reflection Group's report and the Government's response to that.

My concerns are, first, the importance of retaining the CFSP pillar as it stands and of retaining the veto in that area. I am concerned also about the need to ensure the retention of NATO as the essential basis of Europe's defence and to strengthen the NATO/WEU relationship rather than subordinating the WEU to the Union. There is a need to ensure that Commission proposals for legislation come to national parliaments in time for consultation, consideration and scrutiny. So far, as the committee in the other place said, it has been routinely ignored. We learn that the Council has even taken decisions on "unofficial texts" produced by the Commission.

The larger the Community becomes, the more, it seems to me, there is a danger that it will become, like the UN administration, out of control and desperately expensive. It is absolutely essential that in foreign, security and defence matters we continue as full and active members of an inter-governmental Union, not a supranational, federal Union. That means no further extension of the powers of the European Parliament as well as the Commission.

Turning to those issues in greater detail, I hope that the Luxembourg compromise is not to be yet further refined. It seems that it may no longer be available to support a totally unilateral national stand, as I believe was originally intended. There have been, and no doubt will be again, occasions when we are pressured, as in the case of the vote on Bosnia, into unanimity in the name of European solidarity and make a bad decision. I agree wholeheartedly that as the foreign relations of nation states are conducted—particularly, negotiations—with the benefit of a mass of confidential, if not secret, information on the undeclared intentions of the other side, it is simply not reasonable to expect that a viable, coherent foreign policy on a major issue, as distinct from pious generalisations, could be worked out in time for any crisis by a large group of countries with many different national interests to consider and without the essential up-to-date background knowledge to make effective corporate judgments.

I am concerned by several statements in the Reflection Group's report. I refer to the statement that, flexibility should be allowed only when it serves the Union's objectives". The document also states: The key task is to take all the steps necessary to provide the Union with a genuine external identity that will enable it to promote its values and defend its interests It continues, The Conference will have to find ways to ensure that the Union's external policy is visible to its citizens and to the world…and to further develop the European identity, including in the security and defence policy field". We cannot just dismiss such statements as harmless generalities. People out there may actually believe that the Union has a Union defence and foreign policy, binding through a common action, on all the member states and yet formulated on the basis of considerable ignorance.

When M. Jacques Santer, on a visit to Moscow, says, "We have always thought NATO should not play a military role", and when he and the Spanish Prime Minister say to the Russians that Russia should be involved in a European security concept and that steps will be taken, they are taken to be speaking for the Union and of course echoing Herr Kohl. What are their credentials for diminishing the role of NATO and agreeing with Mr. Kozyrev when he says that in Russia's view NATO should not play a leading role in European security? If not NATO, then who should do so?

I do not find it reassuring that the Commission's recent paper on the European Union and Russia—Com (95), 223—lays down as a priority, the further involvement of the Russian Federation in the development of the European security architecture…To this end it will seek to intensify the dialogue between Russia and NATO, and…promote OSCE strengthening…and the development of relations between the Russian Federation and WEU…and contribute to the further examination of the idea of a specific arrangement between the Russian Federation and the Atlantic Alliance which would set up regular ad hoc procedures of consultation and dialogue". The document also proposes: The Member States shall ensure that their national policies shall conform to this Common Position". A common position is, once agreed, binding in international law.

It is bad enough that there are so many interlocking defence organisations in Europe—M. Santer himself thinks they are Byzantine in their complexity—but it is not appropriate or wise that the Commission, in the interests of raising its so-called "external identity", should confuse an already complicated situation and open the door to the Russians to divide and rule. NATO cannot operate effectively if it is undermined by a succession of ill-informed and unrepresentative people trying to climb on the defence bandwagon and claiming to influence what can only be delicate and careful negotiations with a country which, on the one hand, is still far from stable but, on the other, has not lost its cunning when it comes to marginalising and destabilising the one effective organisation for stability which we have—NATO. It is disturbing anyway that after getting rid of one deplorable Secretary General who was much influenced by Vitaly Churkin, the able Russian ambassador in Brussels, we have now appointed another whose credentials for the post are, if possible, even more doubtful. I am again not reassured by Kozyrev's statement on 5th December that Senor Solana's appointment should suit Russia as, he is a good friend whom we have known for many years now". I do not think it a coincidence that on the same day Churkin, although he linked his remarks to Bosnia, said: Now one can forecast that in the coming year there will be a pause with regard to the matter of expansion, which we were striving for". I hope that I am wrong, but I believe that Senor Solana's no doubt honestly held, long-standing opposition of principle to NATO, coupled with an equally long-standing, warm relationship with the Russians—which pre-dated the Gorbachev era, and may well have arisen from an honourable opposition to Franco—will make him at least very vulnerable to Mr. Churkin's blandishments. In those circumstances we cannot afford to have the NATO relationship with Russia, always a delicate balancing act, further complicated by enthusiastic interventions by non-accountable Commission spokesmen purporting to speak for all of us.

The proper contribution of the Union to the political stability of Europe must surely be through enlargement and through such valuable programmes as TACIS and PHARE.

My last point relates to accountability and control. My very slight experience as a member of Sub-Committee C has made it clear that transparency is still lacking in Brussels and that national parliaments are not receiving what they need in time to have any effect on legislation. I was amused to note in paragraph 148 of the committee's report that the European Parliament has the same problem. Mr. Collins, like us, was not allowed access to the minutes of the Regulatory Committee considering annexes to the birds directive. We had the same problem over that and the bathing water directive, as did NGOs with a legitimate interest. However, although I blame the Commission for its failure to deliver, I also consider that if we had a larger British presence at all levels of the Commission's bureaucracy and regarded it, as the French and the Irish do, as a vital national interest to be well and effectively represented there we should do much better and be able to exert sensible influence at an early stage.

I greatly admire the effective way in which Sir John Kerr and the whole mission operate, but they are handicapped. Instead of making it a retrograde step in a good Civil Service career to spend some years in Brussels—until recently, it meant losing promotion—we should offer effective and serious encouragement to bright young men and women to serve there and to learn. I know well that my noble friend the Minister has pushed hard for that and that the Commission does not make entry easy. I know, too, that the Cabinet Office has been encouraging European fast-streamers, but re-entry without advancement remains a serious problem.

I believe that much that is good is happening, thanks to the creation of the Union. The secret is to influence it wisely by being part of it, though still being ready to differ when we should. We should not be afraid to be on our own when principle is at stake.

6.22 p.m.

Lord Reay

My Lords, I too should like to congratulate the noble Lord, Lord Tordoff, on having brokered (if I may use that word without offence) a remarkable—almost miraculous—agreed report from the IGC sub-committee, whose heterogeneous membership I, like others, would have thought incapable of producing an agreed set of recommendations. However, not only were they agreed, they are coherent, clear, often strong and betray few inconsistencies or other hallmarks of compromise, at least so far as I could detect, despite what my noble friend Lord Tebbit had to say about its beige colour in parts. Therefore, the debate in your Lordships' House on this most divisive of subjects has been provided with a most harmonious introduction. Long may harmony, or relative harmony, prevail.

I should like to return to the subject of isolation raised by the noble Lord, Lord Hooson, and taken up by the noble Lord, Lord Stoddart of Swindon. In the run-up to the Madrid Summit we have seen several headlines of the "Britain isolated" type, and no doubt over the next 18 months or so we shall read many more. Two important areas which have been highlighted in this regard have been qualified majority voting and the powers of the European Parliament.

The committee's report has some strong words on the subject of qualified majority voting. In paragraph 244 we find a statement that qualified majority voting should: on no account be made possible on issues which are at the heart of national sovereignty such as taxation, foreign policy and defence". In the same paragraph we find an even more broad opposition to additions to qualified majority voting: We are not persuaded that the need for unanimity is necessarily a barrier to the effective working of an enlarged Community". That provides solid, substantial support for the Government's position.

The Government go further than the committee in one respect. The committee does not absolutely rule out the possible extension of qualified majority voting to new areas at some stage. The Government, on the other hand, have said that they rule it out on principle, as can be seen from column 589 of Hansard of another place for 7th December, when my honourable friend the Minister was replying to the debate on Europe. I am concerned that the Government should have gone as far as that. I should prefer it if they quietly dropped their references in this context to principle. It seems to me to risk making their position excessively rigid.

In view of what occurred in the Council when the number needed for a blocking minority was raised to 27 in March last year against the original declared position of the Government who then had to beat a camouflaged retreat, I should have thought that the Government would want to be particularly careful not to adopt inflexible positions prematurely. After all, we ourselves wanted extensions to qualified majority voting to help achieve the single market. It is not unreasonable to suppose that they might again be necessary to enable an enlarged community to function efficiently. Therefore, it seems to me that it would be wiser to argue for or against extensions to qualified majority voting on a case-by-case basis rather than dismiss them on principle.

Of course, it has to be understood that, if the unanimity requirement is retained—and the more areas in which it is retained the greater the likelihood of Britain sooner or later finding itself isolated again—it does not make sense to resist the extension of qualified majority voting to new areas and at the same time to promise, or claim—and it has sometimes seemed that some leaders of the party opposite have on occasion done so—that Britain need no longer be isolated in Europe. The fact is that the Select Committee is largely behind the Government in opposing the extension of qualified majority voting, including its extension into the second and third pillars. The party opposite seems to me largely to be behind the Government in opposing the extension of qualified majority voting. Indeed, I hope that the vast majority of your Lordships is largely behind the Government. To that extent we shall all be accomplices in any consequent act of isolation in which this country finds itself.

So far as concerns the European Parliament, the committee and the Government both take the view that the Parliament should grow into the substantial new powers it acquired at Maastricht rather than seek new ones.

The committee would also like to see the powers of co-decision simplified but not extended, and makes the telling point that any extension of co-decision must involve some diminution in the role and influence of national parliaments. Yet one of the problems of today's Community, as most people recognise, is the limited role played by national parliaments. This time surely it should be the turn of national parliaments, rather than the European Parliament, to benefit from any attention which the conference may give to the problem of the democratic deficit.

Last month I had the honour to attend in Madrid a meeting of the conference of the European affairs committees of member states. I was struck by how much there was in common between the standpoints of delegates. Not much was expected, or even wanted, of the IGC. The most general theme seemed to be the need to address the public's lack of support for the Union, and all the emphasis was on transparency, accountability and the need to enhance the involvement of national parliaments.

Widespread notice had been taken of the proposal which originated with the House of Commons Select Committee on European Legislation that a minimum four-week period should elapse between the publication of any proposal with serious legislative implications and its consideration by the Council. That proposal is mentioned in paragraph 92 of the Reflection Group's report in the context of that group's statement that in its view an improved process of prior consultation with the national parliaments is now required. I think that the adoption of such a proposal would go far to improve the scope for the involvement of national parliaments in Community legislation, in particular if Declaration 13 was made part of the treaty at the same time.

Together with the need to adapt the Community's institutions to cope with enlargement—which should perhaps be the prime aim of our European policy—the advancement of national parliaments will, I hope, be the other main theme which the Government will espouse at the IGC. I believe that the Government will bring credit on themselves not only in this country but in others if they continue to pursue that goal.

I should like to conclude with two observations. As far as any referendum is concerned, I remain to be convinced of the need for one. On the evidence of the last occasion, referenda seem capable of wreaking great havoc on parties which espouse them. But if there is to be a referendum, the subject should be the single currency and not the conclusions of the IGC which in no way will be worth the exercise.

Secondly, so far as the single currency is concerned, I strongly support the Government's position, which I sincerely hope they will stick to. We should retain our option to join a single currency, both for the sake of the leverage that it gives us over events leading up towards it and because it provides the proper framework for a free and meaningful debate—one which we need to have—on whether we should join or stay outside the single currency, if and when it happens. But that is the subject for future debate. Meanwhile, I commend this excellent report to your Lordships' House.

6.33 p.m.

Lord Barnett

My Lords, if he will not be embarrassed, perhaps I, too, may congratulate the noble Lord, Lord Tordoff. To have persuaded me, with the noble Lord, Lord Tebbit, my noble friends Lord Bruce of Donington and Lord Stoddart, as regards the European Union was quite an achievement. I congratulate the noble Lord. I am sorry that my noble friend Lord Bruce is not present. He said that we should look at the issue with a fresh eye. My noble friend reads everything, so he will note tomorrow morning that I believe that he did not seem to be looking with too fresh an eye on the subject when he spoke earlier.

Perhaps I may say this to my noble friend Lord Stoddart. We did not come to a conclusion either for or against isolationism in Europe. Many of the speeches in your Lordships' House today did not deal with the subject with which we dealt; namely, the IGC. Perhaps I may say this to the noble Lord, Lord Reay. The reason that there was no need for compromise was because we were not looking at single currencies. We were not discussing that kind of topic. At some time in the future no doubt we may have need to compromise, or to do something else. The sub-committee that I have the honour to chair is not considering whether we should join, but the consequences for us as to whether or not we go for economic and monetary union. It is a most important topic.

I see that the noble Lord, Lord Bruce of Donington, is again in his place. I have just congratulated him on not casting a fresh eye on the European Union. I am sure that he appreciates that.

The Reflection Group's report was published after our committee reported. The draftsman or woman of the Reflection Group's report should be congratulated. It was a fascinating document. I am astonished to note how many ways are found to indicate disagreement within the Reflection Group. Phrases such as "some of us"; "one of us"; "many of us"; "a broad view"; "the great majority"; "a widely held view"; and "a very large majority" are used.

However, on one area the group was able to agree. At paragraph 1 on page III the report states that we should be more transparent. The Government agree with that. If that is the case, I hope that when the noble Baroness winds up she will be more transparent and will tell us the view as regards those areas where we may have just been in a minority. I refer, for example, to job creation, at paragraph 58. The noble Baroness is making notes, so she will tell us those areas in which we reached agreement and those where we were isolated.

The First Part of the Reflection Group's report is something of a bad joke. It refers to A Strategy for Europe. As I have said, most of the report is anything but a strategy for Europe. The report refers to matters on which some of us agree, none of us agree, or many of us agree, or to issues on which some of us do not agree, so to refer to a strategy for Europe seems a little odd.

An area on which the group agreed—it was unanimous—was that the Union does not wish to be a superstate. That should have pleased Eurosceptics such as my noble friend Lord Stoddart and the noble Lord, Lord Tebbit. It should be a response to the noble Lord, Lord Beloff, who worried about a federal state. However, that issue has nothing to do with the IGC discussions. I never thought we were talking about a superstate or a federal state. The Eurosceptics should now be happy, if it is possible to make them happy although I doubt that. Some noble Lords look as though they are very unhappy; the noble Lord, Lord Tebbit, shakes his head.

The Reflection Group's report exposed problems for the IGC. The conference will not discuss enlargement, single currencies, and many of the areas discussed today. Therefore I hope that we can return to matters which the committee discussed. We did not discuss enlargement or the common agricultural policy. We discussed, as did the Reflection Group, the consequences of enlargement. That is very sensible. We have to consider those consequences. Therefore my brief contribution today will relate to the consequences of enlargement as regards the presidency, qualified majority voting, the Commission, and the budget.

On enlargement, we should be clear that in the UK—indeed it was one of the areas of unanimity—we are politically committed to enlargement. Let there be no mistake about that. We are all politically committed to enlargement. We refer to that in paragraphs 232 to 234 in the report.

I turn to the consequences as regards the presidency. The noble Lord, Lord Hunt—he knows that I have high regard and huge respect for him—asked how a team presidency could be an honest broker with a team of three or four. It was one of his worries. He made the point that we should leave the matter aside for the time being. Frankly, I hope that the noble Lord, Lord Hunt, will agree that as regards many of the discussions which take place in Europe, even if we decide today that we wish to do something it is likely to be the next century before we have agreement. Therefore we have to consider what will happen to presidencies in due course. It is a subject that we discussed in committee. If we leave matters as they are, and eventually have 30 member states with a new presidency every six or 12 months, there would be such a long delay between presidencies as to make the situation absurd. That is why we considered team presidencies.

I do not expect the Minister to tell us the government view; they probably do not have one at present. Perhaps the noble Baroness can tell me the position. Perhaps she is against team presidencies. For my part, much as I am concerned and understand the problems, for the life of me I cannot see a viable alternative to team presidencies. The alternative would be impossible with 30 member states.

I turn to qualified majority voting. It has been said by noble Lords in the debate, particularly by my noble friend Lord Stoddart, that we must have the veto. However, we point out the problem that if we have small member states, small countries able to veto what the major countries want to do, for example, on the common agricultural policy, it creates an impossible situation. Surely we must agree that that cannot be allowed to go on. We must be prepared to consider new changes in qualified majority voting. I go along with the committee about not wanting qualified majority voting to take place in certain crucial areas for major states, including our own.

I turn to the subject of the Commission. In fairness to the Reflection Group, its members were unable to agree. They were not able to agree on many things, so that did not surprise me; but given that the Reflection Group could not agree, I should be astonished if the IGC could agree next year. Even if it sat right through to the end of the century, there are many areas on which I should be surprised if it agreed. We have a long way to go if there is to be agreement within the Community.

I had wished to refer to what the noble Lord, Lord Beloff, said, but he was not in his place and although he has now returned, I do not wish to go back, otherwise my speech will be far too long.

The other subject on which I wish to say a word is the budget, which again was referred to by the noble Lord, Lord Hunt. I agreed with him in the committee that we should do away with compulsory and non-compulsory areas of the budget, they must be a nonsense. Even my noble friend Lord Bruce agreed with that—if we can ever agree—or at least my noble friend Lord Stoddart agreed, when we were in the committee. With the weight of legislation coming out of Brussels, I find myself in agreement with my noble friends and the noble Lord, Lord Tebbit, we must do something about it. It plays havoc not only in the UK, I imagine, but in many other member states. I had better not dispute it, because there are too many other members who might disagree with me—

Lord Bruce of Donington

My Lords, I am grateful to the noble Lord for giving way. Is he aware that the abolition of the difference between compulsory and non-compulsory expenditure would need a terrific series of amendments to the financial regulations? I doubt whether he would be prepared to contemplate them not only at this time of night but over a couple of months.

Lord Barnett

My Lords, if we are to look with a fresh eye at such matters, this may be a good area in which to use that fresh eye. Finally, perhaps I may come to the matters which will not be discussed at the IGC, which I have not mentioned and which the committee did not discuss. That is enlargement. Inevitably we may discuss the consequences, as did the Reflection Group and as I hope the IGC itself will. One or perhaps many of the Reflection Group looked at the matter, I am not sure. However, it must he right to do so. Paragraph 233 states that if the European Union is politically committed to enlargement—and it is unanimously committed to it—many of the consequences will have to be addressed. I hope that they will be addressed at the IGC, but I fear that if we had also looked at the single currency and other matters that have been discussed in this debate, the IGC would be sitting until the next century. However, as it was never the intention that the IGC should consider all that, I hope it will consider the consequences of enlargement for the European Union in the areas which I have briefly touched on. If it does not, we shall not achieve the efficient enlargement that I should like to see.

6.45 p.m.

Lord Middleton

My Lords, an article in The Times of 30th November stated: The shape, success or perhaps even survival of the European Union will not be decided in the IGC but by the fate of the plan for monetary union and by progress towards the EU's highest current obligation: helping Eastern Europe by including them in the EU". I am not qualified to speak about monetary union. On enlargement, however, if it ought to be at the top of the EU's agenda, then it has to be joined at the head of the list by reform of the CAP. The first depends upon the second, as has been said several times tonight, notably by my noble friend Lord Tebbit.

When my Sub-Committee D reported last year on enlargement to include the central and eastern European countries, we stressed the incompatibility between the common agricultural policy and further integration of CEE agriculture with that of the European Union. We concluded that the target of Community membership by those countries cannot be attained without further CAP reform. In the subsequent debate on our report in this House, my noble friend Lady Chalker agreed, identifying the common agricultural policy in its present form as a major obstacle to progress. She gave a similar reply in answer to a Question in this House two weeks ago. It may seem paradoxical that the sub-committee of the noble Lord, Lord Tordoff, despite hearing evidence on both enlargement and the common agricultural policy, concluded in the report that those were not within its terms of reference. In paragraph 308 the sub-committee says: although they formed an essential background to our enquiry, we have not—except in our injunction in paragraph 234 …—addressed them directly in our Opinion". I should like to confine my brief remarks to those two paragraphs in the report.

The shadow of common agricultural policy reform as the essential preliminary to enlargement hangs over the report. However, its absence from the report's conclusions is rather like Conan Doyle's curious incident of the dog in the night-time. 'The dog did nothing in the night time', said the Inspector. 'That was the curious incident', remarked Sherlock Holmes". The importance to the EU of enlargement to include the CEE states was fully emphasised in evidence to the IGC sub-committee, and that is all reported in paragraph 106 of its report. Mr. Crossick said that the EU had no choice but to enlarge. Mr. Ludlow thought that enlargement should be the leitmotif of the whole conference. Madame Guigou, MEP, warned that enlargement had to be accompanied by significant reforms. Almost all witnesses who discussed enlargement made some reference to the need to reform the CAP.

My noble and learned friend Lord Howe of Aberavon, in his evidence, did not think that the common agricultural policy would be on the IGC agenda, although it would be hovering over it. This opinion was endorsed by Sir John Kerr, who considered that enlargement would require major changes to the two biggest policies of the Community: the CAP and the structural funds. But he pointed out that this did not require treaty changes.

IGCs are about changes to the treaties. Article N.1 of the Maastricht Treaty lays down that the primary function of an IGC is to determine amendments to the treaties on which the Union is founded. One of the tasks, therefore, facing the sub-committee of the noble Lord, Lord Tordoff, was to consider Sir John Kerr's firmly stated view that CAP reform did not need revision of the treaty in the light of evidence in the shape of a paper from the European Parliament's Land Use and Food Policy Intergroup (or LUFPIG for short) which said the opposite. If Sir John was right, then CAP reform, acknowledged to be of crucial importance, could take place under the treaty as it now is and need not be on the IGC agenda. It could therefore fall outside the sub-committee's terms of reference for this particular inquiry. The presence of the dog, though of prime importance, did not require it to bark.

I turn to paragraph 234 and the reference to the work of Sub-Committee D carried out last July at the behest of the noble Lord, Lord Tordoff, and his sub-committee. As the noble Lord said in his opening speech, we were asked to give our opinion on whether CAP reform required alterations to the agriculture articles in the treaty and to consider other matters raised by LUFPIG. That opinion is printed in the form of a letter from me to the noble Lord, Lord Tordoff, in Appendix 5 of his committee's report.

We had considered carefully the LUFPIG paper and were most grateful for the evidence that we received from my right honourable friend Mr. Waldegrave, the then Minister of Agriculture, and my noble friend Lord Plumb, whose knowledge of these matters is profound. Their evidence too is printed in full in the appendix. We concluded that the terms of the treaty articles, though unchanged since the 1950s, do not preclude the kind of changes to the CAP that the UK wants. We considered that it would not be appropriate to amend the key agriculture articles at this time. As stated in paragraph 234, that opinion provided some of the rationale for the view taken by the committee of the noble Lord, Lord Tordoff; namely, that while enlargement should now be the driving force in the EU's forward planning, that and the CAP will not be on the agenda of the IGC.

CAP reform does not need treaty amendment, and enlargement must await CAP reform. That point was made by the noble Lord, Lord Richard. He may be pleased to know that the attention of the European Communities Committee of this House is now likely to be focused on Mr. Fischler's paper on CAP reform in the context of accession by the CEE and other countries. That agricultural strategy paper has been adopted by the Commission and is to be presented at the Heads of State summit this week in Madrid. I hope that my sub-committee will examine its proposals with very great care and report to your Lordships.

As I have so often said in this House, the need for such reform is urgent. I fully recognise the difficulty about unanimity, to which the noble Lord, Lord Bruce, referred, but pressure on our European partners must continue and the IGC committee was right to say so.

6.52 p.m.

Lord Shaw of Northstead

My Lords, once again we are indebted to the Select Committee on the European Communities for a first class report that will be studied widely. Coupled with it, we have the report of the sub-committee chaired by my noble friend Lord Middleton which deals with a very important subject. The discussion of any future of the common market is such that we have to consider changes in the CAP. His committee's contribution to that end is welcomed and we look forward to further contributions in the future.

I should like to make the point that the impression must not go from this place that the Government are isolated in the IGC negotiations. The fact is that at the last meeting of Heads of Government in September, my right honourable friend the Prime Minister had considerable support and backing; and in many cases, so I understand, he was asked to give a lead in encouraging certain points of view. I am bound to say—I have nothing to gain from saying it and have an honest belief in what I am about to say—that we are very fortunate indeed in having our Prime Minister leading us in the discussions. He is an unusually capable negotiator, who makes his points and at the same time remains on friendly terms with those with whom he is negotiating.

As with all such debates, we tend to become swamped by paper and reports. Not only do we have the report that we are discussing today; we also have the sub-committee report. We have a progress report from the Reflection Group and the Reflection Group Report itself. Today, we also receive a report from my right honourable friend, which again helps in our consideration of these matters. In addition, there is the report of the Court of Auditors, which is not irrelevant to our discussions today.

I should like to say straight away that the committee deliberately identified certain areas at which to look: improving the functioning of the Union and equipping it with the means to cope with the internal and external challenges facing it, such as the next enlargement". That is what the Reflection Group progress report gave as its summary of the situation. Again, the final Reflection Group report said much the same thing. I believe that we should aim at further enlargement of the European Union. However, I am equally convinced that, if such enlargement is to succeed, we must bring about most of the necessary changes in our institutions and practices before enlargement takes place rather than afterwards. The group's progress report rightly says that, it will be important for the Conference to contemplate the implications of its decisions for a much larger Union than the present one". Again, the final report makes the same point.

Nowhere, in my view, is it more important to have those changes made than in the CAP itself. I shall not repeat those parts of my noble friend's report that he has so ably explained to us. But the fact is that we cannot continue with the system that was set up, whether relevant or not, for certain circumstances many years ago, but which is completely inapplicable at the present time. Changes may or may not be needed in the articles of the treaty to bring about the situation that we want, but I believe that it would be most unwise for the IGC to reach a final conclusion without changes in the CAP having been brought about or put well on the way.

One of the main objectives is to bring in a number of new people, but how can we possibly ask them to join us in a situation that we believe to be intolerable and which we will change, in any case, as soon as we possibly can? Naturally, they would object because in most cases the old rules would be very beneficial to them. Nonetheless, the fact remains that once they were in on the old system it would be even more difficult to change to a new system.

Incidentally, I understand that there has been a report called for from the Commission on the effects of enlargement on the CAP. I thought I heard my noble friend say that it would be reported to the meeting of Heads of Government on Friday. Incidentally, I was interested to note that my noble friend Lord Plumb, in evidence to the committee, made the point that: Attitudes were changing within the [European Parliament] and within national governments and the time was ripe to take the initiative by way of Treaty revision. It was not the EP that was responsible for inertia towards further CAP reform but the Council of Ministers and individual Member States". Coming from my noble friend, with his great knowledge and experience of these matters, those words must be considered seriously, and I welcome them. On the other hand, my experience from when I was rapporteur at the time of the 1978 budget was that when the draft budget came to Parliament substantial additions were always made, wherever possible, with an eye to various constituency interests including the CAP. It was the hard task of the rapporteur—that year myself—while seeking to implement the will of Parliament, to restrict such proposed increases to within acceptable limits.

I wish to move to another point, because I do not wish to detain the House too long. This is a matter of vital importance to the long-term success of the European Union. The questions of financial irregularity and fraud must continue to be examined. The new powers given to the Court of Auditors are only just beginning to operate. The new Commission has decided on a reform of its internal management. All that is encouraging. But it is far too early to assess the results of those changes and spot the further changes that may be revealed as being necessary.

The chairman of the Reflection Group makes the point in his progress report that, The stronger and more efficient the Union institutions are and the more support they receive from our citizens, the greater the benefits of all sorts that will derive from the forthcoming enlargement. Inadequate or insufficient institution reform, on the other hand, will jeopardise the very process of the construction of Europe". Those words should be put in the form of a banner around the negotiating room in which the IGC sits.

The need for improvement is nowhere more apparent than in the Court of Auditors' annual report for 1994. Its Statement of Assurance for 1994 states, significant reservations concerning the reliability of the accounts—and draws attention to many errors affecting the legality and regularity of underlying transactions for payment". It goes on, This result represents further evidence of inadequate financial administration, by both the Commission and Member State bodies, of a significant part of the Community Budget, in a wide variety of areas". It must be open to question as to whether further changes will have to be made to overcome the shortcomings that are now being revealed. If in fact those shortcomings exist now, how much worse will they be if we seek enlargement without them being put right?

I turn to one final matter; that is, the question of the ombudsman. Under the treaty, Article 138e states, The European Parliament shall appoint an Ombudsman empowered to receive complaints … concerning instances of maladministration in the activities of the Community institutions or bodies". He will be independent and will report directly to the European Parliament. The effect of his activities could be dramatic—but he was only appointed on 12th July. There again, it seems to me, there is further cause for delay in determining what changes should be sought by the IGC.

I ask my noble friend two questions. What were the problems that caused the EP to delay the appointment for so long, if the appointment is so important? Secondly, the ombudsman is to examine complaints of maladministration in the activities of the Community institutions. Can my noble friend confirm that those complaints cover any maladministration within the internal workings of the Council, the Commission and the European Parliament? And would the Court of Auditors, where appropriate, then have the right and duty to follow-up any such cases? The ombudsman may well have a dramatic effect on the efficiency and transparency of many of the actions of the institutions.

This is an important report and we should look forward to the meetings of the IGC with hope, but with a certain measure of cynicism. Primarily, we need perseverance. I hope that in persevering we shall, in the end, have a prosperous, happy, efficient and trusted EU for the future of ourselves and those who follow afterwards.

Lord Richard

My Lords, before the noble Lord sits down; he was talking about the effect of enlargement on the common agricultural policy. He said that new entrants may find it intolerable. Does he not agree that, far from finding it intolerable, they may find it too attractive? The problem with new entrants is that farmers are guaranteed an income; they receive prices for their commodities amounting to more than the cost of production; they are protected from outside competition. All that means that the food mountains will increase. The problem is not that they would not like it; but that they would welcome it with open arms.

Lord Shaw of Northstead

My Lords, I apologise if I gave the wrong impression. I entirely agree with the noble Lord, Lord Richard. What they would find intolerable is the fact that, having joined, they were then asked to change the terms on which they joined.

7.7 p.m.

Lord Elis-Thomas

My Lords, I shall not pursue the debate on the CAP save to note my agreement with the points made by the noble Lord, Lord Richard. I am a self-confessed European federalist. I follow our European debates with a certain sense of déjà vu. I remember a time when I took a different attitude, not towards Europe, but towards the institution of the European Union. That prompts me to suggest that even certain Euro-sceptics in this House may not be beyond grace.

I shall try to introduce some fresh issues into the debate, although one or two points I make will endorse what has already been said by my noble friend Lord Hooson, especially on the issues of subsidiarity. I thank the noble Lord, Lord Tordoff, for producing such a readable document in terms of the final report, particularly in view of the mass of evidence with which the committee had to deal. Therefore, I shall take as my text—which may be an appropriate remark to make on the day of the introduction of a right reverend Prelate to this House—a piece of evidence which has not yet been produced in this debate; namely, that introduced by the UK local authority organisations and the Local Government International Bureau.

In their written submissions they put forward a number of extremely important issues in relation to the development of the IGC process. They looked for a clearer definition of subsidiarity. I am sure that many noble Lords in this House agree with that. They are also looking for a stronger legal basis for the principle of local self-government based on the model already established by the Council of Europe charter on local self-government. They are looking obviously for an increased role for the Committee of the Regions, because that is where they have their representation. And they look also for clarity in the treaty basis of competence for those fields of EU activity which are also fields for local authorities, particularly in the areas of culture, consumer protection, public health, education, environmental, transport and land-use policies.

They are also keen to see the partnership between local and regional government, which de facto occurs in the use of European Community structural funds, recognised as such within the inter-governmental process. I shall turn to those issues in a moment.

First, I want to endorse what the Reflection Group said on an important issue which is brought to the fore in the present Treaty of Union. I refer to the emphasis on the importance of promoting European common values, which are values of democracy and citizenship. It is important that the new treaty should have clearer statements of fundamental rights, of non-discrimination and in particular of those rights which involve the position of racial and ethnic minorities. I very much endorse what the Tordoff Committee, if I may so call it, says in this area. In paragraph 286 it endorses what was said in its previous report Community Policy on Migration and emphasises that there should be a legal base for binding Council legislation on racism. The committee says: We maintained that the United Kingdom in the light of its own achievements in the field of race relations was well placed to press for legislation which might help to improve standards throughout the Member States". This is where I am at a loss to understand the position of the United Kingdom Government as set out yet again in the response of the noble Baroness, Lady Chalker. In her statement she reiterates how proud she is of the United Kingdom's achievement in race relations and goes on to make what is an astonishingly difficult statement for me to understand. She says that, since problems of race are different in each Member State, they should in the first place be addressed on the national, not the European level". I do not understand the rational basis of that argument. Racism is racism. It is discrimination against citizens on the basis of one form of their human appearance. It may have an economic base; it certainly has political consequences; it has personal, tragic consequences. But the nature of racism is similar in whatever society, within Europe and within the international context, it appears. Therefore, I cannot understand that argument. I should like to have a response from the Minister on that issue.

After all, if the Government are proud of their record, why should they go on to say that they will resist a treaty amendment? I want to press the Minister on this matter. How strongly will the Prime Minister or any other UK representatives resist the demand that is clearly coming from the Reflection Group, from the European Parliament and from the White Paper on European social policy, The Way Forward for the Union, produced last September, which specifically committed the Commission to look for legislation against racism. It is set out clearly in the Reflection Group report. I am glad that the noble Baroness, Lady Chalker, has returned to her place. I am attacking her vigorously.

The Reflection Group specifically says: One of us believes that the rights and responsibilities we have as citizens are a matter for our nation states". That is clearly a reference to the United Kingdom. It does not take a detective in these matters to divine that. I want to put it to the Minister that racism is an international phenomenon and should be dealt with in international legislation. Thanks to our great record in terms of the work of our race relations legislation and of the Commission for Racial Equality and its predecessor, the Race Relations Board, if there is any area in Europe where the UK can lift its head up high and say, "We have attempted to deal with this issue in our domestic legislation", this is it. I do not see why the so-called commitment to member state subsidiarity should prevent the Government from seeing the validity of doing that.

I want to introduce one further question in the area of discrimination which is not at the moment covered by the Reflection Group discussion but is covered by the resolution of the European Parliament of 17th May last which was prepared for the Reflection Group. I refer to the issue of other forms of discrimination—of gender, race, religion, disability, age, sexual orientation and also linguistic discrimination. I declare an interest as a paid chair of the Government's Welsh Language Promotion Board.

Lord Richard

Da lawn!

Lord Elis-Thomas

My Lords, the noble Lord, Lord Richard, says "Da iawn". I reply "Diolch yn fawr". I shall help Hansard with that. The position here is that again the United Kingdom has a very strong record, albeit it has not yet signed the relevant Council of Europe charter on minority languages. However, it does more than conform with all aspects of that. It has a record of developing legislation in the area of language equality. It would be useful for the United Kingdom to take a lead in this area as well. Within Article 128 of the Maastricht Treaty there is a clear statement referring to, the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore". The Bureau of Lesser Used Languages—a designation I do not share: no language is lesser used; every language is equally properly used when being used, but we understand what it means—is keen to ensure that within the revised treaty at the IGC there will be reference not only to the other forms of discrimination that I have mentioned but also to the area of language. Article 126 of the treaty could be strengthened not only to refer to the teaching and dissemination of the languages of the member states but of the languages of all citizens of the Union. It could include the promotion of tolerance of, and respect for, the rich linguistic and cultural diversity of the citizens of the Union. I mention that because the European Parliament, in its resolution for the Reflection Group, referred to Europe's cultural identity and diversity and the value of national and regional cultural and linguistic diversity within the European Union as something which should be "explicitly recognised". That is an area where, again, the United Kingdom Government could be taking a lead positively but because of their attitude on the issue of subsidiarity they are perhaps unable to do so. I know the view expressed by the noble Baroness in the Government's response to various European Union publications in the whole field of language policy. Her view is that these matters are ones for member states.

In reality linguistic policy extends throughout the European Union. The European Union has a linguistic policy—a very expensive linguistic policy, as it happens, in terms of the amount of translation that takes place within the Union. About one-third of the Union's administration is involved in translation. I am not knocking that because translation is a noble form of employment. But since the Union has a policy in terms of some official languages, to extend that policy to all the historic and newer languages of the citizens of the Union would be a positive development.

Finally, I come to the issues of subsidiarity as they apply to local authorities and to regional and structural funds. More than 50 per cent. of the activity of the EU impinges directly on local authorities. As service providers, local authorities are clearly involved in all aspects of European policy. It is therefore important that they should be directly consulted and involved in any partnerships. The local authority associations take the view, which I strongly share, that there should be within the treaty revision a process to ensure that structural funds are stipulated as funds which require a genuine partnership. This happens in some European programmes but it does not happen throughout all programmes. There is a strong case for subsidiarity in these matters. The form of government closest to the citizen which deals with the issues should be more actively involved in the process.

The Reflection Group tells us that subsidiarity imposes not only a legal but a behavioural obligation. I wish that the United Kingdom Government would adopt some of that behaviour. I am not going to quote Pope Pius XI again at this late stage of the evening, but the notion of subsidiarity is one of social policy. It is a theological notion in origin, but it is also a very important social principle, which is the equivalent of the federal principle. Although I describe myself as a European federalist, the European Union is not a federal state at the moment. It is a quasi-federal state with federal tendencies. Real subsidiarity works within federations in which powers arc shared between levels of different authorities; that is, between the member state level, the central union level, the regions and the localities. That of course is not a system that applies in the United Kingdom. It applies within most of our European partners.

That is where the difficulty that we have about understanding federalism and subsidiarity arises. As we look to the role of local authorities and the Committee of the Regions, it is important that the Government should endorse the activity of the committee. It has proved very successful, not least because its membership includes extremely effective Plaid Cymru representatives, among others.

What the Committee of Regions does, as the Reflection Group says, is foster throughout the whole territory of the European Union a further sense of belonging. In other words, belonging at the European level is not a matter for individuals or for member states alone; it is also a matter of inter-regional co-operation. That is also part of the European construction which we are about. Nowhere is that more clear than in the area of environmental policy where both overall European activity and local activity is absolutely essential. Before I sit down I must quickly declare an interest as someone who is a director of an environmental consultancy company.

The environmental aspects of the treaty are very important. I do not believe that the Government have concentrated enough on that. There is an opportunity here to integrate environmental policy and sustainable development objectives more strongly within the treaty and within the aims of the union. After all, we have sustainability documents and the policy. We already have the commitment to environmental policy within the existing Maastricht Treaty and that again could be deepened. In fairness, the Government have a fair record on these matters and they could take a lead. I only wish that the Government could, as it were, shake off their obsession about subsidiarity and take a more positive role in the IGC process.

7.22 p.m.

Baroness Rawlings

My Lords, it was a great privilege to have served on the European Communities IGC Committee. It consisted, as noble Lords would imagine, of many learned and experienced Lords with many diverse views. We are all truly grateful to our extremely patient and inspired chairman, the noble Lord, Lord Tordoff, aided by our superb Clerk, Tom Mohan, and all our specialist advisers for this report and for the fair and wise way he conducted the meetings and hearings.

As important as the content of the report, which is really the end of the beginning, is the context in which the IGC will take place. Our report has been published, as has the one from the other place, and we now have the Reflection Group report, too, all in preparation for the IGC next year. Perhaps this is a good time to reflect before we take another leap forward. If your Lordships will forgive me, rather than just looking at the details with a magnifying glass, as we have been doing for the past six months—and today this has been well covered by many noble Lords in this debate—at this late stage I thought that I would step back and look at the whole picture.

Our European politics need to be assessed in a completely different context since 1989 and the collapse of communism as we knew it. We suddenly lost the familiar parameters within which we had operated for so long. Several generations grew up in this century in the face of the communist threat. The collapse of the Soviet Empire meant a break in the historical continuity for all of them.

Until quite recently the Europe of 12 was nothing more than the eastern extremity of the Atlantic world whose centre lay in the United States of America. Today, however, the European Union is almost hidden from view amid the reaches of a continent which is finally becoming reunited again. Once the eastern corner of the western world, the European Union now finds itself in the western corner of the Eurasian world. Once again it is the geometric point of intersection where America, Asia and Africa meet. Having got used to slumbering in a quiet corner of world history, we wake up to find ourselves in the centre of the world.

As we approach the millennium it is worth looking at the radical changes that mark the turn of centuries in Europe. Since the end of the 15th century—that is to say, the beginning of what historians call the modern age—we see the fall of Granada in 1492 and the consequent internal consolidation of Spain and its ventures westwards with the discovery of America.

A similar period of crisis occurred at the end of the 16th century, with the defeat of the Armada, which set the seal on the decline of Spain and started the ascendance of England. The conquest of Hungary in 1686 marked the beginning of the retreat of the Ottoman Empire.

The 18th century was subjected to upheaval by the French Revolution. It was not until 1815 that the Vienna Congress succeed in restoring peace to the Continent and establishing a new and lasting order.

But this order lasted only until the end of the 19th century. The fall of Bismarck in 1890 and the ensuing Franco-Russian alliance took France out of its isolation and allowed a rapprochement with England. The resulting mixture blew up in 1914 and a new world order ensued, with America as the new world power.

In all these cases it was a transition spanning well over 30 years. Our own century is falling into much the same pattern. With the fall of the Berlin Wall in 1989, there have been enormous changes to our continent. Alas, there is much uncertainty and instability today and great criticism and disillusionment with many of the political systems. It is in that context that we approach the sixth IGC.

The first Inter-Governmental Conference was the ECSC in 1950 from the Schuman Plan. There was great enthusiasm for peace and jobs. Many people say to me today, "I don't mind Europe, but it's gone too far; it was only meant to be a free trade area". This is a misunderstanding. The Coal and Steel Community, the forerunner of the EEC, was born out of the ashes of two world wars. It was formed so that there would never be a war within the European community again. We then had the Treaty of Rome in 1957.

The second IGC gave birth to the European Economic Community and the Spaak Report. There was enthusiasm again for peace and jobs. Britain joined in 1973, but then Euro-sclerosis ensued and little happened as every vote in council had to be unanimous. So we had the third IGC which produced the Single European Act of the noble Lord, Lord Cockfield. In 1992 there was great enthusiasm for peace and jobs yet again.

With only two new applicants, Spain and Portugal, the enlargement agenda of the Dooge Report was less complex than today. There were the fourth and fifth IGCs at Maastricht in 1990 and 1991 from the Delors Report on economic and monetary union and political union, when all hell broke loose. We should not be too pessimistic. It cannot be all that bad with more and more countries queuing up to join.

We had a sustained debate on this subject in March this year, so I shall not repeat all the points that we have heard again today. However, there are three areas that I hope the Minister will address seriously: first, the enlargement of the European Union where Britain has been the driving force; secondly, how to make the European Union function better for the benefit of its citizens—an area where we have all failed dismally; thirdly, work for less harmonisation with more mutual recognition. It is the global market that we should be aiming at through progressive liberalisation both in Britain and throughout the European Union. Restrictions should, we hope, be removed and be replaced with the appropriate machinery of competition law.

Finally, although not actually on the IGC agenda itself—but it cannot be ignored—will be the reform of the common agricultural policy which the noble Lord, Lord Cockfield, advocated so clearly and forcefully in the last debate.

We should not lose sight of the original aims of the Community of peace and prosperity for all its citizens, especially as we look at places in turmoil not far from home such as the former Yugoslavia and Chechnya.

The sixth IGC will take place in Brussels. Perhaps I may finish on a lighter note. I am not sure how many people knew where Maastricht was before the big debate, but it subsequently went down in history and will never be the same again. Nothing too much ever happened there, except that it had been besieged or captured by the Spanish, the Dutch, the French three times, and unsuccessfully by the Belgians and Germans—quite a European history, but it was never a household word. Then it all changed and Maastricht achieved fame like Agincourt, which was transformed by a French herald in Shakespeare's Henry V: What is this castle call'd that stands hard by? They call it Agincourt. Waterloo went one better in 1815, when it entered the English language, not just as a battle but as a railway station and even a metaphor, "He met his Waterloo"—something that had previously been achieved only by the River Rubicon.

Gettysburg became a famous address. Fame through battles gave way to religious schisms. The Diet of Worms in 1512 has always had school children sniggering. Then came the 18th century treaties of Vienna, Versailles, and Utrecht—far more famous than the war it ended, that of the Spanish succession. As wars became scarcer, so did treaties, so we had arms control pacts like Reykjavik in 1986 or economic gatherings like Bretton Woods in 1944 and disasters like Chernobyl. Finally, we have had controversial speeches like that in Fulton, Missouri in 1946 and Bruges—perhaps the less said about that one, the better! So Maastricht will never be the same again.

I hope that we have learnt our lesson and that this next Inter-Governmental Conference will not lose sight of the original aims of the Community of peace and prosperity for all its citizens. I commend the report to the House.

7.33 p.m.

Lord Bauer

My Lords, I too wish to thank the Select Committee for its informative report. But, informative as it is, it needs to be considerably supplemented in view of recent events and influentially canvassed proposals.

Under Maastricht, Britain has pooled much of its sovereignty with that of other countries, some with a political culture radically different from our own. Thus, in France city mobs, especially those of Paris, have over many centuries coerced governments and legislatures. They were prominent in the persecution of the Huguenots in the 16th and 17th centuries and spearheaded the St. Bartholomew's Night Massacre. During the French Revolution, the Paris sections successfully pressed the Convention to institute the Terror of 1792–93. In 1871 the Communards of Paris provoked large-scale civil war by defying the elected government.

There were no comparable episodes in British history. The Gordon riots and the Chartist movement were on a small scale and on the whole were peaceful. Even the general strike of 1926 and the more recent miners' strikes were relatively mild affairs compared to what we have recently seen happening in France; and those were disputes over pay, not resistance to the policies of elected governments.

The differences in political culture are only one example of the many deep-seated differences between European countries and societies. Supra-national political institutions inevitably endeavour forcibly to remove those differences. Such attempts imply extensive coercion, exacerbated by differences in the readiness of countries to honour international obligations.

Speaking as a European born in Hungary who now identifies with this country's historic political and economic interests, I believe that successive British governments should have been more circumspect in acceding to the supra-national institutions. Since the war these European supra-national institutions have steadily increased in scope and power. They began in the late 1940s with the European Coal and Steel Community, which was a Franco-German cartel. Their persistent growth to the European Union was at times almost surreptitious, as when the EEC, the European Economic Community, quietly became the EC, the European Community.

The proposed European monetary union is a further big step in the same direction. The establishment of a European monetary union, EMU, would have far-reaching, pervasive consequences. It would preclude an independent financial policy. It would also involve the surrender of a major historic component of national sovereignty. The right to issue legal tender money has been a prerogative of sovereign governments for millennia. When classical Athens conquered another country, it always coerced it to use Athenian money.

The arguments in the advocacy of EMU are insubstantial. It is contended that EMU would eliminate wide fluctuations in exchange rates brought about by the activities of investors and speculators. But those market participants can operate successfully only in the face of inappropriate national financial policies. Under EMU, investors and speculators will transfer their activities to domestic financial instruments such as gilt-edged securities, and their prices will fluctuate accordingly.

Another argument is that EMU would reduce the charges of transferring money. The foreign exchange component of the cost of international transactions is a small fraction of bank charges. The argument is trivial in the context of a far-reaching policy such as EMU which, as I have already said, would preclude independent financial policies.

Currency fluctuations often serve as shock absorbers by mitigating the consequences of external shocks. For instance, an overseas boom would cause an inflationary boom here unless our currency appreciated. If you remove the shock absorber from one wheel of a car, the car will not stabilise if shocks continue. Instead of contemplating EMU, we should think about rolling back the scope and powers of the existing supra-national institutions, as a number of noble Lords have suggested today.

Membership of your Lordships' House is a rare and much coveted privilege. It carries with it the obligation to speak out in a forthright manner even if that is contrary to the policy of one's own party and to widely canvassed arguments, hence the emphatic character of my remarks today.

7.40 p.m.

Lord Willoughby de Broke

My Lords, like all other noble Lords who have spoken, I should like to congratulate the noble Lord, Lord Tordoff, and the members of his sub-committee on the report they have laid before the House. Its conclusions and recommendations are practical and workable—some of them—and ones with which I hope we can all live and which will be a sensible basis for progress at the IGC.

No extension to qualified majority voting: that must be sensible in a voluntary community. Policy changes should surely depend upon support from all member states. Legislation that is unacceptable to a minority, but forced upon it by a majority, will lead to dangerous splits in the Community. Unanimity is surely a better driving force than coercion.

I support strongly the recommendation for greater transparency and accountability in the decision-making process by means of the much earlier release of Council documents to national parliaments. Anyone who believes that parliaments are involved effectively at the moment in scrutinising Commission proposals should read paragraph 307 of the report. I hope that the Government will act upon the specific recommendations which the committee has made.

I believe also that it would be a big step in the right direction for the Government to accept the proposal made by the organisation Justice, which was endorsed by the sub-committee, to require national parliaments to review third pillar instruments before a decision is taken in the Council of Ministers.

I turn now to the Commission. I do not believe that the committee has gone nearly far enough in accepting or recommending changes in the Commission's role. For reasons that I well understand, it has perhaps had to decide not to decide, but the Commission's role is central. On its own admission, it is the indispensable engine which drives the Community forward. In my book, I am afraid that that makes it part of the problem, not part of the solution.

A number of witnesses made the point that in the real world outside the plush offices of Brussels, the Commission and its bureaucracy are seen as self-justifying and, as one witness put it, "harmonising for harmonisation's sake". My noble friend Lord Kingsland, who is not in his place at the moment, said that citizens of the Community do not feel oppressed. I part company with him there, because one has only to look at the evidence given by the chairman of the Federation of Small Businesses. He put forward a convincing opinion that the tangles of red tape, directives and regulations are a serious burden to small businesses in this country. I would remind your Lordships that it is small businesses which create the most jobs.

I agree with those witnesses—MEPs among them—who argued that the Commission's role needs a radical rethink. The IGC is an opportunity to do just that. I ask the Government to pursue that. For example, should the Commission maintain its primacy as the sole initiator of legislation? Should it not be the Council that initiates the legislation? After all, it is a body of elected representatives. The Commission should act possibly as a secretariat and no more than that. Should Commission proposals be subject to the so-called sunset clause, whereby its proposals wither and die on the vine automatically if they are not taken up by the Council? As the driving force behind further integration, the Commission is still moving on. It is not doing less, and it is certainly not doing it better.

For instance, where is progress on subsidiarity? I have not had the opportunity to see the 22-page document on subsidiarity about which my noble friend Lord Renton talked. I should dearly love to know whether there is a real example of subsidiarity in action. The Commission's view on subsidiarity is that it cannot be allowed to remain an abstract principle, neither can it be allowed to reduce the Union's powers. After all that, I am not sure where we are left.

What progress has there been in reducing regulations and red tape? None. We have just been decimalised, harmonised and metricated. Absurdly, it is now a criminal offence to sell packaged meat or vegetables in pounds or petrol in gallons. I wonder whether the Commission will now expect the headquarters of the Metropolitan Police to be called "New Scotland Metre".

The Commission is still stifling business and enterprise under its mounds of directives and regulations. Jobs will not be created by a Brussels diktat, or by setting up the so-called high level committees on employment, or by incorporating "social acceptability" clauses into the treaty. Both those suggestions are made in the reflection paper. On the contrary, jobs will be created by deregulation and by encouraging competition. That is the message that should be put across vigorously at the IGC.

The way that the Commission now operates harms progress towards a free and prosperous Europe. It is losing support and credibility. Recent opinion polls in two of the newest member states, Sweden and Austria, show considerable doubt about the wisdom of entering the Community. I shall give a brief example of the concerns that exist. It is late, and I shall not detain your Lordships long.

On a hot afternoon in this Chamber in the summer of 1993 we debated Article 8 of the Maastricht Treaty which states: Citizens of the Union shall enjoy the rights conferred by the Treaty, and shall be subject to the duties imposed thereby". Some of us had the nerve to ask, "What are these duties?". We were told—somewhat patronisingly, I thought—that there were no duties, only new bright shining rights. But, as my noble friend Lord Tebbit said with great prescience, we should beware the offer of a free lunch. Now, two-and-a-half years later, up pops Mr. Williamson and M. Petite of the Commission giving evidence to the sub-committee (paragraph 700), saying: should we not put some flesh to the concept of citizenship?". The concept concerning duties has been left empty. Having been told by Ministers that no duties are added to the doubtful privileges and rights of citizenship, we now hear that there will be proposals related to the duties of citizenship. Having heard that sort of thing, I concur with my noble friend Lord Renton who asked for a fresh start to be made on the whole thing: let us start all over again from the beginning.

I shall end by encouraging the Government, and our representatives at the IGC, not to be cornered, coerced or made to feel anti-communautaire by being in a minority—even in a minority of one. I shall read a short extract of where I believe we were in a minority. I look forward to hearing this confirmed.

The Reflection Group talks about setting up a high level committee—I have already mentioned that—on employment to ensure permanent supervision and to monitor the impact of Community policies. It states that a considerable majority thinks it urgent to incorporate the social protocol in the treaty. It has also been suggested that a social acceptability clause be inserted in the treaty obliging the Commission to evaluate its proposals in the light of social objectives, but one member rejects that line of argument outright. He thinks that job creation is achieved not by more Community regulation but by less. He feels that the real employment challenge comes from a global economy and that the Community response should be deregulation and emphasis on greater competitiveness. That is fairly sensible. Like the noble Lords, Lord Richard and Lord Hooson, I should like to know whether that member who is making such great sense is indeed our representative. I hope that when she replies my noble friend the Minister will confirm that, because he is talking total sense. He is the only person there who has any sense.

I hope that the Government's pragmatic approach, as evidenced there, will make Europe more acceptable to its citizens. We should remind ourselves that we cannot be accused of being bad Europeans, as some noble Lords and some press articles make out. I do not believe that we can be. After all, we are the second biggest contributor to the EU budget. I happened to look at an Answer to a Question given in another place on 4th December. It shows that in the next four years our contribution to EC funds will be nearly £30 billion. That is a tidy sum to roll around one's tongue and I would have thought that it is a European sum too. Ours is the European army which contributes most to international peace-keeping, ours are the democratic institutions which are most copied and the commercial editions most envied.

Having listened to the speeches tonight, I believe that the Government have been given a strong hand to play at the Inter-Governmental Conference and to press forcefully the case for the Community to do much less but to do it very much better.

7.50 p.m.

Lord Thomson of Monifieth

My Lords, I join the noble Lord, Lord Willoughby de Broke, and other noble Lords in congratulating the Select Committee and its sub-committee on the report. The fact that it is a unanimous report is no mean achievement. Unlike most of the sub-committees of the Select Committee which deal with specific subjects and get down to some kind of objective assessment of the facts, the subject matter of this sub-committee was potentially highly divisive. The fact that the report is unanimous owes a great deal to my noble friend Lord Tordoff. I am sure that he chaired it with his customary patience and courtesy, with which we on these Benches have long been familiar. I began to believe that if the warring factions in the former Yugoslavia caused future trouble he would be the ideal mediator to send out there!

It would be untrue to say that the debate in your Lordships' House has had the same degree of unanimity. Nevertheless, there has been more unanimity than usual. I even found myself agreeing with something that the noble Lord, Lord Tebbit, said—that by far the most immediate help we could give to eastern and central Europe would be to allow their agricultural imports into the European Union. I do not know whether the noble Lord read the examples given in another place the other day by his right honourable friend the Foreign Minister. He gave some astonishing statistics—that at present Bulgaria can send only four lorryloads of strawberry jam to the European Union each year. The Commission proposed that by the end of the century it should be able to send an extra two lorryloads, but that was opposed. There are a number of other interesting facts in the same genre. I hope that the noble Lord, Lord Tebbit, will make the most of our moment of unanimity on these issues.

There has been a surprising amount of common ground on the report's conclusions. All noble Lords have agreed on the need for national parliaments to receive Commission proposals in their final form, not in draft form, in time to exercise effective influence on the Ministers in the Council of Ministers. Everyone has agreed on the need for more effective budget discipline and for more effective action against the scandal of Community fraud. I hope that the noble Lord, Lord Hunt of Tanworth, is perhaps unduly pessimistic in his belief that our hopes of dramatic progress in these fields will not prove well founded. It is important to press on in both those respects.

Furthermore, everyone has agreed on the urgency of making the Union more credible to its citizens and making its legislation more easy to understand. However, my heart sank to my boots when I saw 10 paragraphs of the report headed "The Hierarchy of Norms and Comitology". We have some way yet to go before we know how to communicate in plain English instead of in Brussels jargon. Much of the trouble that arose in respect of the Maastricht Treaty was as a result of its failure to use the kind of language that can win the hearts and minds of ordinary people.

There is also general agreement with the report's statement that two years' experience of the operation of the Maastricht Treaty is far too little to contemplate any drastic revision of the Treaty of Union. There is a lot to be said for the view expressed by Jacques Santer, President of the European Commission, in a speech at Guildhall a few months ago that the immediate challenge for the Union was less action but better action.

The noble Lord, Lord Willoughby de Broke, questioned whether there had been much progress in that direction. Again, I refer him to what was said recently in another place by the Foreign Secretary. He produced figures which showed that in 1990, only five years ago, the Commission proposed 185 pieces of primary legislation. By 1993 that figure was down to 75 and in 1995 it is down further to 43. The Commission estimates that next year it will be down to 21. No doubt that partly reflects the fact that the single market is now virtually achieved. Nevertheless, there is a serious drive to do less but to do it more effectively.

In my view, the European Union has always done itself harm by interfering too much in the idiosyncrasies of national habits. Therefore, making an effective role of subsidiarity is of great importance. I was greatly encouraged to see in the Minister's response to the report that instead of joining in what has been the attack on the European Court of Justice from some quarters, she emphasised the importance of taking steps to make subsidiarity justiciable within the European Court of Justice. I believe that subsidiarity must be made more than words; it must be effectively implemented.

In order for the Union to achieve its benefits for a future generation it is the few big issues which matter rather than the European Commission, the Union, getting itself concerned about excessive harmonisation. That was mentioned by the noble Lord, Lord Willoughby de Broke. Those big, essential issues are, above all, the achievement of European and monetary union and a single currency, the enlargement of the Union and the reform of the CAP.

The report, in the first sentence of its conclusions, draws attention to the fact that those issues are not on the agenda of the IGC. However, they are inextricably linked to each other and linked to issues such as qualified majority voting, which were the subject matter of this report and which will be difficult issues for discussion at the IGC.

We on these Benches have a clear view about a single currency and economic and monetary union. We do not believe that the single market can survive without a single currency and, indeed, without being within a single law, as was mentioned by the noble Lord, Lord Kingsland, in what was an eloquent and knowledgeable speech about the European Parliament. If we fail, a free market area with separate currencies will not last. There will be competitive devaluations and economic warfare within Europe. At best, a great opportunity will have been lost for Europe to compete effectively within a global economy with the rest of the world. At worst there will be a return to all the dangers of the 1930s.

Despite the present difficulties in France, which have been mentioned by more than one noble Lord. I do not believe that the Union will fail. I listened with interest to what was said by the noble Lord, Lord Pearson of Rannoch. He apologised for being unable to be in his place for the reply tonight. I sometimes believe that the noble Lord and others who share his views forget that as regards the single currency the European Union has taken its decision. The decision to have a single currency has been taken; the criteria have been agreed; and the timetable has been set up. The Government are a committed party to that agreement, along with their opt-out to decide whether they want to go in finally when the timetable is completed.

I very much agree with what I thought was an extremely thoughtful speech by the noble Lord, Lord Bridges, who also explained that he could not be here tonight. He said that he thought that those who tried to make too much of the current problems in France were mistaken; that the underlying strength of the French economy is very considerable. He said—and he cheered me up immensely—that he thought that it was possible to see a new EMU timetable emerging which is acceptable to Her Majesty's Government. The noble Lord, Lord Bridges, is an experienced diplomat. He weighs his words very carefully, as I have every reason to know, and I gained some hope from that.

There is strong agreement in your Lordships' House, as expressed in this debate, about the importance of enlargement. But for enlargement to succeed, the European Union needs a strong core of a single currency. It cannot work without radical reform of the CAP, as has been mentioned by a number of noble Lords. The noble Lord, Lord Middleton, made that point a few minutes ago. Reform of the CAP is of major British interest within the European Union.

The European Union cannot bring about a reform of the CAP without a readiness to take up a change in qualified majority voting both in terms of numbers and, equally important, in terms of population weighting. I tend to agree with paragraph 244 of the report which points out that the habit of the European Union, very deep in its patterns of behaviour, is always to try to seek unanimity. In those areas where there is already qualified majority voting, it is relatively rare that it is ever employed. Unanimity is usually achieved. But if one needs to have radical reform of a central policy like the CAP, I hope that it will be possible, after painstaking diplomatic efforts, to achieve unanimity. But I believe profoundly that that will be achieved only if there is the knowledge that if unanimity is not achieved, a qualified majority vote may be used.

Lord Tebbit

My Lords, I am grateful to the noble Lord for giving way. Is it not clear that the European Community will have to make a choice between keeping the CAP and excluding central Europeans from the Community or reforming the CAP and bringing them in? Therefore, there should not be a difficulty about that. The logic of events will force the reform unless we are to become xenophobic little Europeans who detest and keep out fellow Europeans. Surely the Community will not do that.

Lord Thomson of Monifieth

My Lords, I am not in favour of becoming a xenophobic little European. But the argument that I am making is precisely the argument which the noble Lord, Lord Tebbit, has been putting to me across the Floor of the House. I am saying that there is an inexorable logic connecting the need for a single currency and beyond that the need for qualified majority voting with bringing about reform of the common agricultural policy in order to bring about enlargement of the Community. That is my case. I fully recognise that that is a case which may falter and fail. I do not underestimate the difficulties in its way. But I feel profoundly that if it were to falter and fail, that would be a great loss for future generations in all the countries of Europe.

Therefore, there are major issues underlying this unanimous report of great importance and significance. I was impressed by a quotation from Chancellor Kohl which I heard the other day in a television programme. I well recognise that in the divided views on these matters in your Lordships' House and elsewhere lies the fear of Germany. Chancellor Kohl said—and I have not heard him say this before—"I am only the second Chancellor of a united Germany. The last one was Hitler and I am the second one after the Second World War. The difference between us is that Hitler wanted to put a German roof over Europe. I passionately want to put a European roof over Germany". That is the nature of the issue with which we are struggling here.

Therefore, as my noble friend Lord Hooson said in his final words, it is tremendously important to take a long view of these matters. We should not concentrate on and become too preoccupied with short-term political issues. In that regard, I very much agreed with what the noble Baroness, Lady Rawlings, said in her extremely eloquent speech a few moments ago.

By successive solemn treaty obligations which the noble Baroness spelt out rather carefully, Britain is totally committed to membership of the European Union. The only question is whether we put our experience and influence at the service of that membership and at the service of making a Europe of which we shall be proud in the next century. I can only hope, as I have said many times from these Benches, that when the Prime Minster goes to Madrid on Friday he will this time make a serious effort truly to be at the heart of discussions. I echo the words of the noble Lord, Lord Richard, from the Opposition Front Bench. I hope that he will want to make a success of the IGC when it takes place.

8.6 p.m.

Lord Clinton-Davis

My Lords, this has been an extremely wide-ranging debate. One common denominator has emerged; that is, the congratulations which have been offered to the noble Lord, Lord Tordoff, and his colleagues on what has been a remarkable achievement. I join with noble Lords in that commendation.

My noble friend Lord Richard said at the beginning of the debate that he thought that perhaps there were too many commissioners, some without a real job. That is just like home, is it not? What sort of job does the Deputy Prime Minister have? Therefore, that is not confined to the European Union.

I thought that the noble Baroness, Lady Rawlings, was right when she said that, in effect, it is impossible to divorce the deliberations of the committee from the seismic changes which have taken place in Europe since 1989. I agree totally with that. There are the burgeoning but still, for the most part, impoverished democracies of eastern and central Europe. I shall turn to that in a moment. There is also a rising tide of a very unpleasant, chauvinist nationalism in too many countries. I shall also touch upon that later.

With respect, the comment by the noble Lord, Lord Tebbit, in drawing a parallel between the two problems of what I would call the old Yugoslavia and the dangers of federalism, as he put it, is to overlook the wider picture that has emerged over this century of bitterly competing national states going to war on two occasions, which involved enormous loss of life. Whatever one may say and whatever what may be one's criticism of the European Union, it is a real fact that the European Union has brought peace at least to the western part of Europe. That is not an unimportant factor when one looks at those issues.

There has been a great deal of discussion about qualified majority voting. The noble Lord, Lord Reay, sought to support the Government's quite remarkable assertion referred to at paragraph 9 of the response. They are sceptical about the argument that unanimity in an enlarged Europe would paralyse decision making. That is another issue to which I wish to turn, but I believe that that argument is fatuous.

Another point which I wish to take up, because it was raised by a number of your Lordships, is that of subsidiarity. We debated that at considerable length. I agree with the committee that that is not a concept which is justiciable. I should be very surprised if it were wise for the European Court of Justice to become immersed in deliberations about that issue. I believe it to he an issue that is mainly of political application. Therefore, I fundamentally disagree with the Government in that respect.

My noble friend Lord Stoddart said that the European Parliament has an insatiable appetite for greater powers and that was reflected in certain other remarks that were made, rather condescendingly I think, about that Parliament. I certainly do not regard the European Parliament as a perfect assembly. One speaker—I believe it was the noble Lord, Lord Kingsland, who I know by another name—said that it has a fairly brief history. That is true. But to be so condescending and patronising about it is to ignore the fact that the European Parliament actually produces some pretty good reports from time to time on a wide variety of topics that are most important to the future of the European Union. Sometimes such reports are very critical about other institutions, not least the Commission. I believe that those reports have been extremely helpful.

Why is not some credit given to the European Parliament? I believe that credit is due in that respect. Simply to write it off as a useless body is to defy fact. Noble Lords who feel obliged to do that, do so by way of a sort of knee-jerk reaction: anything to do with the Parliament must be wrong. I see that my noble friend wishes to intervene.

Lord Stoddart of Swindon

My Lords, I am much obliged. When my noble friend reads my speech inHansard tomorrow I believe that he will find that I did not criticise the European Parliament because it was a useless body, but because it was an over-ambitious body.

Lord Clinton-Davis

Yes, my Lords, I did say that. I do not actually agree with my noble friend who went on to attack the European Court of Justice, which is the guardian of the treaty. He said that he did not like some of the decisions that had been made and that mirrors the Government's point of view. But what about decisions that are made by our own courts that the Government or my noble friend do not like? Are we to contract out of them?

I have to point out that at about the time of the Edinburgh Summit an idea was being floated by the Government that the European Court of Justice should have its decisions reviewed by the Council of Ministers in retrospect by a qualified majority vote, of all things—what they dislike most of all. I am glad to say that that idea seems to have been, as Dorothy Parker once put it, not lightly tossed aside but hurled with great force out of the window. I believe that it would be very wrong to react in such a way to decisions simply because one does not like them.

The noble Lord, Lord Renton, spoke, rightly, about a lack of compliance with European Community law and enforcement. That is a point that I have made many times in this House. Clearly it is something that is important if we are to give respect to the rule of law. Whether the relatively new powers given under Maastricht to the European Court of Justice will provide that basis, only time will tell. I have my doubts, but we will have to wait and see.

There was some discussion led by the noble Lord, Lord Hunt, for whom we all have great regard, about team presidencies of which he doubted the wisdom. However, the noble Lord said something that I found a little odd. He said that the rotating presidency was the honest broker when differences emerged. I can say with some experience—as, indeed, can my noble friend Lord Richard and others—that the presidency is often assisted by the Commissioner who is dealing with the Council. They do not have a monopoly of wisdom in that regard.

The noble Lord, Lord Finsberg, referred to matters over which there is no difference of opinion. However, when referring to the democratic deficit, he said that co-operation between members of the European Parliament and national Parliaments was deficient. I very much agree. But is it all one way? The noble Lord will know that in the German Parliament, members of the European Parliament sit in committee, without a vote, alongside their brethren. That adds mightily to the support which is given in carrying out important and relevant inquiries. I have certainly been invigilated and interrogated in that way. I thought that the contribution made by members of the European Parliament with considerable expertise was very important. I do not see why we should not do so here, and not treat them as pariahs.

My noble friend Lord Bruce of Donington said something with which I wholly agree. That is, perhaps, unusual but it is true. I believe it is the message of Maastricht that policies imposed from the top do not succeed. In my view, people were taken for granted during the whole course of the Maastricht debate. People want more information; they do not want to be taken for granted. However, when they get more information it does not follow that they will side with my noble friend. I believe that that is something to which all the institutions in the Community should give prompt attention.

A point was made by my noble friend about limiting the number of proposals. I believe that the noble Lord, Lord Thomson of Monifieth, also dealt with that point. The noble Lord, Lord Kingsland, said that the lack of transparency in the Council defeats effective law making. I totally agree with that view. Of course, that point was taken up in the report and I believe that the sub-committee was right to do so. It is offensive that Ministers should say one thing in the Council and something else outside—usually the very opposite. That is not good.

My noble friend Lord Barnett dealt with a point regarding qualified majority voting which is all important; namely, that vetoes do not just go the way of Britain. Indeed, other countries, including small countries, also have the power of veto. The Government introduced or extended qualified majority voting in the Single European Act and later in the Maastricht Treaty.

There was unanimity over environmental issues at the time of the Single European Act. That was the first time that we had an environmental chapter in the treaty and I played some part in the process. But, in addition, the doctrine of subsidiarity was introduced not solely at the behest of the Government. The Commission played a big part in introducing it. I see that the noble Lord, Lord Tebbit, seems to think that that is untrue. However, I was the Commissioner for the environment so I know what was going on. I do not see anything wrong, but I differ about the meaning or definition of subsidiarity when it comes to environmental matters.

The real test should not be repatriating environmental policies to a centralised government here or anywhere else; it should be how do we best protect the environment of 370 million people? Whether it is done at Union level, by government, or locally should really be the question that is posed. I give way to the noble Lord.

Lord Harmar-Nicholls

My Lords, the noble Lord has made a strong point. Before we talk about subsidiarity, should we not agree on a definition which everyone can accept so that we are working towards the same aim?

Lord Clinton-Davis

My Lords, the noble Lord would have heard some interesting observations about subsidiarity if he had been present in the Chamber this afternoon. However, he was not and I do not propose to go into that issue.

I shall deal later with an issue raised by the noble Lord, Lord Elis-Thomas, who is not now in the Chamber. It is a point that I particularly wanted to make. However, in the meantime, I return to the point raised earlier in the debate; namely, the importance of not compartmentalising such issues. I believe that it is wrong to say that there should be no changes in the treaty. There should, perhaps, not be radical changes, but some changes are needed. I believe that the Government's minimalist approach to the matter is a prescription for sterility.

The issue of enlargement, which will affect Malta, Cyprus and central and eastern European countries, will attract a very sharp focus because those countries will make their applications within the next 12 months or so. What strategy will the Government pursue on this? Will these countries enter collectively or separately? With 27 member states, or something of that nature, how can the existing institutions cope?

Employment is rather an important issue, particularly long-term employment and youth employment. How do we go about training people for new jobs and promoting Europe's competitiveness and prosperity? Do we go down the route which is prescribed by the Government of this country of a low wage, low skill economy, or do we look for ways of making social systems sustainable and therefore society sustainable? Should we align ourselves rather with the Swedish Government's proposal for a new priority for employment policy in the treaty and the institutions of the Union? A European-wide strategy for co-ordinating action on unemployment was called for by President Delors in the document Growth, Competitiveness and Employment. These are important issues which affect the lives of ordinary people in the Community. They are not all that interested in the arcane arguments about the institutions per se. Should we in the United Kingdom be at the heart of Europe, as the Prime Minister proclaimed proudly some years ago, rather than seeking, as the reality depicts, to tear the heart out of Europe, which seems to be the role preferred by the Conservative sceptics and some on this side too, and which appears to be driving the Government with their romanticised notions of the extraordinary value of isolationism? The interests of Britain have nothing to do with those considerations which pivot purely and simply on the survival of a discredited government and their cohorts on their Back Benches.

The reform of the common agricultural policy and the structural funds has been dealt with during the debate. I agree that this is not a matter which ought to be dealt with by changes in the treaty. There I would agree with the Government. But, above all, we have to involve people—the ordinary people of all the countries of the European Union—whose concerns are much wider than institutional change, by developing policies which tackle unemployment, improve the environment, extend rights at work, tackle waste and promote peace and security. Those are European not just national issues. The development of the trans-European networks, transport, telecommunications and energy are vitally necessary to improve the competitiveness of Europe's economy and to promote industrial recovery. I believe that that really goes to the heart of the success of the internal market.

As regards the environment, I believe that we need a new European environment charter providing a common approach for tackling pollution, waste and resource degradation within Europe. It should not just set minimum standards but develop comprehensive strategies linking environmental concerns with economic and industrial policy. I believe we have to help the countries of eastern and central Europe to overcome the environmental degradation which they have suffered over years. That is a legacy which they drew, of course, from their Soviet masters over many years. They must be able to build new environmental standards and they need our help to do so. We also need a global strategy to confront the ecological threat to the planet. That is why we need to have a European environment charter.

On social issues we and the Government totally disagree. Protection socially and at the workplace without discrimination, strengthening employment rights 'and giving British employees comparable legal rights enjoyed by their colleagues elsewhere in Europe is, in my view, absolutely critical. We need to promote a more consensual approach in industry not drive down wages and conditions and create insecurity at the workplace as has been happening. Therefore, there is a fundamental divide between us on this issue. I do not believe that fairer competition is helped by this sort of promotion of those ideas by the Government. We have to avoid unfair competitive advantage, and that is also a critical element of our social policies.

Adhering to the social chapter, therefore, will not be a panacea but it is an advance towards an objective of a decent Europe with decent standards. The mere fact that we believe that a more positive attitude towards Europe is vital does not mean that we will subscribe to everything, as the Prime Minister and his friends say so often. I have seen the most federalist governments argue their case vehemently inside the Council. The noble Lord, Lord Tebbit, knows that well. They argue their case because they have a case to put. We shall put the case for Britain wherever we consider that to be desirable.

I want to end on the note—

Lord Tebbit

My Lords, will the noble Lord give way?

Lord Clinton-Davis: No, my Lords, I must not because I have been speaking for some 19 minutes and it would not be fair to give way.

I want to deal with the question of racism. This was a point raised by the noble Lord, Lord Elis-Thomas. Black and Asian British citizens suffer discrimination and harassment in European Union countries. They suffer on entry and when trying to obtain accommodation. That must stop throughout the European Union. I believe that persons who are resident in a member state should be protected against discrimination on grounds of race. It makes no sense for the first pillar of the treaty to outlaw workplace discrimination on grounds of sex but not on grounds of race, colour or creed. We should eliminate that anomaly. We need to amend the first pillar of the treaty to provide the peoples of Europe with similar protection against discrimination on grounds of race, colour or creed as is currently enjoyed on the grounds of sex.

The Council of Ministers decided to accept the recommendation of the consultative committee to put the issues of racism and xenophobia on the agenda for the IGC because of growing concern about Right wing nationalist extremism in Europe and Holocaust denial. Those are important issues which cross boundaries and they should be dealt with appropriately. There are, therefore, fundamental differences between us and the Government on a number of issues. I have not dealt with those issues where there is not a fundamental disagreement—the second and third pillars—but I congratulate once again the noble Lord, Lord Tordoff, and his colleagues on stimulating such an interesting debate.

Lord Willoughby de Broke

My Lords, before the noble Lord sits down, I just wanted to—

8.27 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey)

My Lords, we have already been in debate for some five-and-a-half hours. I believe it would be in the best interests of this House and the debate that follows to proceed without more cross-questioning if possible. I hope that the House will so agree.

The whole House is grateful to the noble Lord, Lord Tordoff, for launching this debate on the future inter-governmental conference. We are grateful to him and to his European Communities Select Committee for its thorough report. There is no doubt about the excellence of the report. As is usual on these occasions, we have had a wide range of topics aired in the debate. We were all sad not to hear from my noble friend Lord Cockfield and we all wish him a speedy return to full health. I was particularly pleased to hear my noble friend Lord Kingsland take a long view of what is needed in the Community. I shall study his eloquent speech with great care. We should consider his suggestions, especially as regards delegated powers and dispersing some of the European Commission's powers. I think that would be in the best interests of the whole European Community.

Europe is the most complex nexus of issues that Parliament debates. It demands of us simultaneously a long-term, cool strategic vision—as the noble Lord, Lord Thomson of Monifieth said—and a deep knowledge of the detail of institutions, law, politicians and states. At this hour of the night I cannot hope to do justice to every question which was asked but I shall as usual write to those to whom I am not able to reply in the time available.

The sub-committee's report demonstrated not only that it had taken that long-term, cool strategic view but had also dealt with much of the detail. The fact that we have a European Union and that countries as diverse as Britain, Greece, Finland and Portugal work successfully together is a tribute to the flexibility and power of nation states to respond to and shape a rapidly changing world. For the European Union is primarily about nation states working together. Unless that continues to be so it will certainly not have the future that I believe moderate pro-Europeans want to see it have, and even perhaps a few of the anti-Europeans.

The coming period will be a momentous one for Europe. The United Kingdom will play a constructive and central role in the series of negotiations which will establish Europe's future shape and direction. We certainly intend to play a positive role on future enlargement. I certainly agree, as did the noble Lord, Lord Richard, with the Reflection Group's view that we need an improvement of our existing work and preparation for enlargement.

This IGC is the first step, but it is by no means the be-all and end-all of change. The signs are that this IGC will be a more modest and practical affair than the great leap forward that some have predicted for far too long. Therefore, I believe that it will meet the views of many in your Lordships' House, and particularly the views of your Lordships' sub-committee.

We shall seek changes to the treaty in line with government policy, making sure that the European Union can act well where necessary, but that it acts only when necessary. There is much to play for. The Government's approach is hard-headed, clear in its long-term vision and practical. Most important, the Government will argue for the people of Britain, reflecting their distinctive point of view, and it is clear that changes planned at the IGC will only occur if the British Parliament concurs.

Europe has a great deal on its plate in the next few years: the enlargement to the east and the south; the sharpening of our global competitiveness; and creating jobs. Those are the very issues, as my noble friend Lord Tebbit said, which are so vital for the countries of central and eastern Europe. We have some hard decisions to take about a single currency and developing a pan-European security architecture.

So why, as the committee report rightly asks, should we complicate the agenda with another review of treaties barely two years after ratification of the results of the last one? That must be a question we should all have examined. I believe that if the IGC were to attempt another massive reappraisal of the relative powers of the European Union and the nation states or of the EU's institutions then Europe's governments would rightly be accused of not listening to what people want of the European Union nor concentrating on the real challenges which face the Union. However, that is not what we or others have in mind.

As the report of the Reflection Group says, the IGC should focus on necessary changes without embarking on a complete revision of the treaty. So the IGC is about servicing the car we have, not about designing a new one. It is about making the Union work better with a particular view to future enlargement, making it more relevant and acceptable to the people of Europe and improving the practical European co-operation in areas where that makes sense. If we can make progress in those areas we shall emerge with a Union better able to face the major tasks for the next few years ahead. It is on that basis that Britain will be putting forward a range of constructive ideas at the IGC.

Many questions have been asked in this debate, but my noble friend Lady Park made a point in her contribution about more British representation in European Union institutions. That is an absolutely vital point. We continue to place a high priority on maintaining adequate British representation in the European Union institutions and, additionally, helping through our European fast-stream staffing programme. That is the way in which the European Union can be made more realistic—by having practitioners who know what they are doing as, I am glad to say, those fast-stream staff do.

We have warmly welcomed the sub-committee's report, as I hope our response shows. The view of many of your Lordships here today is that this IGC will not be about major treaty reform. It must be seen in the context of that real change—prosperity, security, enlargement and popular support. Therefore, we shall argue that the IGC must confine itself to what it can do to meet those challenges.

We shall argue for seven areas: stronger co-operation in areas where people see that as necessary to fight against drugs and international crime and to form foreign and defence policy; further entrenchment of subsidiarity; better quality and reduced quantity of European legislation; democratic legitimacy, with a fairer voting system (which may not be the one that the Liberal Democrats would like, but it would involve an enhanced role for national parliaments, which is exactly what the sub-committee asked for, and greater Commission accountability); better financial discipline and effective action against fraud, which was requested by my noble friend Lord Shaw of Northstead and many others; a flexible and efficient institutional framework ready for enlargement; and a greater role for national parliaments.

We shall not accept the erosion of the right of veto. It would be easy to have a fun political debate across the Dispatch Box tonight, but I do not believe that, even if there were one day to be a Labour Government, when it came to it they would abandon the right of veto in the end. They may think that they would now, but they would change their minds again, as they have five times in 30 years.

I do not believe that the extension of new European Parliament powers would be a good thing, because we cannot see yet that the European Parliament is using the powers that it has already been granted. Nor could we accept a greater Community competence.

That brings me to the very important question of enlargement. My noble friend Lord Tebbit was absolutely right that it is most important that central and eastern European countries joining the European Union should have improved full market access for their products. That is why the United Kingdom is working hard to create conditions in which enlargement can take place successfully. That is why we need policy reform. We need also to extend eastwards the security and prosperity that we have always taken for granted. That is a fundamental task for the Europe of tomorrow.

However, our focus on practical problems should not be misinterpreted as a coolness towards enlargement. Far from it. We want to remove the obstacles to enlargement so that it is not delayed. I agree totally with the point of my noble friend Lord Tebbit, that swallowing all current policies would be difficult, if not impossible, for those countries seeking membership. That is why we want Madrid to call for further work on policy reform. That is why we want Union members to face up to the need for reform. Those are the matters which will pave the way for successful future enlargement. A botched enlargement would be in no one's interest, least of all that of the central and eastern European countries that want to join.

The European Union will consider institutional arrangements in preparation for enlargement in the IGC, but we see no need for the IGC itself to consider the policy of enlargement. That is already decided, and the European Union is fully committed to it. Policy reform does not necessarily require treaty amendment.

Certainly enlargement will require the CAP and structural funds to be reformed. In their current format they are unaffordable and unsustainable. It would be a very poor step to extend an unreformed CAP to the countries of central and eastern Europe because it would also risk breaching our commitments under GATT on subsidised agricultural exports.

It has been said that enlargement cannot take place without prior reform of the CAP and structural funds. That is why we need to begin the debate on that policy reform now so as to avoid delaying enlargement.

There are many other aspects of the whole question of enlargement which are of great interest, but the most important point is that the Commission's report to Madrid should be realistic where enlargement means policy change, particularly with respect to the CAP. We hope very much that the Madrid Council will launch the debate in those vital areas.

The noble Lord, Lord Clinton-Davis, asked whether all applicant countries would negotiate and join together. I suspect that that is a near impossibility for the members of the Commission. There will be different waves at different times for accession. However, the important factor is that we should study, as we are doing, the options for how negotiations might begin and who is most ready to forward their application to a further stage. Even if we negotiated with all 10 countries of central and eastern Europe together—I doubt that we shall do so—some will make faster progress than others. What is important is to help them all with their reforms.

Before I say a further few words about CAP reform, perhaps I may refer to one issue which became a little twisted once or twice in the debate. It is quite clear that the CAP can be amended, as the noble Lord, Lord Clinton-Davis, noted, by qualified majority voting unless it involves treaty change or an increase in the agricultural budget ceiling. In that case amendment requires unanimity. The treaty sets out the CAP objectives, but not in the detailed provisions set out in the regulations. It is the detailed provisions which could, therefore, be amended by qualified majority voting.

I can assure the noble Lord, Lord Bruce of Donington, and my noble friend Lord Tebbit that we are quite certain that the reform we seek from a change in the CAP is a market oriented policy, with prices much closer to world levels. That would make the supply controls such as quotas and set-aside redundant. In addition, any remaining support could then be better targeted towards the environmental and other specific objectives which the noble Lord, Lord Clinton-Davis, holds very dear.

The IGC study group has not discussed the common agricultural policy. The IGC deals with treaty change and not the adjustment of the detailed content of policy. However, I am quite certain that the problems of the CAP stem from the provisions of the treaty rather than from the policy which has subsequently developed. Therefore we must continue to work in the appropriate fora to have the detail changed.

Whenever we talk about the problems of the CAP we quite quickly refer to the problem of fraud. We have always taken the lead in the fight against fraud and we secured great advances at Maastricht and at the Essen European Conference. However, I can assure my noble friend Lord Shaw of Northstead that reports by member states on future action on fraud which were discussed at ECOFIN in November will be discussed this week at Madrid. We are working for clear conclusions on member states' responsibility and a full programme of further work to bring fraud under control and to make sure that the intentions of the European Union are carried through.

There have been a number of comments on procedures by the noble Lord, Lord Barnett, and others, regarding how the study group, as opposed to the excellent committee report from the noble Lord, Lord Tordoff, will work. It is worth saying that the study group on which my right honourable friend David Davis sat was not just a study group of Ministers. It included the Commission, representatives of the European Parliament and a number of academics. Therefore the report of the study group is not necessarily the agenda which the sovereign states will take up when they are at the Inter-Governmental Conference. Those discussions, I believe, are likely to be more realistic than some of the discussions which were held in the study group about what changes should be made. I am quite sure that my noble friend Lord Willoughby de Broke will be glad to know that it was common sense from my right honourable friend David Davis in the study group to which he referred.

What is clear from the study group report which is now finalised is that there is no enthusiasm for that great leap forward. There is no enthusiasm for huge new powers for the Community. It is believed that the IGC should concentrate on issues most relevant to the public and necessary to prepare for enlargement. Therefore we can find ourselves in more agreement than was ever predicted with the views of the study group, although not total agreement, as I indicated.

There is no surprise about the areas in which the UK is at one end of the spectrum: the extension of QMV, the powers of the European Parliament and the "communitisation" of the third pillar. However, I must ask noble Lords to note one thing. Even in those areas there is no consensus among other member states about what they believe should happen. It is also worth recalling that as regards a number of areas over the years in which the UK has started in a minority—I refer to subsidiarity, national parliaments and the fight against fraud—they have now become part of the mainstream thinking and are what is driving the whole policy forward. However, I assure the noble Lord, Lord Richard, that the Government will be playing a positive and constructive role in the IGC. While we may not agree on all the detail, it will be a positive role.

During our debate, much has been made of the role of national parliaments. The Government are keen to develop the role of national parliaments in European Union decision-making. Your Lordships' European Communities Committee and the European Legislation Committee in another place have come up with some good practical suggestions such as the minimum period for scrutiny of EU documents and a bigger role for the national parliaments in the third pillar. We are carefully considering how those ideas might be put into operation. They were well received in the study group. In moving this interesting debate, the noble Lord, Lord Tordoff, spoke of the White Paper. We welcome Parliament's interest in the IGC. We want to look at what would happen as the IGC takes shape. We are considering whether we should add to the process of putting out papers, as we have done on previous occasions, and whether it would help information and consultation to have a White Paper as well. However, no decision has yet been taken.

There is one matter on which we are all in accord: that the national parliaments must be more involved in the monitoring, the scrutiny. I greatly sympathise with what the noble Lord, Lord Tordoff, said about the slowness of papers coming forward. The Government suffer as well as Parliament from the long delays, frequently blamed on translation. However, sometimes I believe that they are not so reasoned. The delays are unacceptable. We shall make every effort to reduce them and we shall be glad of the support in Parliament of both Houses in so doing. I understand that out of 800 documents deposited last year, only 20 produced complaints from the scrutiny committees. But I still regard those as 20 too many and we shall try to do better.

My noble friend Lord Kingsland asked that the ECJ should be able to review delegated Commission legislation, believing that might help to speed up the whole process. I understand that the ECJ is already able to review delegated Commission legislation and has done so on a number of occasions. However, there may be good reason to use that to a greater extent.

A number of noble Lords spoke of the need for openness. Although the noble Lord, Lord Richard, will probably shake his head—he usually does when I say this—I can assure him that this Government have been in the lead in trying to increase openness in the Community. What has occurred in the past two years is in advance by a long way of what occurred until 1993. As predicted, the noble Lord shakes his head, but for once he is wrong and I am right. I can say that with total confidence.

I regret that the noble Lord, Lord Tordoff, was disappointed at the Government's response to the section of the report on the European Court of Auditors. The issue has been mentioned by a number of noble Lords. I assure him that the Government give the highest priority to ensuring proper budget discipline and budgetary procedures in the Community. However, they do not believe that giving priority to those issues in the IGC would lead in practice to a significant improvement over the present arrangements. Our view is that the most effective way of limiting EC expenditure is to restrain the cost of individual Community policies as and when policy and legal decisions are taken. But we shall keep our eye on the ECA ball, as he wishes us to do.

We want to use the IGC to address the perception that there is too much legislation from Europe, that it is intrusive, over-regulatory and unclear. That is why we will be pressing for a number of improvements, including, first, the further embedding of the principle of subsidiarity to ensure that the Community legislates only where it can really make a contribution. Secondly, we want better prior consultation by the Commission before it introduces important new legislation. The practice of proceeding by means of green papers has developed strongly in recent years and we will continue to encourage that trend. Thirdly, we want the greater use of review clauses in Community legislation and sunset clauses for the withdrawal of Commission proposals not adopted and lying fallow. Finally, we want continued progress on deregulation in parallel with and, if necessary, within the IGC. In other words, we want to work for a more efficient, streamlined and accountable Europe and particularly a more efficient, streamlined and accountable Commission which can concentrate on effective enforcement of EC law, proper financial management and strong action against fraud. I believe that the comments of better financial management and subsidiarity, doing less but doing it better, sum up what we wish to see.

Several speakers have talked about the need to reduce the overall number of commissioners from 20. I believe that we cannot allow the college to continue to expand indefinitely as the Union enlarges, but the importance that the smaller member states attach to having their own commissioner means that we must consider possibly teams of commissioners or some other solution. It is clear that the current system of six-monthly rotating presidents is not suited to an enlarged union. There are some attractions in the team presidency but there are practical problems, clearly spelt out in our debate. We are examining whether or not those problems can be satisfactorily addressed, but certainly we are interested in seeing that happen.

I do not wish to speak for too long but I must say to the noble Lord, Lord Hooson, who also spoke of subsidiarity, that it is already in the treaty, under Article 3b. What we would like to see—and many others agree with us—is a further entrenchment of subsidiarity in the IGC and effective implementation of subsidiarity. In that sense I can agree with the noble Lord, Lord Hooson, that it should become a legal principle in every sense and be justiciable. I know that the noble Lord, Lord Clinton-Davis, disagrees.

I was asked by the noble Lord, Lord Elis-Thomas, about Article 126 on education, vocational training and youth. That was inserted at Maastricht, but many of the proposals which the Commission is putting forward under Article 126, including the Commission white paper on education, actually fail the subsidiarity test. That is why we seek an amendment to the proposals. The noble Lord asked a number of other questions. I shall be happy to reply in writing.

We touched on the possibility of qualified majority voting re-weighting. The Government believe that there is a strong democratic case for increasing the relative influence of the larger member states in the qualified majority voting system, both in the current Union and even more so after eventual enlargement. Currently the system gives one vote for every 2 million Belgians but one vote for every 8 million Germans. Without reform, the bias against the larger member states will be exacerbated by the accession of more mainly small states., As my noble friend Lord Reay said, that is a job we have to carry out.

As regards QMV extension, in the study group the United Kingdom was by no means isolated. There is no pressure for QMV in major constitutional areas. There may be a few issues where we are alone, but it is clear from the study group that beneath the rhetoric many member states have serious reservations about extending the scope of qualified majority voting.

It would be wrong for me to leave this subject without saying a further word about EP powers. I have mentioned this already but before any consideration would ever be given by all 15 member countries we would need to know what those powers were to be used for. I mentioned that the European Parliament had not grown into the powers it already has, nor has it learnt to use them effectively in, for example, the fight against fraud. It has not yet built up public respect and support and that is the reason I have a strong view that this should not proceed.

The IGC will give us some good opportunities. I mentioned the European Court of Justice in passing, but let me repeat something we have said before in this House in debates. We are committed to a strong independent court without which it would be impossible to ensure even enforcement of single market provisions. Yes, there have been judgments in recent years that have given rise to concern. There have been judgments that have imposed disproportionate costs on governments or business, even when European Union law has been implemented in good faith. We are working up a number of ideas to address those concerns.

I conclude by saying this. Britain has a distinctive voice in Europe. I make no apology for that. We have a long and unique history on this side of the Channel. It is no surprise when we disagree with the political direction some others may wish to take, but the big surprise is how easy it is to forget how much the states of the European Union agree on. That agreement is growing. The ideas that were the preserve of one country in the past—subsidiarity, the fight against fraud, enlargement, competitiveness—are now shared by all. We will continue the process. It is what is meant by working constructively in Europe. That is why our full and active membership of the European Union is so important. It is the fight for the British people's distinctive ideas and interests within the European Union that we will pursue.

The 1996 IGC will be very different from Maastricht. There is no single big issue but a range of sensible changes. We are greatly helped in taking forward our work for that by the report from your Lordships' sub-committee. We want greater public support, a better European Union, equipped to take on the challenges of the coming years. The Prime Minister and the Government will be playing a full and constructive part in delivering that.

8.57 p.m.

Lord Tordoff

My Lords, I am most grateful to the Minister for the time she has taken. She has been in the Chamber for pretty well the whole of the six hours during which the debate has been going on and has made a more than adequate response to the debate. We wish the Government well in Madrid and look forward to having our usual session with the Minister when she returns and when the Select Committee has the opportunity of asking her questions about how proceedings went.

I am grateful to everyone who has taken part in the debate, especially those who stuck to the subject. It has been wide ranging and I hope that if we have done nothing else in producing this report we go into this IGC better informed by both the report and the debate than we went into the Maastricht IGC. With those words, I commend the report.

On Question, Motion agreed to.