Lords Sitting of 8 March 1995

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Sheffield.

UN Conference on Women
Baroness Gould of Potternewton Baroness Gould of Potternewton asked Her Majesty's Government:
What plans they have for building on the achievements of the Cairo Conference on Population and Development at the forthcoming United Nations Conference on Women, to be held in Beijing in September 1995.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we will work hard to ensure that the Fourth World Conference on Women in Peking endorses the Cairo Programme of Action, in particular the commitments made to improve women's reproductive health and to enable women and men to have children by choice, not chance.
Baroness Gould of Potternewton: My Lords, I thank the Minister for that extremely helpful reply. While fully appreciating the important role that the Minister played in the success of Cairo, will she agree that the International Women's Day—it is today—has a special significance this year, taking place as it does between those two important conferences for women at Cairo and Beijing? Will she also agree that the language and concepts relating to reproductive health and quality family planning agreed at the Cairo conference should be an intrinsic part of the plan of action of Beijing?
Baroness Chalker of Wallasey: My Lords, indeed. On International Women's Day, today, we need to turn our minds very much to the language that will be used for the Peking conference. I certainly believe that we have to take the best of Cairo and make sure that it is part of Peking. I shall be doing my best to ensure that that is done.
Baroness Williams of Crosby: My Lords, I congratulate the noble Baroness on the work that she did at Cairo. Can she inform the House about two additional areas which might be addressed at Beijing? I refer first to the role of women in economic development, especially in areas where their contribution is not monetised and therefore often not recognised; and, secondly, to the growing issue of domestic violence, which many countries have indicated is now a high priority for discussion at the UN women's conference at Beijing?
Baroness Chalker of Wallasey: My Lords, I thank the noble Baroness for what she said. I believe that enabling women through education and training to be able to make a proper economic contribution to their families' lives will be a crucial issue for the Peking conference. Whether we shall be able to tackle domestic violence in the way
264
that the noble Baroness suggests is not yet clear from the preparation conferences. However, I know that many men and women across the world are anxious that more should be done in countries where perhaps their women are less educated to help women not to have to endure such things.
Baroness Platt of Writtle: My Lords, first, perhaps I may congratulate the Minister on her emphasis on education and training for women, which enable them to make a more positive economic contribution to the future of their country. I hope that at Beijing, as we did at Nairobi 10 years ago, women will be encouraged to go into fields of work which are non-traditional for them.
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for her comment and her question on non-traditional employment for women. I am told that one of the marvellous discoveries in some universities these days is what good engineers women can make. While there will not necessarily be full-scale support for that at the Peking conference, I believe that widening opportunities in education and training for women must be uppermost in our minds as we approach the Peking conference.
Baroness Lockwood: My Lords, given the ODA' s excellent policy document, Children by choice not chance, will the Minister inform the House whether the Government have any plans to build on the achievements of the Cairo conference at the Beijing conference in order to achieve the objectives of that policy?
Baroness Chalker of Wallasey: My Lords, we are not even waiting until the Peking conference to seek to build on the programmes which were so widely accepted at Cairo. We have committed about £100 million over two years through our own Children by choice not chance initiative. We have also encouraged other donors to do likewise. That is moving well.
We are now involved in wide-ranging discussions with other donors to ensure that we achieve better international understanding of what needs to be done in each country. We are not only running workshops on reproductive health but also trying to ensure that policy-making is realistic for the conditions in which women have to try to survive in some of the developing countries.
Lord Cledwyn of Penrhos: My Lords, is the noble Baroness aware that the general view in this Chamber is that the contribution of noble Baronesses to our affairs is outstanding? The Beijing Conference would proceed much better if they all went there to make a contribution.
Baroness Chalker of Wallasey: My Lords, I thank the noble Lord for his comment to all noble Baronesses in the Chamber. As a Minister who maintains strict financial control, I have to consider carefully how much money we spend on Peking. Therefore, it might not be possible to take all noble Baronesses there. However, I shall certainly ascertain whether more could be included in the delegation.
Viscount Craigavon: My Lords, following the media reports today about what might be happening behind closed doors at the Copenhagen Social Summit, can the noble Baroness reassure the House that the considerable

265
success and achievements of the Cairo Conference, in which she played a notable part, will not be diminished or traded off in the next few days?
Baroness Chalker of Wallasey: My Lords, I can assure the noble Viscount that what he heard on the "Today" programme this morning was a storm in a teacup. So far as I can tell, competitive press officers were trying to catch the eye of the media and they succeeded. Things are not bad in Copenhagen, the NGOs gained admission to the corridors this morning. I do believe that, if they had asked for it previously, they would have been allowed into the corridors, exclusion from which they complained about in the media. On International Women's Day, it is good to see so many women taking part in Question Time, and also a man. It gives us a little balance and is some help for my noble friend Lord Inglewood, who is only accompanied by the ladies today.
Baroness Flather: My Lords, will the Minister pay particular regard to what is called "cultural and religious sensibilities"? Under the name of "cultural and religious sensibilities", women suffer great injustices in many societies and I request my noble friend to pay particular regard to that. I ask her not to be fobbed off with what are called "special dispensations" for cultural and religious sensibilities.
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for that question. She is absolutely right that in many parts of the world cultural and religious sensitivities are used as an excuse not to face up to the needs of women in those societies. In the past year I have been pleased that we are making some progress in the Moslem communities. A number of the imams are much more forthright in looking to the needs of women than they used to be. I shall certainly bear in mind what my noble friend says in all our deliberations.
Lord Judd: My Lords, does the Minister agree that there is a disturbing trend in many developing countries that, as structural adjustment takes place, user fees are introduced for health, to the detriment of women? Does she agree that an objective at the Beijing Conference should be to ensure that in future such fees are not introduced as part of structural adjustment?
Baroness Chalker of Wallasey: My Lords, I understand the noble Lord's anxiety and he knows that to some extent I share it. However, I do not think any UN conference or any other conference can seek to constrain the financial affairs of a country in the way that the noble Lord described. It is becoming increasingly clear that there is now an understanding of the need to give basic health care to people, free of charge where it can be arranged.
Baroness Seear: My Lords, does the noble Baroness realise that many of us believe that, whatever the limitations of the Government's policy in the area, they would be a great deal worse if she were not the Minister responsible? We are grateful to her.
Baroness Chalker of Wallasey: My Lords, I thank the noble Baroness very much for what she has just said, but my colleagues also help me.

Inter-Governmental Conference 1996
2.46 p.m.
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
What United Kingdom initiatives concerning the repatriation of powers from the European Union in connection with the Inter-Governmental Conference in 1996 have been canvassed with member states over the previous six months and what has been the result.
Baroness Chalker of Wallasey: My Lords, my right honourable friend the Prime Minister has set out the basis of our approach to the 1996 Inter-Governmental Conference on a number of occasions. We are now considering the details of our approach and will put forward a number of ideas to improve the efficiency and accountability of the European Union in support of British interests.
Lord Clinton-Davis: My Lords, will the noble Baroness indicate whether the reports are correct—apparently supported on 15th January by Mr. Portillo—that the Government seek to enable decisions of the European Court of Justice to be revoked or reviewed by the Council of Ministers on qualified majority voting? Is there any truth in that quite absurd suggestion? It seems completely to contradict the rules relating to the separation of powers.
Baroness Chalker of Wallasey: No, my Lords, I do not think so.
Lord Clinton-Davis: My Lords, perhaps the Minister will indicate what her reply means. Is the suggestion being contemplated by the Government? That is what I ask.
Baroness Chalker of Wallasey: My Lords, it is much too early to predict what will be discussed at the IGC. We have not even finished our own internal discussions. Having been a member of a former government, the noble Lord knows full well that until we reach the end of the process I shall not say yea or nay. However, I gave him a clear hint in my first Answer.
Lord Bruce of Donington: My Lords, the Question was whether certain views had been canvassed with other member states and what responses were obtained. To the best of my recollection, the noble Baroness does not appear to have answered that part of the Question. If Ministers have not been involved in canvassing the views of others, can the Minister say whether they have been dealt with at the COREPER level with their own permanent representatives making the appropriate approaches, receiving responses and relaying them to Her Majesty's Government?
Baroness Chalker of Wallasey: My Lords, any discussions at the present moment are necessarily tentative. But of course members of the Government—by that, I mean Ministers—are discussing the forthcoming Inter-Governmental Conference with European counterparts. But certainly I cannot comment on the

267
discussions, which have been held in private; and no decisions have been arrived at. I shall be listening to the noble Lord in the debate this afternoon.
Lord Richard: My Lords, is the noble Baroness aware that her negative ambiguity in answering this Question is regarded by some of us on this side of the House as a very positive sign? May I take it that that is the way in which she would wish her Answer to be regarded?
Baroness Chalker of Wallasey: My Lords, the noble Lord knows that I always like to be positive with him; but sometimes he causes me to be negative.
Lord Pearson of Rannoch: My Lords, I wonder whether my noble friend the Minister would care to take this opportunity to welcome the European Research Group's recent pamphlet A Europe of Nations, with a foreword by the Prime Minister, which certainly proposes substantial repatriation of powers to the nations of Europe, is supported by 80 centre-Right politicians from across Europe and which can be roughly described as coming from the centre of the Conservative Party?
Baroness Chalker of Wallasey: My Lords, as my right honourable friend the Prime Minister stated in his foreword, it is a very good document for debate. Occasionally the authors behind the document may claim more authorship for it than it actually has.
Lord Mishcon: My Lords, will the Minister forgive me if I have become a little confused between the negatives and the positives? In those circumstances, can she positively say that, if any such suggestion were made in regard to the upsetting of the division of powers as was indicated by my noble friend Lord Clinton-Davis, it would be vigorously opposed in principle by the Government?
Baroness Chalker of Wallasey: My Lords, the sort of balance of powers to which the noble Lord refers is indeed not so simple and straightforward. If I took a line now, it would be thrown at me for ever more. We are not at the end of our discussions on what will be debated and what will not. I shall take the careful path until we are ready to make a decision.
Lord Beloff: My Lords, will my noble friend agree that, as we have now had a Euro-debate, we could all go home?
Baroness Chalker of Wallasey: My Lords, I am sure that some Members would be very willing to accept the noble Lord's offer; but I suspect that one or two others might not. We shall have a debate anyway.
Lord Stoddart of Swindon: My Lords, will the noble Baroness agree that the European Court of Justice is more a political court than a court of law, manned by non-lawyers and people who are not skilled in the law? Will she therefore agree that the separation of powers does not really exist?
Baroness Chalker of Wallasey: My Lords, first, on a point of information, the European Court of Justice—as I am sure our noble and learned friend Lord Slynn would indicate—is indeed manned by lawyers, not by non-lawyers. We need a strong court to enforce
268
Community rules and obligations; the Community can only work if all member states are held to their obligations. The European Community needs an independent judiciary to adjudicate over disputes and to be the final interpreter of the treaties and the decisions that are adopted under them. Certainly some aspects of the court's jurisprudence may not be to everybody's liking. We are considering what proposals we might make to address the concerns positively in the 1996 IGC.

National Identity Card Proposal
2.55 p.m.
Lord Wyatt of Weeford Lord Wyatt of Weeford asked Her Majesty's Government:
Whether they will now consider the introduction of compulsory electronically-based identity cards.
The Minister of State, Home Office (Baroness Blatch): My Lords, my right honourable friend the Home Secretary has announced his intention to publish a Green Paper in the spring which will set out the possible options for a national identity card scheme and invite views upon them.
Lord Wyatt of Weeford: My Lords, as the Home Office has no idea whatever how many illegal immigrants there are, is it not very urgent for it to find out rapidly by using an electronically-based system of identity cards which can be instantly verified and which cannot be forged?
Baroness Blatch: My Lords, the whole purpose of having a Green Paper and exploring all the options—which will range from a compulsory scheme to a number and range of voluntary schemes—is to have just that sort of debate to discuss the possible benefits. One will possibly be to prevent crime; another may well be to give security to those people who have bona fide residence in the country and to help sort out those who do not.
Baroness Sharpies: My Lords, can my noble friend say whether the police now support a compulsory scheme?
Baroness Blatch: My Lords, in advance of the debate, we know the view of the Association of Chief Police Officers: it supports a voluntary scheme. Whether or not that will be confirmed as a result of the consultation process we do not know. At this stage it certainly supports a voluntary scheme.
Lord Mason of Barnsley: My Lords, I am sure that the Minister will agree that the introduction of at least a voluntary ID card scheme is inevitable. The vast majority of our people are now accustomed to carrying some form of ID card. First, is the Department of Transport going ahead with its plans to introduce a photo-ID card for all motorists by July 1996? Secondly, in view of the fact that investigations are taking place within departments in respect of the ID card, can the Minister give an indication as to the likely outcome and what form the consultation will take before it is introduced?
Baroness Blatch: My Lords, on the noble Lord's first point, we know that there is a great deal of support for an

269
identity card scheme. What we do not know is the nature of that support. There is a great debate about what form it should take. On a recent survey, 75 per cent. of people responded positively that they would support an ID scheme.
On the second point, it is true that plans are at the developmental stage to introduce a travel card. That is to conform with a European directive that there should be a common travel document throughout the European Community. Work is in hand to that end. A possible benefits card is also being developed at the moment. The travel card is due to be introduced in 1996. I cannot be precise about any further consultation on that. We are conforming to the law so far as the driving licence card is concerned.
Lord Hailsham of Saint Marylebone: My Lords, will my noble friend, in the course of her consultations, bear in mind that most of us already have a passport, a driving licence, two or three credit cards, a sort of halter that we put round our necks to prove that we are Members of the House of Lords and dozens of other pèces d'identité? Does she agree that the introduction of still further compulsory articles made of plastic will not necessarily serve any useful purpose?
Baroness Blatch: My Lords, my noble and learned friend is absolutely right. I think that that is what lies behind the popular view that this is not a threat. I have to say to my noble and learned friend that other people take a different view; namely, that somehow or other it is an infringement of liberties. My noble and learned friend makes an important point: we all carry numbers of identification documents on our person every day. Of the 15 European countries, 10 have schemes, of which six are compulsory and four are non-compulsory. Five European Union countries, including the United Kingdom, do not have such a scheme at present but are contemplating one.
Lord McIntosh of Haringey: My Lords, will the Minister agree that, whatever may be the technical merits of identity cards, public confidence in the ability of this Government to introduce them fairly and to maintain confidentiality will be reduced by the proposed privatisation of the police national computer? Will she give an undertaking that, if such cards are to be introduced by the Government, they will not subsequently be privatised?
Baroness Blatch: My Lords, I will give no such guarantee in advance of the consultation exercise. I do not believe that there is a read-across. All aspects of introducing a card will be taken into account in the Green Paper. For the purposes of this debate, it will be a very green paper, because particular options will not be preferred by the Government in advance of the document. Perhaps I may correct what I said in an earlier reply. I referred to "travel document" when I meant to say driving licence.
Lord Wyatt of Weeford: My Lords, does the Minister realise that, despite what her noble and learned friend Lord Hailsham (who was Hogg) said, not many illegal immigrants will have either a plastic card to get into this House or a driving licence? Is not the whole point that we
270
ought not to be so old-fashioned? Should we not use modern means of identification? If we have an electronically-based card which we can all carry around, there would be no need to have anything else. The card can be used for money and almost everything. It is instantly verifiable. One will never be able to catch all illegal immigrants or stop people burgling and breaking into houses. So why do we not wake up and join the modern age?
Baroness Blatch: My Lords, all those very colourful points made by my noble friend will be part of the consultation exercise. Perhaps I may also make a very important point. The noble Lord mentioned illegal immigrants several times in his remarks. Some identity card options might just help the prevention or detection of illegal immigrant offenders. But such a control would be in addition to existing controls. There is no intention whatever that identity cards should replace our current system of primarily ensuring the security of our frontiers.

NHS Health Care: National Standards
3 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
Whether they will set national standards of eligibility for free continuing National Health Service health care.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, on 23rd February the Government issued guidance on NHS responsibilities for meeting continuing health care needs.
Lord Ashley of Stoke: My Lords, does the noble Baroness agree that if such standards were established by the Government, clinical teams throughout the country would have to decide solely on the basis of medical need whether a person should be in hospital, as they should do? But will she confirm that the Government refuse to establish those standards because they know that some trusts are poorer than others, so the Government allow variations in health care not on the basis of medical need but because of cash? Is not that situation entirely wrong?
Baroness Cumberlege: No, my Lords, that is not the case. Take the case of a person who has had a stroke. The result may be that that person can live a normal life but will have a limp. On the other hand, a person who has had a stroke may be so paralysed that he will have to have long-term care. It must be left to local clinicians to make the decision as to what care is required in conjunction with both the patient and the family.
Baroness Jay of Paddington: My Lords, is the Minister aware that many patients and their families were reassured by some of the guidance suggesting that there would be a right of appeal under the new system? For example, if someone felt that he might be pushed out of an NHS bed and into means-tested social care, he would have a right of appeal. But how can that appeal system possibly work fairly if there are no national criteria?
Baroness Cumberlege: My Lords, the guidance sets out a broad framework. When it was published it was very

271
much welcomed by a number of bodies, including the Association of Directors of Social Services, the National Carers' Association and the National Association of Health Authorities and Trusts. So it has been warmly welcomed. It sets criteria in that framework. As the noble Baroness said, there is an opportunity for people to appeal. If they feel that the eligibility criteria published by individual health authorities are not met in their case, they will have the right of appeal to an independent panel.
Baroness Gardner of Parkes: My Lords, is it not a fact that in the past many acute hospital beds were occupied by people with long-term and unimproving conditions that were not suitable for continuing hospitalisation over a long period? Was that not one of the reasons why changes were made?
Baroness Cumberlege: Yes, my Lords. We believe that the National Health Service has a responsibility for continuing care. But it must be based on health needs. Where social care is required, we believe that it is the responsibility of the social services.
Baroness Fisher of Rednal: My Lords, in her reply the noble Baroness did not draw the attention of the House to the cutbacks in local authorities' funding, which means that they cannot pick up the jobs that health care is giving them. Does she agree that the real problem is that, although local authorities may want to do the job, they cannot do so unless the necessary cash is given to them?
Baroness Cumberlege: My Lords, there is a total increase in social services funding for 1995–96 from £6.3 billion to £6.9 billion. Funding for community care services will increase from £4.6 billion to £5.1 billion. Funding for local authorities' new community care responsibilities will increase from £1.3 billion to £1.8 billion. I have a table giving those figures which I shall be pleased to put in the Library if it will help your Lordships.
Lord Ashley of Stoke: My Lords, the noble Baroness is always fair. However, I am very surprised at her Answer. Why does she think that the British Medical Association's spokesman in effect has said that it is the end of the free National Health Service? Does she believe that he was talking nonsense on behalf of his colleagues? Has she read the abundant evidence which shows that clinical teams throughout the country are being guided by the lack of cash allocated to them by the Government? Does that not mean that people needing hospital care are not receiving it, not because of the doctors but because of the Government's allocation of funds?
Baroness Cumberlege: My Lords, the guidance reinforces NHS responsibilities. I am not sure whether the noble Lord has had an opportunity to read it in detail. It makes clear that health authorities must arrange and fund within their resources a full range of services to meet continuing health care needs. But it goes on to say that it depends on the complexity and the nature and intensity of those needs. I feel that the BMA also misunderstood the guidance.

Boxing Bill [H.L.]
3.7 p.m.
Lord Taylor of Gryfe: My Lords, I beg to introduce a Bill to prohibit the organisation of boxing matches for profit. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Taylor of Gryfe.)
On Question, Bill read a first time, and to he printed.

Health Authorities Bill
Baroness Cumberlege: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Health Authorities Bill has been committed that they consider the Bill in the following order:

Clauses 1 and 2,

Schedule 1,

Clauses 3 and 4,

Schedule 2,

Clause 5,

Schedule 3,

Clauses 6 to 10.—(Baroness Cumberlege.)

On Question, Motion agreed to.

Inter-Governmental Conference 1996
3.8 p.m.
Lord Jenkins of Hillhead Lord Jenkins of Hillhead rose to call attention to the need for the United Kingdom to play a positive role in the Inter-Governmental Conference of 1996; and to move for Papers.
The noble Lord said: My Lords, I do not wish this to be a politically partisan debate. I have at least two substantial reasons for that. The first is the appalling effect which excessive attention to party politics has had, under different governments and over several decades, on Britain's ability to deploy an effective and consistent European policy. The second is that in my view there is an urgent need to revive the cross-party pro-European alliance which provided the Heath Government with its 1971 majority for taking us into Europe and which overwhelmingly won the 1975 referendum, despite indications six or nine months beforehand that public opinion was just about as unfavourable as it looks today. That same cross-party alliance, in a brief revival in your Lordships' House, secured a massive majority for the Maastricht ratification nearly two years ago.
However, there is no denying that the superficial mood in the country has become much less favourable than it was at the time of those several past events. But, as Sir Edward Heath himself pointed out in last week's debate in the other place—a debate which I found singularly instructive in a number of ways, to which I shall refer—if year after year a government do practically nothing to counter the drip, drip, drip of denigratory news about Brussels and everything to do with the Community and if they allow that to be almost the only European diet of the British people, enthusiastically magnified by a press

273
which is now overwhelmingly owned by those who have very little stake in the future of this country, one should not be surprised at the result. If one goes for a ride on a tiger, one may end up, if not in Riga, at least somewhere fairly unpleasant. This, M. Balladur has rather vividly been discovering in relation to his excursion on the back of M. Pasqua.
It is also undeniably the fact that 20 years of vacillation have reduced British influence in Europe to its lowest point since we joined in 1973. That political history was encapsulated by Mr. Blair, again in that instructive debate, when he said that he would prefer to be leading a party which had been anti-European and is now pro-European than leading a party which was pro-European and is now becoming anti-European. That fair, if damaging, summary was not very flattering to either party but tells us a lot about what has bedevilled British policy towards Europe. I do not want to be self-righteous about this—
Noble Lords: Hear, hear!
Lord Jenkins of Hillhead: My own party has never had the temptation of behaving weakly in government. I should like to believe it would not, but it has never been put to quite the temptations which other parties have had. But let there be no doubt that this sort of weather-house attitude towards Europe, in which one figure representing the Conservative Party comes out and the other figure representing the Labour Party goes in, and vice versa, has steadily pushed us away from the centre of influence and decision-making. There have been few greater illusions than the view sedulously propagated that everything in Europe has recently been going our way.
Its only rival for illusion is the belief, a constant triumph of hope over reality, that the Franco-German partnership is always on the point of breaking up and that either country would much rather be allied with us than with the other. I have heard that not merely recently but going back to the Schmidt/Giscard partnership, and going back even before that to the Adenauer/de Gaulle partnership. On the contrary, in my view, despite certain natural strains, it is a relationship which has steadily deepened and in which there are now such vested interests involved on both sides that it transcends changes of personnel at the top. The tragedy of our British position is that we have allowed ourselves to become a rather sour observer of this remarkable partnership, which is Europe's greatest gain compared with the 75 years from 1870 to 1945, and that subconsciously we are always hoping, generally vainly, that it will fray.
The peripheral position to which we have reduced ourselves is plain for all to see. It showed itself, for instance, in the fact that Sir Leon Brittan, much the ablest available candidate, was not seriously considered for the Presidency of the Commission because of his nationality.
Noble Lords Noble Lords: Oh,
Lord Jenkins of Hillhead: My Lords, it was totally understandable. Why should a group of countries have someone from a country which they feel has a half commitment—half in, half out—and might be off at any possible moment? It was totally and wholly
274
understandable. All that we could do was to play a charade between M. Dehaene and M. Santer, whose moment of glory in Mr. Major's eyes—the right man in the right place at the right time—was somewhat shortlived. As I have reason to know more directly than anyone else, Britishness was in no way a similar disqualification 18 years ago.
Then we had the Prime Minister's speech last week. That, also, I found yet another instructive aspect of last week's debate in another place. I thought he engaged with the subject more seriously and reflectively than perhaps has been his habit. He did indeed say some favourable things, and said them forcefully, about the Community, which made it a very exceptional speech. One could feel him almost arguing with himself in the course of the speech. And, on the whole, a politician arguing with himself is a more edifying spectacle than one arguing with his opponents. But when that has been said, I was struck and depressed by the totally reactive, as opposed to proactive role, which he assumed for this country, particularly in relation to the single currency, which was the subject to which he principally addressed himself: we will wait and we will see what Germany and France, attended by Benelux, decide to do and then we will react to that according to what at the time we judge to be in the best interests of the country.
This "attentiste" attitude has some advantages. It does not slam a door. It does not repeat the Prime Minister's unwise assumption of a short time ago that a single currency is a chimera. And it does not mount a ridiculous horse of monetary sovereignty, in a week when the activities of Mr. Leeson, following the somewhat different ones of Mr. Soros a couple of years ago, demonstrated the hollowness of a tight little island money entirely under its own control.
But this waiting attitude—see what France and Germany do—is totally incompatible with the view that Britain has a leadership role anywhere near the heart of Europe. It also shows an imperviousness to every lesson we ought to have learnt from our past experience. It was precisely this attitude which got us the worst of all worlds in our approach to the exchange rate mechanism. One of the recent weaknesses of the pro-Europeans is that we—and I deliberately say "we"—damn everything with faint praise and stress how moderate and reasonable and even half-hearted we are. As a result, increasingly, the best lack all conviction and the worst are full of passionate intensity. A ratchet effect goes on and the position of the Government, responding to the passionate intensity, becomes more and more hostile. Therefore, eschewing half-heartedness and looking at our ERM experience, I do not hesitate to say that our major mistake was being the only one of the nine members of the Community at that time which did not fully participate from the beginning.
That was a decision which cannot be laid at the door of the present Government. It was taken by the previous government a few months before Mrs. Thatcher came to office. And vividly do I recall my sense of disappointment—perhaps more sadness than surprise—when I realised that the European monetary system, inaugurated under a British President of the Commission,

275
was to be without a full British participant. Thus was an important step taken on our journey to the periphery of Europe.
But the benefits of initial adhesion would not merely have been political and symbolic, important though those considerations can be. The object of foreign policy, after all, is to keep friends and win influence for British interests. The initial adherence would also have meant that we could have homed in on a correct and sustainable rate of exchange, rather like an artillery barrage ranging onto a target—an enterprise in which I have not engaged for approximately 50 years now.
In the early days of the European monetary system there were a great many fairly small adjustments of central rate which were all done without humiliation or upheaval. Eleven-and-a-half years later the position had become much less fluid and we lurched into the trauma of Black Wednesday without being able to get the rate right by trial and error. Moreover, from the beginning we would have avoided the wild exchange rate fluctuations of sterling of the early and mid- 1980s when we varied for no rational cause between 1.07 dollars to the pound, and approximately 2.40 dollars to the pound, the plunges producing interest rate panics and the surges adding to the destruction of too much of British manufacturing industry. We would have had the ERM stability from the 1980s enjoyed by all the others under our belt before we came to face the much more turbulent climate of the early 1990s. As it was, we just joined for the crash.
It is not a bad idea to try to see things partly through other people's eyes as well as through our own. Furthermore, we gave a great deal of fuel to the thought that everything went well in Europe with the ERM until we came in and mucked it up not only for ourselves but for others as well. That history does not provide much encouragement for our applying the same recipe in the future.
The single currency apart, what are the other issues which will confront us at the IGC? Frankly, I would not expect the Inter-Governmental Conference to attempt a great leap forward: it is doubtfully well-timed for that. But there are certain clear British interests which we should have in mind and which, properly handled, would not only serve those British interests but could put us much nearer to the mainstream and not skulking in an isolated corner.
On the assumption that at any rate part of the Government really want us to stay in Europe and see "an ever closer union", to which we have committed ourselves over and over again, functioning efficiently and constructively, although certainly without seeking in any way to obliterate different national characteristics and certainly without seeking to obliterate equally a strong continuing role for national governments—in my view those fears have always been a complete illusion—on that assumption of wanting things to work well and constructively, two British policy objectives would probably command the nearest approach to widespread agreement in this country. The first is reform of the common agricultural policy and the second is further enlargement, particularly to the east, so as to fulfil Europe's duty to the lands and cities indisputably European which, as it were, emerged with their eyes
276
blinking from 40 years of Iron Curtain oppression and which are now desperately short of security anchors, political support and a sense of international direction. Those two objectives are in fact clearly linked with each other, for without CAP reform, major enlargement is not possible. The Community simply could not afford to extend the CAP to the countrysides of Poland and Hungary in its present form.
But there is also a third, lurking British Government objective which is also a part of the nexus with the other two, but this time in a perverse way. That third objective at the back of the British Government's mind is to retain for each and every member a liberum veto and restrain or even eliminate qualified majority voting where it exists, to make qualification as high and as difficult to attain as possible.
Apart from the basic fact that a union of between 20 and 30 members will be frozen into immobility by such an approach, by a liberum veto, it is more specifically incompatible with the other two objectives. One will never reform the CAP under a unanimity rule, and without CAP reform we are blocked to the east. If the Government would face up to that dilemma, and also to the fact that it is no use complaining that Brussels is a remote bureaucracy unless you are prepared to bring it more under the control of the European Parliament and strengthen its links with national parliaments too, then Britain could have a constructive approach to the IGC which would win it more allies than it has seen for a very long time.
But that depends on the genuine desire to get the most out of British membership and to make things work. Alas, however, a note is increasingly struck not only on the Back Benches but to some extent in the Government itself, to which the only logical conclusion is that Britain should seek its destiny outside the Europe of the Community. If that is so, then for God's sake let it be clearly said. That would produce a cleaner and more honest argument. Nothing is worse than the desire to undermine and denigrate in every possible way without the courage of openly going to the conclusion. The core of the Government is in increasing danger of being pushed in that way, which is a recipe not only for minimising British influence but for making us disliked and distrusted as well as disregarded. Half in and half out is hopeless. But such is our store of old capital—moral and political capital—that with courage and commitment this country could still play a great role in Europe. My Lords, I beg to move for Papers.
3.29 p.m.
Lord Howe of Aberavon: My Lords, the noble Lord, Lord Jenkins of Hillhead, will not be surprised to learn that I find it difficult to follow him in the more partisan parts of his analysis, so I am glad to be able to congratulate him on his insight that his present party has never needed to abandon its self-righteousness on this issue. I am glad to be able to agree with him when he stresses the need for Britain to play a positive role at the IGC. I hope that the

277
House will forgive me if an earlier commitment to give a lecture on this topic this evening prevents me from being here for the winding up of the debate today.
It is all too easy on this topic in this kind of debate to find ourselves not merely repeating each other, but repeating ourselves. Perhaps the House will therefore forgive me if I start with two texts from statesmen outside this House whom I have had the good fortune to meet in the past few weeks. The first is Kurt Biedenkopf, the Minister-President of Saxony, whom I met at a ceremony in Chemnitz last week. He said:
"Before we give consideration to further institutional development, the tasks facing Europe need to be properly understood and clearly defined".
I think that that is a fundamental proposition. I do not mean to imply by that quotation that there is no need for the IGC to consider such questions as the mechanics of qualified majority voting or the size of the Commission, but those should, in my view, be subordinate to consideration of the basic strategic questions.
On that, I turn to my second witness, President Eduard Shevardnadze, whom I chaired when he spoke at Chatham House recently. He asked this telling question:
"Why were the world community and Western nations in particular caught unprepared on the very threshold of this swift and consequently unmanageable transformation of the world"?
He spoke of having experienced for himself,
"all the horrors and nightmares of enraged, aggressive separatism. No less ghastly than the brutalities of Hider",
which pose a serious and continuing threat to the stability of our continent. That is why I agree with the noble Lord, Lord Jenkins, that the main task facing our European partners ahead of and beyond the IGC must surely he the evolution and implementation of a clear strategy for the rehabilitation of post-communist Europe.
I say that it is a task "for Europe" because we cannot necessarily expect American help or American leadership. Of course, we want that help—and I am sure that it will be forthcoming—but I do not believe that we can, or even need to, look to the United States to play the leading role in that task. I fancy—indeed, I fear—that the manifest reduction in the threat from the east may have done more than we know to weaken the magnetism that has drawn America towards Europe throughout the past half-century. We should not underestimate the gap that exists between Secretary of State Marshall and Speaker Gingrich, between President Truman and would-be president Dole. The United States was indeed the sponsor of the Marshall Plan for the rehabilitation of western Europe, and we should be eternally grateful for that leadership and generosity. That plan underlined our intercontinental interest in each other's security. That strategic truth has not altered.
But is it not now the time for Europe to take the lead? Is it not now the time for western Europe to take the lead in sponsoring the rehabilitation of eastern Europe—with, I emphasise, the help of the Americans—to ensure a much more closely co-ordinated economic and political strategy? Thus far, neither through the international financial institutions nor in any other partnership have we given sufficient effective, balanced guidance and support to the emerging countries of the east.
278
In my judgment, our economic approach towards eastern Europe should, as former Prime Minister Carl Bildt recently suggested, take a much more positive view of the scope for active market building between both halves of the continent. If we are able to remove the rigidities which hamper our own development—I agree with the noble Lord that they include the common agricultural policy—even cautious estimates suggest that enlargement could bring substantial long-term advantages for the whole of Europe—east and west alike.
The first Cecchini Report gave political momentum to the freeing of markets in western Europe with the benefit of qualified majority voting. A second similar analysis, pursued with vigour, could spread that benign liberalising process across the entire continent.
I should like to say just a few words about the single currency. The Prime Minister was right to make plain in the debate last week that the options are, and must remain, open for us on that issue. Whatever view we take upon the outcome of that debate, it would surely be wrong for us to play no part in shaping the development of the argument. In my judgment, a single currency should remain a long-term goal. As even George Soros has acknowledged, this week's turbulence underlines the desirability of that objective—but it also underlines the difficulties. The case needs to be discussed in relation to what we are trying to achieve and not by reference to a rigid timetable. That was one point on which my noble friend Lady Thatcher and I were glad to find common ground in our reaction to the rigidities of the original Delors Report.
I repeat that EMU should be discussed in relation to what it is supposed to achieve and whether the conditions, especially on unemployment and structural change, yet make it achievable. The process should not be hastened at the risk of mistakes which could entail great political cost. It is in that context that I hope profoundly that our country will play at the IGC a role not of reluctance but of commitment.
Our future is not to be found by turning our backs upon our European partners or by seeking to promote some nationalistic resurrection of the past. A Norwegian journalist wrote recently:
"Unlike the rest of Europe the British did not emerge humiliated from the War, but could—rightly—look back on 'their finest hour'. They have, strangely enough, kept a deeper dislike for their fanner German enemies than have the other West Europeans who experienced German soldiers on their soil".
I ask myself continuously: why should we alone be so reluctant to abandon the enmities and hostilities of the past? Has Europhobia in some form made us fearful even of the friendships of a wider world which all our partners are willing to embrace?
I return to Eduard Shevardnadze in London who asked:
"Could it be that in the year of the 50th anniversary of victory over the greatest evil of the century, we would fall short of victory over the multiple new evils threatening us, with the restoration of walls which divide the world"?
Is it not ironic that it should have been a former member of the Soviet Politburo who spoke thus in London of the need today for something like Churchill's vision of a world community as a force for action?
With Kurt Biedenkopf in Chemnitz, Saxony, last Sunday, I listened to a deeply moving performance by Saxony's Robert Schumann Philharmonie and

279
Manchester's Hallé Chorus and Boys' Choir of Benjamin Britten's "War Requiem". The stunned silence at the end of the performance suddenly exploded into a spontaneous standing ovation—far longer and far more spontaneous than any that has ever been achieved by any of my noble friends. If our peoples are capable of and, indeed, anxious for reconciliation and partnership of that quality, I pray with all my heart that our leaders can find the confidence and courage to achieve the same.
3.37 p.m.
Lord Richard: My Lords, I begin by expressing my gratitude to the noble Lord, Lord Jenkins of Hillhead, for initiating this debate. I cannot compete with the noble Lord when it comes to his magisterial and judgmental attitude towards the history of the past 30 or 40 years. I shall approach the debate with certain basic propositions which I should like to put before the House, some of which were considered by the noble Lord, Lord Jenkins, and at some of which the noble and learned Lord, Lord Howe. hinted.
However, before I do so, I should like to make one other comment by way of introduction. It is unfortunate that we are not being given a statement of government policy at the beginning of the debate. It would have been helpful if the Government had exposed some of their thinking early on in the debate so that the rest of us know the way in which their minds are supposed to work.
I should like to enumerate one or two basic propositions. Some are truisms, but the thing about truisms is that they are very frequently true. First, membership of the European Union is good for Britain. It is good for trade, good for investment and good for jobs—certainly when compared with any practical alternatives that may be on offer.
Secondly, the possibility of withdrawal from the Union is just not practical politics—leaving aside the question of the legalities. The issue of membership is settled and should be regarded as settled; it was settled in 1975 and British policy should be based upon that fact. Our future lies with our European partners. It is perhaps time that we started treating them as partners instead of regarding them with all the warmth and eager anticipation with which the east coast counties of this country regarded the approach of the Vikings.
Thirdly, in the future and particularly at the 1996 conference we must avoid the errors of the past in allowing Europe to develop in ways that we do not support and which are not in Britain's interest because we failed to play an active part in the negotiations. As a corollary, the other countries of the Union could well decide to move to greater unity without us. What of our opt-out then? In those circumstances it would not be an opt-out, but more of a lock-out.
We should also bear in mind that political union, federalism, or however one wishes to describe it, is not a practical proposition at the moment. As a country we should neither rule out the possibility of greater political integration, nor should we insist on it. That follows from what the noble Lord, Lord Jenkins, and the noble and teamed Lord, Lord Howe of Aberavon, said.
280
As to the supremacy of national sovereignty, let us meet that argument head on. The supremacy of national sovereignty as the guiding principle of political action is becoming increasingly difficult to sustain on the part of individual nations, as more and more issues come to be decided on an international rather than a national basis. Frankly the world is becoming too small to permit us to indulge too closely in that sort of luxury.
It follows that our political institutions are neither sacrosanct nor untouchable. It follows as well that the European institutions are not set in concrete either. Their powers, their composition and their relationship with each other are clearly flexible and are going to change: some indeed have changed already, witness, for example, the powers and the position of the Parliament. I am sure that as the Union gets larger and more countries become members, the institutions will have to be looked at afresh. I share the view of the noble and learned Lord, Lord Howe of Aberavon, on that point.
I think it is worth looking just for a moment at what the Maastricht Treaty says about this Inter-Governmental Conference in 1996. The treaty actually says that:
"a conference of representatives of the governments of the Member States shall be convened in 1996 to examine those provisions of this Treaty for which revision is provided, in accordance with the objectives set out in Articles A and B."
If in turn we then look at Articles A and B, they set out the objectives of the Union itself. I concede that the wording may be somewhat sonorous, but the objectives are fairly clear. Article A establishes the Union itself and Article B sets out its objectives. So the aim of this conference is clear, at least on paper. It is to consider how much progress has been made in the areas covered in the treaty towards the fulfilment of the objectives of the European Union. So far, so clear; and that includes some pretty fundamental areas. These areas include monetary union and a single currency, a common foreign and security policy, let alone citizenship and subsidiarity. The potential agenda for the conference is vast.
I suspect, though, that when the conference actually takes place other things are bound to be talked about, particularly enlargement. Again, I share the view of the noble and learned Lord, Lord Howe, that if the 1996 conference can produce a concerted European strategy for expansion—by the inclusion of the east European countries—then it will be a success.
How are we to approach this conference? The question for Britain in many ways is not one of detail but one of attitude. Since the Government negotiated the treaty and accepted it in its present form, I assume that they agree with it. That may be naive, but it is an assumption I am prepared to make. In particular I assume that they are in favour of what the treaty refers to as
"an ever-closer union among the peoples of Europe".
If they are in favour of that, I do wish that from time to time they might appear a little more enthusiastic about the process. The continual denigration in this country of Europe and all its works, sometimes even by Cabinet Ministers, is losing us status and influence in Europe. Our friends just do not know what to make of the current British position. Those who want to be kind to us assume that the Government's heart is broadly in the right place, as they would see it, but that for internal political reasons

281
they have to behave as they do. Those who are less well disposed towards us take advantage of the present situation to foster mistrust of Britain's intentions. Frankly, it is a mess, and I have to say that it is a mess of the Government's own making.
The trouble is that one just does not know where the Government, and particularly the Prime Minister, actually stand. As I intimated at Question Time this afternoon, constructive ambiguity is one thing, but this continual balancing act is really quite another. Our policy towards Europe, whatever it may be, now looks as if it has been designed not with an eye to British interests but rather by what is thought to be in the interests of Conservative Party unity. I do not see how this can go on very much longer. Either the Government must be seen to be negotiating seriously in the direction that the Maastricht Treaty indicates, or they will have to make it clear that they are not prepared to see Europe move any further in that direction. What they cannot do is to say one thing and in fact mean another. What they cannot prevent is other countries moving in the very direction we have decided to avoid.
In so far as the 1996 conference will be concerned with EMU and a single currency, it would be absurd to rule out the possibility of a single currency now, as some would have us do. Does anybody seriously believe that, if conditions were right and there was the serious possibility of a single currency in 1999, the United Kingdom would be best advised to exercise its frankly meaningless opt-out and remain outside? I can imagine nothing more likely to put sterling under the most intense pressure than a decision by Britain to remain aloof. As for the effect on inward investment and jobs, I think it would be little short of catastrophic.
I have two brief pleas to make to the Government about the 1996 conference. First, we should go to the conference to try and make it a success; in other words, we should recognise that agreement is on the whole more desirable than failure, even if confrontation might help the internal politics of the Conservative Party. This time opt-outs will not do, and a statement in advance that we will veto any constitutional changes coming from the conference is frankly absurd.
Secondly, we should concentrate our efforts at the conference on two main objectives. One, which I share with the noble and learned Lord, Lord Howe, is enlargement, which I mentioned earlier. Next, we have to consider the way in which Europe is groping towards the establishment of a common foreign and security policy. We have never had one in Europe and we have never succeeded in speaking with one voice. At lunchtime today I reread the debates in another place on the Russian invasion of Czechoslovakia in 1968. I well remember it. The House was recalled and the then Mr. George Brown spoke from the Labour Back Benches and made one firm point. He said, "Europe has not been heard. Why? It has not been heard because it cannot speak with one voice".
282
Until it can speak with one voice, we cannot expect to play the part in world affairs that, frankly, I am confident this country deserves.
3.48 p.m.
The Lord Bishop of Sheffield: My Lords, I speak very much in this debate as the man in the street and as a layman. Not only am I perhaps the only Bishop in the country, or perhaps in the world, who has no passport, but I remain a fairly unreconstructed English nationalist who occasionally murmurs to himself the scurrilous Flanders and Swann couplet:
"The English, the English, the English are best!
I wouldn't give tuppence for all of the rest!".
But worse than all that, I am a Northumbrian nationalist and it took me a long time to believe that there was life south of the Tyne; and I still doubt whether there is civilised life south of the Trent. Nonetheless, I grieve to see our reluctance to play a positive and active part in the life of Europe.
There are three things that I really should like to say to the politicians, to the Government and to those, whoever they may be, who will be taking part in the Inter-Governmental Conference. The first is to remember that we are Europeans in a Europe that goes beyond a European Union but has a common faith, a common history and a common background. That continuity with a remembered past, which will bind us together if we let it, is of vital importance.
I should like to give as mascots, as patrons, to our politicians two famous Englishmen—Alcuin and Boniface: Alcuin a Yorkshireman—a Yorkshireman through and through—born near Spurn Head, Helen Waddell tells us, although I am not sure that she is right, but near York certainly:
"springing from the fields and rocks above Spurn Head, like a true Yorkshireman he could boldly withstand even an emperor".
He had a European mind, but knew his own as well and never lost his national identity.
To the great schoolmaster of York, the request to be the schoolmaster of Europe, made of him by Charlemagne, produced a positive response. So he left his native land, but never forgot it. The letters he wrote to his friends among the English remain significant, important and deeply moving. There was a loyalty to England that in no way weakened his loyalty to Europe. Again, Helen Waddell tells us:
"They were men of vision, great statesmen, soldiers and scholars, often of approved sanctity like Alcuin and Paulinus, who spent their lives striving to build on the rubble of a shattered Roman Empire, the ideal commonwealth of the City of God on earth".
It is not an unworthy ambition to follow in those footsteps.
Similarly, Boniface—I cannot claim him as a Yorkshireman, he was a Devonian—had a total commitment to his brothers and sisters (his Saxon brothers and sisters in Europe) to share with them what he had come to learn not just of Christianity but of European civilisation. We do well to remember that the word "Anglo-Saxon" did not originally set us who spoke English against the rest of the world, but was to remind us of our bonds with the other Saxons—the German Saxons.

283
We were the English Saxons, with a common race, a common inheritance, and, thanks to Boniface, and Willibald and others, soon to have a common faith.
That we remember those things is of great importance. Although we looked back at the troubled history of Europe with sadness, we rejoice to see within the European Union that what again Helen Waddell calls, "the undying quarrel for the Rhine", at least seems to have ended. I long for us to take up again our role as Europeans in Europe, remembering those great men and women from the past; remembering our history; and recognising that it is ultimately a European history, and not merely an English history.
Secondly, I want us to beware of the wrong sort of nationalism. I am a nationalist. I do not apologise for being a nationalist, but we do not have to go outside the British Isles to see the perils of a nationalism that is unable to, see good in anyone but one's self. One does not need to go further than recent history in the Balkans, in the former Soviet Union, to see the terrible perils of a nationalism that says, "My country right or wrong". When I listened to our football supporters in Bruges, or Dublin, and just occasionally read the newspaper headlines—and, sadly, occasionally listen to our politicians—I believe that we are in terrible danger from the wrong sort of nationalism.
I want us to take into Europe our own nationalism—a consciousness of our individuality, and a consciousness of our individuality that makes us warm to the individuality of others, and, particularly at this time, warm to the individuality of those nations which have been put to the outskirts of Europe, and which it must be our calling—we who are a little bit on the outskirts of Europe ourselves—to remind them of our common concerns and our common interests. There is a concern for the east, for the Mediterranean, for which we in Britain should have a special calling. We should be ashamed of that yobbish nationalism which sometimes it is tempting to people, for their own purposes, to build upon. There is too much of it around. We want to fight against it. We raise it up at our peril.
Thirdly and lastly, we need to grasp the significance, or perhaps the lack of significance, of that philosophical fiction which we have come to call sovereignty. I know, of course, as a bishop, the 39 Articles. There we read:
"The Kings Majesty hath the chief power in this Realm of England, and other his Dominions…and is not, nor ought to be, subject to any foreign Jurisdiction".
King Canute was the first to discover the folly of that type of definition of "sovereignty". We now know that it cannot be like that. We have, for better or worse, taken the decisions that recognise that there is a variety of sovereignties. Somehow or other we hide from ourselves that that is so. We need to recognise the changed situation in which we find ourselves.
In my diocese of Sheffield there is the Dore Stone which recognises the moment when the Kingdom of Northumbria acknowledged that it was part of England—a decision that I do not believe it has ever regretted. It was not a humiliation for Northumberland to acknowledge the greater sovereignty of the Kings of Wessex. We have taken the same step already in our decisions on Europe, and yet somehow or other we pretend that we have not. We need to recognise the integrity and the importance of
284
European institutions, European customs. Somehow, the claim to righteousness on our part—that no one is ever dishonest in England, but always dishonest in Europe; that our Parliament is always wise and the European Parliament always foolish; that our governments never do anything wrong, but the European governments are always doing things wrong—is not borne out by the facts. It does not help us to "make the best" of the profitable situation in which we find ourselves as part of a greater unit than we were before—a unit to which we come naturally by geography and history, and, I dare to say, by religion.
I long for us to be less afraid of Europe and more ready to give ourselves, as English or British nationalists, wholly to a way of living with our neighbours that recognises their distinctiveness and their individuality, but recognises too that we have a common inheritance and a common calling, and that we can do things so much better together than apart.
3.58 p.m.
Lord Elis-Thomas: My Lords, it is a particular pleasure for a mere Welsh nationalist to follow a Northumbrian English nationalist with whom I share a religious affiliation, and to follow three noble Lords with whom I also share a cultural nationality. I use those terms deliberately because those noble Lords have set to the debate a strong moral and practical tone. I welcome that warmly, because the debates that we have had in the United Kingdom on our relations with the mainland—that is how I choose to call it and will call it throughout my speech; indeed, as the people of Anglesey call the rest of Wales the mainland—have been bedevilled by a lack of conceptual understanding and the use of a completely inadequate, negative vocabulary.
Here I beg to switch the tone, perhaps, from what we have heard already about nationalism. We are now entering into a century—the 21st century—which it is hoped will be a century of post-nationalism; by which I mean that the ideology which combines the notion of identity with a notion of fictional political power has to be undermined. Because we have in the concept of the nation state mixed up the notions of political power with the notions of citizenship and identity, we have created for ourselves in the 20th century a monstrous century with over 100 million deaths, induced by the notion of nationality, nationalism and differences of identity. That relates to the whole issue of citizenship, federalism and subsidiarity.
In the remaining seven minutes I shall dwell only on the notion of subsidiarity. In the context of this debate that is the most misunderstood term in the United Kingdom. As the right reverend Prelate will know, subsidiarity derives from early 20th century Catholic moral and social theology. It is about powers not relating to particular classes or states but about powers being shared in relationships. That is where the concept arises. It was reinvented by the Christian Democrats and the Social Democrats, who were also within a similar Catholic moral milieu on mainland Europe. It was reinvented as a European concept precisely relating to the notion of shared levels of power.

285
In the United Kingdom it is assumed that subsidiarity stops at Dover. Subsidiarity is assumed to be about the relationship between the European Parliament, the Commission, the Union, this House and another place. Subsidiarity is not only about that; it is about all levels of governmental relationships and all levels of political powers. Within the discourse of the Community and the Union, that is how it is used. There is subsidiarity in the relationship between the Union and the member states but there is also subsidiarity between member states and nations and regions within member states.
That is where the United Kingdom debate appears to be entirely predicated upon the notion of maintaining the idea of the United Kingdom as a unitary state. The attitude of the Conservative Government—and, indeed, the attitude of some noble Lords on the Labour Benches—towards the European Union is based upon their British state nationalism. I distinguish between that and our British nationality, European passports and the notion of a Welsh, Scottish and English cultural nationality.
It is important-to make those distinctions because on mainland Europe the idea of affiliation simultaneously to different places and spaces and levels of government is not a problem. As the right reverend Prelate so clearly said, the affiliation of Northumberland to England meant that one could maintain both a Northumbrian and an English identity. Similarly, we in the United Kingdom need to construct the notion of a positive English nationality which does not become the English nationalism of our football hooligans. We need to construct a notion of English nationality that is not racist. We need to construct a notion of English nationality that is not nationalistic.
Some of us have laboured in different ways to construct the notion of a Welsh or a Scottish nationality that is not nationalistic. The whole issue on the island of Ireland is to do with the construction of a European notion of Irish co-operation that is not rooted in nationalistic traditions. The problem that we have is that England, because of its assimilation into the British state for which the Welsh Tudor dynasty must bear some responsibility, created a British form of nationalism which then became imperial. There was never an opportunity for a healthy English nation with its regions to develop.
The English are a supremely European nation. They could be nothing else in terms of their extraction, their relationship with the mainland and their culture. That is where in the past we in the United Kingdom have failed to understand our origins. Obviously, I speak as a Celt and in that sense the Celtic people are a submerged level of European identity and unity; pre-Roman and pre-Greek and everywhere dispersed. Those who are aware of the history will understand that the notion of being part of an identity that is not necessarily rooted in a single space or power is an important concept for our European future. After all, we were the people who believed in circles rather than straight lines. That kind of culture which believes in an encompassing circle is the one with which we must work within the emerging Europe.
I leave that Celtic whimsy and return to the IGC. Development in the context of the IGC will be incremental. It will be incremental for our other partners
286
in the rest of Europe. But, within the United Kingdom, the time is approaching when we must face a crisis of identity; when we must reunderstand our national pasts. What is happening now on the island of Ireland may help us to do that. A government who can respond clearly to the feelings of Scotland, Wales and the English regions must be able to understand that the relationship between regions and nations within the UK is intimately linked with what is happening on mainland Europe, where a Europe of the regions is an emerging reality whether we like it or not. Jordi Pujol and other colleagues on mainland Europe will not go away. The Europe of the regions is the Europe of subsidiarity and the federalised future.
The problem that the United Kingdom has is that because it has developed as a unitary state it is unable to relate to those developments. The sooner that we are able within this House and another place to reject the discourse of British nationalism and to adopt a way of speaking about our identity which does not relate to the notion of one centre of political power or one form of identity, the sooner we shall be able to participate more positively in the construction of the European Union.
4.6 p.m.
Lord Cockfield: My Lords, I too am most grateful to the noble Lord, Lord Jenkins of Hillhead, for giving us the opportunity of debating these matters. I never thought that it would enable us also to debate Welsh nationalism. I have always taken the view that it is suicidal for an Englishman to become involved in matters affecting either the Welsh or the Scots. Therefore, I shall confine myself to the speech made by the noble Lord, Lord Jenkins, in introducing the subject. If the noble Lord really hopes that the Government will take what he described as a constructive approach to the Inter-Governmental Conference of 1996 he is an incurable optimist. But, of course, to be a member of the Liberal Democratic Party one needs to be an incurable optimist.
The problem with the debate in the form that it takes is that we shall have no government statement until the end of the debate when there is no opportunity for anyone to comment upon it. Whether that is because the Government have no policy, or that, if they have a policy, they are not prepared to reveal it, I am unable to say. However, the exchanges that took place today at Question Time suggested that the absence of a policy justifies the order that the debate is to take. So, as regards the Government's future intentions, we must proceed in darkness but we shall do our best.
I propose to speak only about one overarching issue. I do not propose to touch on any of the detailed matters which will go to the 1996 Inter-Governmental Conference. The issue about which I propose to speak briefly will ultimately determine the attitude that is taken on every single issue that comes before the conference. It is whether we are going forward or whether we wish to go back. Will there be further steps in the direction of European integration or are we to try to resile on the steps that have already been taken and go backwards?
I shall illustrate that point in two particular ways. There are some Ministers in the Government, and certainly many Members of another place on both sides of the Chamber, who believe that we ought to turn the European

287
Union into some form of glorified free-trade area. That is complete and absolute nonsense and that is demonstrated conclusively if one looks at every single enlargement that has taken place in the Community since it was first established. When we first refused to join the Community—and we refused to join because at that time, no one was trying to keep us out—our reaction was to set up a rival organisation; that is, the European Free Trade Area. Within almost a matter of months, we scuppered our own creation and applied for membership of the European Community as it then was.
I shall not go through every single enlargement that has taken place since then, but the underlying trend is exactly the same. I shall take the latest enlargement which involved Finland, Sweden and Austria. They did not join the European Union in order to join a free trade area, glorified or not. They already had a free trade area and they had had that for many, many years in the form of EFTA—the European Free Trade Association. They had gone further than that. They had the European Economic Area which expanded the free trade relationship in a further direction. But that was not the limit of their ambitions. They felt that they had to join the European Union, and that they have done.
Let us look at the countries of central and eastern Europe which now wish to join the European Union. Why do they wish to join? Is it just to join a glorified free trade area? They could have had that anyway. They already have the European agreements and they could progress from those to the European Economic Area which still exists. But no, their ambition was to join the European Union. In other words, no country, including ourselves, which has joined the Community since it started ever set out to join what was merely a free trade area. The attempts to regress and turn the Union into a free trade area will not stand up to a moment's examination.
Then there is endless talk about a multi-speed Europe, a multi-tier Europe, about variable geometry and eccentric circles, about a Europe à la carte. That is all absolute nonsense and none of those will work. Of course you can have derogations. There have been derogations ever since the Community was founded, but the whole point of a derogation is that it is merely a breathing space that is given to people in order to enable them to catch up. All those other ideas are the creation of massive institutional arrangements in order to accommodate varying, disparate and conflicting views. As institutional creations, none of them will work.
However, something that will work is something like the relationship which existed between the European Union and the EFTA countries and then the European Economic Area. But the point to remember about that is that they are not differing degrees of membership of the Union. In fact, they are a relationship between two entirely different bodies.
The fact that has to be faced—we need to face it and it is no good pretending that it does not exist—is that there is a core of countries in the Union which are determined to go ahead in the direction of greater integration. They comprise at least Germany, France, Belgium, Holland and Luxembourg and they will no doubt be joined by others. There is no way at all that we shall be able to stop those
288
countries going ahead in the direction of greater integration. It is no good talking about vetoes or blocking majorities or anything of that sort. The determination is there and it will be achieved.
We have to decide whether we are going to go along in the direction of greater integration, with all the opportunity of influencing that process and ensuring that our anxieties are taken fully into account and, in the end, being members of a cohesive whole, or whether we are going to marginalise ourselves and stand on one side. In that event, our influence, which is already gravely diminished, will be diminished even further.
From the point of view of the economic and political future and its future in terms of security and defence, I have no doubt whatever where the true judgment lies. I hope that the time will come when the Government in turn realise that that is the position.
4.15 p.m.
Lord Callaghan of Cardiff: My Lords, there has been a remarkable harmony of view in the speeches that we have heard so far and I agree with much that has been said by all noble Lords. But the time has surely come to disturb a little that harmony by asking where the biggest obstacle lies to the achievement of the sentiments that have been uttered on all sides of the House this afternoon. It lies fairly and squarely with the Cabinet and with the Conservative Party. Therefore, I intend to discuss one or two matters about the Conservative Party, and I hope that I shall not offend too much any tender consciences which there may be opposite.
The peseta and providence have jointly saved the Prime Minister for the time being from the critics who have been snapping at his heels for so long. But I forecast that the lull will not last. They will be at him again before long. The irreconcilables among them will not let go so long as he fails to meet their fundamental challenge as to where he stands on the issue of sovereignty.
The argument in the Conservative Party—and it is in the Conservative Party—is taking place on two different levels. First, the questions which the men of business, the trade unionists, the economists and the financiers ask are will monetary union and a single currency keep down inflation? Will they or will they not lower interest rates? Will they stimulate growth? Will they reduce unemployment? And, generally, will they assist their businesses? Those are the practical concerns of practical people who ask whether it will work.
The second argument is basically the position of so many members of the Cabinet—people like Mr. Aitken and Mr. Portillo, who is a young man in too much of a hurry—and Mr. Lamont, who is outside the Cabinet, supported by their Whip-less sceptics. They would hesitate for an eternity before they would surrender—I had better not say a gram—an ounce of British sovereignty. Where have they been all these years? Since World War II Britain has been giving up bits of sovereignty through trade agreements and in our defence arrangements and so on whenever we thought that it was in the interests of our people to do so; and so obviously have our partners who have entered into agreements with us. They too have given up bits of their sovereignty because it seemed to be in our joint interests to do so.

289
Frenchmen and Germans have not found it difficult to combine a pride in their countries and different cultures with a strong sense of being European. In this country also I take the view that the growing experience of working with mainland European business men, with others in the professions and with skilled work people travelling in and out of Europe and working side by side has resulted in a growing understanding among the people of this country that we are no less English, Welsh or Scottish because we are also Europeans and that our national identity is no less strong because of that.
I wish that the Prime Minister would recognise that. I wish that he would say it clearly and take less notice of the sceptics. He would not ease his path with them, but he will not do that in any event. But he might be surprised by the strong favourable response which he would receive by giving a lead to our fellow countrymen. That would evoke support from a great many of us. I agree with the noble Lord, Lord Jenkins, that we should be reviving a positive approach among all of us who take that point of view.
Sooner or later; the Prime Minister will have to face the issue of sovereignty. The sooner he does so and says what I believe he really feels but is frightened to say at the moment, the sooner we can move ahead in that field.
The Conservative and Labour Parties are in agreement that Brussels should not become a superstate—nor that every form of economic and monetary union would lead to that. The Prime Minister is quite unconvincing when he pretends that a Labour Government would give everything away to Brussels. That certainly was not what we did. Giving an imitation of John Bull does not really suit his style; indeed, it is not in his character. It would be far better if he were to give that up.
A week ago I wrote some early notes for today's debate about monetary union. I included a paragraph that I should like to read to your Lordships. I wrote:
"The real test is not whether some member states can fulfil the required criteria for monetary union at certain favourable moments in the ups and downs of the economic cycle, but whether they can sustain those conditions over a long period. That is when the test will come".
When I wrote that I did not know that Spain would illustrate my point so quickly by devaluing its currency only a few days later. I speak as one who came to the conclusion some years ago that a form of monetary and economic union would be beneficial to Europe's position in the world of the 21st century. But I make that assertion subject to two conditions: first, that the system is so well adjusted, and the exchange rates are properly fixed, that it is capable of being sustained for an indefinite period; and, secondly, that its terms will not inflict the hardship and social evil of large-scale continuing unemployment on any of the member states which join.
In a number of member states at this moment their high levels of unemployment are not due solely to the ups and downs of the economic cycle but to long-term and permanent changes in patterns of trade and production caused by differential wage costs and productivity levels and, to some extent, by the effects of removing barriers to trade. In other words, as the economists say—so I am told—it is structural and not cyclical unemployment. Those changes will lead to semi-permanent high levels of unemployment, with their social costs and consequences, in some
290
of the member states unless mitigating action is taken to enable the displaced workforce to be re-employed. The first essential is a high level of education, with the flexibility which comes from that, and the retraining of those displaced, as well as sufficient capital investment in new industries and services to replace the old ones.
If that were to come about, Britain would need to be particularly careful not to repeat the error made when we entered the exchange rate mechanism a few years ago at the unrealistically high rate of 2.95 deutschmarks to the pound. Today's rate of 2.25 or 2.30 deutschmarks, or round about there, is more than 20 per cent. lower than the rate at which we entered. Owing to the vagaries of the market, I believe that it is a little too low at present. However, that emphasises both the fact that there are such vagaries in the market and the benefits that a fixed exchange rate would bring; but it must be at the right rate if and when such rates are fixed.
That will not happen in 1997. So let us put that to one side. An economic and monetary union will not take place at that time. It is difficult to forecast the future, but it may be—indeed, I think it will be—that in 1998 or 1999 (and we shall discuss such matters in 1998) that the economic skies will not be very much clearer than they are today. That is to say, there will continue to be high structural unemployment with member states at different stages in the economic cycle but with a nucleus of countries, with Germany as the anchor, whose economies will be durably convergent and capable of forming an economic and monetary union.
If that turns out to be so, the decision about the Union will then turn on the political will of the member states concerned and particularly on the political situation in Germany. Britain will have an option—thank goodness the Prime Minister negotiated that! I hope that we shall be able to exercise it in favour of joining if and when the time comes. But those who take my view must not allow the sceptics to make all the running in favour of a referendum. If there is at the time of decision a great difference of opinion in the country, we should be ready to put the issue to the people and fight it. I believe that we would win.
If we are to get the best result for Britain, we must apply our great technical skills to constructing a practical scheme that will not rely upon unrealistic assumptions and hopes. We are more likely to achieve that aim if our negotiators are believed by the other member states to be playing a constructive role in the discussions that take place at the IGC in 1996 with the intention of achieving a positive result.
That is not the position today. Instead, we have a paralysis at the centre of government on the matter—deciding only to be undecided, irresolute rather than resolute and positive only for inaction—deeply harmful to Britain's influence in the negotiations that lie ahead. The verdict that I have reached is that if we are to exercise the influence in Europe that our technical knowledge, our economic size, our history and our experience ought to command, it will require a different government than the present one.
4.25 p.m.
Lord Ezra: My Lords, it is a great honour to succeed the noble Lord, Lord Callaghan, in today's debate. The

291
noble Lord always speak wisely and with great and eminent experience. We are debating a major issue introduced so effectively by my noble friend Lord Jenkins of Hillhead. It is both important and timely. I believe that the issue is a very simple one: would it be more in our national interest to take up a positive attitude at the Inter-Governmental Conference in 1996 or a negative attitude?
All those who have spoken so far have been in favour of a positive attitude. I share that view. I believe that that can be demonstrated by analysing the issues which are likely to be raised on that occasion. My noble friend and the noble and learned Lord, Lord Howe, referred to the importance that enlargement will take in those debates. I believe that that is likely to be almost the dominant subject. Enlargement, which has been supported continuously by all British Governments, will be one of the most important political and economic developments of our time, arising out of the removal of the Berlin Wall. We shall be responding to that issue. I very much hope that British contributions to that debate will be positive.
As my noble friend pointed out, it is quite clear that, if we are to achieve enlargement of possibly another 12 countries from central and eastern Europe (thus making the total membership of the Community 27) with the total population rising from 345 million to 480 million, there are many things in the existing Community that started with six members some 40 years ago which will have to be renegotiated and rediscussed.
As has already been mentioned, the prime issue in that respect is the common agricultural policy with which we were landed as a country because we were so unwise as to walk out of the Messina negotiations in 1955. Had we stayed there, we would have negotiated something quite different. As it was, when we subsequently joined the European Community in 1973 we were confronted with that policy. Now, 40 years later, we have a unique opportunity to get that situation corrected. I very much hope that we will receive confirmation from the Minister when she responds that the Government have worked out what they want to say on that very important issue. The European Union could not afford to apply the same system with agricultural policy if it were enlarged to the degree envisaged. I look forward to hearing the Minister's reply in that respect.
Apart from that, we have to complete the single market to ensure that new members come into a market which is highly developed. We have already made substantial moves in that direction. Indeed, the noble Lord, Lord Cockfield, whom we had the benefit of hearing a short while ago, played a crucial part in that process. However, there is more work to be done. There are some sectors, such as energy, transport and telecommunications, where access is still restricted. Here, also, I believe that Britain can play a positive role. I say that because we have moved forward in those areas in our own country and can offer to our friends in the Union ways in which this could be achieved. That is the second area in which I believe we can be positive.
As regards competition policy, it is in our interest that we have a fair, effective competition policy and that policy must have a Community imprint. There is no
292
point in our working out our own competition policy for our own enterprises if every other country within the single market works out its own policy. There is a need for a common approach. One of the weaknesses in the European competition policy at the moment is the subsidies and state aids which some countries still provide to their enterprises. We have eliminated that in Britain; they have not. Here we can show the way. That is therefore a third way in which Britain can be positive to serve our interests and those of the Community.
As regards financial responsibility, we are continually urging the more effective use of the resources of the Community. We are also raising the question of the elimination of fraud. I do not think we can entirely blame the Commission for that. All member countries in one degree or another are responsible for some of the fraud that goes on. However, the Inter-Governmental Conference will be an opportunity for readdressing that question. I think that here, too, we can be positive.
I wish to touch next on social policy. This is rather more controversial. I feel that we made a mistake to opt out. The social chapter is a list of aspirations. So far, very little of those aspirations has been translated into practice. By opting out we have lost the opportunity of influencing the conversion of the aspirations into reality. I believe that there is an increasing recognition among our partners in the European Community that social charges have got out of hand and have to be reduced. In my opinion, we could have played a much more effective part in that debate had we not opted out. Nonetheless, I hope we can play some part in that issue.
Environmental policy is another major issue which arises, particularly when we are talking about bringing in the countries of central and eastern Europe where, for all sorts of reasons, their environmental policies have been lacking. We must work out ways in which European Union policies can be adapted to apply to countries which, for reasons they are probably not responsible for, have been unable to come up to our standards. That is another area in which we, with our notable achievements in environmental matters, can take a lead.
There will obviously have to be institutional changes as a result of the enlargement of the Community. The question of the Parliament has often been mentioned. I happen to believe that the role of the European Parliament should, if anything, be increased but there is a case for creating a second Chamber which could consist of, as has been suggested, people nominated from the existing parliaments in the member countries. In my opinion, the relationship between the national parliaments and the European Parliament is important. We must work closely together. I hope that some thought has been given to that.
Finally, I turn to the question of the single currency. I regret that this issue has been politicised at such an early stage. What we ought to be doing is seriously considering —as the noble Lord, Lord Callaghan, mentioned in the final part of his speech—the economic pros and cons. There is not the slightest doubt that we have already lost much control over monetary policy. In fact, in my opinion we lost most control over that on a precise day, 24th October 1979, when the noble Lord,

293
Lord Howe, was Chancellor of the Exchequer, and exchange controls were abolished. I fully accept that that should have been done, but we have to recognise that as a result of that abolition, and with the free movement of currencies throughout the world which has multiplied since, any individual government's control of its currency is limited. The only way to cope with that massive surge of currency movements—we have seen that in recent days—is to form a larger group. The big advantage of a single currency would be in that connection. The disadvantage could be that we could lose control in changing our rates of interest. Those are the issues we should be addressing. To sum up: I believe we could play a positive role in this negotiation on all the issues that I have mentioned.
4.35 p.m.
Lord Barnett: My Lords, I am sorry that the noble Lord, Lord Tebbit, will not be speaking. I assume that I shall not now have 18 minutes rather than nine in which to speak! On the other hand, I am particularly sorry because I would have wanted to disagree with the noble Lord and at the same time say how nice a fellow he is even though he tries so hard to be so nasty at times.
In the short time at my disposal I propose to concentrate on EMIJ and the single currency. I make it clear that I am in favour of Britain being a part of economic and monetary union in principle. I shall make clear why I say "in principle". The argument about the loss of sovereignty, as my noble friend Lord Callaghan pointed out, is of course something of a nonsense. We are talking about pooling sovereignty with other sovereign states, not about the loss of sovereignty in that sense. I believe, with my noble friend Lord Richard, that it is absolutely vital that we are inside the Community, playing a large part at the core of the Community. If we are not, we will be outside and that would he a disaster for our industry and for investment in this country.
Unlike my noble friend Lord Callaghan, I regret the opt-out that the Government took on the Maastricht Treaty for three reasons. First, I believe it was unnecessary for few will be ready to do what we are discussing—as everyone has said—in the timescale envisaged. Secondly, we shall be excluded because of that—and have been already—from crucial decisions on EMI and the Central Bank. Thirdly, we shall be left on the sidelines if we are not careful rather than being at the heart of Europe where I wish to see us.
My criteria for joining EMU were set out clearly in the Maastricht Treaty. They were, first, a high degree of price stability and inflation close to the three best performers. This the Government claim to have achieved. Secondly, sustainability of the financial position which we have without an excessive deficit. Again, the Government claim to have achieved this. Thirdly, observance of normal fluctuation margins inside the exchange rate mechanism and two years without a devaluation. Again, the Government claim to have achieved that. I am happy to congratulate the Government on having achieved that. How long it will last is another matter, because the question really
294
concerns the durability and sustainability of convergence. Those are the crucial issues and they are mentioned in paragraph 1 of Article 109J of the treaty.
That achievement of a high degree of sustainable convergence, to which my noble friend Lord Callaghan quite rightly referred, is vital because if we join in an economic and monetary union and do not have that sustainable convergence we are in serious trouble. However, I have other reservations beyond those which the Chancellor of the Exchequer set out. First of all, I have reservations as regards a high degree of sustainable convergence. Secondly, who on earth will assess that we and other member states have achieved that high degree of sustainable convergence? Apparently it is not to be the UK Treasury, which is perhaps as well. It will be the Council acting on reports by the Commission and the EMI not only on the criteria I have referred to but also taking account of the development of the ecu, the results of the integration of markets, the balance of payments on current account, unit labour costs and other price indicators. That is a somewhat difficult task for one country; for 15 or more, to put it mildly, it is even more difficult.
I turn next to the European Central Bank. As at present proposed, it is to be a wholly independent central bank. I know that some can see the advantage of that. But it takes out of the hands of mere politicians the idea of controlling inflation: that it should be in the hands of central bankers who know more about these things. With great respect to central bankers, I prefer some control by politicians, who at least have to be elected on a reasonably regular basis in a democracy, even though they may get it wrong from time to time. But we in this country have already sold the pass on an independent central bank. Our Chancellor has given the Governor of the Bank of England that power. There are monthly meetings and the minutes are published later. Being a naive sort of fellow, I assume that the Governor and the Chancellor do not severely massage the minutes. We therefore have, effectively, an independent UK central bank.
That brings me directly to the question of a single currency and my third reservation. It is not as to whether we should join. I believe that we must. It is as to how and when. The single currency issue has caused the greatest anger and emotion among those on what is called the Eurosceptic side. I cannot understand why that should be because it is not going to happen now; it is not even round the corner. I believe that we can ignore the present panic in relation to the deutschmark; that is a quite separate issue. I think that it was the noble Lord, Lord Cockfield, who asked why a Minister was not opening the debate. On this crucial issue at the centre of the arguments, a Minister can only say that the policy is to decide not to decide. I have a great affection, as she knows, for the noble Baroness, Lady Chalker. But she cannot say anything else on that aspect of the problem. She can only say that the Government's policy is to decide not to decide.
The single currency needs all those criteria to be met. Then by 1st July 1998—that is only three years away—by a qualified majority vote and taking account of the opinion of the European Parliament, the Council will

295
decide which member states fulfil the necessary conditions. With great respect to the European Parliament and the Council, they, no more than any UK chancellor, in July 1998 will he in a position to decide on sustainability and durability of exchange rates and other factors. They will not be able to. It will not be possible in three years' time. It may be for Germany but not for many others. That argument certainly applies to the exchange rate problem. I agree with my noble friend Lord Callaghan and the Governor of the Bank of England that to lock into a fixed exchange rate when one does not have that sustainable convergence could be disastrous for any member state which did so. So it will be some time before we are in a position to join.
If and when we do decide, whether it be in three years, 10 years or whenever, the argument on the other side of the debate is that it is a major constitutional issue. In my view that is a bogus argument because in practice it is a purely economic and financial issue, as the Chancellor of the Exchequer has argued. The bogey put forward by the sceptics is quite wrong and should not be deployed., But if my reservations are met, and sustained and durable convergence can be obtained, then I am very much in favour of joining in a single currency and economic and monetary union. But that would be primarily on economic and financial grounds. At that stage—and it may be a long way ahead—we would no more be giving up our basic constitutional rights than would Germany, France or any other member state.
As I have argued before in your Lordships' House, to talk about a federal Europe is another bogey. The plain fact is that if we had the kind of federal Europe which is spoken of, member states would probably have greater subsidiarity than they now have. So that argument is another bogey which sceptics use against the Community and one with which I totally disagree.
In any event, for the reasons that I have given, the time when we shall be ready to join economic and monetary union and a single currency is way ahead. I doubt—and I regret it—that it can be achieved by 1st January 1999. But I hope that we shall be in a position to join. If we are in such a position, since I wish to play a positive role in the IGC next year—I refer to the terms of the Motion—I hope that we shall make the position crystal clear.
4.45 p.m.
Lord Boardman: My Lords, like other noble Lords, I welcome the opportunity that the noble Lord, Lord Jenkins of Hillhead, has given us to speak on this important subject. In some speeches there has been a suggestion that we have been playing a negative role in Europe to date. I remind noble Lords of the very positive things that have been achieved: the single market, attacks on fraud, and so on. I must confess that I was a little disturbed by what the noble Lord, Lord Callaghan of Cardiff, said, involving criticisms of the Prime Minister and the Conservative Party. It was implicit in his remarks that the Labour Party had been a consistent supporter of Europe. However, as we all know, no party has ever changed sides more on that specific subject than has the Labour Party. The noble Lord also suggested that business was critical of the
296
stand now being taken by the Government. However, all the information that I have—I include information from a luncheon today at the CBI—is that business is strongly supportive of the line taken, and laid out in another place by the Prime Minister recently.
I shall have an opportunity to refer to the comments of the noble Lord, Lord Barnett, in a moment. However, I believe that there are areas in which we should play a positive role, and that we have a major contribution to make before the 1996 conference. We have already done a great deal of work on fraud. The Select Committee of this House has set up some clear guidance on things that should be done. There is some disappointment that they are not being done in the way that we suggested. But I believe that there is a positive role for the Government, and indeed by mechanisms such as the Select Committee of this House in that field during the time ahead.
My second point refers to the CAP. A number of noble Lords have referred to the unsatisfactory nature of the policy and how impossible it is to operate it at the same time as we seek to achieve enlargement. The two do not go together. I doubt whether it is possible to have a common policy which will cover such diverse agricultural regimes as Finland, Greece, Denmark and Portugal, for example. To achieve a common policy which suits all those member states seems extremely difficult. There was some tinkering with the policy in 1992, but it was only tinkering, which I do not believe will survive long, certainly with the growth of Europe which we hope and expect to achieve. Repatriation of the CAP would be a long step backwards. However, that may be the only alternative unless in the meantime we can produce some policy which fits those disparate agricultural regimes.
I turn to a subject which has been predominant in the debate: the single currency. I shall not enter into the arguments relating to why or why not a single currency is desirable. It has been debated fully. I strongly endorse the line that has been taken. It was set out clearly by the Prime Minister in a speech in another place recently. I believe that a single currency, monetary union, must lead to a degree of fiscal union. If one has a fiscal union, I find it difficult to envisage how one can avoid political union.
It may be many years before a decision has to be taken, but I believe that we should consider the alternatives. There is a role for a common or parallel currency which could serve many of the purposes that a single currency would achieve, without bringing with it the complications and downsides of a single currency.
One may well ask why we want a single currency. Some want it because they believe that it produces a certain political control. Putting that on one side, however, the answers given by most people to why we want a single currency are the following. Some people say, "If I am travelling abroad, I take £1,000 in my pocket. I start in London, I cross every frontier in Europe and come hack with no money left, it has all gone on exchange controls". I am sure that noble Lords have heard that many times, but it is nonsense. Anyone going to Europe today need take no cash except perhaps tips for porters; otherwise one takes a credit card and

297
Euro-cheques. Whether or not there is a single currency is therefore immaterial. There are those who want a single currency because it would assist trade. I agree, it would and to that extent it has some plusses. However, if today one accepts an order to supply goods to Hamburg for delivery in three months' time, it is possible and easy for the bank to arrange straight away for the money which will be received in sterling when the goods are delivered in three months' time. Banks now produce low value cross-border payments and I believe that that can be accelerated and made cheaper, and it should be done. It would avoid some of the difficulties which might otherwise exist.
Of course, there would be currency risks. We have seen what happened this week in Spain and Portugal. Thank goodness we are not in a single currency with them at this time. I suggest that in a common or parallel currency we should be able to protect ourselves against that type of risk with the hard ecu that was thought through some years ago. It was, I believe unfortunately, abandoned, but a type of hard ecu should be reconsidered as a common or parallel currency which could be introduced without our being forced into painful decisions, appearing to be reactive to a single currency. We would be proactive in suggesting an alternative which would serve the people of this country and business and industry well.
That course has many advantages. It would overcome the political, economic and practical difficulties of a single currency. It would enable the achievement of a desired objective to have a currency which is weighted so that a sudden change in one of the exchange rates would have a diluted effect on any transaction. It would leave everyone with the option of whether to use it. People could decide whether they want it, whether they prefer to deal in sterling or marks or to use what, for these purposes, I call the "hard ecu".
That policy could evolve into a single currency over time. If it did, it would only be because it was wanted and had been truly product-tested. It would have gone through all the processes and we would see how it operated and whether it worked. It would be a voluntary decision whether to use it. That would be a proactive way—to use the description of the noble Lord, Lord Jenkins of Hillhead—and we would not sit back waiting to say "no" to a single currency, if that were the decision. In the meantime, we would take a positive role in developing an alternative, if we pushed the suggestion forward, examining it to see whether it would serve Europe better than any of the other courses.
4.54 p.m.
Lord Roll of Ipsden: My Lords, I apologise to the House if, as seems likely, I have to absent myself before the end of the debate. I hope that the House will, as usual, be indulgent. With other speakers, I am deeply grateful to the noble Lord, Lord Jenkins of Hillhead, for having initiated the debate on a subject on which he speaks with great experience and authority. It comes soon after the debate in another place which was
298
overshadowed in the public interest and in the effect it had on public opinion by the political arithmetic of the moment.
The House has the opportunity today—which it has already taken—to show once again that it can debate a serious subject seriously. There can be no doubt about the seriousness of the subject. The problem of our relations with our neighbours in Europe, of their aspiration for unity and our reaction to it has been fateful for 50 years. It is a fair guess that it will remain so for many years to come.
Recently, I have indulged in the liberal use of that freely available commodity, hindsight, to review some of our policies over the past 70 years, including our policy towards Europe, based on my experience. I am afraid that the list is pretty lamentable, whatever views one may take as to what should or should not be included. The uncertainties, hesitations, ambiguities and equivocation and often the downright hostility to what was going on on the continent rank high in the list of errors. Perhaps second to none, in view of the amplitude of the concerns it covers for our well being, is our policy towards Europe.
I said that I wanted to draw on my own experience. The Motion refers specifically to the negotiations which are to take place next year in the Inter-Governmental Conference. On that subject I shall say nothing except that I agree largely with what was said by the noble Lords, Lord Callaghan and Lord Barnett. I add one point which is often overlooked on monetary union. It is that closer monetary arrangements have a powerful influence in promoting economic convergence. The emphasis has been almost entirely the other way, yet not only can the opposite be demonstrated in economic theory, but the experience of the countries that belonged to the exchange rate mechanism before we joined it bears out that contention. That is something that should not be forgotten.
I had the privilege for over 20 years after the war of being much involved in European matters, in the inception and development of policy in Whitehall and in its execution by means of international negotiations. When I look back at my own experience, I am struck by two facts. One is that, despite the ravages of war which so impaired our strength, at that time we still had enormous assets at our disposal—military and strategic, diplomatic and political, even economic and financial and certainly intellectual and, above all, moral.
If we leave aside the special position of the two super powers, and if we look particularly at Europe, the sum total was infinitely greater than that of any other country at the time. It would have entitled us, had we so wished, to take the leadership in the European movement. Indeed, at that time, our liberated allies and our former enemies were thirsting for leadership and looked to this country for it. It was an opportunity which I am afraid we threw away.
Another point is that from that time on we carried with us an enormous amount of ideological baggage which prevented us from taking a simple, free and down-to-earth view of our interests in regard to the European movement. The components were many and varied. There were specific ones like a misguided belief

299 s
in the durability and significance of the sterling area; a misguided belief in the durability and significance of many economic arrangements with the Commonwealth which proved to be evanescent. Above all, there was the fact that the view across the Atlantic seemed much more seductive than the view across the Channel. That was due to the half real, but also, alas, to the half illusory belief in the special relationship with the United States. We carried that through; in the Marshall Plan already those vociferous tendencies were present. We refused to join the Coal and Steel Community, maybe largely due to the nationalising proclivities of the Labour Government of the time. Certainly, some of us believed that the Treaty of Rome and the European Community were far too liberal. Others believed that they were far too dirigiste. Obviously, they could not be both at the same time.
'At any rate, when we came to make the first attempt to join the EEC in the early 1960s, despite the vision of Harold Macmillan and the skill and determination of Edward Heath in one and a half years of negotiations, we failed. Of course the proximate cause of that failure was the veto of General de Gaulle. But that veto, in my view, was facilitated very greatly by the uncertainty of our own position at the time, whereby we had to address two very different audiences—our prospective partners in Brussels and public opinion at home—at one and the same time in two different voices. At any rate, in the end the General prevented us from joining.
While I am on the subject of the General, perhaps I may mention one point to which the noble Lord, Lord Callaghan, indirectly referred. I believe that everybody here is aware of the fact that nobody could have been more mindful of the interests of his country than was General de Gaulle. He had a most exalted view of the grandeur of France and of the overriding duty to safeguard her position. But he, too, in the end came to the view that that purpose was best achieved inside the Community rather than outside. It may well be that the prospective entry of a powerful newcomer was not at all welcome to him. I believe that he genuinely had an element in his make-up which convinced him of our "un-Europeanness", perhaps our "anti-Europeanness", at that time. At any rate, it was another 10 years before we joined the Community and started on the laborious way back to retrieve our position.
The next test came in 1979, when the Community instituted the European Monetary System, for which the noble Lord, Lord Jenkins, alongside Helmut Schmidt and Giscard d'Estaing, must take credit. When it came, we joined it—but even then, barely half-heartedly. We did not join its most important operational part, the exchange rate mechanism. Even then I thought that the grounds for that refusal were sophisticated, in the worst sense of that word. It was again over 10 years before we joined the ERM. When we joined, we did so—as the noble Lord, Lord Callaghan, has already pointed out—at far too high an exchange rate to the D-mark; and moreover, by all accounts, without adequate, perhaps without any, consultation with our partners. This was not merely a question of courtesy. In joining the
300
exchange rate mechanism, we put our partners under certain specific financial obligations. That certainly required careful consultation on the terms of our joining.
However, we extolled both the exchange rate mechanism and our membership of it as the finest things that had happened since sliced bread. We maintained that position right up to the moment when we had to abandon the ERM. When we did so, we declared triumphantly the next day that we now had a fiercely competitive exchange rate. I know, as do many noble Lords, that economics is a many splendoured that sort of double talk really will not do.
Now we are faced with the prospect of the negotiations next year on the back of the Maastricht Treaty. All I can say is that there are several broad requirements if we are to make the negotiations successful. My remarks are very much along the lines of what the noble Lord, Lord Cockfield, has already said. We have the opportunity next year to retrieve a part—perhaps a large part—of the position that should rightly have been ours half a century ago. Whether we shall in fact do so, remains to be seen. We shall certainly not do so if we go into the negotiations with that curious inferiority complex that regards Brussels as an overwhelming bureaucracy. Of course it has those tendencies and, like all bureaucracies, it requires constant vigils. But the idea that it is a sort of malevolent monster—as I heard last week, when a Member of another place declared that to work constructively with Brussels means (if I may use her elegant turn of phrase) "rolling over on our backs with our legs in the air"—really is an absurdity. It is an affront to the loyal and capable people who represent us in all the institutions of Brussels. We must get rid of that attitude.
Furthermore, we must at last demonstrate—not on this or that particular issue, but right through the negotiations—that we believe what our neighbours on the Continent have believed for so long; namely, that the unity of Europe is an important objective and one that we hold dear. It had a powerful rebirth after the war, first, because of a determination that the fratricidal conflicts that had disgraced the century should never happen again, and, secondly, because of the belief that the world power map, economic and political, was radically changing and that the unity of Europe was a correct response.
If that was true then, what about the changes that have taken place more recently to which reference has been made? I refer to the collapse of the Soviet Union; the changes in central and eastern Europe; even the changes in that great power across the sea, the one remaining super-power, in its interests, its orientation, its foreign and economic policy and so on? Surely it is more true than ever that we must all hang together. Otherwise, most assuredly, we shall all hang separately. If we enter the negotiations in this way, we may retrieve some of our position. If we do not, I am afraid that, contrary to the wishes of the Prime Minister, who wants this country to be at the heart of Europe, we may well end

301
up in a very different part of the anatomy. Moreover, we shall be making Europe all the poorer and all the less effective.
5.5 p.m.
Lord Gilmour of Craigmillar: My Lords, the noble Lord, Lord Callaghan, referred to the remarkable harmony of this debate and undertook to disrupt it. However, I do not believe that he really tried. I think we were all relying on my noble friend Lord Tebbit to do that without really trying. We certainly regret that he has been unable to do so. I have no such ambition. But I should like to look briefly at the reasons for the increased public hostility to Europe to which my right honourable friend the Prime Minister referred in the debate last week.
My right honourable friend Sir Edward Heath had no doubt at all about the reasons for that. He said flatly that nothing had been said in the past 15 years by the Government in favour of Europe; there had just been unjustified condemnation. I do not believe that my noble and learned friend Lord Howe, who made an admirable speech this afternoon, would quite go along with that; nor would I. But we would perhaps agree that there is a substantial amount of truth in it. Very often, the positive case for Europe has not been put, and that has had a considerably deleterious effect on public opinion.
A much more important influence on public opinion has been that of the British newspapers—if indeed they can properly be called either British or newspapers. We have had an almost continuous barrage of British, or rather English, nationalism. It is not the sort of English nationalism that was referred to so well by the right reverend Prelate, but a nationalism and anti-Europeanism on the part of the owners and editors and of some British politicians. Such people's nationalism is extremely selective. They do not turn a hair when great swathes of British industry are bought up by foreigners and come under foreign control, or when the same thing happens in the City. But they get extremely worked up when there is even a thought that British sovereignty, so-called, may be infringed; and when the European Court of Justice finds for a British subject against the British Government, they whip themselves into a frenzy of nationalist hysteria—always carefully failing to consider either the merits of the case or the fact that the British subject has won his case and has benefited.
As has already been said by the noble Lord, Lord Jenkins of Hillhead, and others, the most virulently nationalist of our newspapers are owned by foreigners. They are multinational corporations. That no doubt explains their benevolent attitude to foreign multinational corporations buying up British industry. So we have a press that is in large part foreign-owned, stoking up resentment against the foreign countries that are closest to us. Oddly enough, the multinational corporations do not seem to have realised that they are sawing off the branch on which they are sitting. If ever Britain does become the sort of stridently nationalist and unpleasantly xenophobic country that they seek to bring
302
about, such a nationalist state would lose very little time in taking over and in seeing that our newspapers and television were owned by English nationalists.
In any case, the nationalism of our Euro-haters in the press, in parts of the Conservative Party, and indeed in the Cabinet, is, as I said, remarkably one-eyed. They are less concerned with real control over our affairs than with the trappings of sovereignty, of which the noble Lord, Lord Callaghan, and many others have spoken. So long as Britain retains its so-called parliamentary sovereignty—whatever that means in 1995—they are happy for everything else to be multinational or foreign controlled. In fact, as noble Lords will agree, no country today can be economically sovereign, not even the United States—certainly not Britain. Furthermore, I do not believe that our Euro-haters in the press and elsewhere are concerned with patriotism in the Burkean sense. As he put it:
"to make us love our country, our country ought to be lovely".
Instead, they concentrate on abusing our foreign neighbours. The English football hooligans to whom the right reverend Prelate referred are a caricature of our Euro-haters; but the caricature is recognisable.
But in reality, the strident English nationalist and anti-European propaganda has much more to do with ideology than with patriotism. Over the past 15 or 16 years, we have become probably the most Right-wing country in western Europe. That is quite new in our history. I do not think that it has ever happened before. In consequence, we are out of step with our European partners who have kept to a sensibly centrist course. So the Far Right English nationalists look to the even more Right-wing United States, although the United States does not look to them or even at them. And they disapprove of our allegedly socialist and bureaucratic partners in Europe.
In consequence, they—and, I am afraid, sometimes even the Government—talk what to me seems an extravagant amount of nonsense about such matters as the social chapter. I hope that when my noble friend the Minister winds up, she will tell us which parts of the social chapter any reasonable, one-nation Tory could or should find objectionable. In any case, if the Government became a good deal less Right-wing, many of their difficulties would disappear and their position would be greatly strengthened both at home and in Europe.
I very much hope that the Government will play a positive role in the Inter-Governmental Conference and that on Europe it will also be more positive both in the country and the party. If they put the positive case for Europe, as my right honourable friends the Chancellor and the Foreign Secretary have recently done, they will soon find that public opinion will spring back to its customary position in the centre and away from where it is now and that British politics will become a great deal more healthy than they recently have been. But the Government must give a lead.
5.14 p.m.
Lord Clinton-Davis: My Lords, it is always refreshing to listen to and to follow the noble Lord, Lord

303
Gilmour. The views that he has just expressed perhaps explain why he had certain difficulties with the former Prime Minister. They were views that I believe were well worth hearing.
I propose to put forward today from the Back Benches views which are personal to me about the Inter-Governmental Conference and certain proposals that I should like to see coming out of that particular deliberation. There is a story, which may be apocryphal—I know not—about Mr. Portillo (or perhaps it was Mr. Lilley). The Minister went to a press conference and a very penetrating journalist asked him, "Minister, why is it that you and so many of your colleagues are so hostile to the European Union? Is it ignorance or apathy?" The response was "I don't know and I don't care".
Unfortunately, it often seems like that. I do not see that that attitude can in the least help Britain to be at the heart of Europe, as so many of your Lordships so obviously wish. It was extraordinary that not so long ago the Prime Minister himself indicated in terms that he wanted to see progress stultified so far as the Inter-Governmental Conference was concerned. That was an extraordinary proposition in the light of the challenges facing the European Union in the years ahead, not least in terms of first deepening and then widening it. It is as though somehow or other the Government have lost confidence in their ability to persuade others in the European Union. I believe that, if we were seen to be more fully involved in the debates as full members of the European Union, our voice would not go unheeded.
There is an emphasis on the negative, the veto, the opposition to any extension of qualified majority voting and curbing the power of the European Court of Justice. Those are matters which arose at Question Time today and about which I sensed a certain degree of ambivalence on the part of the noble Baroness who replied. Nevertheless, Mr. Portillo has supported it. There is the whole question of the opt-outs, to which reference was made by the noble Lord, Lord Gilmour. The opt-outs have already cost us the possibility of siting the Central Bank in this country. That is a rather serious loss. But there is also the meaningless opt-out in relation to the social chapter. The Government's view is simply being ignored by the many conglomerates which have interests in this country and the rest of the European Union; and so social policy is being enacted in practical terms.
I believe that the Government are drowning in a mounting crescendo of contradictions. They welcomed qualified majority voting—quite rightly in my view—to facilitate the extension of the single market. They acquiesced in an extension of qualified majority voting so far as concerned the environmental chapter of the treaty, when they agreed to Maastricht. Now, when they proclaim their determination to secure substantial changes in the common agricultural policy, not least in terms of how that will apply to a widened Europe, they mount an onslaught on qualified majority voting, which is the only practicable means of achieving that and many other objectives. How do they contemplate widening the Community unless many of the institutional situations
304
with which we are faced today are substantially reformed? That will require powerful and positive decisions to be made at the Inter-Governmental Conference.
I want to add some observations to the discussion that we had earlier today about the European Court of Justice. If the Government or any members of the Government are serious about curbing its powers by saying that politicians should be able to review or revoke decisions of the European Court of Justice by qualified majority voting at the Council of Ministers—which, in itself, is a contradiction in that sense, because here they are talking about an extension of qualified majority voting—it would deal a very severe blow to the rule of law on which the European Union has to be founded. It is quite wrong for Ministers even to contemplate that idea. As Dorothy Parker once said, in a totally different context, "I don't think that idea should be lightly tossed aside; it should be hurled aside with great force".
We have to ask how best we can protect British interests. As was said at the very beginning of the debate by the noble Lord, Lord Jenkins, and the Leader of the Opposition, it can only be done by our being a full member of the European Community and by adopting a starkly different position from that which the Government have opted to take on so many issues.
I want to refer next to the whole question of the democratic deficit. Not much has been said about that today but a great deal was said about it at the European summit. Many bold declarations were made about how it was necessary to introduce more transparency, particularly at the level of the Council of Ministers. Unfortunately, very little progress was made, but I noticed some very helpful support from the noble Lord, Lord Inglewood, in a rather different capacity. Not so long ago, in April 1994, he said:
"The Council of Ministers is probably the only legislature in the free world that meets behind closed doors, and that state of affairs should not continue".
That is a pretty authoritative source, sitting where he does today. I hope that he continues to share that point of view and that he has some hope of influencing some of his colleagues in that regard.
What he had to say then is absolutely right. It is clear that decisions which are so central to the interests of the citizens of the Community should be divulged to them in a way that does not happen today. I wonder whether it would not be appropriate to enable the President of the European Parliament, or at a lower level the members of the relevant committees, to be present at meetings of Councils of Ministers. That might be a good way of ensuring that fairness should rule.
I also believe that the powers of the European Parliament need to be enhanced still further beyond the Maastricht Treaty. It is, after all, the only democratically elected institution. It should have the power to initiate legislative proposals where the Commission has failed or refused to do so over a period of years—it does not matter for how long—when the Parliament has requested that a particular proposal should be brought

305
before the Commission. It should have the right to approve the nomination of the President of the European Commission.
Of all the policy areas which are undertaken by the European Union, and in particular the Commission, the environment is by far the most popular. That has been revealed in European poll after European poll. It is perhaps wrongly seen by so many people as a kind of court of appeal against the anti-environmental activities of member states. But, contrary to the view of the Foreign Secretary in his discredited "nooks and crannies" argument, I believe it is essential that when it comes to the question of implementation and enforcement of European Union environmental laws—there are far too many breaches—powers should be provided to the European Commission or the European Environmental Agency to enforce the laws along lines comparable to the enforcement of European Union competition law. There should be a small inspectorate and action against the undertaking and not simply against the member state which is in breach. There should be the imposition of a fine to stop the mischief in its tracks and the right of appeal to the European Court of Justice. I do not believe that the power which has been vested in the court by Maastricht is anything like sufficiently practicable. The taxpayer would pay if fines were levied against member states and certainly not the polluter.
Time demands that I finish and so I shall end on this note. I believe passionately that we have to play a real part in the development of the policies relating to the future of Europe. It has to be a more democratic, vibrant, purposeful and efficient Europe. It is essential that we should exercise our influence. Arguing for Britain and arguing for Europe are absolutely synonymous, That is my profound belief. I hope that it will he reflected in our attitude at the Inter-Governmental Conference.
5.24 p.m.
Lord Thomas of Swynnerton: My Lords, ghosts in this House, of whom there are many—in fact there may well be more than there are Members present —would remind us that Britain spent the last part of the 19th century not making up its mind satisfactorily over Ireland. It looks as if there is a danger that Britain may be condemned by historians for having made the same kind of mistake in relation to the end of the 20th century over Europe; because, as many noble Lords have pointed out, Britain's voyage to the heart of Europe has been one of the most round about journeys ever undertaken since Christian embarked on the Pilgrim's Progress. We now know, at the end of the 20th century, that good novels do not necessarily have to have a happy ending.
The European Union, as it is today, was conceived by Monsieur Monnet largely for three reasons: first, in order to achieve common economic policies which would avoid the catastrophes of 1914 and 1939; secondly, to try to achieve a European economy which would be a satisfactory challenge to any conceivable rival; and thirdly, to try to ensure that Europe's overall
306
political interests were borne in mind in the destiny of the world. The first of those aims has been achieved; the last two, as yet not fully.
Behind all these policies was the sensation that the European nation state in the 1950s—even the largest European nation state—was not large enough to be effective, a point of view which most of our colleagues and partners on the European Continent now accept by second nature but which many members of our own population do not seem to have done. Of course, M. Monnet did conceive with his colleagues that, in the long run, they should try to achieve a United States of Europe—M. Monnet had an action committee for that purpose—but the fact is that neither he nor they ever sought to achieve a federal European state with a federal government, a federal civil service and a federal police.
On the contrary, they always conceived the present situation, which is that the directing body in Europe is the Council of Ministers, a group of individuals who are responsible to the nation states—their own nation states, their own parliaments and their own electorates. The absence of coercive power at the level of the Union, as we now call it, is the most remarkable, interesting and in some ways extraordinary aspect of this great political innovation. The nation states carry out what the Union decides. There are no Community agents to carry out those decisions. So how can there be a serious danger in what has been achieved up until now of a federal state, as so many Euro-sceptic members of the Conservative Party assume?
It is fair to say that this idea of shared sovereignty, so well described by the noble Lord, Lord Barnett, is a new one and something which is a challenge to classical ideas of political philosophy, but there is no reason why such innovations should frighten us.
There is of course the possibility that the functioning of the European institutions may seem not to be able to work in the end without the establishment of a federal state. I have often thought that myself. Certainly it is true that the area of competence between the state and the Community is not clearly defined, even after Maastricht which devoted so much attention to the idea of subsidiarity. Certainly the construction of a federal constitution would resolve more easily than any other solution the question of the democratic deficit, to which the noble Lord, Lord Clinton-Davis, referred. However, the probability is that the existing institutions, basing their legitimacy on the continuation of the nation state collaborating with other nation states as we now have, will be able to work quite satisfactorily for the foreseeable future.
I believe that the test is European Monetary Union. If Europe can achieve a common currency without a federal structure then surely it—we—can do anything. The question of whether to have a full federal structure can be delayed indefinitely and at least until such time as the maximum number of candidate states will have joined in something like the year 2020. That is the year when many of us in this House will look forward to repeating this debate and having a full and final discussion on the matter.

307
All these innovations have sat ill to some extent with this country. Britain has felt ill at ease with these tremendous innovations. It is perfectly understandable why, in the 1950s, many felt that our nation state still with imperial power was adequate for our foreseeable needs. In 1995, however, it is much more difficult to understand why that attitude should survive. It certainly seems to have survived even though we are, if anything, more ill at ease with the European Community than at any previous time.
This is particularly a matter within the Conservative Party. It is a party where one Conservative hostile to the European Community can accuse another in favour of it of being "a Pétainist" adapting himself to the new European order, as one such person did to me only two nights ago. This mood derives not from national pride or even a memory of past greatness but from a new mood of provincial nationalism which is extremely destructive.
I wish to say two more things. First, I strongly believe that my noble friend Lord Cockfield was correct in saying that it is an illusion to suppose that we can return to something like a common market and a simple customs union between nation states after 40 years of European integration. Anyone who believes that is like someone coming into this House and supposing it to be primarily a cricket club. Anyone who believes that we should try to establish a customs union instead of what we have already should have the courage of his convictions and advocate, like Mr. Norman Lamont, full withdrawal.
Britain outside the European Community is not an impossible concept. Many of us would like to know more about what those who claim that as a possibility believe the outcome would be. At first sight it would appear to be a rather bleak and austere possibility. I wonder whether those who advocate such an eventuality would allow those of us who remain in this country in those circumstances to maintain ecu bank accounts.
5.34 p.m.
Lord Harris of High Cross: My Lords, I fear that I am rather ill-prepared to stem the tide of so far mostly uncritical Euro-enthusiasm. I am bolstered by the fact that further down the list of speakers there will be support coming to my help. We have missed the contribution of the noble Lord, Lord Tebbit.
I say that I am unprepared because I learnt of this debate only this morning. I have just returned from Italy where, some will be shocked to hear, at the invitation of the British Council I have taken part in a debate with an Italian, Professor Comba of Turin, on the issue of free trade and economic co-operation. I hardly dare hope that the remarks I draw from my paper will be as well received here. I was totally astonished. Older people in Italy drawn from the Oxford and Cambridge Society, among other exemplary bodies, acknowledged that Italian enthusiasm for Brussels had hitherto been due to total disillusion with their own political and economic muddles. They said that anything would be better than Rome. Older people in Italy regretted that younger Italians did not share that view. They were much closer
308
to the Thatcher view. They described it as the Berlusconi and Antonio Martino view of the last government.
I was shocked to hear the noble Lord, Lord Thomas, speak about a "simple customs union" as though it were to be despised as a marginal addition to economic policy. On my argument the Treaty of Rome is based on the central idea of promoting the lasting peace of which we have heard, by replacing economic nationalism with a framework for a competitive common market. That was a central notion of the Treaty of Rome. I shall not provoke hostility by developing the theme that follows from that beyond saying that the case to economists was that in place of protectionism and autarky, which caused so much trouble before the war and which Adam Smith had denounced as mercantilism, the founders of the EC principally backed the notion of integration through economic trade and investment by removing tariffs and non-tariff barriers to the free movement of goods, services, capital and people.
When apologetic British spokesmen say that we are isolated or marginalised in Europe and the noble Lord, Lord Ezra, says that if we had been in it earlier we would apparently have refashioned the entire operation to our taste, they ignore the totally different tradition in political economy and economic philosophy on the Continent of Europe from that prevailing in this country. Classical liberalism never won the intellectual ascendancy on the Continent that it achieved in Britain during the 19th century. Apart from a few isolated economists such as Einaudi, Rueff, Erhard, Ropke and a few others, the prevailing philosophy owes much more to the intellectual tradition of Catholic social doctrine. That is closely linked with corporatism, which is a somewhat elusive concept. I argue that corporatism is redolent of the seven Cs, beginning with consensus and conformity, going on to co-operation and centralism, and then collectivism, carve-up and not forgetting corruption, and all the time increasing coercion. That is the corporatist tradition.
The impact of the Catholic social doctrine on the Continent has been reinforced by the way in which proportional representation has led to fragmentation of government support. It has enfeebled governments—and Italy is a classic case—where party apparatchiks become very powerful; there is a premium on coalition, compromise and backstage deals between political elites disregarding entirely public opinion and always favouring a consensus which has little merit necessarily to the balance of argument in the case.
In 1971, before the referendum, the Institute of Economic Affairs, in which I must declare an interest, having run it for some 30 years, produced a classic paper with a most important title, Rome or Brussels? It posed a real choice between the liberalism that was inherent in the Treaty of Rome and the burgeoning bureaucracy that was already visible in 1971 in Brussels. Since the 1980s, it has daily become more clear that the bureaucrats of Brussels have triumphed altogether over the Rome liberalisation.
This week, the same institute (without my wise guidance) produced a further paper, which I am allowed to advertise, called The Centralisation of Western

309
Europe—not by what the noble Lord, Lord Gilmour, would call a "Euro-hater" or a "Euro-hooligan" but by one of the leading German economists, Professor Roland Vaubel. I advise your Lordships to watch Vaubel as a likely entrant in the next 10 or 15 years for a Nobel prize. Vaubel shows that instead of encouraging trade, integration, closer relationships and interrelationships through trade based on mutual recognition, whereby the products and standards that are acceptable within any member country can be exported freely throughout the whole Common Market, the Commission and its apparatchiks have exploited the plausible pretext of "harmonisation" and "level playing field" to set about flattening and homogenising the very differences in costs and qualities on which a large part of free trade fundamentally depends.
Helped by the Single European Act, which had the aim of completing the market by 1992—it is still, alas, incomplete—we had the great development of qualified majority voting which was necessary in place of the old veto. However, as a result—an unintended result—there has been a tidal wave of Brussels legislation. According to Vaubel, at the last count there were 24,000 regulations and 1,700 directives. He argues that despite recent talk of "subsidiarity", they are growing at the rate of 1,500 regulations and 120 directives per year.
What emerges from Vaubel's study, which is a very close and intricate economic analysis of the whole operation, is that there has been a tremendous development of lobbying. He reveals that there are now 3,000 lobby organisations and 10,000 lobbyists in Brussels. He quotes the calculation that 70 per cent. of Community legislation and subsidies is concerned with special interest groups, including the common agricultural policy. He explains that lobbyists find it easier to tackle the bureaucrats who enjoy enlarging their bureaux and who are not subject to the same restraint of democratic control as politicians, who can often tell a lobbyist on the make.
The noble Lord, Lord Gilmour, asked what was objectionable about the Social Charter. I probably have the time to answer that question for him. It is perfectly clear that when you introduce free trade in a Europe that has had a history of Colbert restrictionism over the decades you will have a varying impact on different parts of the market. Some countries will fare worse than others and their interests will be badly affected. The only solution to that is to develop a flexible labour market. That is a phrase that the Liberals find rather distasteful, but a flexible labour market has enabled the great countries of the Far East, such as Hong Kong, to adapt to changing opportunities and to shift resources, such as labour and capital, into industries where the prospects are better. Instead of that, the EEC backs the Social Charter. You even hear nominal Liberals like the noble Lord, Lord Ezra, asking what is wrong with it and saying that we should get in there.
For the information of the noble Lord, Lord Gilmour, among the aims of the Social Charter is the imposition of uniform requirements on all aspects of working conditions, including redundancy, maternity leave, pensions, social benefits, hours of work—and ultimately
310
a European minimum wage. The protectionist intent of all that—not protecting standards, but protecting economies against the impact of change and trade from abroad—became clear in 1993 when M. Jacques Delors—happily departed to, I hope, more agreeable activities—launched the bizarre idea of incorporating into the GATT negotiations a "global Social Charter". The idea was to prevent European standards of living being undermined by what he called "social dumping" from low-wage Asian competitors. He had not looked closely enough to find that the effect of trade is always to tend to equalise standards of wages upwards, so that in Hong Kong we have seen people who were paid a handful of rice in my youth now enjoying wages and benefits that are at least on a par with the English standards.
Since the noble Lord, Lord Tebbit, has allowed us a little extra time, I must, I am afraid, deal with the question of nationalism, which is constantly being put forward. My argument in conclusion is that for Britain to play its most helpful role in Europe, it must stand by its guns and develop its different vision of Europe. That is a perfectly honourable position, as opposed to being in the middle with constant compromises being struck against the development of the free movement of goods and services and all the rest of it. There is nothing despicable about nationalism. It does not mean narrow chauvinism and the "trappings of sovereignty"—
Lord McIntosh of Haringey: My Lords, I hope that the noble Lord will forgive me, but the noble Lord, Lord Tebbit, has not given every other speaker three extra minutes. The noble Lord, Lord Harris, has already been speaking for more than 12 minutes.
Lord Harris of High Cross: My Lords, I apologise to the House, but perhaps I may complete my sentence.
Adam Smith, David Hume and those other great men saw international free trade as a way in which independent nation states could co-operate together, pooling such sovereignty as was necessary to remove barriers, but not getting drawn into deep political involvement and engagement with other countries.
5.47 p.m.
Lord Plumb: My Lords, I too welcome the initiative that was taken by the noble Lord, Lord Jenkins of Hillhead, in calling for this timely debate. Similar debates are taking place throughout the European Union. Indeed, I left such a debate in Brussels only this morning. Your Lordships may be interested to hear that many of the things that were being said in that debate have been said here this afternoon. In other words, there is a similar pattern throughout the whole of the European Union in preparation for the Inter-Governmental Conference.
Many people fear that that conference will take a leap towards a centralised, high-spend and interventionist Europe —a Europe dominated from Brussels; a Europe run by bureaucrats and a Europe that weakens our sovereignty. Sadly, much of that fear has been generated by Euro-sceptism at a time when we ought to be working for what is best in Britain, for what is best for Britain in Europe and when we should be shaping events

311
rather than continually reacting to them. My noble friend Lord Boardman made that position quite clear when he referred to the many issues in which Britain has led the field and from which we are now benefiting.
So, a flexible decentralised European Union is the way forward, as we see it, to allow the growing diversity of the Union politically and economically to develop. That enables sovereignty to be shared in areas of common concern which require obligations and legal action in those areas to which we are now accustomed, such as the single market, external trade, the environment and many other issues of which we are all aware. It allows for more flexible arrangements, based on inter-governmental co-operation in areas such as foreign policy and internal affairs. I believe that that will be central to the debate in the IGC. As many have recognised, it also provides the forum for enlargement which is fraught with dangers and yet which is full of opportunities. If we are to press ahead with enlargement, as I am sure that we are, we have to face up to and deal with the huge repercussions that that will have in every area of the European Union and then determine how that fits into the liberalisation of trade under GATT.
That means finding practical solutions to so many issues like the cost of the common agricultural policy and its structure—the cohesion and structural funds and institutional reforms. I share the view of many that the common agricultural policy cannot operate in an expanded Europe in its present form. Your Lordships will be aware that the Ministry of Agriculture has called a few of us together to consider the future of the common agricultural policy, and I look forward to being able to present my own views on that later this year. Detailed proposals can be expected to cover areas for inter-governmental co-operation in the fields of foreign policy and defence, as well as in interior and justice matters.
Many of your Lordships have mentioned the importance of subsidiarity. That obviously needs to be entrenched further into the workings of the Community and the influence of larger states needs to be strengthened. The European Parliament will need to focus more on scrutinising and holding Commission activities and spending to account. The recent hearings which we held for the new Commissioners were a good example that the European Parliament is taking its new responsibilities very seriously indeed. Nor should the legislative role of the European Parliament be forgotten. This role was, rightly in my view, enhanced by the Maastricht Treaty and no doubt the 1996 conference will need to build on what was agreed in 1991.
I do not think it can be said too often that the Parliament complements; it does not contradict competences exercised by Members in the other place. The so-called co-decision procedure, for instance, which was introduced by the Maastricht Treaty, gives in certain areas a right of veto to the European Parliament. That veto is in no sense a right taken away from national parliaments, which have no right of veto over European legislation. Parliamentary scrutiny is not a zero sum game. But the democratic legitimacy of decision-making needs the scrutiny and involvement of national parliaments.
312
In his opening speech as President of the European Commission, Jacques Santer said:
"the Commission should do less, but what it does it should do better".
I am sure that my noble friend Lady Chalker will say, "Hear, hear" to that, particularly in the context of Lomé and overseas aid.
Baroness Chalker of Wallasey: Hear, hear!
Lord Plumb: My Lords, another issue which has been raised is fraud. Fraud has to be tackled and we must make sure that there are tough controls over spending. These issues and the many other voting changes will require proper debate, and I know that our own Government would want some convincing that we need to go further on qualified majority voting and on any extension of Community competence. I am sure that any move towards a more centralised or more intrusive Community—a move to abolish the veto or to aim for a centralised European super-state—will be vehemently opposed, but I do not expect the Inter-Governmental Conference to make proposals which would significantly change the constitutional position of the United Kingdom.
However, I suppose that the main fear concerning many people is what they see as a threat that we may be dragged into the EMU and a single currency. The principle of a multi-speed Europe, even a measure of variable geometry, is already central to the EMU provisions of the Maastricht Treaty. So before a member state proceeds to the third stage of EMU it is required to meet the convergence criteria, covering inflation budget deficits, exchange rate stability and long-term interest rates. If a majority of member states meet these conditions, then a single currency may come into being in 1997—if so decided by Heads of Government acting by a qualified majority. Of course it is likely that those conditions for EMU will not be met: there would need to be proper convergence on economies coming together right across Europe. For sterling to join EMU would have meant that we would have needed to be in the ERM for two years and that there would need to be an independent Bank of England. The economic realities in March 1995 indicate that economic and monetary union is unlikely to happen in the next 18 months, and perhaps in the 18 months beyond that.
Whatever the outcome of this conference, Members in another place and Members of your Lordships' House will have the opportunity to take the decisions they want, when they want, knowing that our Prime Minister's ability and success in negotiating Britain's opt-out give us time for full parliamentary debate before agreeing to any timescale for a single currency.
Let me conclude by saying that compromise is necessary for reaching an agreement. I do not see the changes in 1996 as a gigantic upheaval, but at the same time I do not believe in the status quo being an option either. Change is manageable, but only on the basis of flexibility and compromise.
5.56 p.m.
Lord Stoddart of Swindon: My Lords, I too would like to congratulate the noble Lord, Lord Jenkins, on

313
bringing forward this debate today. I am particularly grateful to him for telling us that he was in fact part—indeed the leader, I think—of the cross-party pro-European Alliance. This is part of the fight back, a fight back which I suppose started when, from 1970 onwards, he and his fellows drove us into the EEC by securing 69 votes from the Labour Party on a three-line Whip; so we have been warned, and some of us will take that warning.
It is gratifying that so many of your Lordships are speaking at this stage of the debate, which is likely to be a long one. But of course this must not be the only debate, and certainly it is not the most important debate. I think it should be seen rather as the aperitif rather than the main course, or even the hors d'oeuvres.
I, with other people, shall expect the Government to come forward with their own proposals for discussion not only in Parliament but throughout the country as well. It is no use, on this occasion, hiding behind some absurd posture of protecting their negotiating position, because everybody in the country is now interested in this subject. They want a wide-ranging discussion upon it. It is up to the Government to set the agenda for that discussion and to listen to what this House and the other place have to say and to what the people of this country have to say. Indeed the people are increasingly sceptical, not only about the benefits of further integration but also about the supposed benefits Britain has so far secured. My own position about the European Union and our membership has always been clear. I find myself in all sorts of strange positions. In the 1970s I was accused of being an extreme Left-winger, because I was then what is termed a Euro-sceptic. I now find that I have been pushed right to the other side of the political spectrum and have become suddenly a political Right-winger, although I have stood still. The argument has in fact moved from side to side.
However, many people, hitherto content with the prevailing fashion, are now using arguments about the European Union that I and others have been using 'over a very long period of time. Let me quote from last Wednesday's Daily Mail— not a Socialist newspaper by any means, nor a Euro-sceptical newspaper. What does it say? It says:
"A non-sceptic former Minister attacks the claim that the EU is this country's only life-line."
The main headline of the article is "The Great Euro Myth". It goes on to say:
"Today, pro-EU MPs will argue that Britain's trading future depends on the Common Market. The truth is that we're dealing ever more with the rest of the world."
That was last Wednesday, 1st March. Who said that? Mr. David Howell MP, former Transport Secretary and now chairman of the Parliamentary Foreign Affairs Committee.
So the argument is indeed moving on, and people who hitherto have been very much in favour of Europe are now saying that there is indeed life outside the European Community or Union —call it what you will. The noble
314
Lord, Lord Jenkins, moved for Papers. Unfortunately, he did not mention what Papers he wanted. I shall mention what Papers I and many other people want.
Lord Hooson: The Daily Mail!
Lord Stoddart of Swindon: My Lords, I quoted from that, so I shall pass on if you do not mind. It was a good quote, if I might say so. I want a cost benefit analysis. I want to know, on the basis of a cost benefit analysis, whether we have done better on trade; what have been our monetary contributions; what has been our loss of resources—the common fisheries, for example; the additional costs of food; the cost to industry, private individuals, and the public purse of implementing Euro-decisions such as transport decisions and decisions on water quality and the quality of our beaches. Without such an analysis, we cannot decide where we want to go.
In the Motion we are asked:
"To call attention to the need for the United Kingdom to play a positive role".
I want us to play a positive role. I have always wanted us to play a positive role in Europe, but on my terms, not on the terms that have been forced upon the country by so many people, including the noble Lord, Lord Jenkins of Hillhead.
What do I think the Government should be saying at the IGC? First, they should be saying that the constant attempt by the European Union to grab ever more power is disruptive of our national life, our political system, and our economic performance, and will not help Europe in the long term. Secondly, the conference should be told that the British people believe in a Europe of co-operating nation states, not a centralised, corporatist, bureaucratic superstate, because that is what some people want. Let us make no mistake about it. So the British Government should make clear their position on that.
Thirdly, the Government should say that the existing institutions are expensive, unwieldy, bureaucratic, and not suitable for the sort of Europe Britain has in mind. Fourthly, they should therefore propose that the European Council become the policy initiator, and that the Commission be reduced to the role of a Civil Service with the task of implementing Council decisions—no more, and no less.
The European Parliament, which costs us some £600 million a year at present, should be disbanded. It should revert to an assembly to which national parliaments would send representatives. In that way we should indeed be helping with the democratic deficit. The European Court must cease to be the engine of further legislation, and must be a law court rather than a political court. It must be made crystal clear that the United Kingdom will decide who may and may not cross its borders. I hope that the Minister will give us that assurance tonight.
On qualified majority voting, that must not be extended under any circumstances. The existing system must more accurately reflect the population strengths of member states, and, where expenditure is involved, it should reflect the amount of money that is contributed to or taken from the budget.

315
Economic and monetary union, complete with a European currency—that is, over the next 10 years—is an unattainable and dangerous dream that could have nightmarish consequences for this country and for Europe itself. We should say now that Britain rejects the EMU and a single currency, and will not contribute any further to the work that is now going towards achieving that end.
Finally, on foreign affairs and defence, it should be made absolutely clear that Britain will have nothing to do with a European army, and that our foreign policy will always give priority to the national interest. The Motion called for a contribution to the debate. I hope that I have made some contribution.
6.6 p.m.
Lord Blaker: My Lords, the noble Lord, Lord Jenkins of Hillhead, whom I too congratulate on initiating the debate, said that it would be better for those who wished the United Kingdom to pull out of the European Union to say so openly. I should not be speaking on this' matter unless some important people had not been saying so openly. I regard the proposal as so astonishing and unrealistic that something should be said about it,
We have to look at the history, and the noble Lord, Lord Roll of Ipsden, did that to great effect. But there was one historical event that he did not mention with which I had a connection at the time. That was the French proposal in 1953 for a European defence community. That proposal was put forward by the French in response to American pressure for German rearmament and as a means of integrating the armed forces of the six to control or contain German rearmament.
The six, especially France, were desperate that Britain should, if not join it, at least associate itself with it. But Anthony Eden would have none of that, and partly for that reason the proposal collapsed.
The next step was to create the Western European Union, which was based, of course, on inter-governmental co-operation. It still exists, and not on the integrated model, but those in the six who believed in European unity were not content with that and the next step was the Messina Conference which prepared the European Economic Community.
The desire among the six for British participation in that conference was every bit as intense as the desire had been over the European defence community. If we had gone in at that time, as the noble Lord, Lord Ezra, said, we could have shaped the European Economic Community very much to suit ourselves, so great was the desire of the other members to have us in. But, again, we refused to take part. We sent an observer for six months, and then withdrew even the observer. Sir Anthony Eden possibly expected that that conference would collapse, as had the proposal for the defence community.
As we all know, that led on to the Treaty of Rome, and a scheme for a European Economic Community, designed by the six, for the six, with features highly inconvenient to the UK. As the French would say, "The
316
absent are always wrong". Within a very short time we made our application for membership, but, of course, by that time de Gaulle had come to power in France. He did not want us in, for reasons which the noble Lord, Lord Roll, mentioned. So we were rebuffed in 1962; we were rebuffed again under a Labour Government in 1966; and we eventually got in in 1972–15 years after the creation of the Community. We had to accept the Community largely as it was, and not as we would have designed it.
Given that background, I regard it as astonishing that any responsible politician can suggest that we should now leave the Community. It makes no sense economically when over half our visible exports go to the Union and when we get much more inward investment than any other member country.
Politically it makes no sense when the world looks increasingly to the European Union in foreign policy and not to its individual member countries. The mere talk of withdrawal does no good for our influence in day-to-day negotiations inside the Union. I do not believe that the British people want to pull out. They may be maddened by some of the Commission's sillier schemes—when it involves itself in what the Foreign Secretary has called the nooks and crannies of our national life—but the British people believe that we should stay in and use our influence to secure change.
We should play an active role in every aspect of the preparations for the conference, including preparations for a possible common currency. When considering where to put our main emphasise in the conference, a relevant factor is the likely growth in the number of members of the Community. We are told that within a few years there may be as many as 27 members. We must ask ourselves whether such a large Community is to develop by Community action, Commission initiative and majority voting, or is it to put the future emphasise on inter-governmental negotiations.
I have difficulty with the idea of a Community of 27 members operating in an integrated manner across the board, as my noble friend Lord Cockfield appeared to suggest. I recognise that a looser form of approach may slow down the momentum. I am not calling for the return to a free-trade area, but I believe that, in the long run, a looser approach with such a large number of members will take us further.
At any rate, the looser concept lies behind the second and third pillars of the Maastricht agreement. I hope that at the conference we shall put great emphasise on developing co-operation in foreign policy and security and in Home Office issues such as anti-terrorism steps.
I put in the same category the Prime Minister's welcome proposals for the development of the role of the Western European Union, without infringing NATO's role but drawing on its capabilities and working on an inter-governmental basis. I hope also that we shall put great emphasise on pushing forward the doctrine of subsidiarity.
I also warmly support the Prime Minister's view that we should decide not to take a decision now on membership of a single currency. That view was strongly reinforced by the currency turbulence of the past week. In particular, it is unnecessary for us to take

317
a view now because we have the privilege of the opt-out obtained at the Maastricht conference. The question does not now arise and it is nowhere near right for a decision to be made. Other countries are not deciding and every day makes it more likely that a decision must be postponed for a considerable length of time. There are many uncertainties; we do not know the necessary terms and conditions nor how many countries and which countries will join. If the Spaniards, Portuguese, Greeks and Italians were members—and some of them have expressed an interest—it would be a different kind of single currency than if they were not. We do not know the implications for the pound sterling of staying out.
I believe that the words of the Governor of the Bank of England, in a speech on 21st February, are extremely relevant. When commenting on monetary union he said:
"It is not a decision that can or should be taken now. We all have our work cut out to achieve economic and monetary stability... And we have a great deal still to do in continuing to explore both the economic and technical conditions that would need to be met before any decision could be made. The important thing at this point is that we all carry forward, this work patiently and with an open mind".
I believe that those are wise words.
6.14 p.m.
Lord Hooson: My Lords, there is a great danger of our country giving the impression to its mainland partners that we are becoming the Don Quixote of Europe—that is, tilting at windmills, seeing grave dangers where none exists, and seeing friends and recognising them as enemies. Where we see opportunities, we concentrate on the problems attendant upon them and not on the opportunities themselves.
As was said by the noble Lord, Lord Gilmour, the reason for that is the control of the media, the prominence given to the Euro-sceptic view of the media and its resorting to a nationalistic line. I come from Wales and am a Welsh cultural nationalist, but I have always hated political nationalism. I know that the easiest thing to promote in this world in order to stir up people's subconscious anxieties is nationalism. The press have done that, and it is a dangerous trend.
We should look at the reality of Europe. When we consider the state of Europe in 1945 and its state today, 50 years later, we see that the progress has been enormous. The greatest instrument in achieving that progress has been the Treaty of Rome. There is no doubt about that. Even the countries outside are pressing to come in. Sweden, Finland, Austria and our own country having spurned the original offer, wanted to come in.
Surely, at the present time Europe needs sustained, confident progress towards the goal of some future form—probably in the distant future—of a united Europe. This country needs to find its own role within Europe and to be confident and constructive in ensuring that we are fulfilling our role as one of the leaders—not the leader but one of the leaders—of Europe.
I wish to suggest three requirements that should be operating on the minds of our leaders for the 1996 conference. The first requirement is to reassure our fellow Europeans that we are intent on making a success of the European concept. Today that reassurance is
318
necessary. A few years ago I would not have thought it necessary but now it is the No. 1 requirement. Furthermore, we should not be about employing tactics to try to defeat the firm objectives of the Treaty of Rome or to try to enlarge the Community in such a way as to change its essential nature and reduce it to a mere free-trade area of disparate development.
Our history on the subject is not reassuring to our European partners. Already we have had a list of the opportunities that have arisen. We as a country have never been at the heart of Europe; we have had opportunities to be so, but we have nearly always rejected them. There was, in particular, the invitation to the Messina Conference. We were so disdainful, patronising and dismissive of the original European Community concept. We set up EFTA as an inadequate and ill-fated rival. We must be aware of the fact that throughout we have seen steady and determined progress towards the goal of an integrated European Community but the leadership and the confidence has not come from us.
Despite our history and our claimed present economic success, we give the impression that we are a country completely uncertain of its future role or of its ability to hold its own in such a role. We have in Europe many friends waiting for a sign of positive leadership and a real and constructive contribution towards progress to a successful European Community. We need friends, and we have them; but we need to reassure them above all that we are not up to the old game of attempting to divide and rule.
The second issue that is important to recognise is the single European currency. It is my belief that those who are really shaping the future of Europe will, unless something totally unforeseen happens, have forged a single European currency by the end of this century—and that is only five years away. The potential political, economic and sociological benefits are obvious; but they are largely long-term benefits. The dangers are also fairly obvious; but they are very much in the shorter term. By and large, the politicians can see the longer-term advantages and the bankers see the shorter-term difficulties.
But surely a European currency will be in the premier league of currencies. We shall be competing with the dollar and the yen on an equal basis. Those countries whose economies and performance enable them to accept the single currency will be in the first division of Europe. That is inevitable. Those countries which are unable to achieve the criteria will he in the second division until they are able to do that. The pace setters of Europe will have achieved what they intend to achieve. If one looks at the history of the common market, they have achieved very much what they set out to achieve. If there is to be considerable enlargement, there will be a third division, too. That is a problem to which I shall turn in a moment. All will benefit, although a very strong compensatory regional policy will be necessary, as the noble Lord, Lord Callaghan, indicated, to have an ameliorating effect on the developments which will inevitably take place if there is a single currency.

319
Whatever scepticism is stated by the Government at present, as a country, we can never afford not to be in the first division. We should make every effort to be there by the turn of the century. In passing, perhaps I may mention that I agree totally with Sir Edward Heath's demolition of the argument for a referendum on a single currency. One can imagine the enormous benefits for the speculators and those who are able to manipulate the media if there were a sustained campaign as to whether we should have a single European currency within this country. As Sir Edward said:
"Barings would be child's play compared with what the speculators would do then".—[Official Report, Commons, 1/3/95; col. 1079.]
The third matter that I wish to mention is the common agricultural policy. On that, I disagree to a degree with what my noble friend Lord Jenkins said earlier. It has few friends in this country but it has many in Europe. I remember many years ago an extremely distinguished German politician explaining to me that in his view, parts of Europe have been saved from becoming Communist by the agricultural policy of the common market. One can imagine the depopulation that there would have been without that protection in Europe. People would have flooded into the industrial cities, and industrial and agrarian unrest would have resulted from that. He was giving his opinion to me well over 25 years ago but his opinion was that in France and Italy, there would have been Communist Governments.
I believe that we underestimate the support that there is for the common agricultural policy in Europe. I say that as a warning because whereas it will be possible to modify that policy, it will not be possible to change it basically within the foreseeable future—and I see the noble Lord, Lord Plumb, nodding in agreement. We should be warned that if there is to be a choice between expanding the Community and scrapping the agricultural policy, the majority of opinion within Europe will be for retaining the CAP and not expanding. It may be that that will lead to a discussion at the next summit as to whether associate membership as opposed to full membership of the common market is an appropriate step for the eastern European countries. I say that only in passing.
It is extremely important to recognise that if we are to be at the heart of Europe, what is needed in this country is a change of attitude: to see the enormous opportunities which exist, and not be put off by the problems which undoubtedly arise on the way to realising those opportunities.
6.25 p.m.
The Viscount of Oxfuird: My Lords, I have listened with care to some noble Lords who are normally labelled by the press as "Euro-sceptics" and to others who are labelled as "Euro-enthusiasts", including the noble Lord, Lord Jenkins, himself—and I, too, am grateful to him for giving us an opportunity to debate this important subject.
I have to say that I agree with a lot of what has been said by both camps. So what does that make me? Well, I am certainly not a Euro-agnostic, and for the reasons that I shall try to explain.
320
Back in 1975, when we had the referendum, I voted to stay in Europe, and I do not regret that because I think that membership of the European Community has yielded great benefits for the United Kingdom. Walls have come down. There is no doubt, however, that some aspects of the Community's affairs have not been handled well since the noble Lord, Lord Jenkins, stepped down as president in 1981. Under Jacques Delors, the European Commission seems to have created the impression of a sort of unaccountable hydra-headed monster wallowing in its own waste and profligacy and causing deep disquiet among the peoples of the member states.
It seems to me, therefore, that the Government have got it about right with their policy which was so well enunciated by my right honourable friend the Prime Minister in another place last week. Indeed, I would argue that the leadership shown by the British Government within the European corridors of power has lit a slow fuse of awareness of the frailties of some European Union institutions throughout the peoples of the nations of Europe.
It is acknowledged that we are much better off in Europe than out, but the Government are right to have set for themselves an agenda which will attack some of the structural nonsenses that are limiting the benefits that we and the other members are reaping from the Union and which are beginning to cause natural concern not just in this country but in other member states.
There are some who would argue that we should join Switzerland, Norway and Iceland in an EFTA-type free trade affiliation with the main Union as part of a trading block only. I reject that argument. We must remain an integral and dynamic part of the Union if we are to maintain any influence over its affairs. We must retain our positive place at the main negotiating table in order to reject federalism, to reject a system that appears to tolerate fraud and corruption, to fight waste and to keep up the pressure on the nonsenses promulgated by the common agricultural policy.
The Government emerged very well indeed from the last Inter-Governmental Conference in Maastricht with firm opt-outs from the Social Chapter and the monetary union timetable. Speaking in another place only last week, my right honourable friend the Prime Minister made it clear that, in his view, this 1996 Inter-Governmental Conference has followed on too quickly after Maastricht. I think that we would be wrong to regard the 1996 conference as some great momentous milestone event. It is merely part of an ongoing process in which we should play a constructive role.
The Prime Minister summed up the position very well in his speech at Leiden University in September 1994, to which some other noble Lords have referred already. He said:
"I see two pre-eminent tasks for the period ahead: within the Union, to build a cohesion and confidence which has diminished in the past few years: in external policy, to extend security and prosperity to the countries to our East."

321
My own view is that the Union will certainly not be ready for any new initiatives by 1996, but should be looking forward to a period of consolidation—a period of bringing into effect some of the things that we are trying to do already.
It is vital that we do not add to the already overburdened Brussels machinery by initiating at the 1996 Inter-Governmental Conference any more new initiatives before those already on the agenda have been adequately tackled.
Let me say in conclusion how very important I believe it is that we should support the Prime Minister and the Government in the difficult task that lies ahead as they prepare for the next Inter-Governmental Conference. Speaking in 1888 in Caernarvon, the late kinsman of my noble friend the Leader of the House, the Marquess of Salisbury said:
"We are part of the community of Europe and we must do our duty as such".
That is as true today as it was then, but we must work to build a sensible Europe, a Europe that recognises the importance of Vive la difference!—in short, a Europe that will retain the support of the European people as a whole by encouraging and enjoying the richness of the individual and unique cultures of our continent.
I believe that Her Majesty's Government have their feet very firmly on the ground on the European issue and they have my very strong support in the difficult, but extremely worthwhile task that lies ahead.
6.31 p.m.
Lord Bruce of Donington: My Lords, the response to the demand from the Leader of the Liberal Democrat Party asking for a positive response from the Government and for a positive attitude to be put forward has generally—to me at any rate—been a little disappointing. We have heard a number of statements like, "We must go forward and we must not go back"; "We must not be at the sidelines: we must be at the heart of something or other"; or, "We must avoid variable geometry, going round in concentric circles or adopting triangular attitudes". On the whole, they do not seem to be a frightfully satisfactory contribution to the demand for some positive information as to which way the Government intend to go.
I trust that there will be other occasions upon which I can inflict my more detailed eccentricities in the matter on your Lordships' House. However, I venture to suggest—without, I hope, causing undue alarm—that we are not talking about abstract things, or we ought not be: we should be vitally concerned about people, not concepts or institutions.
Unfortunately, on the Continent of Europe there are vast numbers of our people, millions in fact—and I am talking about our people in the European sense—who are living under disgraceful conditions. Indeed, them are millions of people who are unemployed and that situation shows no sign of abatement. Moreover, within member states themselves, apart from Luxembourg which can be roughly equated with the City of Bristol, there are considerable disparities of income and wealth.
322
Housing conditions vary throughout the Community and are certainly very bad in this country. There is a whole series of matters to which responsible politicians ought to be addressing themselves. In view of the uncertainty of the political situation in the United Kingdom, I speak to both the Conservative Party and to my own party because there may be an abrupt transition, without notice, at any time. Therefore, my advice is quite impartial on such matters.
We must decide how we can get the close co-operation which we all want. I speak, unashamedly, as a socialist and have been one since November 1935. It has always been my concept of my party that there should be as much internationalism and far less jingo nationalism than there is. I also extend that to Europe. I am all for the utmost co-operation not only between the peoples of Europe but also between the politicians, whether they be in opposition or government, who represent the people.
How do we reach that stage? I suggest that the role of the Commission as a dynamic force in the European Community passed roughly at the same time as the noble Lord, Lord Cockfield, finished his mission, or almost finished it, on the completion of the single market. Even though it has not yet been quite completed, that essentially marked the end of an era. It marked the end of an era to which limits were originally set by Mr. Edward Heath when he took us into the Common Market. I am all in favour of any measure that enhances the single market throughout Europe.
However, what we have begun to experience is something totally different. We have had a situation where the Commission has been flooding the Council of Ministers with our proposals, with which it is ill equipped to deal by virtue of the time available to individual Ministers. There has been a continuous flow of proposals which has not abated, as I shall show, to a hapless Council of Ministers for which we provide 29 Ministers in accordance with Article 146 of the treaty. They assemble every few weeks or every month to have laid in front of them a draft presidential communiqué prepared for them in advance by the insistence of the Commission and thereafter debate how it should be amended and how much of it should be agreed. Anyone who has attended those conferences will know that I speak the truth; that is exactly what happens.
Surely the time has come, especially in view of Ministers' positions at home in their own countries, for such a situation to be changed. When there is large-scale unemployment and distress, it is the duty of Ministers to think and act constructively in their own countries. When extensions are required in order to promote co-operation in Europe among member states, members of the Council and Ministers should be the initiators of when they want to meet and what they want to discuss with the aim of obtaining the maximum possible agreement. Consequently, it follows from that that the Commission, which under M. Delors boasted that within a number of years 80 per cent. of the legislation of member states would be supplied from the centre, should cease to be and that it should lose its exclusive right to make proposals.

323
The Commission can make such proposals when it likes, but the Council should be able to look at them and say, "No, we don't want to look at that just now, thank you". The Commission itself should be unbundled and divided into three parts, with the status of very highly paid and respected civil servants. The first would be a commission of the single market; the second would be the treasury board composed of the nine spending directorates in the Community, plus half of two others; and the third would be the overseas trade commission. But the Treasury section should be made directly responsible to the Council. By these means the Council could then obtain much more effective control of its own space, much more control of its own time and be much more responsible to its own nationals and to its own parliaments.
Those are just a few of the proposals which in due course I hope to elaborate upon to your Lordships in future debates of this kind. But one thing is quite certain, unless integration—by that I mean the utmost co-operation—is accomplished upwards through member states, ,the idea disappears that it can be inflicted from on top by the Commission itself and can he imposed upon the Council, with the option of the Council to have a debate on it, probably postpone it, and possibly read newspapers while it is being read out to it.
If we are to have a Europe which means anything at all and which may ultimately, and one hopes, culminate in the ultimate world government that will be required to deal with global warming and things of that kind, we have to liberate our own politicians from the virtual dictatorship exercised by pressure which has been enshrined in treaty, and pressure which should be removed. If that is done, perhaps we can find a greater degree of agreement within the House. No one is opposed to greater co-operation among member states. What one must always be opposed to is the endeavour by a bureaucracy to dictate and to bring continuous pressure to bear. We want a free democracy and we want the politicians to be closer to their people.
6.42 p.m.
Lord Shaw of Northstead: My Lords, I, as others, welcome the opportunity of debating the part that we should play in the Inter-Governmental Conference of 1996. The basis on which we must start all such discussions—this was mentioned by the noble Lord, Lord Richard, earlier—is to remind ourselves that we are firmly committed to being in the European Union; and that being in the European Union, our whole history—both political and economic—demands that we make a substantial contribution to its development and success.
I hope that, after the speech of my right honourable friend the Prime Minister last week in particular, we have had an end to manoeuvres that, at best, would blur our position or, at worst, hint at our possible withdrawal. I have always felt that one of the differences that exist between the various members of the Community is that while in the case of most countries the approach to a proposal is too general, with often too great a reluctance to face up to the practical difficulties involved, our approach to any proposal tends to start at the other end. It
324
is not that we do not understand the idea; but what we are concerned with is what will be the practical steps that will be involved; and what will be the practical results?
The two approaches to these problems must often lead to disagreements. Probably there are often faults on both sides. But patience, discussion and a steady willingness to negotiate will make sure that the reality of the problem is unavoidably revealed, which then greatly increases the chance of agreement. Being in the European Union was never going to be easy. The original concept of a Community of Six has completely changed with the dramatic increases in numbers that have taken and will take place. The changes inherent in the development and expansion of the Union themselves demand constant scrutiny and, from time to time, changes in the structure and practices of the institutions themselves.
To this end, I welcome the significance of the establishment of the Reflection Group. I am amazed that I am the first speaker this afternoon to have mentioned the existence of the Reflection Group. That has inspired a number of studies that are now being undertaken within the member states—and not least of course here at Westminster. These studies will form an important basis for the recommendations that the Reflection Group will be making to the IGC when it meets next year. In that regard I am grateful—indeed, I think we all should be grateful—to the House of Commons research department for its paper No. 95/27. That paper shows that already certain views are becoming clear in the studies that have already been announced in the various states in Europe. Already it can be seen that now that practical details are having to be discussed rather than general aspirations the UK is in no way isolated in its views. I give three examples. I hope that this is congenial to the noble Lord, Lord Bruce of Donington, and coincides with some of the remarks that he made.
First, the relationship of the Council and the Commission must be examined. I think that the noble Lord was quite right to spend much of his speech dealing with that important matter. I do not blame the Commission. If the Council does not do its job, the Commission has to. If one has a weak board of directors, the management tends to take over and that is not good for the running of a company or indeed of any authority. The Council, in summary, in the past has been too weak, and means have to be found to strengthen it in possibly the way the noble Lord wishes, or certainly in some other way. In my view, that must be a matter for consideration at the conference.
The second point is the increase in the numbers in the European Union. The structure of all the institutions must be examined. As the numbers go up, we cannot continually automatically keep on increasing the numbers working in the institutions because that will blur the effectiveness of the actions that are necessary within those institutions. I am glad that the matter of national parliaments has been raised by several speakers. National parliaments must in some way be more greatly involved. It has always seemed to me, as one who is a nominated Member of the European Parliament, that the connection that we then had with

325
our national parliaments is now missing. If that relationship can be restored, I believe that that would be to the benefit of the Community.
Having studied the House of Commons research paper and the helpful information it contains, I am struck by the almost complete absence of one vital ingredient—and that is the need to establish financial discipline. The Reflection Group, when it meets in June, has a mandate to draw up an inventory of what have been called "real problems" as opposed to imaginary problems to be tackled by the IGC next year. But let there be no mistake: whatever size and shape is designed for the European Union; whatever powers and rights it takes to itself; whatever influence it hopes to create within itself, or with the world outside, there has to be established within the European Union the firm basis of a sound and respected financial discipline. There must be established not only financial regularity and value for money systems; there has also to be developed audit controls that are capable of checking the workings of such systems. Above all, there has to be established the acceptance that where wrongdoing is discovered, proper discipline and punishment will follow. When our Minister, Mr. David Davis, goes to the Reflection Group meeting in June, I hope that all aspects of financial control will feature at the top of his list of matters to be discussed.
Finally, I have already said that being in the Union was never going to be easy; and certainly steps taken in the past seem not to have produced the result for which we had hoped. All that we did in 1977—the establishment of the European Court of Auditors, the Budgetary Control Committee in the Parliament, and revision of financial regulations—have not worked in the sense that they have not produced the results for which we had hoped. For me the lesson of where we went wrong in 1977 is now clear. The truth is that we only half did the job. I must admit (I suppose naively) that I had assumed that once the fraud and shortcomings were discovered, something would be done about them. But in fact that was not so.
What should we do to put that matter right? It means that thanks to the Maastricht Treaty, the Court of Auditors now has greater powers to insist on such action. But that alone is not enough. If the economic union is to develop, as it must, high on the inventory of the "real problems" (as the chairman of the Reflection Group calls them) must be the commitment of all the member states to the establishment of successful financial controls.
6.52 p.m.
Viscount Waverley: My Lords, Britain must enter the Inter-Governmental Conference with both a flexible and open mind, reflecting the diversity and complexities of issues relating to Europe. A clarified strategy, however, needs developing from what has been a fractious and hitherto counter-productive debate.
In shaping a constructive IGC we must pay heed to two important factors: first, the need for an informed debate involving the British people, thereby encouraging
326
a clearer understanding of key issues; and, secondly, the development of a fixed IGC agenda as agreed by member states.
The quality of debate is hampered by the self-serving interests of party politics. Divisions of opinion over Britain's destiny in Europe will inevitably transcend party allegiances. Main opposition parties serve no practical purpose by feigning unity in the vain pursuit of political point scoring. Arguments appear static because there exist strong tendencies towards over-simplification. Britain's future stand cannot be neatly confined by a commitment either to opting in or opting out.
The Europe of tomorrow should not be seen as a straight choice between federalism and free trade. We must avoid blanket policy making. Every issue must be considered and evaluated according to its individual merits and drawbacks. Choices will have to be made, but the Prime Minister is right to suspend judgment until the appropriate time. Caution, as opposed to haste, should be our guiding watchword.
There is concern over the scale of change that the IGC might bring. The conference cannot satisfy British expectations unless it follows an enlightened national debate encompassing our long-term vision of Europe.
We can exert a strong influence provided that we are not hindered by the federal fear factor. Britain can be at the heart of Europe, shaping policy, without being chained to it.
The IGC should address the institutional challenges posed by enlargement. There must be in place a plurality of streamlined institutions and effective mechanisms ready to deal with problems posed by expansion into eastern Europe. We must steer away, however, from over-centralised bureaucracies. Institutional reforms are necessary in the drive for increased transparency and accountability. The relationship between various existing bodies such as the Council of Ministers and the European Parliament should undergo review as well as the CAP and the current system of qualified majority voting.
Certain institutions can be made to work to the benefit of both the EU and individual nations. The European Parliament can provide a democratic legitimacy to newly developed international political structures that will arise from the pressures of enlargement. Their creation should not be seen as a direct threat to the independent powers of nation states. Britain must view the IGC as a forum for positive debate. There are encouraging signs that she will do so.
A common European defence policy incorporated within the Western European Union has its merits, provided that its objectives are clearly defined and do not duplicate those of NATO.
In justice and home affairs the IGC should encourage inter-governmental co-operation. No single nation appears immune to the spread of internationally organised crime and worldwide drug trafficking.
Monetary union is not scheduled for discussion in 1996, and rightly so. Britain's future is not exclusively linked to prospects for a common currency. Britain's opt-out clause is pragmatic rather than anti-European—

327
a point not lost on our stand with the Social Chapter. In years to come we must fashion an economic policy best suited to the interests of our people. The IGC' s success, however, not only depends on our own attitude, but also on the attitude of all participating countries. The pre-conference hype must be facilitated by European dialogue examining those issues in need of debate.
The French and Germans have already hinted at pushing for far-reaching constitutional changes while Britain prefers deferment on such questions. The European debate is too often marked by a heightened sense of fear through ignorance. The world's rapid socio-economic transformation warrants increased European adaptability and harmonisation. We should not fear change, provided that it is diligently undertaken within an acceptable timetable.
6.57 p.m.
Lord Beloff: My Lords, debates on Europe in this House are always decorated by the contributions of former commissioners, and this afternoon has been no exception. The one thing that they all have in common is what I can only call a degree of retardation in their understanding of what has happened since they occupied those important posts. Perhaps it is the chocolate that they eat in Brussels which gives them that feeling—it is the only good thing that ever came out of Brussels.
The noble Lord, Lord Cockfield, spoke of a great, powerful core block of European states, with France and Germany to the fore, striving to create a more integrated Europe. That was true; but is he certain that it is true today? It seems to me that there is some unwillingness to look outside this country and therefore too great a willingness to regard the scepticism in this country as unique to Britain.
On French television yesterday evening, M. Giscard d'Estaing said that he did not propose to stand for the French presidency because he found that his accent on Europe as a cause raised no echo in the French electorate. That is a very considerable admission by someone who, as the noble Lord, Lord Cockfield, and others know—indeed, it was mentioned in the course of the debate—played a major part in the development of some of the Community's policies and institutions.
However, even if we say, "All right, we cannot know what goes on abroad, let us concentrate on what goes on in this country", the debate has been heavily weighted on the side of Europhilia—if that is the right word—but I have found no one who has even recognised the main reason, that there is a strong movement of opinion away from the notion of European integration. Even the noble Lord, Lord Gilmour, agreed with that. It is a simple fact that people believe that the laws under which they live should be made by people elected by themselves and interpreted by judges in whose impartiality they have confidence. The feeling is that laws are made externally. I am no animal lover—I prefer the cause of the Welsh farmers to that of animals—but it is striking to me, as it has been striking to people throughout the country, that the Minister of Agriculture could say, "Whatever I should like to do, I cannot do it because I would be breaking European law".
328
We are assured that it is a new legal order. All the jurisprudence of the court is based on that. The trouble is that we have got into a legal system in which our own traditional inclination to obey the law, which is not universally accepted in other member states, may conflict with our national interest.
I should like the Minister to comment on this example. Let us take the matter of borders. Is it or is it not the case that Brussels can insist that in future we demand visas from members of friendly Commonwealth countries who fought with us, when the European countries did not? The Australians, the Canadians may all happily obtain visas and no doubt we shall make it easier for them. However, it seems to me that that fact strikes the ordinary citizens of this country as unacceptable. They believe that in many ways, through family ties, language and past history, they are closer to members of the Commonwealth than to people across the Channel.
Lord McIntosh of Haringey: My Lords, I know that this is a timed debate, but has the noble Lord never had to obtain a visa to go to Australia?
Lord Beloff: My Lords, I have not been to Australia since visas were brought in there, but it does not alter my case. I believe that there should be no visas either way within the Commonwealth.
There are many such instances which explain why there is a universal complaint—I know that the Labour Party is riding high at the moment, but even members of that party have complained—that the younger generation do not regard party politics as an interesting way of spending their time. The youngsters prefer single issue causes, whether it be animals, women or other issues. The reason is that political parties exist in order to man (or woman) our Parliament. If Parliament becomes a second-rate assembly merely registering what is done elsewhere, why should people take party politics seriously?
All noble Lords are agreed that we live in extremely difficult times. We have world challenges to face which are greater than those within the European Community. But if we are to face them, it is essential that we do not build up legends about ourselves or Europe. The noble Lord, Lord Hooson, said, on the basis of a conversation with a German informant a quarter of a century ago, that the common agricultural policy saved France and Italy from going communist. France and Italy were saved from going communist by the infusion of American financial aid long before the common agricultural policy was even dreamt of. In so far as it is desirable always to cushion the movement of people away from the land and into the cities—which is a world problem—that can be achieved, as it was in this country before we entered the Community, by the country's own financial compensatory mechanisms. The noble Lord, Lord Hooson, says that the common agricultural policy helps to put money—and I have seen them on the ground—in the pockets of part-time Bavarian farmers or the barons of the wheatlands of northern France. To put that against the absolute necessity of giving some feeling of confidence in Europe to our neighbours to the east seems to me one example —and I could give many

329
others if this were not a timed debate—of where we are mythologising the Community. It is not the Community which has brought about peace in Western Europe. Peace in Western Europe came as a result of the experiences of war. That could have been done without M. Delors, without the European Court and without the Commission. It would have happened anyhow. The United States and Canada do not go to war or threaten to do so. They have no common political institutions. Let us look at things as they are and cease to build up myths about them.
7.6 p.m.
Baroness Rawlings: My Lords, your Lordships have so far had a comprehensive debate today with diverse contributions from several experts and a most moving speech from the right reverend Prelate the Bishop of Sheffield. It is a great honour to follow the noble Lord, Lord Beloff, who is always most entertaining and I should like to add my thanks to the noble Lord, Lord Jenkins of Hillhead, for initiating the debate.
The lack of serious debate before the previous Inter-Governmental Conference in Maastricht resulted in a great many misunderstandings and problems. I hope that this will not be the case with the 1996 Inter-Governmental Conference. We should not lose sight of the significance of the IGC and therefore not get sidetracked into other areas that are not and will not be on the agenda such as, in particular, economic and monetary union, as the noble Viscount, Lord Waverley, rightly said.
I wish to touch on just a few points without delving into too much detail. My aim today is simply to emphasise three areas which I hope will be seriously addressed in the months to come. I shall not venture into the sea of acronyms, of QMV, CFSP and WEU. These issues will all be discussed in great detail with our European Union partners, but this is neither the place nor the time for me to go into them.
The Inter-Governmental Conference will rightly consider the defence and security pillar of the treaty. The Cold War may be over. Nevertheless, we still live in a very fragile world. We cannot overlook the fact that Russia is still heavily armed and not perhaps the most stable of nations as it slowly moves from a command economy to the free market. The United States is ambivalent towards European defence. For several years now senators like Sam Nunn have lobbied for burden sharing. As we are aware, it is for Europe to take on more defence responsibilities herself. This pillar will be of paramount importance to preserve peace. We have now had 50 years of peace in western Europe, a longer period of peace than at any time in the past 120 years. Furthermore, the justice and home affairs pillar offers possibilities which will be developed and will be discussed at the Inter-Governmental Conference.
I shall just mention one of the worst scourges in today's world: drug abuse, responsible for so much crime in our society. This is a growing cancer which has always existed but never on such a horrific scale. It is a problem which, I am sure all noble Lords will agree, is impossible to solve in Britain alone. It can only be done
330
in co-operation with other nations, working closely together. I urge the Minister, the noble Baroness, Lady Chalker, to keep this in mind. It is one of our greatest evils today.
In this connection I should like to raise a few fundamental questions with your Lordships. Where should the balance of power lie? Is the balance of power between governments and the European Union institutions satisfactory? Is the balance of power between governments and national parliaments satisfactory? I am certain though that closer co-operation between national parliaments and the European Parliament is essential. But how should it be structured?
As the discussion develops, it is vital that this time the general public should be accurately informed so that everybody can understand what is at stake. I have full confidence that our Government are putting together a robust set of practical proposals, in particular in these areas, and that they will play a positive role in the Inter-Governmental Conference. These proposals will be thoroughly thought through, the paramount concern being how to make the European Union function better, to the benefit of its citizens.
Let us not forget that Britain was the driving force behind the enlargement of the European Union to the east. With the fall of the Berlin Wall, the political agenda of Europe changed. Even though it will take time for the countries of central and eastern Europe to comply with the European Union's requirements, ultimately membership is their aim, and also ours.
The first step has been taken by members of these countries by means of the Europe agreements. For enlargement to succeed it will be necessary for the European Union itself to adapt its policies and institutions to accommodate the new members. That has been the case in the past. These changes will have to be carried through, and any arrangements decided in the Inter-Governmental Conference will have to work for a European Union of possibly more than 20 members.
Perhaps we should not lose sight of the original aims of the Community of peace and prosperity for all its citizens. Let us hope that these noble aims will be bolstered by the outcome of the 1996 Inter-Governmental Conference.
7.12 p.m.
Lord Desai: My Lords, there is a basic misunderstanding of the nature of the European Community. It is, of course, a customs union, a free trade area in one sense. It started as a customs union. It also started from the Coal and Steel Community, which is a dirigiste organisation. These two axes jointly constitute the basis of the European Union. Many people like one but not the other. For a long time the Labour Party did not like the customs union free trade aspect of the market, and M. Jacques Delors sold us the dirigiste angle, saying, "Come with us and we will give you good social and labour conditions".
The problem is that those two aspects come in a package. On the mainland of Europe, as the noble Lord, Lord Elis-Thomas, called it, there is no problem about

331
this. But in Britain we have a problem, in that we like either one or the other. That will remain a problem. What it points to is a kind of dirigiste logic that was accepted—and not just in Europe. In the post-war period, that sort of logic was accepted here as well. It no longer is. People want much more democratic control over bureaucratic decisions. Therefore the democratic deficit in the European Community has to be addressed. First, as my noble friend Lord Bruce of Donington said, the European Commission has to be made properly subservient to the elected members, and be seen to be so. And secondly, as the noble Lord, Lord Ezra, said, a second (if I may use the word) federal chamber has to be added, where national parliaments are represented on a permanent basis, so that they know what the European Union is up to.
I believe that we are also all agreed that the common agricultural policy has to be reformed. If it is not reformed, the logic of expansion will become so expensive that it will not be possible let other countries into Europe. Even if the Community were not expanding eastwards, the common agricultural policy is an affront, not only to common sense but to good economic theory, and therefore it should go.
In the few minutes that I have, I want to concentrate on the question of monetary union and a single currency. I agree with the remarks of the noble Lord, Lord Roll. It is a mistake to think that convergence should come first and a single currency later. I have always held that this will be an extremely costly cart-and-horse idea.
Let me give an example. Within the UK there is a single currency, but there is no convergence. That is why we have inequalities in regional unemployment. If convergence did exist, the unemployment statistics would be uniform across the country. Most national economies have a single currency but they do not have convergence. We tackle the problem by other policies, such as regional policies. Therefore it must not be thought that convergence is required before a single currency is established. Indeed, a single currency may hasten convergence.
What will, however, happen, is that, because of the way in which conditions for convergence have been laid down, many countries will undergo an especially deflationary experience in order to get convergence. When convergence comes about and we have a single currency, a second dose of adjustment will have to be made as a result of the single currency. Therefore, the deflationary logic of a single currency will stay.
A single currency has the advantage that expansionary policy could be pursued. But that requires not just a single currency but a powerful single fiscal authority. Whether it follows logically or not, I do not care. But if you want to pursue Euro-Keynesian policies, you require a European-level state authority which can pursue Euro-Keynesian policies. Such policies do not come from scattered states which have sovereignty. I always thought, therefore, that the single currency experience was delayed far too long. I would have preferred a single currency now, and convergence later. I have said this before—but that is surely pure madness and we will not pursue it any further.
332
Many noble Lords, and others outside this House, have tried to argue that there is something called real convergence that we ought to worry about, not just nominal convergence, and that we ought perhaps to wait until our productivity and unemployment are in line and all sorts of other indicators are in line. That is Utopia. As I said, there is no national economy which satisfies those conditions, and no European economy ever will.
However, it is possible to say that the nominal conditions that have been laid down are not appropriate. They do not make much economic sense. They are easier to check for. It is easier to satisfy yourself that the deficit is less than 3 per cent., that the debt/GDP ratio is whatever it is, or that the exchange rate has stayed in a certain band. But all these are nominal magnitudes which do not have any economic logic to them.
Let us take, for example, the deficit. We ought to have a clear interpretation that a deficit is a deficit only on revenue account and not on capital account in the budget. That has to be perfectly satisfied. It has to be said that this deficit should be over the cycle. These matters should be properly defined, perhaps at the IGC. Secondly, looking at the debt/GDP ratio, the debt should be net; it should be only that debt which has been incurred for revenue purposes and not for capital purposes. If there are assets to be offset against the debt, those assets should be netted out, and the debt/GDP ratio should be calculated net of the assets that a national economy possesses. Thirdly, in referring to exchange rate conversions, we ought to worry about real exchange rates and not nominal exchange rates. As it is, we have realised that nominal exchange rates can move in and out of the stable band before you know it. It is very easy to destabilise. I predict that if we said that we would have a single monetary authority on 1st January 1999, starting on 15th December 1998 the markets would go haywire and all conditions would be violated. That is exactly what will happen.
I think therefore that we ought to concentrate on real exchange rate movements. We should ask ourselves whether or not the real exchange rates of countries are reasonable. If real exchange rates are not in line, it is no use having nominal exchange rates in line, because they do not have much influence on the real economy. They only influence the speculators who are moving their money around.
If those three things are added, as it were as addenda or notes to the Maastricht Treaty—not as revisions of the treaty but interpretations of the treaty—then I believe that we can talk much more seriously about whether or not there is convergence. What has already happened, as some noble Lords have pointed out, is that the Netherlands, Germany, perhaps Belgium and Austria (certainly the Netherlands and Austria) are already in a de facto single currency regime. There is no doubt about that. Austria has been shadowing the deutschmark for many years, as has the Netherlands. Whether France and Belgium can get up to that level—Ireland as well—we do not know.
In a sense, everyone is becoming too excited about a single currency. The Maastricht Treaty states that if a country is not ready, it will not be allowed to join

333
anyway. There is no problem of being forced to join if one is not eligible to join. If a country is eligible to join, I do not understand why it would not join. The only freedom that one has outside the single currency is the freedom to devalue. Over the past 50 years the British data show that depreciation of the pound, internally and against the deutschmark, has been horrendous. Nobody can tell me that the past 50 years of monetary sovereignty have been a great success in our economic life. We have wasted monetary sovereignty and it is about time that we had some sensible policies.
7.22 p.m.
Lord Harmar-Nicholls: My Lords, with tonight's list of speakers as long as it is, I know, coming in the last quarter of it, that all the technical details that could be said on this subject have already been said. I shall not attempt to add to that long list of advice about the technical side of the issue. I want to talk about tactics. My points, for what they are worth, are addressed to my own Front Bench. It is, of course, just my luck, that at the time when these pearls are to drop, the Minister is no longer in her seat. However, I have every confidence that my noble friend will pass on faithfully the points that I make. Still, that will be hearsay rather than direct evidence from the person presenting it.
Starting with the opening speech, most of the speeches that I heard were sermons. I have a high regard for the noble Lord, Lord Jenkins of Hillhead. He is one of the most experienced and knowledgeable Members in this House. I remember that he and Tony Crosland were the leading intellectuals who were so excellent at keeping the debates alive in the other place in 1948 to 1950. So I am speaking of an experienced operator. But tonight his contribution was something of a sermon rather than a speech. My noble friend, when she reads it, will see that that is what it is. There was not much content in it. Indeed, funnily enough, most of the other speeches were what I call sermons. In fact, the paradox is that the one speech that was not a sermon came from a professional sermoniser—the right reverend Prelate. He had his feet on the ground. It was a real speech and a genuine contribution. He matched my noble friend Lord Cockfield, who also always speaks in language that one can understand; the message that he puts over is always quite clear.
The tactics about which I shall speak have the following basis: whether we remain as the Government or some other party succeeds us in government—whatever will come after next year's conference—unless that party carries the nation with it, it will make no success of anything. The nation has to be behind the Government. It is clear to me that we have come so far in the progress toward a federal Europe mainly as a result of tactics which I personally have witnessed and in which, unfortunately, I have had to take part.
I remember the debate which decided the matter in October 1971. The Motion before the House was:
"That this House approves Her Majesty's Government's decision of principle to join the European Communities on the basis of the arrangements which have been negotiated".
334
On that Motion the vote was 356 in favour and 244 against. The 244 votes comprised mainly the socialist vote. In those days, their doubts about the absolute inviolability of the rightness of merging into Europe along those lines was not so keen as it seems to be today.
I wonder what caused that change. I am glad that the noble Lord, Lord Desai, reminded me of the occasion when Jacques Delors came to this country. The noble Lord said that M. Delors had pointed to all the advantages of the social sections and the improvements that they would bring. That was not my recollection of what happened. The Trades Union Congress invited Jacques Delors to speak at their annual conference but it was not on that kind of level. The information that I gathered at that time was that Jacques Delors, the French socialist, came to the annual meeting of the Trades Union Congress and made his view perfectly clear to his colleagues in the British socialist parties. He said, "You will never get your socialism in England through Westminster. There is a good chance of getting it through Europe". It was rather a coincidence that almost overnight, on the strength of that argument, the 244 socialist vote (which was on the record at the time that we agreed to go into Europe) was switched around. So I am not at all impressed with talk about the sudden belief that the change on the other side of the House has come as a result of all the wonderful things that would happen as a consequence of joining the EEC.
They want their socialism and I understand that. I want my capitalism because I believe that it is better for the people and the country if we follow what is known as capitalism. The other side think differently. That is what the great argument will be about for a long time to come.
The talk is that we ought to give more powers to the European Parliament. I am rather inclined to agree with the noble Lord, Lord Stoddart, that, if we really want this Union to work, it would be better if that were a nominated parliament rather than an elected one. My noble friend Lord Plumb and my noble friend Lady Hooper, who sat with me when I was elected to the European Parliament—I went there to try to find out what it was all about—will remember that the time I spent there trying to make a contribution was spent in attempting to persuade my Conservative colleagues in the European Parliament that their duty was to be there as British representatives in order to put the British point of view on the issues. However, a number of them had gone native—I suppose that that is the term to use. One was not communautaire if one did not think in those terms. I did not succeed with many of them.
How did the Members of Parliament, with all the dangers that showed themselves, allow that situation to come about in October 1971? I was an active member and think I understand who at that time was ambitious in politics. Within five years of being elected I had been made a Minister. I was a Minister for eight years. But I resigned as a Minister in 1961 when this move towards Europe came up again. I instinctively felt the dangers of it. Why did the Government win despite that feeling among many people? They won because they said, "Don't be afraid. We have the veto. Nothing can

335
happen. We can stop everything". But the veto is hardly there anymore. The other member states now want majority voting and so the protection of the veto hardly exists. After Maastricht they have produced the new protection which is called subsidiarity. What does "subsidiarity" mean?
When my noble friend comes to reply—she is an outstanding Member of the Government—will she define what subsidiarity really means? Will it go the same way as the veto? Does it mean that individual nations can decide for themselves when they feel that their domestic problems are theirs and no one else's? We want no more double meanings. We want this nation to succeed and I want the Conservative Government to be the government that sponsors that success. They can do that only if they carry the nation with them. One cannot carry the nation if one has "clever-dick" excuses for moving in a direction in which one does not want to go.
7.31 p.m.
Baroness Hooper: My Lords, I can certainly confirm the description of my noble friend Lord Harmar-Nicholls of his role as a Member of the European Parliament, a role which he happily continues in your Lordships' House. What I am going to say will horrify him more than a little because I am speaking this evening both as a former Member of the European Parliament and also as a member of the parliamentary assembly of the Council of Europe. It is my fond wish that those two institutions should in the future—it will he the long-term future—merge and operate together so that we have a real and true Europe.
I realise that that issue is not a topic for the IGC agenda in 1996, but that goes for a number of matters that have been raised in the course of the debate today. I mention it in any event because it illustrates the fact that nothing stands still and that as soon as we reach agreement in one set of circumstances external changes occur. We are then faced with new challenges and new decisions have to be made.
As a further general comment perhaps I may say that the more I travel in those countries of central and eastern Europe which are already members of the Council of Europe and which aspire to membership of the European Union the more I realise that our culture, history and identity in this country are as much dependent on influences from central and eastern Europe as they currently are dependent on influences from the Celts, whose contribution was so well described by the noble Lord, Lord Elis-Thomas, many hours ago at the beginning of the debate. Indeed, in this context I very much liked the reference made by the right reverend Prelate the Bishop of Sheffield to St. Alcuin having a European mind. I believe that many Members of your Lordships' House who have spoken today have shown that they too have European minds.
What nearly everyone has agreed is that we should be positive and constructive. I certainly subscribe to that view and I was also pleased to hear my noble friend Lord Boardman pointing out that we have quite a good record in that respect. But let us not forget that the success of the Inter-Governmental Conference next year
336
does not just depend on us and our attitude. Every member of the European Union will have to be positive in deeds as well as in words. So, instead of perhaps always being rather inward looking, let us concentrate on encouraging our fellow members as well as ourselves about the future of our participation in Europe.
In saying that, I agree with all those who have said that the continuing debate in the lead-up to the IGC is vital. My noble friend Lord Plumb referred to the international meetings and discussions in which he is currently involved and my noble friend Lord Shaw of Northstead referred to the work of the Reflection Group. I know that at a national level a number of preparatory measures are taking place, not least the setting up of a sub-committee of your Lordships' European Communities Committee. I can assure the noble Lord, Lord Stoddart of Swindon, that his hors d'oeuvre in the debate today will certainly be followed by a main course somewhat later in the year when no doubt we shall have the opportunity to debate the report of that sub-committee. I hope that this debate and others we may have will help to send out the right signals in order to prepare the right climate for a successful conference next year.
Some of today's debate has ranged considerably wider than the topics likely to be debated at the Inter-Governmental Conference. I was grateful at the outset to the noble Lord, Lord Richard, for bringing us down to earth by referring back to the source document, the Maastricht Treaty, and outlining the agenda that it spelt out. But we cannot expect at this stage—it is too early—to spell out in detail every single issue that will be examined at the conference. In saying that I certainly look forward to hearing my noble friend reply to today's debate. In spite of some of the criticisms that have been made it is entirely appropriate that her contribution should come at the end of the debate. Otherwise, we would have received the criticism that she was not prepared to answer and respond to comments that were made in the course of the debate.
Although anticipating her reply and the information that will bring us, I believe that the Government's agenda for the Inter-Governmental Conference is clear and positive. For example, in relation to subsidiarity, it has been spelt out time and again that we are in favour of seeing subsidiarity entrenched even further into the workings of the Community. In relation to a clearer definition of the roles of both the European Parliament and national parliaments, it is quite clear that the Government believe that the European Parliament certainly has the main role of focusing on scrutinising the Commission and holding it to account for its activities and spending but that nevertheless an important constitutional role remains to national parliaments to contribute to the democratic legitimacy of the European Union decision-making process.
The Government have made it quite clear that they agree with the remarks of the new President of the Commission, which were quoted by my noble friend Lord Plumb, that the Commission should do less but that what it does it should do better. The Government have always made it clear that enlargement is most important.

337
Another issue is the strengthening of intergovernmental co-operation in the fields of foreign policy and defence. My right honourable friend the Secretary of State for Defence has made it perfectly clear on a number of occasions —I am aware of this as a member of the parliamentary assembly of the Western European Union—that in European defence it is the time for a practical step forward in accordance with what has been agreed at Maastricht and that the European allies should now extend their ability to make a contribution to international crisis resolution, to peacekeeping and to helping with specifically European concerns where NATO is not involved. I believe that is all very clear.
As a final comment as regards the general and positive approach as opposed to the positive detail of what is going to be discussed, I wish and hope in your Lordships' House in a debate of this kind that we shall not hear in future noble Lords talking about "Europe" and "us". By all means talk about "the rest of Europe" but please do not let us make that kind of differentiation because it is not a, question of "them" and "us". I believe very firmly that we are part of them and they part of us.
7.40 p.m.
Lord Monson: My Lords, I entirely endorse the contention of the noble Lord, Lord Jenkins of Hillhead, that the United Kingdom should play a positive role at the 1996 Inter-Governmental Conference. That positive role in my view should be to articulate the feelings of the people of the European Community, as opposed to the aspirations of their elites. It is no good trying to influence or change their minds—at any rate the elites of the core countries of the Community, the original Six. For the most part, they are deeply, sincerely and passionately integrationist, federalist and intent on creating a United States of Europe as a rival to the United States of America and Japan, with a single foreign policy, a single army, navy and air force. To do them credit they have made that perfectly clear time and time again.
But most of the ordinary people of the Community do not want a single army, navy and air force; they do not want substantially greater integration, more bureaucracy or more probing into the nooks and crannies of everyday life by people living hundreds of miles away and speaking a different language both literally and metaphorically. The narrowness of the referendum results in France, Denmark, Finland and Sweden, despite the massive propaganda facilities and substantial financial resources available to modern governments and establishments, amply demonstrate that, as does the revelation that three-quarters of the German people now oppose a single currency.
That is understandable since there is no point in replacing the deutschmark with the ecu unless the latter is going to be potentially more inflationary than the deutschmark. With 15 nations having an input into the administration of the ecu, it is bound to be more inflationary. Despite the apparently cast-iron safeguards written into the Maastricht Treaty, one can be certain that the moment widespread civil disturbances break out in one or more Mediterranean countries in consequence
338
of deflationary policies being pursued by the central bank, the purse-strings will be loosened, interest rates will be lowered and the ecu will be effectively devalued against the dollar, the mark and indeed the Swiss franc.
On the Continent, when rules and regulations which are apparently set in tablets of stone run up against realpolitik, one can bet that realpolitik will always win, as the abatement of the massive fines imposed on Spain and Italy for the overproduction of milk and the continuing illegal subsidy to Air France and other semi-nationalised French companies fully demonstrate.
There is no time to say more about the disadvantages of the single currency except to commend to your Lordships an excellent article by Mr. Tim Melville-Ross, the Director General of the Institute of Directors, in The Times yesterday. Even he does not give all the manifold arguments against, but he gives a good few of them.
Strictly speaking, the United Kingdom's role at the 1996 conference should be confined, first, to opposing any extension of majority voting, with the possible exception of voting which affects the future of the CAP—I believe that the noble Lord, Lord Jenkins, had a perfectly valid point in that regard. Next, the United Kingdom should urge much greater caution about a single currency as opposed to a common currency—otherwise known as the "hard ecu"—so well advocated by the noble Lord, Lord Boardman; oppose greater powers being granted to the European Parliament, inevitably at the expense of national parliaments; and oppose any moves towards a single foreign policy, or a single army, navy and air force.
But these are all defensive moves. What of more positive ones? When departing from the strict agenda, as people invariably do, the United Kingdom representatives should take every opportunity to extol the inspiring clarion cry sent out by the European Research Group in its recent pamphlet A Europe of Nations to which the Prime Minister contributed a foreword. The group's programme has been contributed to by political figures from no fewer than 20 European countries: all the 15 European Union countries with the exception of Austria, Greece and Luxembourg, together with representatives from the Czech Republic, Hungary, Iceland, Norway, Poland, Slovakia, Switzerland and Turkey. That is truly Europe, unlike the truncated EU version that dares to usurp the name.
It goes without saying that the contributors to this pamphlet are every bit as pro-European as the noble Lords, Lord Jenkins of Hillhead, Lord Howe, Lord Richard and others. It is simply that they take a different view of the way in which Europe should develop. Among their important recommendations are that the Visegrad countries should be admitted to the European Union by 1st January in the year 2000. Long before that we should have dismantled all the tariff and non-tariff barriers against the importation of agricultural and manufactured goods from those countries which are such a disgrace at the moment.
All power should be assumed to rest with national governments unless explicitly stated otherwise in the treaties. The ambiguous principle of subsidiarity should be codified and strengthened. The European

339
Commission should be reduced to the role of a civil service carrying out the will of elected Ministers and lose the right to initiate legislation. The European Parliament should be prevented from competing for power with national parliaments and should focus simply on scrutinising the work of the Commission. The European Court of Justice should be strictly confined to a specific judicial role interpreting the plain text of the treaties. The doctrine of the acquis communautaire should be abandoned. Responsibility for agricultural policy should be returned to the member states, The WEU should be decoupled from the institutions of the European Union and remain purely under the control of its member governments.
I suggest that that is a programme to enthuse and inspire ordinary people throughout the Community. It is not a blueprint for a simple free-trade association so criticised by the noble Lord, Lord Cockfield, but rather a variant on l'Europe des patries aspired to by General de Gaulle. The fact that in the French presidential election race the federalist, M. Edouard Balladur, is losing ground to the Gaullist, M. Jacques Chirac, ably assisted as he is by the openly Euro-sceptical M. Philippe Séguin, is an encouraging straw in the wind.
The noble Lord, Lord Cockfield, has often quite rightly reminded us that the Treaty of Rome aims at an "ever closer union between the peoples of Europe". Indeed, but bureaucracy, enforced harmonisation and constant interference in the aforesaid nooks and crannies of everyday life have the opposite effect. They create hostility between peoples. Conservatives often talk about getting the state off people's backs. It is only by getting the potential superstate off the backs of the peoples of Europe that one will pave the way for genuine harmony between them.
7.49 p.m.
Lord Pearson of Rannoch: My Lords, the noble Lord, Lord Jenkins of Hillhead, to whom we are indebted for this debate, started his speech by regretting that the cross-party pro-European alliance which existed in the 1970s appears to have grown weak in recent years. I imagine that the last five hours will have done something to reassure him—were he to be in his seat—that that alliance is still very much alive, at least in your Lordships' House, although I would agree with him that it has grown weak. I believe that it has grown weak because its arguments have grown weak and out of touch and are now often reduced to slogans such as, "We must be at the heart of Europe"; "We attract inward investment because of our membership of the Union"—as opposed to the market; "We must get in wholeheartedly and influence things our way"; "We'll be left behind by France and Germany who are going ahead with the Union anyway and that would be a bad thing", and so on. I fear all these slogans strike me as tired and out of date. They might have been relevant to the Europe of the 1970s when Germany's economy was booming and ours was labouring under Socialism, but none of them is justifiable today.
Listening to the first 10 speeches this afternoon and to several other speeches later, it struck me again, as it struck me at the time of our debates on the Maastricht
340
Treaty two years ago, that another alliance is at work in this country and in Europe. It is perhaps a somewhat subconscious alliance, but it consists of politicians and bureaucrats, and I fear that it has grown out of touch with the aspirations of the people.
I have to say that that alliance is very well represented in your Lordships' House. Indeed, the majority of speakers in today's debate made their careers in politics or the bureaucracy. We have been privileged to hear a number of politicians and bureaucrats who have been very influential in setting up the Europe which we see today, and it is absolutely understandable that they are reluctant objectively to see it as it has become, which is very different from what they hoped it would be. Of course, that is only to be expected from at least one former Foreign Secretary, a former Prime Minister and from several ex-Cabinet Ministers, former European Commissioners and MEPs. I suppose that it is a bit like looking at your own baby when it is born. You tend to find it difficult to recognise the warts and other distortions which may be apparent to other people less involved in its creation.
Be that as it may, I have been quite depressed this evening to see how their mood has developed since our Maastricht debates in 1993. They now seem to take our loss of sovereignty for granted. They no longer pretend that Article 3b of the Maastricht Treaty, the infamous subsidiarity clause, is a shield against the further plundering of that sovereignty, as we were constantly assured by the Government in 1993; and they view monetary union as the certain and final surrender of that sovereignty with equanimity.
Well, I have to tell them that many of us—indeed, a growing number of the people in this country and Europe; possibly now a majority—do not share those cosy and unreal feelings which seem to pervade the political and bureaucratic club. We who are not politicians and bureaucrats, we who have worked, and work, in the real world of commerce and industry are not cursed with having brought us to where we are now in Europe, and we wish to see the IGC deliver a substantial repatriation of powers to the nation states. The noble Lord, Lord Stoddart of Swindon, and the noble Lord, Lord Monson, have already enumerated some of the powers which we wish to see repatriated, and so I will not repeat them now.
But we certainly want to see subsidiarity mean something, which at the moment it does not, or, if it means anything it means the opposite of what the Government assured us it meant in 1993. It means that the Community decides what nation states will be allowed to decide.
If my noble friend on the Front Bench thinks I exaggerate, could she perhaps answer the questions I put to the Government on 24th November 1994, the last day of our debate on the gracious Speech? What has happened to the initiative, inspired by my right honourable friend the Prime Minister, to withdraw 25 per cent. of all Community legislation, which he has assured us was agreed at the Corfu conference, and how does that fit with the Community's determination to

341
maintain its doctrine of the occupied field, whereby once it has acquired a power, it never gives it up? Is the acquis communautaire dead or alive?
Would my noble friend accept that the Commission's work programme for 1995 runs to 72 pages and that it only pays lip service to subsidiarity? Is she aware that M. Santer has admitted that there will be some 52 of what he calls "new priority legislative proposals"—or one a week? A "new priority legislative proposal" is roughly what should be the equivalent of a Bill in this country—except that we import so many of them by delegated legislation. Does my noble friend accept that EC directives and regulations rose from 1,602 in 1993 to 1,800 last year, of which the regulations—which do not have to be sanctioned by national parliaments—rose from 1,160 to 1,579? It is one of those regulations which threatens the UK glasshouse lettuce industry, which employs 12,000 people. It is the absurd, continuing so-called "fine-tuning" of the single market which threatens the survival of the London bus, and much else. For instance, we are soon to have a directive harmonising the construction of lifts. In this respect, perhaps I can repeat a request to my noble friend. Can I ask her to explain to the bureaucrats in Brussels that a level playing field and a market are a contradiction in terms?
As to monetary union, does my noble friend agree that eventual monetary union would he likely to lead to a harmonisation of interest rates and taxation, and inescapably to political union? Can I ask her and those who favour monetary union whether they have thought of an ever weaker ecu after such monetary union, dragged down against the currencies of the vibrant economies of the world by Europe's sluggish, bureaucratic and over-politicised regime? Is that a prospect that they have really examined objectively?
Finally, can I ask whether it is such a terrible crime at least to contemplate tearing up the Treaty of Rome and all its works? As the noble Lord, Lord Stoddart, suggested today, until we have an unbiased cost-benefit analysis of our present membership, it seems impossible to know how unwise that suggestion might be. That was another question that I put to the Government on 24th November—again I got no answer. Certainly, the Europhile slogan that we get our inward investment because of our membership of the Union does not bear examination. Most of our inward investment comes to us because we have access to the European market, because thanks to the policies of this Government we have good labour relations and low inflation, because we are not saddled with the ruinous social chapter, and because we speak English. I cannot believe that the prospect of our monetary and political union with our weaker brethren in Europe can be much encouragement to potential investors.
So, the key question becomes: would the French, the Germans and the others deny us access to the European market if we left the Union, bearing in mind that we trade in deficit with Europe and have done so for 20 years? It seems most unlikely, but I do not imagine it is a question which we have ever dared to examine dispassionately. May I suggest that it is time that we
342
did so so, that we might discover the strength of our negotiating position, which I feel sure is much stronger than at the moment we dare to hope? Only then can we enter the IGC negotiations in a suitably objective and positive frame of mind. Unless we can persuade our partners to create an altogether less stultifying framework for the free nations of a prosperous Europe, we should be determined to leave the Union, especially if that means leaving the European economy stuck in the slow lane of world economies which it so richly deserves.
7.59 p.m.
Lord Thomson of Monifieth: My Lords, the noble Lord, Lord Pearson, ended the debate from the Back Benches opposite by making a clear case for what he described as "tearing up the Treaty of Rome". Whether that would constitute a positive approach for the Government at the IGC, as he seemed to believe, I am not so sure. However, I believe that I speak for all noble Lords who have spoken—even, I am sure, for the noble Lord, Lord Pearson—when I thank my noble friend Lord Jenkins of Hillhead for launching this debate and for devoting one of the rare Liberal Democrat days to discussing the need for Britain to play a positive role at the 1996 Inter-Governmental Conference.
Compared to some of the debates that we have had over the last year or two on these issues, which have very often been ill-attended—indeed I have often felt ill-represented in your Lordships' House—this debate has been extraordinarily well attended. There has been a wide variety of views and it is very clear that the great majority have supported the proposition of my noble friend that the Government should take a positive attitude when the IGC is called. Whether we are going to get a positive attitude from the noble Baroness the Minister this evening I am not so sure. I think I share the lack of optimism of the noble Lord, Lord Cockfield, on that matter. Regarding the question of whether the Government are at the heart of Europe, of course we all know that the noble Baroness's heart is in the right place but we shall wait to hear what she has to say to us tonight.
The noble Lords, Lord Pearson and Lord Beloff, both raised the point about the state of public opinion on the European Union in this country and they argued that it had turned pretty negative. The noble Lord, Lord Beloff, speculated why. I will give him one strong reason. During the 15 years this Government have been in office there has been a generally negative attitude from them over the possibilities of British membership of the Community—not totally and all the time but, generally speaking, over the whole of the last 15 years. I am bound to say that I think it has immensely damaged Britain's capacity to influence European developments in our own legitimate national interests, as well as depriving Europe of a positive British contribution.
With one or two notable exceptions, there has been no Cabinet leadership on the benefits of British membership of the Community. The minorities in Parliament, who have a principled view of a deep dislike of Britain being part of the European Community, have had a field day, attacking the Community all the time:

343
sometimes over serious issues of sovereignty and the sharing of sovereignty and sometimes over the minutiae of the behaviour of the European Commission in the matter of such great issues as the curvature of cucumbers and similar matters.
There is always a need for constructive criticism of the European Community and of the Commission. I am not, as has been pointed out, a totally dispassionate witness in that capacity, but the Commission is like any other political and bureaucratic institution: it is fallible and it makes mistakes. What I think is important for people in this country and Members of your Lordships' House, in making a judgment about British interests in Europe, is a sense of proportion concerning these criticisms. For example, the level of Community fraud is obviously a crime and a scandal. The reports of your Lordships' Select Committee have made a notable contribution to getting the Community at last to take more effective action about this.
However, all Community public expenditure taken together—the CAP, the Cohesion and Structural Funds, the lot—amounts to 1.25 per cent. of the Community's GDP, compared to an average of about 50 per cent. of GDP accounted for by national government spending in Union countries, where there is ample scope, as we all know, for criticism of bureaucratic national practices. This must be seen in proportion against the fact that membership of the European Union has been the reason why Britain has attracted over 600,000 new jobs since 1979. Nearly half of all Japanese, American, Korean and foreign investment into the European Union comes to this country. London is a magnet for overseas banks. There are 520 banks from 76 countries, with the Deutchesbank just moving its foreign investment banking from Frankfurt to London. Someone told me recently that there are more German banks in London than in Frankfurt.
This inward direct investment and the outward flow of financial skills would both be seriously adversely affected if a single European currency were to emerge with Britain choosing to remain outside. Apart from the quantifiable economic benefits of British membership, there are the unquantifiable benefits of Britain playing the role it ought to play in making the Union an effective force for peace in an increasingly fragmented and fanatical European continent. We are, in fact, in danger of turning our backs on our history and leaving the leadership of the European continent to France and Germany while we become petulant spectators on the sidelines.
The Government appear to hope that major issues of change can be avoided by the IGC, but the Maastricht Treaty agenda itself includes important matters. As the noble Baroness, Lady Rawlings, pointed out, it includes the question of the future of the Western European Union and the development of effective foreign policy and defence arrangements. These are very big issues. I think she is perhaps optimistic in feeling that the issue of the timetable for economic monetary union will not come up, or that issues like enlargement and the massive unemployment that still remains in a Europe, where the
344
recession is retreating, will not be issues raised at the IGC. Whatever the treaty says about the agenda, I think that member countries will bring their own agendas.
So what are the real options for Britain at the IGC and beyond? The Government's preferred option appears to be the claim that they can convert the rest of the Union to their concept of a minimalist Community, concentrating on international competitiveness—obviously very important—and on the expansion of the free trade concept to which the noble Lord, Lord Cockfield referred; also opting out of social policies and, I suppose, praying that a final decision on a single currency and economic monetary union may be delayed indefinitely. I prefer to call that not an option but a pathetic illusion. Sir Leon Brittan dismissed it in a sentence recently when he said in London:
"Those who stubbornly believe that EMU is not going to happen are simply overlooking the level of commitment which exists in the rest of Europe".
The danger of the Government's present approach to the IGC, with their talk at times of vetoes, is that it would cast us in this country in the role of wreckers. We would be seen as preventing the majority in the European Union from moving forward to tackle the undoubtedly formidable problems of combining enlarged membership from east and central Europe with efficient and democratic decision making. As the noble Lord, Lord Cockfield, said, we would not in any case succeed. The only wrecking that would be done would be the wrecking of what remains of our influence among our partners on the mainland of Europe. In that situation, which I profoundly hope does not happen, the lesser evil would be to step aside and let those who want to move faster towards integration do so; but it would be a sad second-best action for Britain.
I hope that the Minister will allow me to say that I find a strange paradox in the behaviour of the Prime Minister. On Northern Ireland, Britain's other overshadowing problem, he has shown vision and determined courage; yet Ulster is an issue which arouses deep traditional fears among Conservatives and it also involves questions of sovereignty. Over Europe, if he had chosen to show the same leadership he could have put Britain truly at the heart of Europe. I hope it is not too late for a change of attitude on the part of the Prime Minister and the Government.
We are an island nation with a fortunate history, protected from foreign invasions. We have undoubtedly an insular psychology. The grand vision of a European union, with all that can mean in terms of peace and prosperity for the citizens of Europe, demands a high quality of leadership from governments in all the countries concerned. There are difficulties in all the countries, but this is particularly so in our country. I end by pleading with the Minister and, through her with the Government, to respond to the Motion moved by my noble friend and to make a positive contribution to the "Group for Reflection and to the IGC that follows it.
8.9 p.m.
Lord McIntosh of Haringey: My Lords, like other noble Lords, I am grateful to the noble Lord, Lord Jenkins of Hillhead, for raising this issue. I hope that he

345
will be pleased at the quality of much of the debate that followed his speech. I was interested in the fact that he started by saying that this was not really an issue of party politics. To me, in the real world politics are party politics, and if this is not a political issue, I do not know what is. I hope that it does not mean that the noble Lord is pursuing his withdrawal from the arena of party politics. Joining the Liberal Democrats is of course a first step in that direction, but I hope that he will stay with us in party politics for some time to come. He has a lot yet to contribute.
I noticed also that neither his speech nor that of the noble Lord, Lord Thomson of Monifieth, mentioned what might be the view of the Liberal Democrat Party of the agenda for the IGC. I did not hear one suggestion from any Liberal Democrat speaker about their party's policies and the way in which they should be presented at the conference. Perhaps they will find some other opportunity to enlighten us, but in the world of party politics we expect—I shall attempt to provide it—not merely negative comments but some commitment to a policy position.
Nevertheless, it is clearly right that there should be an open debate before the IGC. We must be grateful to the noble Lord, Lord Jenkins, for opening that debate in your Lordships' House. It was notorious that before the Maastricht Summit public debate was very restricted indeed. Whether it was for the conspiratorial reasons which have been adduced by a number of noble Lords I rather doubt. But it is still a fact that there was not much public debate before Maastricht; and that many of the proposals at Maastricht came as a surprise to the ordinary people in Europe. As a result, the ratification of Maastricht was a very much more difficult process than it ought to have been.
The noble Lord, Lord Shaw of Northstead, rightly referred to the work of the Reflection Group which has been set up under the French presidency. I shall want to say a word or two about the contribution to that Reflection Group of the European socialist delegate, Elisabeth Guigou, but it is not just that; there will be more preparation. Under the Spanish presidency there will be an extra Council meeting in Majorca in September. We can expect a more serious attempt at wider debate, and that must be welcome.
Of course, we must be realistic about the scope of the IGC, because listening, as I have, to almost all of the speeches, I have heard many which are about issues that are very much wider than the treaty revision issues which will be coming before the IGC. I was surprised to find that so many Members on the Conservative Benches were anxious to have a re-run of the debacle which hit them in another place last Wednesday. I should have thought that they were so badly burnt then that they would not wish to go over that ground again. I was also a little disappointed to find a number of noble Lords wishing to go over the ground of the 1993 Maastricht ratification debates because the IGC' s role is very much more limited, as has been suggested, and I cannot avoid repeating some of the valuable points made at the very beginning by my noble friend Lord Richard.
346
Article A of Maastricht says that the purpose is ever closer union among the peoples of Europe. But then Article B, in specifying what should happen at the IGC, refers to improving the effectiveness of Community mechanisms and institutions. That is what the conference will be about, rather than some of the wider policy issues which have been referred to. Of course the Community mechanisms and institutions have a purpose. Their purpose—I summarise rather than expound—is to promote economic and social progress; and to promote economic and social cohesion. There is reference to the establishment of a European monetary union and possibly of a single currency. There is the whole issue which has not been referred to, interestingly, of the common foreign and security policies which are expected to lead to a common defence policy and possibly in the future to common defence. There is the issue of Union citizenship; there is the issue of close co-operation between member states—note that it is co-operation between member states—on justice and home affairs. And all of that is within the context of subsidiarity. That is what is set out in Article B of the Maastricht Treaty.
Article 189b goes a little further, because it refers to co-decision procedures, which I take to be jargon for talk about majority voting and unanimity. I want to come back to that issue also later. Finally, the first declaration refers to bringing energy, civil protection and tourism into Community competency.
Those are all important issues. The revision of the treaty to give effect to those objectives is not unimportant. But I suggest that much of the debate will be secondary to the two fundamental changes which are taking place in Europe which could blow away much of the discussion that will take place at the IGC.
The first, of course, is enlargement. What appears to be the case, almost without it being discussed as a matter of principle, is that we in Europe—I mean what the noble Lord, Lord Pearson, calls the elite as well as the people—have accepted and welcomed the idea of the enlargement of the European Community. The result of that is that we shall land up in 10 or 15 years with a Community of 27 members, rather like—I am sorry to see the noble Baroness, Lady Hooper, is not in her place—
Noble Lords: She is.
Lord McIntosh of Haringey: My Lords, she is in a much more distinguished place, and I beg her pardon. We shall end up with co-terminality between the Council of Europe and the European Community—a very welcome prospect—but we should think about the effect of that.
The noble Lord, Lord Ezra, referred to the effect on enlargement of the CAP. I put it the other way round. I cannot see how the CAP in its present form can survive with 27 members.
Similarly, I cannot see how those additional 12 members will come in if we are going to be just a free trade area. They want much more than that, but they do not want federalism. We cannot have federalism with 27 states. So much of the discussion about the ultimate result of ever closer union—if people are afraid or

347
hopeful of federalism coming out of it—will be blown away by a Europe of 27 member states. That is one of the factors which will limit the scope of the IGC.
The second of course is the whole concept of what the Prime Minister called a multi-track, multi-speed, multi-layered Europe; in particular the single currency issue which has been referred to by many noble Lords.
Let us first make it clear that we in the Labour Party do not propose to abandon unanimity as a criterion for much of the decision-making of the European Union. As Robin Cook made clear in the debate last week, we shall still be demanding unanimity for fiscal and budgetary policy; for foreign and security issues; for changes to the Treaty of Rome and other areas of key national interest. But at the same time the Government's policy of opting out, in particular on the Social Chapter, has meant that there is, in practice, majority voting, with the UK being left out of many of the important issues—social and employment issues—which are being considered by the European Union. Therefore, we have majority voting and a diminution of our sovereignty by our own decision to opt out of some of the provisions of the Maastricht Treaty.
More important is the issue of the single currency. Let us agree that we shall not have a single currency in 1997. Only five member states have reached the stage of convergence, even on the existing criteria. They would have to get there quickly, certainly by 1997, if in 1999 there was to be convergence on the 1997 principles.
But 1999 is going to be very different. No longer will it be a requirement that a majority of members of the Community—that is, eight member states—shall achieve a convergence and decide to impose a single currency. By 1999 there could be a core of member states going it alone and raising for us the different issue, which we have not yet faced, of what happens if there is a single currency which we are invited but not required to join; in other words, if there is an inner circle with all the political and economic fragmentation that that might bring about.
I agree with my noble friend Lord Desai who criticised the convergence criteria set down by Maastricht for a single currency. I agree that the definitions are unsound. My view is that they are central banking criteria rather than governmental criteria and that, if they are achieved, the result is likely to be an equilibrium, but an equilibrium at a low rather than a high level. Far more important than any of those are full employment, growth and convergence in productivity. My noble friend was right in saying that we cannot wait for that, but at the same time we must expect it and must work towards it.
I have left myself little time to do what I wanted to do; that is, to set out in more detail the policies that were set out in another place last week. I believe that the Labour Party has a vision for Europe that goes beyond the day-to-day policies. The vision of a democratic and social Europe was set out by Elisabeth Guigou. That is where I begin to agree with the noble Lord, Lord Harmar-Nicholls, and my noble friend Lord Bruce of Donington, who spoke of the need to bring with us people rather than politicians.
348
Incidentally, I strongly object to the noble Lord, Lord Pearson of Rannoch, saying that he is not a politician, unlike other noble Lords who have taken part in the debate. He has been a distinguished insurance broker for most of his life and I have been a market researcher for most of mine. However, when we are here we are both politicians and we take a party whip. The noble Lord cannot escape responsibility for being a politician simply by denying it.
That vision of a democratic and social Europe is one to which the Labour Party adheres. We do not believe that the leadership so far shown by this Government—there is always time for repentance—has indicated any sign that they understand the issues before Europe and this country which will arise at the Inter-Governmental Conference next year.
8.23 p.m.
Baroness Chalker of Wallasey: My Lords, I am sure that the whole House is extremely grateful to the noble Lord, Lord Jenkins of Hillhead, for initiating this debate. We have heard a series of notable speeches. They have covered the entire spectrum of views. However, if one necessarily starts on the left-hand side of the circle one might end up on the right-hand side, as the noble Lord, Lord Stoddart of Swindon, appeared to indicate he had.
We have had a long debate about much more than the positive role that we should play in the Inter-Governmental Conference in 1996. On the whole, the debate has been remarkably constructive about the future of the European Union. It will be important to read carefully what all noble Lords have said and I shall enjoy doing so. Certainly, the many contributions have been helpful in presenting the real balance of opinion in this country, as the Gallup poll showed last Friday and as my noble friend Lord Blaker explained today.
Perhaps I may comment on not having spoken earlier in the debate, for which I was chided by the noble Lord, Lord Richard. When such a Question is tabled the Government spokesman does not normally speak twice. If the Government spokesman spoke twice, the amount of time for Back-Benchers to speak in the debate would be reduced. Furthermore, as a result of tonight's performance, I am certain that this is but the first of a number of debates on the Inter-Governmental Conference that might take place during the next one, two or three years, or however long it takes to reach a conclusion.
I wish to be positive. We are members of the European Union, not because of idealism or romanticism but because our European Union membership is in Britain's national interest. Of course there are costs to membership; any organisation has to have rules and we will not always like them. But the benefits of our membership outweigh those costs, as my noble friend Lord Oxfuird indicated tonight. Indeed, we always do our best to obtain a sound cost-benefit analysis but whether others would necessarily have the same premises and therefore arrive at the same conclusions is obviously a further debating point between myself and the noble Lord, Lord Stoddart of Swindon.

349
Membership of the European Union means jobs, investment and prosperity that we would not otherwise have had. From what I saw in the days when I was fully employed by industry and in the days since, when I have been a politician, I have no doubt about that. However, I am still fundamentally interested in making industry work. We must use our European Union to help industry, British and European, to create a greater economic base for our people.
The Union is the world's largest trading bloc with 40 per cent, of world trade. Britain is more dependent on trade than any other large industrial economy. We are the world's fifth largest importer and exporter and the European Union now takes 53 per cent. of our visible exports, as my noble friend Lord Blaker said. The single market, though not yet complete, offers our businesses huge opportunities. Britain is selling croissants to the French, smart cards to the Germans, pizzas to the Italians and—especially for my noble friend Lord Beloff—chocolates to the Belgians. I hope that he will be eating English, chocolates if he buys them in Belgium because he will find the quality superb.
Our trade surplus in financial and business services with the rest of Europe tripled from £1 billion in 1983 to £3 billion in 1993. During the past six years our car exports to Europe have more than doubled. In 1994 we produced more cars than for 20 years.
Membership of the European Union has reinforced the position of the City of London as the world's biggest foreign exchange centre. More than 70 per cent. of European foreign exchange transactions and 90 per cent. of European cross-border equity deals go through London. As the noble Lord, Lord Thomson of Monifieth, said, the Deutschebank has just moved all its foreign investment banking from Frankfurt to London. Those are exactly the issues to which my noble friend Lord Boardman referred. London is the financial centre for the European Union.
European competition laws mean that, whatever the inhibitions of national governments, barriers to trade are coming down across Europe, and so they must. We have all heard the arguments about airlines, but British Airways is now flying from London to Orly Airport, a route which was for so long wrongly protected for Air France. But we must go on and go further.
We have become a magnet for inward investment and, directly or indirectly, that has brought more than 600,000 well-paid jobs to the UK since 1979. We attract one-third of all inward investment into the European Union. In the past two years alone there have been more than 400 inward investment decisions, safeguarding around 100,000 jobs, many in areas of high unemployment. The reason that those companies are attracted to Britain is because we provide an open, deregulated environment for business. They would not come unless we were also active, committed members of the European Union, pushing the Union down the open, free market path that it has followed since we joined.
Membership of the European Union has allowed us to promote free trade, open market policies across the world. The GATT deal was clinched by a British
350
Commissioner—Sir Leon Brittan—negotiating on behalf of Europe as a whole. That is a huge step towards the open, world-wide trading system which the UK has always supported. Britain, with its dependence on foreign trade, will benefit more than most from the completion of the Uruguay Round. The GATT deal is worth about £500 for every household in this country and the combined value to Britain of the single market from the GATT Round is estimated at between £20 billion and £35 billion.
Lord Bruce of Donington: My Lords, I am sure that the noble Baroness would wish to be fair and to complete the trading picture by stating quite correctly that the deficit on visible trade with Europe over the past 10 years has amounted to £72.9 billion.
Baroness Chalker of Wallasey: My Lords, this country does not live by visible exports alone. It lives by invisibles too. The overall cost-benefit analysis, which is what I was being asked for at one point in the debate, must take into account visibles and invisibles.
It is against those benefits that we need to balance our net contribution to the budget. Britain and Germany used to be almost the only net contributors. Now Germany contributes almost five times as much as we do. France now makes a similar net contribution to ours. The Netherlands is not far behind. Italy, Sweden, Finland and Austria have all become net contributors too.
That development has brought a very welcome change in the attitude of member states to budgetary discipline and value for money. I say that because Britain has been fully involved in all those arguments in Europe and it has been winning them. The evidence is undoubted. The single market was largely a British crusade. There is now universal acceptance of Europe's historic responsibility to achieve EU enlargement to the east. Yet that was by no means accepted a few years ago. There is a new accent on competitiveness and free trade in the European Union which delivered a market-opening GATT deal in the teeth of French opposition. And there is greater concern—and not before time—about budget discipline, fraud and the mismanagement of funds.
As my noble friend Lord Plumb said, we should be extremely grateful to your Lordships' Select Committee for all the work that it has done to enhance proper control of what goes on in the Community. We are now starting to see the beginning of agricultural reform, although there is still a long way to go. Subsidiarity—and I shall return to that in a few moments for my noble friend Lord Harmar-Nicholls—is now part of Community life. The pillared structure of the Maastricht Treaty, which ensures that crucial areas remain for national co-operation and not for the Community, was a major setback for European integrationists and centralisers, and yet we drove it through. Above all, there is now general acceptance of the importance of respecting national identity and diversity within the Union, which must never develop into a federal superstate.

351
A prominent European said only last year that only Great Britain had asked the real questions before Maastricht even if—and I agree with the noble Lord, Lord McIntosh—there was inadequate debate in the country as a whole. When one tried to debate the issues before Maastricht, many people simply were not interested. I can say that from my own direct experience. I addressed meeting after meeting and looked at many, many blank faces—and not because of what I said either.
But the same prominent European went on to say that the construction of Europe, without our questions, was virtually on auto-pilot. That was not my right honourable friend the Prime Minister; it was the former President of the Commission, Jacques Delors. He recognised the unique contribution which Britain had made and goes on making. We are not afraid to ask difficult questions of our partners about European construction and we shall continue to do so.
We are determined to play a positive role, but that does not mean that we have to go along with each and every suggestion' that is made. I shall look at all the suggestions that have been made in this debate and in particular those to which I cannot refer in my winding up this evening.
The noble Lord, Lord Bruce of Donington, was quite right to say that the Commission must not get too big for its boots. The Council is the decision-making body. Subsidiarity is working well. It is reducing the Commission's inclination that it had in the past to become involved in the nooks and crannies of our lives. I can tell the noble Lord that progress is being made in relation to financial matters. The new budget Commissioner is now required to vet all proposals with budgetary implications before they are passed to the College of Commissioners. That is something for which the United Kingdom has pressed for some considerable time. Members of this House who were Members of the European Parliament have also pressed that issue.
The noble Lord, Lord Bruce of Donington, was right also to say that in the past the Commission produced too much legislation. The UK success at Maastricht in relation to subsidiarity has meant that the number of proposals for primary legislation has fallen significantly: 185 in 1990; 47 in 1994. There is still a problem with subsidiary legislation because changes have to be made, but even that is under clear scrutiny and will be reduced.
My noble friend Lord Shaw of Northstead made the point about fraud. Fraud against the Community budget and the continuing waste of Community resources are totally unacceptable. Much is now being done to address the problem. The Commission has reinforced substantially its anti-fraud work, but much more still needs to be done. Therefore, we persuaded our partners to agree a plan of action at the Essen European Council. That plan of action is now under way. We are determined to deal with fraud.
My noble friend Lord Shaw of Northstead was the first noble Lord to mention the Reflection Group. Perhaps I may spend a few moments dealing with that and institutional issues. Last week the Prime Minister
352
made clear our approach: that the institutional balance between the parts of the Union should not be altered significantly. That is certainly our approach to the IGC. As I said, the Council must remain the primary decision-making institution of the Union but it must be strengthened, as my noble friend Lord Shaw said. The Commission must concentrate more on management and value for money and less on its legislative role. The key issues will be the proper implementation of legislation and effective action against fraud and waste. The noble Lords, Lord Bruce and Lord Desai, and my noble friend Lord Shaw mentioned that.
We see no case for giving the European Parliament significant new legislative powers. It must grow into the powers that it has already under the Single European Act and the Maastricht Treaty.
We believe too that national parliaments must be the primary focus of democratic legitimacy. As my noble friend Lord Shaw said, we should like to develop the role of national parliaments in European Union decision-making.
The Reflection Group will meet first on 2nd June in Messina and then regularly during the second half of this year. Its mandate is to look at the functioning of the treaty. No doubt it will suggest options for possible improvements. My honourable friend Mr. Davis will be working hard in that group on those issues and is also already discussing with colleagues how we can make the whole Community work better. That is exactly what we wish to do.
A number of your Lordships spoke of the European Court of Justice. As I said at Question Time earlier today, we need a strong court to enforce Community rules and obligations. There are aspects of the court's jurisprudence which cause us concern; in particular where judgments have had unforeseen or disproportionate financial implications for member states. Therefore, we are considering what proposals to make to address those concerns at the 1996 IGC. But we are not alone in that. Other nations also wish to make proposals and such proposals will be made in a positive manner.
However, we shall certainly not be seeking to emasculate the Court as some would obviously like. We need to be clear that the Court is there to ensure that others comply with their obligations. We must ensure that others keep to what is decided by the Council. The Court's role is to interpret and apply the treaties and EC legislation. There are a number of recent cases which show that the Court is now more sensitive to members' concerns—the World Trade Organisation ruling and the recent European Development Fund ruling are but examples of that process.
My noble friend Lady Rawlings, the noble Viscount, Lord Waverley and many other speakers spoke about the ERM and EMU. In another place on 1st March the Prime Minister set out our policy clearly and at some length. Therefore, I shall not repeat those points. However, perhaps I may emphasise the fact that there

353
can be no intention of rejoining the ERM in the lifetime of this Parliament. I believe that we are all clear on that point.
At other times during our debate we went into the question of variable geometry, but the noble Lord, Lord Bruce of Donington, said that we would be wrong to talk in abstractions. Perhaps I may just explain to the noble Lord that "variable geometry" means a flexible Europe. More flexibility will obviously be essential to a Europe with more members. There is no way, without flexibility, that we could increase the number of members of the European Union to 20 or, indeed, beyond that number. Therefore, we must work for sensible flexibility in Europe.
My noble friend Lord Harmar-Nicholls, asked for a definition of "subsidiarity". We have discussed the matter on numerous occasions. It is defined very clearly in Article 3B of the Maastricht Treaty. That article was a considerable success for Britain. It says simply that the Community can only act if it has been given the power to do so and has genuine value to add over national action. Moreover, if it does act, then it should do so in the least intrusive way possible. I could speak more about subsidiarity and perhaps I shall need to do so in order to convince my noble friend. However, I should also like to tell my noble friend Lord Pearson that in the report to the Brussels European Council, the Commission said that it would propose the repeal of about 25 per cent. of all existing legislation. Some of that would be repealed for good, and some replaced with a smaller number of new proposals. That work is well under way. It certainly demonstrates that the acquis communautaire is not sacred, nor is it untouchable.
We all know that the European Union is facing unparalleled challenges over the coming period. Enlargement is vital to embed democracy and market structures in eastern and central Europe. NATO and the Western European Union must be adapted to the new tasks. We need to forge a new European Union relationship with Russia. Therefore, I beg that we do not become mesmerised by next year's Inter-Governmental Conference. It is still a year off. While we shall work away positively at it, as the noble Lord, Lord Jenkins of Hillhead, asked, and we shall play, as my noble friend Lord Oxfuird requested, a very constructive role, there is a great deal of other priority work to be done. In any case, we do not expect dramatic results from the 1996 process, nor should we encourage the speculation that great changes are in the wind.
Maastricht has barely had time to settle down and it is, by general consent in Europe, too soon for major new departures. There is certainly much useful work to be done; but it may not be as exciting as some noble Lords might wish, and others might fear. I believe that I can assure the noble Lord, Lord Jenkins of Hillhead, that we shall go into the IGC not only with a positive agenda but also with an absolute determination to improve the operation of the Maastricht Treaty and to build upon its flexible pillared structure.
354
Our proposals will include the improvement of the Common Foreign and Security Policy. We shall step up the fight against organised crime and terrorism, especially in the field of drugs, to which my noble friend Lady Rawlings, referred.
Lord Harmar-Nicholls: My Lords, may I ask a question?
Baroness Chalker of Wallasey: No, my Lords. We shall further develop the subsidiarity principle and strengthen the role that national Parliaments can play alongside the councils and the European Parliament. Another priority is to continue the work, as I mentioned earlier, against the mismanagement that has taken place in the Community budget. Therefore, there is much work to be done and much support for the British approach. There is no great pressure for new Community competences, and there is no plot to collapse the pillared structure of the treaty. We shall not be waiting fearfully to see what others may throw at us. We shall be where we should be: at the heart of Europe, shaping the agenda.
In conclusion, the nations of Europe are here to stay. People are rightly proud of their nationhood, their history, their languages, their culture, their traditions and their heritage. The sense of national identity reflects deep feelings which governments ignore at their peril. As I believe the right reverend Prelate the Bishop of Sheffield said, nationhood can slide all too easily into yobbish nationalism—or, at least, extreme nationalism—into xenophobia and hatred.
Twice this century European rivalries have plunged the world into war. We never want to see that happen again. It is not just a truism: it is truly right that the European Union has been central to the stability and the prosperity which western Europe has enjoyed for the past 50 years. It certainly provides a framework which goes well beyond international co-operation. Nations can and will continue to pursue their interests, but enlightened self-interest demands a level of regional co-operation which was never imagined by our forebears. No longer do the nations of Europe protect their markets at the first hint of recession; no longer are they free to subsidise their companies at will.
Similarly, it is not just a question of prosperity. The European Union as a pole of stability in Europe, has buttressed democracy in Spain, Portugal and Greece when those countries emerged from dictatorship. It also provided a framework for peaceful unification in Germany. Now it is, again, proving its value for the democracies that are emerging after the collapse of the Soviet Union. For all its faults, the European Union, with NATO, is a sure foundation for peace in our continent. It is the basis upon which we must continue to build.
Perhaps I may return to the Motion tabled in the name of the noble Lord, Lord Jenkins of Hillhead, who was himself a much respected President of the European Commission. The Motion calls attention,
"to the need for the United Kingdom to play a positive role in the Inter-Governmental Conference of 1996".

355
I should emphasise that it will, indeed, be an Inter-Governmental Conference; it is not an initiative of the Commission and it is not a report to the European Parliament. It will be a conference between the member governments of the Union to review the treaty. Each government must decide what, if anything, they wish to propose by way of treaty change to their own national Parliaments. I can assure noble Lords that Britain will approach the IGC in a positive spirit. As my right honourable friend the Prime Minister said in another place last week:
"the conference can and should usefully improve the way in which Europe operates, and we shall present a range of our ideas at the conference".—[Official Report, Commons, 1/3/95; col. 1063.]
They will be ideas to develop and improve the Union, not for the convenience of its public servants nor for the glory of its politicians; hut for the sake of all the people of Europe.
Lord Harmar-Nicholls: My Lords, before my noble friend sits down—
Noble Lords: Order!
Lord Harmar-Nicholls: My Lords, the procedure of the House is well known to all of us—
Lord Strathclyde: My Lords, my noble friend Lady Chalker has sat down. My noble friend Lord Harmar-Nicholls tried to intervene during the course of my noble friend's speech; but she chose, because of the time limit, not to allow such an intervention. That permitted my noble friend to answer many of the questions posed by speakers in today's debate. As I said, my noble friend has now sat down, and the noble Lord, Lord Jenkins of Hillhead, will now reply.
Lord Harmar-Nicholls: My Lords, is the acting Leader of the House—
Noble Lords: Order!
Lord Harmar-Nicholls: My Lords, is the acting Leader of the House seeking to change the customs of this Chamber? It is accepted that the intervention I want to make is a proper one. I wanted to ask my noble friend—
Noble Lords: Order!
Lord Harmar-Nicholls: My Lords, if there is a conflict between the application of Maastricht and the application of the Treaty of Rome, which treaty is the superior one?
8 50 p.m.
Lord Jenkins of Hillhead: My Lords, I am not a great believer in a second speech from the same person on the same subject on the same day. Therefore, my comments will be very brief. Also I suspect that noble Lords may be beginning to prefer the thought of the first course of their dinner to a second course from me. I thank noble Lords who have participated in the debate which has been a worthwhile one and has struck a new and slightly more constructive note in our European debates than we have heard recently.
356
For me, the debate would almost have been worthwhile alone for the speech of the right reverend prelate the Bishop of Sheffield in the—if I may put it this way—catholicity and generosity of his historical and geographical sweep. He made me almost feel I was listening to an address from John Henry Newman.
Noble Lords: Oh!
Lord Jenkins of Hillhead: My Lords, I will not say at which phase in the career of that distinguished Anglican who became a cardinal. I turn to comment, possibly a shade less generous, about the noble Lord, Lord Pearson. When he was speaking I was reminded of the Manifesto of the Three Tailors issued early in the 19th century which began, "We, the people of England". I thought his doctrine that those who had any experience of these matters and who had been concerned with any political or administrative matters should not speak on them, was interesting and novel. It would certainly leave a good deal more space for him to speak in this House, and we might hear him very frequently in those circumstances.
Lord Pearson of Rannoch: My Lords, may I—
Noble Lords: No!
Lord Jenkins of Hillhead: My Lords, the noble Lord, Lord McIntosh of Haringey, was worried that I was deserting party politics. Parties have their place, but they can get above themselves. Some of the puerility of party politics in this country has done a good deal of harm to our handling of the European issue. The noble Lord rebuked my noble friend Lord Thomson and myself most mightily for not having set out in detail the Liberal Democrat programme. He then spent a good deal of time doing that; and then, at the end, said he had not left himself enough time to set out the Labour programme. However, we are all subject to time factors.
I now turn to the Minister. She is, as always, the acceptable face of Toryism. I thank her for her speech this evening. There were parts of it which I preferred to other parts; but what I thought was the case—and I cannot say better than this—was that the parts of it I preferred were those which she prepared more herself and had her personal conviction behind them. In any event, I thank her for her reply as I thank all those noble Lords who have spoken. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Legitimated Persons (Succession to Titles) Bill [H.L.]
8.53 p.m.
Lord Kilmarnock: My Lords, I beg to move that this Bill be now read a second time.
Its sole aim is to make it possible for persons legitimated by subsequent matrimony to inherit a title throughout the United Kingdom rather than, as at present, in only one part of it; namely, Scotland. It is a modest measure but not, I believe, without importance. I hope it will find favour with your Lordships.

357
As regards the dilatory amendment in the name of the noble Lord, Lord Morris, I could have wished that the noble Lord had put it down a little earlier, or approached me, so that we could have had time to discuss—and, I would hope, allay—his fears. As a result of a conversation this morning, I now have an inkling of what disturbs him, erroneously in my view and that of my advisers, and I shall do my best to set his mind at rest. At all events I hope that he will agree with me after this debate that we should continue to pursue any remaining matters of concern in Committee, as happens in the vast majority of cases with Private Member's Bills in your Lordships' House.
Before I proceed any further, two things are incumbent on me. The first is to declare a personal interest in that the succession to my own peerage would be affected if the Bill became law. It would pass from the current heir presumptive who is my younger brother, to my son who would become the heir apparent. There is no disagreement in my family that this is a proper step. But I am aware that there is a question of expectations, which I will address later in my speech.
I also want to make it absolutely clear at the outset that the Bill has nothing whatever to do with reform of the House of Lords. It is exclusively concerned with the succession to hereditary titles. It is up to Parliament to decide whether or not the holders of such titles should be entitled to sit in Parliament. Possibly this question will arise again in the not too far distant future, and possibly not, but whatever the outcome of the next general election and any proposal for reform that may follow it, that will not be affected one way or another by the Bill.
Perhaps I may now draw attention to the general law on legitimacy as it now stands. In various reports on the subject the Law Commissions of England and Wales and of Scotland—the two Law Commissions—recommended, as a matter of general principle, the removal of any discrimination against a person born outside matrimony, whose parents subsequently contracted matrimony. This principle has been adopted by Parliament in various Acts including the Legitimacy Act 1976, the Family Law Reform Acts 1969 and 1987 and the Children Act 1989.
However, as regards titles of honour, the Law Commissions did not propose any change in the law. It might be surmised that this was at least partly because the vast majority of extant hereditary peerages (526 out of a total of 772 entitled to a seat in this House) are peerages of the United Kingdom, created since 1801, while the Law Commissions' remit is confined to their respective regions and countries. There is no Law Commission for the United Kingdom as a whole.
The upshot is that a person legitimated by subsequent matrimony has exactly the same rights and responsibilities as if he had been born legitimate, with the outstanding exception in England, Wales and Northern Ireland, but not in Scotland, of the inheritance of titles of honour. Indeed paragraph 4(2) of Schedule 1 of the Legitimacy Act 1976 expressly provides that apart from Section 1, which deals with void marriages,
358
"nothing in this Act shall affect the succession to any dignity or title of honour or render any person capable of succeeding to or transmitting a right to succeed to any such dignity or title".
In this, it simply follows Section 10 of the Legitimacy Act 1926.
This is in marked contrast to the situation in Scotland where it has always been accepted under Scottish common law, subsequently codified by the Legitimation (Scotland) Act 1968, that persons legitimated by subsequent matrimony are eligible to succeed to Scottish titles and do so succeed. Furthermore, we have the extraordinary anomaly that a person legitimated in England by the subsequent marriage of his parents may inherit a Scottish title but would be debarred from inheriting an English, Irish, British or United Kingdom title in the same circumstances. This is surely quite unacceptable. I can see no sound reason why those of us who hold such titles should not benefit from the same regime as the Scots. The United Kingdom is clearly made up of different component parts, but it is still a unitary state.
That is the background to the reform I am proposing. The current exclusion of most but not all hereditary titles from the general thrust of the law on legitimacy across the United Kingdom is clearly discriminatory and my aim is to remove this discrimination. I am glad to be able to report to your Lordships that the Bill has widespread support among representative bodies of the legal profession outside Parliament. It is supported by the Family Law Committee of the Law Society, by the Family Law Bar Association, and by the Solicitors' Family Law Association. They are all united in their opposition to discrimination against any particular category of citizen—correctly, it seems to me. I have also received assurances that this Bill would not be opposed by the Labour Party in another place although of course I obviously will not pre-empt what the noble Lord, Lord Rea, has to say from his Front Bench in this House.
Let me take your Lordships briefly through the Bill. It is my duty to do so. It is always an attractive idea that a one-clause Bill will do the trick for a simple matter. But usually a number of subsidiary and consequential matters need to be taken care of. So this Bill has six clauses and a schedule, all straightforward but the minimum required to do the job efficiently.
Clause 1(1) is the principal provision of the Bill and would enable legitimated persons to succeed and transmit a right to succeed to titles. That is at present excluded by provisions in the current legislation concerned with legitimation in England, Wales and Northern Ireland—provisions which are repealed by Clause 6(1) and the schedule to the Bill. In Scotland legitimated persons can already succeed to titles, as I mentioned earlier.
Clause 1(2) makes it quite clear that the words "lawfully begotten", or similar words in letters patent or other instrument creating a title, will not prevent a legitimated person from succeeding to a title. In the case of a barony by writ, the title has no instrument of creation; hence the acknowledgement in the subsection that not all titles have such an instrument.

359
Clause 1(3) establishes that the Bill covers persons legitimated under, or recognised as legitimated under, the law of any part of the United Kingdom. It also defines "title" widely to cover any dignity or title of honour—and in that it follows paragraph 4(2) of Schedule 1 of the 1976 Act which employs the identical phrase, "any dignity or title of honour". Section 10(1) of the Northern Ireland Act is to the same effect. It is drawn in the same terms. The Bill accordingly goes beyond peerages and would embrace baronetcies as well.
Clause 2 is a technical clause concerning seniority. It would normally secure that the eldest child, if legitimated, would have seniority. The other provisions in the clause concern in particular the case of the holder of a title marrying en secondes notes a woman by whom he has previously had an illegitimate child. But that child's legitimation, and therefore his seniority, would date from the remarriage and he would not be able to displace an heir, albeit younger in years than himself of the first marriage.
Clause 3 makes it clear that the Bill covers existing titles, but that it will affect only successions on a death occurring after the Bill is enacted. It does not bite back into the past and could not therefore disturb any present title holder. Nor could the descendant of someone legitimated in the past, but deceased, disturb the succession to the current line. All successions through a legitimated person who died before the passing of the Act are excluded.
This clause is also intended to secure that the interference with present expectations is the minimum consistent with the aims of the Bill. It is obvious that some hypothetical expectations—and I have reason to believe a very small number of actual expectations—may be disappointed. But here I would point out that the expectation of an heir presumptive can never be other than contingent on the current holder not remarrying, however late in life, and producing an heir. Even an heir apparent—that is, a male child in the direct line of succession—may have his expectation disappointed by untimely death, as recent tragic events have shown in a noble Scottish family. Some expectations exist only as a result of the discrimination and anomalies to which I have referred. Others may be blown away by fate. Expectations are not foolproof or irreversible entitlements.
Clause 4 recognises the fact that under Scottish law legitimated persons are already able to succeed to Scottish titles. It leaves the Scottish law to operate where it operates already and, in effect, ring-fences the Scottish position.
Clause 5 exempts the Crown from the scope of the Bill, making nonsense of the hysterical claim in the Daily Express recently that if the Bill became law,
"the Queen would not be the Queen".
I may add that Clause 3, which I have already discussed, equally makes nonsense of the other assertion in the same column; namely, that,
"a good half of the Lords would lose their seats".
I am not paranoid about the press, but if the Daily Express cannot do better than that, I suggest that it sacks someone in its research department and sharpens up its
360
act. In the meantime, I can assure all noble Lords that as far as their titles go they have absolute security of tenure. As regards a seat in this House, that is a matter for any reform Bill that may be presented to Parliament.
Clause 6 (the last clause) ushers in the consequential repeals in the schedule and gives the Short Title of the Bill.
This is a small Bill designed to tidy up a small corner of the law. We have for some time now ceased to discriminate against children born outside wedlock through no fault of their own, nor often of their parents, as, for example, in the case of a premature birth or a long and complicated divorce procedure in another country. The act and commitment of marriage or remarriage is the important thing, and that is at the heart of the Bill. That is what has been upheld by all family law legislation over the past quarter of a century—and rightly so in my view—as the trigger of legitimacy and all that flows from it.
It might be argued that hereditary peerages are such an arcane and unusual institution that the general law should not apply to them. There is not much foundation for that. The hereditary peerage is certainly not older than the institution of marriage. In fact, as I have already indicated, much of it is of very recent origin. The great majority of current hereditary peerages have been created since 1831 and a large proportion of those since 1918. Taken as a whole, we are not all that far removed from our origins in the business, commercial, agrarian, intellectual and recent political life of this country. That is our strength. There is nothing unusual or mystical about us requiring unusual or mystical rules as for some ancient priesthood.
The one thing that is special about us is the privilege that we enjoy (or most of us enjoy it; there are some exceptions) of a voice and vote in your Lordships' House. However, I think that I have demonstrated that the Bill will have no effect one way or another on that. Peering—if I may be forgiven the pun—a little further into the future of the hereditary peerage, I can well foresee a time when we shall no longer enjoy that privilege as of right. That does not mean that we shall cease to exist unless formally abolished by a republic—an eventuality which may yet be some way down the track, perhaps over the horizon. In the meantime, I venture to suggest that holders of hereditary titles should be in no worse or different a position as regards legitimation and its effects than that enjoyed by the generality of the population of England and Wales and Northern Ireland, as laid down by the statute law of the land, to which I propose these modest amendments. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Kilmarnock.)
9.8 p.m.
Lord Morris Lord Morris rose to move, as an amendment to the Motion that the Bill be now read a second time, to leave out ("now") and at end insert ("this day six months").
The noble Lord said: My Lords, I am sure that we are all grateful for the very clear way in which the noble Lord, Lord Kilmarnock, has introduced his Bill to the

361
House. I found his silence on the effect of his Bill deafening. Let me explain what I mean by that. What any reasonable man should seek in the law is clarity, brevity and, above all, certainty. While I suppose we should be grateful to the noble Lord, Lord Kilmarnock, for the brevity and clarity of his Bill, I am of the opinion that the effect of the Bill wars most heavily in its effect against certainty.
We must first look at the nature of hereditary peerages—and we must not forget of course baronetcies. They are created by letters patent under the Great Seal in a form prescribed by rules under the Crown Office Act 1877, which limits succession to the heirs of his body lawfully begotten.
To put this another way, the creation of an hereditary title and the rules of succession are a question solely—I repeat, solely—of Royal Prerogative. It is my view that it is quite wrong for a Member of this House to attempt to usurp that prerogative.
Let me attempt to illustrate the uncertainties that the Bill will create. In marked contradistinction to the Legitimacy Act 1959, which enabled children of putative marriages to succeed to titles, this Bill, as drafted, would affect those born before as well as after the commencement of the Act. This would inevitably have the effect of depriving some heirs apparent of their title in favour of persons born out of wedlock, and legitimated not by the will of the Crown, so to speak, but by the parents of the previously illegitimate child.
At this stage, the noble Lord, Lord Kilmarnock, was totally silent on the question of entailment. This is of critical importance. It is a lawyer's term of art for the movement of property which flows with the title. All those property rights and expectations would be lost.
A slightly more complex case is where a Peer has one son out of wedlock, marries the mother and then has a second son. The second son, who will at present expect to succeed, would be deprived by the Bill since his elder brother will, by Clause 2, be deemed to have been born by the date of the marriage.
Rather more difficult and doubtful is the case where a Peer has a son legitimated by a subsequent marriage and, before the commencement of the Act, dies, so that the collateral line, or the younger legitimate son in my previous example, succeeds to the title. The legitimated person, however, is still alive at the commencement so that his line of succession is not barred by virtue of Clause 3. The question then arises of whether the legitimated person's claim revives when the succession next opens on a death after commencement, so that he may assert it against, for example, his nephew (the son of his younger legitimate brother in the example I gave). It is not clear whether the Bill is intended to cover that position; but it is arguable that it does, and with the effect of reviving the claim of the legitimated person or a claim made through him by his son.
I can see another and not unfanciful mischief that this ill-begotten Bill provides. Let us say that the son, a legitimate heir of most probably, I suspect, a Liberal Peer, with the assistance of several willing ladies, sires
362
a string of sons out of each of these ladies. He then waits until they are all of personable age and decides which of his father's grandsons shall succeed to the title.
I shall not weary the House further with a catalogue of the uncertainties and harm that the Bill would create. One thing is certain: to move, as this Bill most certainly does, the power away from the intention of the person creating the honour—namely, the Crown—to the holder or the heir presumptive of the title is to encourage irresponsibility and is clearly wrong. The ability to create uncertainties in the succession of titles by virtue of this Bill is limited only by the imagination of man. Families can be quite revolting enough as it is. This Bill positively encourages them to be more so. I beg to move the amendment standing in my name.
Moved, as an amendment to the Motion that the Bill be now read a second time, to leave out ("now") and at end insert ("this day six months").—(Lord Morris.
9.14 p.m.
The Viscount of Oxfuird: My Lords, the very term "heirs of the body" evokes a form of comfort which appears to have no contradiction until one looks into the depths of the inheritance laws of the Peerage and the root of their existence, and the importance of the Crown prerogative.
Thus it is that one must return to col. 685 of Hansard of 27th November 1986, and to the speech of my noble and learned friend Lord Hailsham when he was Lord Chancellor, at the Second Reading of the Family Law Reform Bill, which is now an Act.
In response to the question from the noble Lord, Lord Mishcon, "Why not titles of honour?", my noble friend went on to say:
"Far more important than … hereditary Peerages is the descent of the Crown. It would raise serious questions if I were to embark upon this delicate field in relation to the Family Law Reform Bill. The patent which creates the Peerage, except in those few Peerages which are created by writ, where different and common law considerations arise, is normally to the heirs of the body lawfully begotten and to be begotten".
My noble friend went on to say (at col. 686):
"It is part of the Crown's prerogative to ensure that it descends through the married line. What is far more convincing to my mind is that even in 1926, when we legitimated children per subsequens matrimonium, thereby following the Roman Catholic Church and not the Church of England, the question of the descent of titles of honour was expressly reserved. They can only be legitimated if lawfully begotten at the time".
Perhaps we believe that we sail in so-called "charted waters" with the legitimacy Acts, but there are also the gods of the copy book headings, and they are to be respected. Acceptance of this Bill could have severe consequences, particularly in connection with its retrospective effect.
I cannot support this Bill and will support my noble friend's amendment.
9.17 p.m.
Lady Saltoun of Abernethy: My Lords, when I first glanced at this Bill, I thought it was pretty innocuous. But when I came to examine it more carefully, I began to have misgivings. Upon further investigation, my misgivings increased to the point where I shall support

363
the amendment of the noble Lord, Lord Morris. Having said that, I think that there is not one of us here who does not sympathise with the noble Lord, Lord Kilmarnock, in his predicament. But it seems to me that his Bill, if enacted, would make bad law. I wonder whether there might not be some other way of achieving what he seeks.
There are two principal aspects of the Bill which I find totally unacceptable: first, its retrospective effect, and, secondly, the disappointing of legitimate expectations. That is what Clause 3 does. If the Bill receives a Second Reading, I shall seek to amend Clause 3 at Committee stage, so as to remove the first and avoid the second.
The noble Lord, Lord Kilmarnock, dismisses legitimate expectations in a somewhat cavalier manner. But the disappointing of them can be the cause of much sorrow and bad blood in a family, and is something to be avoided wherever possible. God may blow them away, but that is no reason for us to do so.
The noble and learned Lord, Lord Keith of Kinkel, in his judgment given in 1986 on the appeal of Dunbar of Kilconzie, clearly thought that both retrospection and the disappointing of legitimate expectations should be avoided; and although his judgment applies to Scotland and this Bill is not, I understand, supposed to apply to Scotland,—although I do not find that that emerges very clearly from reading the Bill—the principle applies equally to England and Wales. I am very sorry that the noble and learned Lord is not hem this evening to contribute to this debate. There is a way in which what the noble Lord, Lord Kilmarnock, seeks might be achieved without the damage that this Bill will do.
In Scotland, in the early days—by that I mean before 1603 —it was, by the law of Scotland competent to the grantee of a peerage, or any of his successors, to resign such grant into the hands of the Crown in return for a new grant which could limit the destination in such manner as the grantee, with the consent of the sovereign, might direct. Indeed, it was customary to resign any peerage to the Crown on the accession of a new sovereign, and hope for a re-grant, which could of course be dependent on past good conduct. I believe that that law has not been repealed.
I should be happy to support such legislation for GB and UK peerages, provided of course that no legitimate claimants existed or that their consent had been obtained before any alteration was requested in the destination. That would also enable peerages which are in danger of extinction, for want of male issue, to be revitalised.
It occurred to me that another way of doing this might be by a personal Bill. But I believe that the Personal Bills Committee might think otherwise. So that may not be a very practical suggestion. As it stands, I shall support the amendment of the noble Lord, Lord Morris.
9.21 p.m.
Lord Teviot: My Lords, it is a great pleasure to follow the noble Lady, Lady Saltoun of Abernethy. I support the noble Lord, Lord Kilmarnock. This Bill is a "Legitimated Persons" Bill. It dwells on those who have been illegitimate and who have suffered in the past. I
364
speak now as a genealogist. I can tell the House that I have looked at parish registers and illegitimate issue have been referred to as "base child", "bastard" or "son (or daughter) of a harlot". We are all Peers in this House and we are all equal. We are all addressed as noble Lords, apart of course from Dukes, who are not very numerous.
With regard to succession, there have been many what I might call eccentric legal arguments. But a case can be made. There have been various Acts on legitimisation in England and Scotland. An illegitimate person can inherit. On the rare occasions on which it might occur with regard to this House, illegitimate people could well inherit. I see no reason for any objection, whatever the legal argument. But we have to look at what might be called the basis of the argument.
Perhaps I may make just one final comment. I have already spoken for one minute and would like to extend my observations to one minute and a half. In 1968, in a debate in your Lordships' House, the late Lord Ramsey, Archbishop of Canterbury, in the days of his primacy, quoting an old hymn said:
"There is room for fresh creations
In that upper home of bliss".
I support the noble Lord, Lord Kilmarnock.
9.23 p.m.
Lord Sudeley: My Lords, I rise to intervene rather than to make a speech. The Bill has been criticised as a personal Bill and perhaps I may be allowed to declare a personal interest. There were two English kings who had a good brood of bastards: Henry I and Charles II. It is from Charles II that some of our Dukes are descended. I am proud of my illegitimate descent from one of the illegitimate children of Henry I. Whatever modem American women may say, in those days there was honour in being a royal mistress.
The fate of the legitimate son and heir of Henry I is well known. He would have survived the sinking of the White Ship, if he had not sought to rescue his illegitimate half-sister, the Countess of Perche. They both drowned together and there followed all the misery of the contested succession under Stephen and Matilda, when the government were so weak and the Church so strong that canon law exceeded all proper bounds into probate and so on.
What is the practical outcome of an old inheritance, a peerage and a bastardy? Let me cite just one example. The Earl of Egremont, patron of Turner, had only illegitimate issue. Queen Victoria said of that:
"A barony is enough for a bastard; an Earldom is too much".
Egremont mortgaged the Orchard Wyndham property in Somerset, entailed on the legitimate line, to the hilt. To pay off the mortgages the legitimate line was unable to pay for their daughters' dowries. They had to lock up all their daughters, a tragedy surely of a large scale if we have any feeling. I should like to oppose the Bill.
9.25 p.m.
Lord Rea: My Lords, although I speak from this Bench, I do so in a personal capacity since the Opposition have no set views on this issue, if such a

365
term is allowable, considering the nature of the Bill. However, I think that my views would be acceptable to most members of the Labour Party. I congratulate the noble Lord, Lord Kilmarnock, on bringing this small measure before your Lordships and on his, as usual, very clear method of presentation.
The Bill itself, in my humble view, is very carefully drawn up and I hope will need no amendment. In supporting the Bill I, like other noble Lords who have spoken, wish to declare an interest in that I have a grandson who is legitimated in the eyes of the law and falls into the category covered by the Bill. In fact, my interest is really of a technical nature since no one in my family takes the matter terribly seriously. We all assume and, in fact, hope that the right of hereditary Peers to sit as legislators will finally have been abolished long before the time this three year-old could inherit his title. But I have to say that I have always thought, since my early adulthood, that that time would have come to pass before I inherited the title. So I have to enter the caveat that perhaps he will still be able to sit in the House of Lords, although the noble Lord, Lord Kilmarnock, said that that is not the point of the exercise.
Without this archaic privilege, which we all enjoy, of sitting in your Lordships' House and being able to speak and vote, the possession of an hereditary title is merely an historical curiosity, especially when it is not accompanied by a stately home or a fortune. But I accept that such a title means a lot to some families, especially if the title represents an ancient lineage, even if it were not to be associated with the right to attend and vote in your Lordships' House. Certainly, hereditary peerages on the Continent continue. Some people take them seriously although others regard them as an object for ridicule.
As the noble Lord, Lord Kilmarnock, said, the 1976 Act to legitimate children was really a consolidation measure. The question of the inheritance of titles was omitted because it would have required new legislation. This Bill provides the opportunity to remedy that deficiency and to correct what, as the noble Lord has described, amounts to a real discrimination against legally legitimated persons. The anomaly in which male legitimated persons, or female in some cases, can inherit Scottish titles but not English, British, UK or Irish titles should surely not be allowed to persist.
I find it curious that any noble Lord can oppose this manifestly fair Bill. I certainly was not convinced by the arguments of the noble Lord, Lord Morris, which were rather far-fetched and unrealistic. He said that families are revolting and this Bill will make them worse. I found that an extraordinary statement because I believe that exactly the reverse is the purpose of this Bill, bringing to the first-born child of a couple the justice that should be his. This House and the Peerage which fills it is only here because of tradition. That has many anomalies. This Bill will help to reduce those anomalies and bring the Peerage up to date. It will make fairer an ancient institution.
9.30 p.m.
Baroness Trumpington: My Lords, the noble Lord, Lord Kilmarnock, has given us an opportunity to consider the topic of this Bill with a closer focus than was possible when the noble Lord, Lord Mishcon, with his customary thoroughness, raised it during the passage of the Family Law Bill in 1986.
Legislation enacting reforms in this area has not been the province of any one party in government, and the government's position is neutral since it seems that the issue to be decided is where and how one is to draw the line between the principle of non-discrimination and the principle that those with a genuine and well-founded expectation of succession should not be unfairly deprived.
The Legitimacy Act 1959 which put children of certain void marriages on the same basis as those of valid marriages for all purposes including succession to titles drew the line on the side of existing expectations and applied the change as it affected titles only to those born after the passing of the Act. Where the line might be drawn in the present case and how this might affect the Bill are pre-eminently matters for this House to decide on a free vote.
Care has been taken to limit the effect of the Bill on existing expectations, but the Government see some difficulties with the Bill as it is currently drafted. In order for the Bill to avoid destroying any genuine existing expectations, it would have to be limited in such a way as to change its character in what may be felt to be a fundamental way. For example, it might be limited so as to affect only those born after its passing, or to come into force in relation to any particular title only when every person living and with a genuine expectation at Royal Assent had died.
There may be changes, depending on your Lordships' views of the nature of the line to be drawn, which could be made short of those I have described but dealing with the more difficult cases. There is one area in particular where the Bill is at least unclear and in which it may have effects which would cause anxiety. That concerns the case in which a legitimated person has before the passing of the Bill been passed over for the succession to a title but is alive and legitimated at the time the Bill is passed. It is not clear whether the Bill is intended to, or would, have the effect of reviving the legitimated person's claim and enabling him to transmit it so that it might be asserted when the succession next opens, but it does seem that it might have that effect as currently drafted.
That is connected with another issue, which is the way in which the Bill relates to Scottish law. It is, as I understand it, the intention that the Bill should not affect Scottish law, which is already broadly in line with what the Bill sets out to do. But it is not clear why the Bill is not simply excluded from applying to Scotland. Indeed, there is a possibility that the Bill might, as currently drafted, have the effect of changing Scottish law if it has the effect which I have described of reviving the claim of a legitimated person previously passed over.

367
That is because that point has been considered in the Scottish context, where the Legitimation (Scotland) Act 1968 retrospectively legitimated certain people. It was decided that considerations of reason and justice favoured the conclusion that the claim of a person thus legitimated many years after the succession passed over should not be revived; and the Bill's effect on this decision is not clear. It may well be that it would have the effect of reversing the decision, which would call into question the way in which the Bill deals with Scottish law.
I think it proper to confine myself to giving the Government's view of the Bill as currently drafted. I know that my noble and learned friend the Lord Chancellor has written to the noble Lord, Lord Kilmarnock, pointing out his worries on the various issues that I have raised. I have drawn your Lordships' attention to certain aspects of the Bill which seem to the Government to he important. Views may differ on the question of whether those matters and others which have been raised are of a nature suited to discussion and resolution in Committee or whether they go to the heart of the Bill. Those matters and the question of whether the Bill should receive a Second Reading are, as I have said, pre-eminently matters for decision by this House on a free vote.
I accordingly wish simply to close on a note of gratitude to those who have taken part in this debate and to the noble Lord, Lord Kilmarnock, for initiating it.
9.36 p.m.
Lord Kilmarnock: My Lords, I am most grateful to all noble Lords who have spoken although not all have spoken as I would have wished. I should like to refer first to the speech of the noble Lord, Lord Morris. The noble Lord is under a misapprehension. There has been no interference whatever with the Royal Prerogative. The Royal Prerogative has been placed by Her Majesty at the disposal of Parliament and of this House for the purpose of this Bill. In fact, the noble Earl, Lord Airlie, came from the Palace precisely to make that declaration to your Lordships shortly before Christmas. As I said, there is absolutely no question whatever of unwarranted interference with the Royal Prerogative. I am very surprised that the noble Lord, Lord Morris, was not aware of that.
I must refute the noble Lord's comments about lack of clarity. I should like to take just a moment to read out Clause 3 which states:
"This Act applies to persons legitimated before as well as persons legitimated after the passing of this Act and has effect in relation to titles created before as well as titles created after that passing, but it shall have effect only in relation to succession on a death occurring after that passing, and no person shall by virtue of this Act have any right of succession to a title based on a relationship to a legitimated person who died before that passing".
I should have thought that that was crystal clear.
I understand the reference by the noble Viscount, Lord Oxfuird, to "heirs of the body" and to the phrase "lawfully begotten". Clause 1(2) extends the definition of the words "lawfully begotten".
368
It is not true that patents are absolutely sacred. The noble Earl, Lord Russell, has drawn to my attention cases in which patents have been varied. As your Lordships know, the noble Earl is a distinguished medieval historian and he has drawn my attention particularly to the case of Lord Brooke in 1628 who succeeded his cousin—by whom he had been adopted when but four years of age—in the peerage under the the special limitation of the patent. It is not true that patents have never been varied. They are not, in that sense, completely Holy Writ.
In regard to the interesting speech of the noble Lady, Lady Saltoun of Abernethy, I was surprised that she referred to the Bill as "bad law". In fact, it attempts to replicate the law of Scotland. We often say in your Lordships' House that they order things better north of the Border. Indeed, that was one of the assumptions of the Bill. I therefore found that a rather strange remark. With regard to the noble Lady's point about retrospection, I draw her attention to Clause 3, which I have quoted. It is absolutely clear that that is not retrospective.
The noble Lady referred to the case of Dunbar of Kilconzie, of which she kindly sent me copies. I read it with great care. This Bill would not have gone against the ruling which the noble and learned Lord, Lord Keith, delivered in that case, and so it would be entirely on all-fours, all square with that ruling.
With regard to the very interesting suggestion the noble Lady made of re-grants, I venture to say to her that I do not believe that this particular procedure has been used since the Act of Union, 1707. It would seem to me to place a tremendous burden on the Crown if people were always petitioning, let us say, to jump over a black sheep in their family in order to award the title to someone whom they thought would bear it more honourably or more reputably. It seems to me that what we have here is very much more simple than the procedure that she has proposed.
Lady Saltoun of Abernethy: My Lords, would the noble Lord give way? I think I suggested that the Crown would only give a re-grant, with a destination as the Peer wished, if all other claimants were in agreement or had died out.
Lord Kilmarnock: My Lords, I appreciate that, but I think it still would impose a burden on the Crown. There would be constant petitions going to the Crown. That is one of the reasons, if I recall correctly, why your Lordships were not very happy with a Bill of the noble Lord, Lord Diamond, which required these constant approaches to the Crown. I thought it was an interesting suggestion, but obviously it would be an entirely different Bill from this one if the noble Lady felt inclined to introduce it. If she did, however, I am sure we would discuss it with great interest. Obviously I am grateful for the support of the noble Lord, Lord Teviot, with his great genealogical knowledge, and also to the noble Lord, Lord Rea, from the Labour Front Bench, for the stress that he placed on discrimination against those who are legitimated.

369
I am also extremely grateful to the noble Baroness, Lady Trumpington, for having replied on behalf of the Government and set out a neutral position. Very properly, I thought, she set out various concerns which, in my submission, could or should be properly addressed in Committee. The noble Baroness herself made a number of suggestions and in effect produced a "menu" of possible amendments. I, as promoter and mover of this Bill, would be very happy to consider any or all of those when we come to the Committee stage. It seems to me that the Government are completely correct and proper in the matter of this Bill and I hope that we will follow what I take to be her suggestion; that we should be able to proceed and to discuss these various ideas, and if necessary change the Bill.
On the point made by the noble Baroness about reviving the claim of a legitimated person previously passed over, I think she was not quite correct. In fact, the Bill provides against that and, as I said to the noble Lady, Lady Saltoun, it would not affect the ruling of Lord Keith in the Dunbar of Kilconzie case. I believe the Bill has been well enough and tightly enough drafted to avoid the eventuality mentioned by the noble Baroness.
For all these reasons—and we have had an interesting debate—I feel it would be in accordance with the normal procedure and traditions of this House that a Bill, albeit a modest Bill, that has aroused a considerable amount of interest—in fact, rather more interest than I thought it might—should be allowed to proceed to the Committee stage. I would therefore say to the noble Lord, Lord Morris, before he decides what he is going to do, that I very much hope that he will not press his dilatory amendment and that he will agree that the Bill should go forward so that we are able to discuss some or all of these matters—some of which are very detailed and quite technical—in the proper setting of a Committee. I hope that he will take up that suggestion in the perfectly friendly manner in which it is proffered to him. I look forward to hearing his concluding remarks.
9.45 p.m.
Lord Morris: My Lords, critically in his first speech the noble Lord, Lord Kilmarnock, prayed in aid organisations outside Parliament concerned with family law reform which he had consulted. They happened to be the Family Law Bar Association, the Family Law Committee of the Law Society and the Solicitors' Family Law Association. My God, they would support the Bill, would they not, because of the chaos that it will cause. They will have God knows how many briefs winging in their direction. I pray in aid a much higher authority than that.
Every Sitting Day in Parliament we beseech Almighty God, among other things, that,
"laying aside all private interests, prejudices and partial affections",
we work towards the,
"peace and tranquillity of the Realm, and the uniting and knitting together of the hearts of all persons and estates within the same, in true Christian Love and Charity".
370
There is no Bill better designed to war against that principle than this Bill, and I feel that I must take the opinion of the House.
9.46 p.m.
On Question, Whether the amendment shall be agreed to?
Their Lordships divided: Contents, 46; Not-Contents, 14.

Division No. 1

CONTENTS

Annaly, L.

Long, V.

Brantford, V.

Lucas of Chilworth, L.

Brougham and Vaux, L.

Lucas, L.

Burnham, L.

Lyell, L.

Carnegy of Lour, B.

Macleod of Borve, B.

Chalker of Wallasey, B.

Massereene and Ferrard, V.

Cranborne, V. [Lord Privy Seal.]

McColl of Dulwich, L.

Cumberlege, B.

Melville, V.

Dean of Harptree, L.

Montgomery of Alamein, V.

Denton of Wakefield, B.

Morris, L. [Teller.]

Elles, B.

Newall, L.

Faithfull, B.

O'Cathain, B.

Falkland, V.

Oxford, V. [Teller.]

Fraser of Carmyllie, L.

Plumb, L.

Gardner of Parkes, B.

Rodger of Earlsferry, L.

Goschen, V.

Saltoun of Abernethy, Ly.

Gray, L

Seccombe, B.

Hayhoe, L.

Shrewsbury, E.

Henley, L.

Shuttleworth, L.

Hooper, B.

Strathclyde, L.

Inglewood, L.

Sudeley, L.

Lindsay, E.

Trumpington, B.

Lindsey and Abingdon, E.

Wynford, L.

NOT-CONTENTS

Clinton-Davis, L.

Monkswell, L

David, B.

Morris of Castle Morris, L

HolmPatrick, L.

Ponsonby of Shulbrede, L.

Kilbracken, L.

Prys-Davies, L.

Kilmarnock, L. [Teller.]

Rea, L. [Teller.]

Mar and Kellie, E.

Strafford, E.

McNair, L.

Teviot, L.

Resolved in the affirmative, and amendment agreed to accordingly.

Appropriation (Northern Ireland) Order 1995
9.55 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield)The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield) rose to move, That the draft order laid before the House on 14th February be approved.
The noble Baroness said: My Lords, I beg to move. I am sure that the noble Lord opposite will feel that, unfortunately, this is not an unusual time at which to start Northern Ireland business.
This is one in a series of financial orders covering Northern Ireland departments which come before the House each year. The draft order before us today authorises expenditure of £198.2 million for Northern ireland departments for the current financial year. That is in addition to the £5,824 million voted by the House last June. The order also authorises the vote-on-account

371
of £2,705 million for 1995–96 to enable the services of Northern Ireland departments to continue until the 1995–96 main estimates are brought before your Lordships later this year.
Before turning to the details of the estimates, I should like to set them in the context of the recent performance of the Northern Ireland economy. The local economy as a whole continues to perform well. That is reflected in the figures for those in employment and those out of work. The number of employees in employment in Northern Ireland now stands at 553,850—an all-time high for the region. Seasonally adjusted unemployment has fallen in 10 of the past 12 months and, at 12.4 per cent. of the workforce, is now at its lowest level for 13 years.
That is encouraging, as is the marked upturn in business confidence, exports, output and investment intentions revealed in recent surveys of Northern Ireland business. Those also indicate that Northern Ireland industry is beginning to benefit from the cessation of violence by the paramilitaries. While those are welcome developments, none of us can afford to be complacent. Government will continue to assist local industry to improve its competitiveness and to maximise the opportunities offered by the economic recovery now under way.
With your Lordships' permission, I now turn to the main items in the estimates, starting with the Department of Agriculture. In Vote 1, a token increase of £1,000 is required to reflect various changes in the vote. Some £2 million is required for additional uptake under the Farm and Conservation Grant Scheme. That is offset by savings in other areas.
In Vote 2, covering local support measures, some £25.2 million is sought; £26.5 million is for the Agricultural Development Operational Programme, where claims were higher than anticipated; £0.7 million is for the disease eradication programme; and some £1.3 million is carry forward of capital and running costs from 1993–94 to 1994–95. Those increases are partially offset by reduced requirements elsewhere within the vote.
Turning to the Department of Economic Development, a net increase of some £19 million is sought in Vote 1. That includes £4.7 million for the Industrial Development Board for the provision of land and buildings which is to meet expenditure on factory buildings for recent inward investment projects and reflects the continuing success of the board in attracting competitive companies to Northern Ireland; and £17.7 million is for selective assistance to industry, mainly for existing inward investment projects and for local, very competitive companies. Also in this vote, £6.5 million is required for Shorts recapitalisation programme. Those increases are offset by increased receipts totalling £8.5 million from the sale of IDB factories and lands.
In Vote 2, a token increase of £1,000 is sought. Some £0.6 million is for the Northern Ireland Tourist Board. That will enable the board to promote and market Northern Ireland as a tourist destination. The increase is offset by increased receipts elsewhere in the vote.
Vote 4 makes substantive provision for expenses incurred in the privatisation of the electricity supply industry in Northern Ireland. Those costs have been met from the second instalment payments received in respect of the Northern Ireland electricity share issue.
I now turn to the Department of the Environment. A net increase of some £5.4 million is sought in Vote 1, including some £4.3 million for the road network. Some £0.8 million is for the Driver and Vehicle Testing Agency. Those increases are partially offset by increased receipts, including those for car parking and ferry services. Also in the vote, over £47 million is appropriated in respect of the sale of Northern Ireland Airports Limited.
In Vote 2, covering housing, token provision of £1,000 is sought. Additional grant to the Northern Ireland Housing Executive of some £4.7 million includes increased resources for maintenance and to offset a fall in rental income from lower than anticipated house sales. Gross housing expenditure in Northern Ireland this year is expected to be about £564 million, some £5 million more than 1993–94. Much has already been achieved in improving housing standards in Northern Ireland and that will enable further progress to be made.
In Vote 4, covering environmental and other services, a net increase of some £3 million is sought. That includes £1.3 million for comprehensive development schemes and various adjustments between programmes. Increased expenditure is partially offset by additional receipts of £2.5 million.
I now turn to the Department of Education, where a net increase of £2.7 million is sought in Vote 1. That includes some £4.1 million for grants to education and library boards, mainly for maintenance, minor works and equipment. £1.7 million is for voluntary schools, mainly for health and safety and equipment. Those increases are offset by savings elsewhere in the vote.
In Vote 2, an additional £5.4 million is sought. Some £3 million is for mandatory awards and student loans, reflecting increased demands. £1.2 million is for universities, mainly for essential equipment. Some £0.4 million is for arts and museums, including the adaptation of premises to improve access and facilities for disabled people. Increases are also required for departmental administration, youth services and the Armagh observatory and planetarium.
I now turn to the Department of Health and Social Services, where a net increase of £12.9 million is sought in Vote 1. That includes £9 million for hospital, community health and personal social services and £6.5 million for capital expenditure. It also includes £1 million to provide additional help for people disabled by violence. That will help improve facilities at the regional development centre at Musgrave Park Hospital and provide better wheelchairs. Those increases are offset by increased receipts and a reduction of £3.4 million in loans provision to trusts.
I move now to Vote 3, where additional net provision of £2.1 million is required. That includes some £7 million for administration costs and capital expenditure. Those increases are offset by reductions elsewhere and by a net increases in receipts of some £4.9 million.
Finally, in Vote 4 which covers social security, £80.5 million is sought. That is due mainly to a greater than anticipated demand for income support and disability benefits, in particular, attendance and disability living allowances. That is offset by a decrease in family credit. I hope that your Lordships have found the summary of the main components of the order helpful. I commend the order to the House.
Moved, That the draft order laid before the House on 14th February be approved.—(Baroness Denton of Wakefield.)
Lord Prys-Davies: My Lords, first, I wish to thank the noble Baroness for the care with which she has explained so clearly to the House the important details of the expenditure which is authorised by this draft order. It is very much our hope, as it is clearly the hope of the whole House and the people of Northern Ireland, that the peace process in Northern Ireland will make it possible in the not too distant future to put an end to the Westminster machinery of an appropriation order. The prospect of achieving an enduring peace is far better than anyone would have dreamt of two years ago. I believe that is the time I last spoke to an appropriation order.
We have had the ceasefire for six months and the two governments have produced their agreed joint framework document. I believe it is fair to say from these Benches that the Government are entitled to their full share of the credit for the changed scene. But our hope must be that the ceasefire and the enormously improved prospects of achieving an enduring peace should make it possible to adjust the December 1993 estimated expenditure of £2.8 billion on the law and order programme for the period 1994–97, and to divert yet more resources to the task of regeneration in Northern Ireland.
However, I am conscious of the warning by Coopers & Lybrand, in its January review of the Northern Ireland economy, that the Treasury may take its own peace dividend. That warning has not gone unnoticed. I am sure that I need not remind the House, notwithstanding the Minister's comforting and sincere words, that unemployment still remains a considerable social problem, being very high at 12.1 per cent. compared to 8.4 per cent. in Britain. Over half the unemployed—90,000 or so—have been unemployed for more than a year. Therefore more money is badly and urgently needed to strengthen the economy.
As is the custom at this time of the year—and has been the custom for 10 years at least—the Minister has reviewed the performance of the Northern Ireland economy. The noble Baroness has done so in pretty optimistic terms. I trust that she has got it right.
As the Minister explained, the draft order falls into two main parts. First, it authorises additional expenditure for the financial year 1994–95, ending on 31st March. Secondly, it authorises the sum required on account for 1995–96 pending the main Estimates. That funding is very substantial indeed and this, of course, excludes the expenditure by the Northern Ireland Office on law and order.
374
It is late in the evening and we have to turn our attention to two orders. Therefore in the short time available I wish briefly and inadequately to draw attention to two or three topics in which I happen to have an interest. If we look at the supplementary increases for the year 1994–95, I believe, if I have understood the columns correctly, that the biggest single item is in connection with the privatisation of the electricity industry. I am sure the Minister will know that the privatisation of the Northern Ireland electricity industry has been a most controversial issue, and the division was not only on political or party lines. I shall not weary the House with those arguments tonight. But I would like to ask the Minister to confirm whether the proposed expenditure in 1995–96, under Vote 2, on what is described in Vote 2 as "residual privatisation costs", will see the end of this item of expenditure.
I note that there is a small increase in one of the Votes of the Department of Agriculture on measures of agricultural and fisheries support for the year ending 31st March of this year. This gives me the opportunity to ask the Minister—I believe that she is in charge of the Department of Agriculture—how many fishing vessel owners from Northern Ireland have applied for the decommissioning grant under which they would scrap their vessel and surrender its licence. Perhaps the Minister will tell us whether Northern Ireland's fishing industry receives equal treatment from the EC compared with the fishing industry in the Republic.
I have good news for the Minister. She will be pleased to learn that the community development programme of the Northern Ireland Rural Development Council has attracted a great deal of favourable comment by voluntary bodies which are primarily concerned with the well being of the Welsh countryside. Consequently they refer me to the development programme of the Northern Ireland Rural Development Council. Perhaps I may ask the Minister whether the programme is achieving the objectives set out in paragraph 5.46 on page 44 of the Expenditure Plan and Priorities, 1994–1997.
The Minister touched upon the health Vote. On that I merely ask whether she can assure the House that the Department of Health in Northern Ireland is not pursuing an insensitive policy of closure of hospital beds. There is increasing concern about the hospital beds run-down programme in England and Wales and that sick people are suffering in the result. I hope that the Minister can be reassuring on that point.
I wish to spend a moment or two on my final point. It relates to a matter that is not in the order—or at least I have not seen it. I refer to a possibly hidden Vote, which I suspect is among the smallest of all the Votes. I refer to the expenditure on promoting community relations and fostering mutual understanding and respect among children and young people in schools and colleges in Northern Ireland. This programme has considerable potential, but also considerable implications for teacher training colleges, the education and library boards, head teachers, teachers and school governors.

375
I have always been a supporter of integrated schools since the first was opened in 1981. There are by now about 23 such schools with enrolments of about 4,000. My support for integrated schools, and certainly party support for such schools, in a divided society is undiminished. But in the short-term there is also great potential in the cross-community programmes for bringing about changes in attitudes and improving relations between the young people of the two communities.
Arising out of what is not stated explicitly in the appropriation order, I wish to ask the Minister two questions and to make one comment about the cross-community programme. First, the planned expenditure for 1994–95 was, to quote page 122 of the December 1993 Estimates, "almost £2.5 million". What is the outturn, or estimated outturn, for the year ending 31st March? Secondly, what is the planned expenditure for the year 1995–96?
My comment is this: I have searched in vain through the order—I believe that there are about 3,000 words in the draft appropriation order—for a single reference (even a five worded reference) to expenditure on promoting community relations and mutual understanding during the coming year, and have failed to trace it. I assume that it is included under the heading "miscellaneous services". If that is so, it is discouraging for those working in that difficult area. I ask the Minister whether she will ensure that the programme receives the priority that it rightly deserves. That is the single most important message that I want to deliver to the Minister arising out of the appropriation order.
I have touched inadequately upon a few topics covered by the order. Some will say that undoubtedly the heart of this order lies in the industry Vote. For others it lies in the countryside Vote. For others it undoubtedly lies in the health Vote. But for my part, it lies in a Vote which does not deserve a specific mention, if I have got it right. I believe it is true to say that the heart of all the people in Northern Ireland lies now in fostering mutual understanding and tolerance which could lead to enduring peace in the not-too-distant future.
10.15 p.m.
Lord Holme of Cheltenham: My Lords, I thank the noble Baroness for her extremely clear and helpful introduction of the order. Perhaps I may also say what a pleasure it is to see the noble Lord, Lord Prys-Davies, back in the select club of those who deal with Northern Ireland orders late at night, as is our wont.
The noble Lord, Lord Prys-Davies, said that for some people the economic and industrial section of the appropriation order was at its heart. I may be one of those, although I shall wish to come back a little later in my remarks to the point on community relations which he made. It would be right to preface what I am about to say by briefly trying to give an overview of the state of the Northern Ireland economy.
The noble Lord referred to the extraordinarily high level of unemployment. Despite the best endeavours of local companies, local employers and the Government, as well as the Northern Ireland Office, we still have a painfully high level of unemployment. As the noble
376
Lord said, about half of those are long-term unemployed. The economy of Northern Ireland is such that only 20 firms employ more than 1,000 people. It is an economy still more dependent on agriculture than other parts of the United Kingdom. However, it is also particularly dependent on government expenditure. It is worth reminding ourselves—though not in any grudging sense—that the total subsidy paid by the mainland GB taxpayer to developing the society and economy of Northern Ireland amounts to some £200 per household per year, £4 per household per week. So we all have a great interest in ensuring that that money is spent to good effect, to develop what successive governments have thought of as the twin track in Northern Ireland: trying to achieve a stronger economy and society at the same time as we achieve a political settlement. We all know that those go together.
There is a point on which I wish to press the noble Baroness. In a way it is unfair because she is particularly active in industrial matters and I know that she is greatly respected in Northern Ireland for that reason. But I wish to press the' Government and ask at this juncture, when matters are so hopeful, how we can all make Northern Ireland less of a dependency economy, less dependent on the continuing flow of funds and less of an economy where nearly half the people are ultimately employed in one way or another by the Government. How can we make it more of a self-sustaining and growing economy? There is a unique opportunity to attract inward investment, not merely from the United States, where sometimes the promise seems to be greater than the reality, but also from the European Community and from private firms throughout the world. It is a wonderful opportunity and I know that the Government are active in that respect.
There is the matter of skills and the way in which education relates to industry and the economy. I was very impressed two weeks ago to see the way in which the Magee campus in Derry—or, to be politically correct, Londonderry, or shall I say "Derry" again; whichever it is—is now closely intertwined with the local economy and producing the sort of skills that will make for economic growth.
There is, for instance, the Northern Ireland Growth Challenge that the CBI has undertaken. It has identified, I believe, 13 sectors and is trying to develop sectoral priorities. And there is, of course, the potential of EC structural funds.
All those lead me—perhaps erroneously, but I shall be glad to have the noble Baroness's opinion—to two conclusions. The first is that we really do need for Northern Ireland an industrial strategy. I know that those are difficult words for the noble Baroness's party. However, in Wales, under the leadership of her right honourable friend Mr. Peter Walker, the Government had a very successful industrial strategy. Is it not now time to do that in Northern Ireland: to pull together the best hopes of industry and of the University of Ulster and Queen's; to pull together the Government's own efforts and incoming money, whether governmental or private, and try to get the whole economy pulling itself

377
up by its own bootstraps with its friends? So many people round the world wish it well. That is a little more than the IDB is doing.
The other conclusion I draw is that of the fundamental importance of doing more things on an all-island basis. I am not talking for the moment about the new body in the framework document. I do not want to get off into the wilder shores of politics. I am talking about practical co-operation on tourism, infrastructure and telecom. In all these areas there is so much scope. Again, it needs slightly more than the "invisible hand" approach which characterises the Government's policies on the mainland. It needs an active industrial strategy. I do not hesitate to say that to the noble Baroness because of her own robust reputation in this respect.
Perhaps I may turn to one or two specific questions on the order. The first is on the matter of education. I should like to ask the Minister two questions that fall within the educational budget. First, can she tell me a little about the funds that will be made available for integrated education? I voiced my fears in this House on a previous occasion that, as the two communities begin—we hope that they will move faster—towards some sort of accommodation with each other, the danger is that integrated education may be squeezed out. It is part of a plural society, and does not necessarily fit with the prejudices of the leadership of either main community. It is vitally important that the percentage of students who benefit from integrated education rises from the present 4 per cent. to a higher level. The Northern Ireland Office is proposing some fairly rigorous tests on how many students you have to have in order to open one of these schools. I should like to be reassured about the budgetary provisions that are available for those parents and communities who can get integrated education projects up and going.
The other question is a rather specific one. I am very excited by the imaginative project for a peace line campus in West Belfast, the so-called Springvale site. This project is imaginative if—and it is a big "if—it can be fully integrated into the community of West Belfast. Are the Government planning (this would clearly be cross-departmental) on a forward basis for the very large-scale investment that will be needed? I understand that the noble Baroness's right honourable friend Mr. Ancram is considering this matter. Can she tell us a little more about the potential and the plans?
I turn to the matter of community relations which was also raised by the noble Lord, Lord Prys-Davies. If I read the order aright, there is a very slight fall from just above £2 million to just below £2 million this year for community relations. Do the Government not believe that community relations are now even more important than they were before? And in particular I should like to ask the Minister about the balance between inter-community relations and intra-community relations.
I was very impressed when I visited the Corrymeela community recently to see the work being done with groups of young sixth-formers from the two main places coming together there, working on projects and undertaking adventures together. I believe with the
378
noble Lord, Lord Prys-Davies, that that kind of practical getting-together and working together of young people offers one of the best hopes for at least a higher level of mutual understanding on which a better future can be built.
The final point that I should like to raise has, I suspect, been mentioned already. If there is success with the political dimension of the settlement and there is to be a devolved Northern Ireland assembly, this could be the last time that we discuss an order of this kind in the House. Is there now any clear assessment of the financial scale of the so-called peace dividend? Can we have an assurance from the Government that their priority for any peace dividend will be to reinvest it where it is needed in building a better economy and society in Northern Ireland rather than allowing it to be clawed back by the Treasury.
That is a danger of which all spending Ministers are well aware in all situations. But in this instance it is particularly important that the Treasury should not be allowed to lead the debate. It is essential that the debate is led by the need for political and economic progress in Northern Ireland. I am glad to say that the Government have already answered the question about additionality on any extra European funds and that they will not be, as is true of regions of Great Britain, taken back by the Government.
I should like to widen the question beyond that and ask the noble Baroness whether in her response she can say that the Government and the Northern Ireland Office are successfully resisting the fell embrace of the Treasury. It is very important that they should do so.
Lord Lyell: My Lords, perhaps I may detain the House and indeed my noble friend for just one minute. I must thank her for everything that she presented in the order. I have had a request not to ask any questions, although I may speak for as long as I wish. Certainly, I shall not detain your Lordships for one digit on the clock let alone double digits. I certainly have no questions to ask.
I beg my noble friend to give as much support as she can give in Vote I under the Department of Agriculture to market support or marketing and processing. I hope that my noble friend will bang the drum on all sides of the Community for the Northern Ireland food industry in ANUGA, the world-famous fair in Cologne this autumn. Above all, I hope that she can use her remarkable talents to promote the production and marketing of Northern Ireland's food industry.
My noble friend in Vote 2 mentioned the sum of around £25 million and she said that there was a very high take-up of grants. I am delighted that the industry is still observing the wise words that it used to me: "Act fast while grants last". You never know—they might stop tomorrow. However, it seems that the industry is making full use of the funds available. I hope that my noble friend will be able to reassure us on that score over the years.
With regard to the Department for Education and Vote 2, I am glad to see—indeed, my noble friend took time out to mention it—the Armagh Observatory and Planetarium. Clearly, there is a major programme there.

379
I appreciated all that went on there and enjoyed visiting it, which I did three, four or even five times. I learnt something new every time that I went there. I know that it is a unique and worthwhile site in Northern Ireland.
Finally, I conclude by adding my good wishes to those of the noble Lords who have spoken for integrated education and cross-community education where possible. I appreciate that there are priorities for funding. But I should like to add my support to the good wishes of the two noble Lords who spoke before me.
I thank my noble friend for presenting the order tonight and for all the nice things that she was able to say about Northern Ireland.
10.30 p.m.
Baroness Denton of Wakefield: My Lords, I thank those noble Lords who have contributed to the debate. How fortunate Northern Ireland is to have such friendship in this House. We much appreciate the support that the Province is given.
Despite the brevity of the debate a number of points were raised. I am grateful to noble Lords who gave me notice of many of those points. I shall try to answer all of them but if I miss any I shall read Hansard carefully and write to your Lordships.
I should like to thank the noble Lord, Lord Prys-Davies—I agree with the noble Lord, Lord Holme, that it is nice to see the noble Lord back dealing with Northern Ireland matters—for his acknowledgement of the Government's achievements in leading forward the peace initiative. Much of that tribute should go to the people of Northern Ireland, who themselves have earned, worked for and now have a peace which they so rightly deserve.
I was described as presenting an optimistic plan. I am optimistic. I daily visit companies and I daily see the innovation and creativity of companies in Northern Ireland. I think that we can look forward to a bright future and it is the future that the ceasefires have allowed us to build on. We can be rightly proud of what is happening there but not unaware—I promise your Lordships that I am not unaware—of the issue of unemployment in the Province. It is a long-term unemployment issue. I am delighted to report that we are piloting programmes in Strabane, Fermanagh and West Belfast for the long-term unemployed and we are doing so with funds resulting from the peace dividend. The sooner we can roll out that programme to the whole Province, the better. It will allow the long-term unemployed to have three years' experience of work and then, it is hoped, they will be able to go to the top of the ladder for recruitment in future.
The noble Lord, Lord Prys-Davies, referred to the closure of hospital beds. Northern Ireland has, as I know personally, a very good health service. A rationalisation of the services in the Belfast centre is under way. That is necessary. But business plans are coming forward for Downpatrick, for a new hospital in Coleraine and for the Royal Victoria Hospital. There is investment in the health service in Northern Ireland.
380
I was delighted that the noble Lord, Lord Holme, raised the issue of how the Province is moving from a dependency culture to actually being a wealth creating economy. It is key that we change the tilt from the public sector to the private sector. We have to face outwards. The Department of Economic Development has been working consistently for several years on an industrial strategy which we are now reviewing. We are consulting with the players and we shall return with a revamped strategy which will show that our aim is to make the companies of Northern Ireland competitive. No company ever went to the top of the league by building on grants.
Companies have to be competitive in global marketplaces. It is a very good time for inward investment. The number of calls that we have received at IDB in recent months since the ceasefires is greater than the number we received for the whole of the previous year. There is interest and people who did not have us on their list before now do so. I pay special tribute to the role of the Koreans in inward investment. We have major investment already and other companies have followed Daewoo into the Province. There is much to do. We must not waste or duplicate the resources that we have. But I can assure the noble Lord that we have not only an active strategy but an active Minister.
My noble friend Lord Lyell raised the issue of agriculture which is so important to the economy of Northern Ireland. I promise him that I shall go to ANUGA with the companies from Northern Ireland. I shall also be attending the international food exhibition which is being held very shortly. Our food processing companies are second to none. I am delighted that their exhibition at SIAL means that we are now not sending coals to Newcastle, but sending bread to France. That is a great success.
I am glad that my noble friend mentioned Armagh. A great deal of work is taking place there on the economic development plan, which deserves to succeed. The cross-Border initiatives give it particular point.
I shall try to answer the questions quickly. The noble Lord, Lord Prys-Davies, raised the question of expenditure on residual privatisation costs in the electricity industry. The residual expenditure in 1995–96 for the privatisation of the electricity supply industry will be mainly for the redemption of bill vouchers which customers can set against their electricity bills. That will be relatively minor and is likely to continue into 1996–97. As in the case of all other costs associated with privatisation, they will be met from the proceeds of sale.
The noble Lord raised the very important question of the fishing industry, which has seen a great many problems. There is no way in which we can put more fish back into the Irish Sea. We have to conserve stocks which are already there. Decommissioning is important. I shall let the noble Lord have the number of fishing vessel owners who applied for decommissioning grants. In 1993–94, 28 Northern Ireland applicants under the decommissioning scheme were successful and a further 15 qualified in 1994–95. Substantial funds will be made available in this area in the 1995–96 scheme which is yet to be finalised. My understanding is that no equivalent scheme currently operates in the Republic of Ireland.

381
The noble Lord was looking for a level playing field. There is rightly concern among fishermen about quotas between the Republic of Ireland and ourselves in Northern Ireland under the Hague preference scheme. That is something which my honourable friend the Minister is looking at very closely. We are trying to see whether there can be solutions.
I was pleased to team that people recognise that the rural development programmes are working well. That has been a neglected area in the past. Inner city deprivation has taken the high ground for so many years. There is a great deal to do. I am delighted that it is a bottom-up programme and that the people themselves are looking at how we can build on it. The strategy of our own Department of Agriculture was well received. I am happy to confirm that expenditure on this programme will not be reduced in 1995–96.
Not surprisingly, the noble Lord raised the important matter of integrated education, a subject in which this House takes a continuing interest. We recognise the importance of integrated education. I am pleased to say that there are now 23 integrated schools in operation with a total enrolment of over 4,700 pupils. Four new integrated schools will be established in September. We expect to see pupil numbers increase to 6,300 in 1997.
Expenditure in 1994–95 on integrated education will be about £13 million. That is an increase of £2.2 million over the previous year. Since the funding of integrated education was introduced in 1990–91, we have spent £43.5 million which is clear evidence of how important we believe it is.
Noble Lords have expressed concern about community relations and education for mutual understanding. I can promise Government support and commitment in both areas. Healing the divisions in Northern Ireland has been, and remains, at the centre of our policy. The end of violence can be only the beginning of peace. Far from reducing the need for community relations work, the ceasefires present new opportunities for such work and have given a new urgency and impetus to those who are working to promote reconciliation and understanding.
In 1994–95, the Government are spending almost £7.3 million on community relations. That includes estimated expenditure of over £2.5 million on measures to foster the mutual understanding and respect among children and young people which is so important. I am relieved to discover that that does not come under the heading of "Miscellaneous Services" but under "Youth, Sport and Community Services". That expenditure is set to rise to over £3 million in 1995–96. That money is worked extremely hard and is used to assist activities which seek to increase the level of cross-community contact and to encourage much greater understanding and respect between different cultures and traditions. There is also the cultural traditions programme which receives £1.5 million of the community relations programme budget. It involves work on the cultures of particular communities with the overall aim of promoting appreciation of, and respect for, the diverse traditions which make up the cultural heritage of Northern Ireland. I believe that that too is very important work.
382
The noble Lord, Lord Holme, raised the important question of the size of the peace dividend and the implications for government spending in Northern Ireland. We hope that the peace will be consolidated. The ceasefires have allowed the security forces to respond to a diminished threat and that, in turn, has enabled the Secretary of State to reallocate savings totalling £15 million in the current financial year, largely due to a reduction in RUC overtime. Further savings amounting to £180 million over the next three years will come mainly from criminal damage and emergency provisions compensation and, again, from the reduction in RUC overtime. That has been allocated to important economic and social programmes in Northern Ireland. Those savings are in areas which in recent years have placed increasing demands on the Northern Ireland block.
We have benefited both from the saving of £180 million and from the absence of new demands related to violence. It is much too early to estimate the extent of further savings on law and order expenditure. Everything will depend on developments on the ground. In that respect, the Government have made it clear that they will not lower their guard prematurely - nor will they do so on political grounds, but will be advised by their security professionals.
The resources already released from the law and order budget would have to be restored if terrorist violence were to be renewed. If that were to happen, it would unfortunately be necessary to impose cuts in the economic and social programmes in order to reinstate that provision in the law and order programme. I am sure that noble Lords will agree that that would be most unfortunate. We must all pray that it does not happen.
The noble Lord, Lord Prys-Davies, referred to the fact that the Coopers & Lybrand study feared that there would be a reduction in funds. I believe that that message is uttered often in Northern Ireland in an effort to ensure that it does not happen. The Treasury has not clawed back money from this year's allocation, and I remind noble Lords that in his speech in Belfast in October the Prime Minister gave an undertaking that the Government would take full account of Northern Ireland's special needs in setting future levels of public spending for the Province. As the Minister in the Province, I can assure the House that we have enormous support.
A further issue which has been raised and which is of enormous interest in the Province is the question of the Springvale campus. As I suspect the noble Lord knows, we have commissioned a full economic appraisal of the project and have asked the Northern Ireland Higher Education Council to consider the educational aspects. Both reports are expected in March this year and in a reasonably short time we should be able to look at a decision on the Springvale project. It is an exciting concept and one which will require a considerable amount of help from our friends throughout the world. However, I am delighted to report that Northern Ireland does have friends throughout the world and we are very grateful for their support. Given that friendship, we still have the task of managing the funds which the

383
Government contribute to the Province of Northern Ireland. I believe we do it well, and I commend this order to the House.
On Question, Motion agreed to.

Wildlife (Amendment) (Northern Ireland) Order 1995
10.46 p.m.
Baroness Denton of Wakefield Baroness Denton of Wakefield rose to move, That the draft order laid before the House on 30th January be approved.
The noble Baroness said: My Lords, the purpose of the draft Wildlife (Amendment) (Northern Ireland) Order 1995, which was laid before Parliament on 30th January 1995, is to make minor changes to the Wildlife (Northern Ireland) Order 1985. The effect of these is to allow a system of annual general licences to be introduced for the year round control of magpies, crows and nine other species of "pest" bird. The changes are necessary to ensure that the legal basis for control of these pest species complies with the technical requirements of the EC Wild Birds Directive.
The Commission has previously ruled that derogations from this directive, which requires member states to protect all wild birds, must be specific as to time, place and the nature of the threat posed by the species concerned. A reasoned opinion issued by the Commission has recently held that a scheduled pest list, as currently provided by the 1985 order, does not meet these requirements although at the time the 1985 order was enacted it was believed that it complied fully with the directive. Farmers and others involved in pest control have found that the present arrangements under the 1985 order work well and it is important that they should be able to continue to deal with these pest species in the same effective manner, albeit using a different legislation framework.
Licences will be general—that is, individuals will not need a personal licence to carry out pest control—will be valid for a period of one year and will cover the whole of Northern Ireland. Licences will be in the following categories: one, the protection of any collection of wild birds and the preservation of public health or air safety; two, the prevention of the spread of disease and prevention of serious damage to livestock, foodstuffs, crops, vegetables, fruit, growing timber and fisheries; and three, the conservation of wild birds.
There is no intention to alter the species covered by the licence. However, arrangements will be made to monitor the conservation status of the species concerned. The department will therefore be alerted if populations fall to a level where care is needed and appropriate action will be taken.
There has been widespread consultation in Northern Ireland about the proposal with interested parties. There was only one objection to the proposal. Some concern was expressed about the population status of some of the species listed. The long-term population trends of the species concerned are, however, either stable or
384
increasing, and it is not considered that continued year-round pest control will have any detrimental effect on their status for the foreseeable future.
This order will ensure that we meet our obligations under the Wild Birds Directive. At the same time, it will enable us to introduce an efficient system of licensed pest control which will not place any additional burdens on farmers and others who need to carry out the action, and will allow them to protect their crops and also look after the interests of wild birds of a less well populated species.
I commend this order to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 30th January be approved.—(Baroness Denton of Wakefield.)
Lord Prys-Davies: My Lords, again, I want to thank the Minister for explaining the purpose of the order, remedying, as it does, the defect, or a possible defect, in the Wildlife (Northern Ireland) Order 1985. As I understand it, the order is required in order to comply fully with the EC wild birds directive. Were the Government pressed by the Commission to introduce this amending order? I ask that because I noticed that when the order was before the other place on 28th February a Member asked why it was necessary to amend the parent order (the 1985 order) given the doctrine of subsidiarity. He thought that in a small way it raised implications of subsidiarity. I am not sure that the question was answered fully by the Minister in the other place, so I should be grateful if the Minister would clarify the position briefly.
I turn to the merits of the order. I am aware of the concerns that so many species of birds have become extinct in the UK over the past 100 years. Having been brought up in the countryside, I appreciate fully that the aim must be to ensure that there is a reasonable balance between agriculture and conservation. I am glad that the Minister has been able to confirm that, apart from one, all the organisations involved in Northern Ireland which have been consulted have supported the order.
I have one further question for the Minister on conservation generally. Can the Minister tell the House how many staff are employed by the department or the Northern Ireland Office on conservation duties in Northern Ireland? I have no other questions, and hasten to say that we fully support the order.
Baroness Denton of Wakefield: My Lords, I thank the noble Lord for that support. In answer to the two questions that he asked, the directive does allow for member states to derogate from its general requirements and so gives them the ability to be masters in their own houses. We believe that that is important. Member states can make their own decisions on how they deal with pests. The existing legislation does not meet the requirements specified under which the derogation can take place.
The order will amend the existing legislation to enable Northern Ireland to take full advantage of the derogation provision while maintaining a simple and non-bureaucratic system for the control of these pest

385
species. I can sum it up by saying that we are making an adjustment to the law, which allows us to make our own decisions. So we have the subsidiarity element, and we are meeting the legal requirements of a piece of European legislation. The noble Lord does not look as though he thinks that that is much clearer, but I hope that when he reads Hansard he will feel that I gave a rather better answer than he judged my honourable friend to have given.
The noble Lord was interested also in how many people are employed in the conservation of the countryside and wildlife. That is important to the Province because its beauty and natural habitats form part of what we can offer visitors. I am delighted to be able to tell him that at present approximately 100 staff are engaged wholly on those aspects within the department's environmental services. That represents a significant coverage and would, I suspect, match and probably better that in other areas of the UK. Those people do a very good job, as people living in and visiting the Province can see. Having answered those questions, I commend the order to the House.
On Question, Motion agreed to.

Children's Evidence (Northern Ireland) Order 1995
10.55 p.m.
Baroness Denton of Wakefield Baroness Denton of Wakefield rose to move, That the draft order laid before the House on 9th February be approved.
The noble Baroness said: My Lords, I beg to move that the draft order laid before the House on 9th February 1995 be approved. Although it is the last of the three orders before the House tonight, that by no means ranks its importance. It is a most important order for a section of society for whom we must always express special concern and carry out special responsibilities.
This order will replicate provisions already enacted in England and Wales. It contains a short but valuable package of measures to help reduce the trauma of children giving evidence in cases relating to violent or sexual offences.
The provisions on children's evidence replicate those in the Criminal Justice Act 1991, as amended by the Criminal Justice and Public Order Act 1994 following some adverse comments in the English courts.
Article 3 abolishes the competency tests which are applied to prospective child witnesses in criminal proceedings. It removes the present distinction between the way in which children of different ages give evidence and provides that all children under 14 shall give evidence unsworn.
Article 4, together with Schedule 1, provides for committal proceedings to be bypassed in cases of sexual offences or cases involving violence or cruelty. It will apply where the witness is a child and the Director of Public Prosecutions is of the opinion both that the evidence is sufficient for the defendant to be committed
386
for trial and that, in order to avoid prejudicing the welfare of the child, the case should proceed without delay in the Crown Court.
The provisions of Article 5 lie at the very heart of the order. They enable a video-recording of an interview with a child witness to relevant offences to be used in trials at the Crown Court or a juvenile court in place of the child's evidence-in-chief. The child must, however, be available for cross-examination via live television link. Any rules of court requiring disclosure of the circumstances in which the recording was made must also have been properly complied with. The article also precludes any person who is charged with a sexual or violent offence from personally cross-examining a witness who is either a victim of or witness to such an offence.
The Government recognise that the key to the successful implementation of this legislation is full and appropriate training of staff who will be involved in the prosecution of offenders and the care of child witnesses. The multi-disciplinary approach required has been recognised for some time by the relevant agencies in Northern Ireland and staff training is at an advanced stage. The training, and the associated guidance to staff, will of course take full account of practitioners' experience with the corresponding legislation in England and Wales.
I hope that noble Lords will welcome this order, which helps to shorten and simplify procedures for some of the most vulnerable witnesses who come before the courts. I commend it to the House.
Moved, That the draft order laid before the House on 9th February be approved.—(Baroness Denton of Wakefield.)
11 p.m.
Baroness Faithfull: My Lords, I thank my noble friend for her explanation of the Children's Evidence (Northern Ireland) Order 1995. There are certain matters in the order which I do not fully understand and I hope that my noble friend will forgive me for asking six brief questions.
First, I know that since 1993 there have been discussions in the Province concerning the subject of children's evidence in cases of alleged child sexual abuse. I also know that a working party has been considering the order in the Province. However, I am informed that on that group there was no representative of the British Association of Social Workers or the Association of Directors of Social Services. There was only one representative from the voluntary sector —from the NSPCC.
In part, the order will be implemented by social workers. Why were they not represented on that working group? They could have contributed to and learnt a great deal from participation in such a group. The Reverend Martin Smyth made reference to that when the order was before the Fifth Standing Committee on Statutory Instruments on 28th February 1995 (col. 6).
Secondly, would it not have been wise to defer the order until the Government have the results of research which is to be published on 26th May? That research

387
has been carried out by Professor Graham Davis of Leicester University and was commissioned by the Lord Chancellor. The research concerns the evidence and cross-examination of alleged child victims of sexual abuse through television link and video. That method has worked satisfactorily in some areas of England and Wales, but there have been difficulties. Surely the Lord Chancellor would not have commissioned research if the system had been consistently well-administered throughout the country? There have been difficulties in different parts of the country.
If the research recommends changes in practice, should not those recommendations, if accepted, have been incorporated in this order? Mr. Paul Murphy, a Member in another place, made the same comment on this matter when it was before the Fifth Standing Committee.
Thirdly, I seek further information on Article 5. I agree with television link and video recordings but would not this order have provided a wonderful opportunity to implement the recommendations made in the Pigot Report? That recommended that a video recording should be made before a locotar of a hearing attended by the alleged sexually abused child, counsel for the prosecution and counsel for the defence, with the accused in another room, able to communicate with his barrister; and that the video would be shown at the trial, with the child present. That would greatly reduce the child's trauma, partly because the case would come before the locotar at an early stage and the child is much more likely to remember the events at that time rather than a year later.
The recommendation has many other advantages. Would not this order have been a wonderful opportunity to implement the Pigot recommendation, because many people in the country agree that that is a very good, sound recommendation? There is no similar provision in Scotland but there can be no real comparison because the penal system in Scotland is quite different, with its panels and sheriff courts.
Fourthly, do I understand that the order is to be implemented in June 1995? If so, there will not be sufficient time to train all those involved; namely, the judiciary, the officers of the court and social workers. Does the Judicial Studies Board operate in the Province? Will there be training for the judiciary?
Fifthly, can my noble friend the Minister say what is the estimated cost for implementing the order? We so often pass legislation in your Lordships' House—and, indeed, in the other place—but we do not provide the resources for its administration. In the first instance, the legislation now before us will take much money because much money and many resources will be required for the training at all levels of the work regarding administration of the order.
Finally, does my noble friend the Minister agree that there should be someone outside the system—that is, apart from social workers, the police and the judiciary—to whom the child can look for help, support and interest? I suggest that there should be someone quite objective who has not been involved in the case at all;
388
for example, a guardian ad litem. Under the order, would it be considered appropriate in the Province for such a guardian to be appointed to each child?
Child sexual abuse in childhood leaves a person throughout life with an element of unhappiness. The hurt that court proceedings can cause to a child is quite incredible. I have dealt with many such children and I know that appearing in court is a trauma which is hard to overcome, certainly as regards cross-examination. Therefore, whatever happens, it is a difficult area. It is difficult to meet the welfare of a child and it is difficult to ensure that justice is done to the alleged perpetrator. However, I am sure that we shall work out a system in time that will meet both those pressing needs. I support the order, but I wonder whether there ought to be some variations.
11.7 p.m.
Lord Holme of Cheltenham: My Lords, I thank the Minister for her introduction of the order. I must also say what a privilege it is to follow the noble Baroness, Lady Faithfull, with all her experience and sympathy of such very difficult cases. I have but one simple point to make, but a further point arises out of the remarks made by the noble Baroness which I should like to pursue.
While I am generally supportive of the order, I have a concern about the issue of impending research. I understand that Mr. John Spencer of Selwyn College, Cambridge, is about to publish a thesis on the matter in which he calls for children to be "warmed up" before they give evidence. That is another report which is due to be published. One wonders why the Government could not have waited for all the research to be gathered together. It is possible that we are dealing with an area in which there will always be new research; but it is important to get it right.
I turn now to the other point that I wish to raise. All abuse of children, whether physical violence or sexual abuse, is so peculiarly horrible that all civilised people's instincts react against it. However, there have been enough cases in recent years and months to make us aware that we must also be careful as regards the rights of a defendant. Children's timescales and imaginations are different from adults. It is possible that adults can lead children towards recollections and memories at the end of an interrogation that they may not have had at the beginning of the process. Some of that may be right and proper. Indeed, it may be the careful and cautious solicitation from a child who is unhappy of what the real truth was, or, as we have seen in some highly-publicised cases recently—notably, in the Orkneys and Shetlands—it can be the very reverse. It can be someone with an agenda of his or her own seeking to persuade the child that something happened when, perhaps, it did not.
The point that I should like to press upon the Minister is whether we can arrive at a better definition of what constitutes a memory which is admissible in court. In recent history, Northern Ireland has had very unhappy and highly-publicised cases of child abuse. Indeed, there is one at the moment. These are matters where we have to strike a careful balance between, on the one hand, the proper treatment of a child who may already have been abused, may already be unhappy and may be further

389
traumatised by the way its evidence is taken, versus the extreme importance of not turning solicitous care for the child into leading it towards conclusions that suit some other adult's agenda. Although I do not pretend to understand these matters with anything like the expertise of the noble Baroness, Lady Faithfull, I hope that the Government, in responding on this order and accepting that we support it generally, will try to understand that, if anything, public concern is growing about whether the balance is being properly struck.
11.10 p.m.
Lord Prys-Davies: My Lords, I also wish to thank the Minister for explaining the order. I have also listened with anxiety to the contribution of the noble Baroness, Lady Faithfull, because she speaks with great authority in this area of policy. I believe that her piercing questions and observations need to be answered.
The order itself is relatively short—six articles. I believe that probably five of the articles are welcomed as they stand, but there is disappointment and concern that Article 5 has not been extended at least to cover the video recording of the cross-examination of the child victim or the child witness of the alleged assault when giving evidence in a criminal trial. We wonder why that has been restricted to the child's evidence-in-chief.
The Minister said that the order applies in Northern Ireland the relevant provisions of the 1991 Act as amended. But as the noble Baroness, Lady Faithfull, indicated and underlined, much has been learnt in England and Wales, certainly since 1991, and the evidence shows that the provisions of the 1991 Act, as amended, have been less effective than had been hoped for. I am told that an enormous number of videos have been taken but not used. I believe that that needs to be explained. I note the cautious words of the noble Lord, Lord Holme, and I understand his cautious approach, but there is a feeling that not only have too many offenders in child abuse cases escaped conviction but that too many have even avoided prosecution in the first place.
One has read and studied the speech of the Minister who is in charge of the measure in the Commons, but he has not explained why all the lessons which have arisen since 1991 have not been learnt and have not been incorporated in the order. I am sure that if this legislation had been enacted by a Bill rather than by an Order in Council, there would be an opportunity for the House to seek to widen the scope of Article 5 in order to implement the full recommendations of the Pigot Report. I notice that the director of Leicestershire social services made the point that until such time as those recommendations are on the statute book the scales will remain too firmly tipped in favour of defendants and against the abused children. That must be a matter of great concern.
I read the opening and winding up speeches of the Minister of State when the order was discussed in the Fifth Standing Committee on 28th February. It seemed to me that he was under great pressure from the Members to explain the omissions. Perhaps I may summarise the position. He wound up the debate by
390
expressing the hope that the other recommendations—the noble Baroness, Lady Faithfull, referred to them—could be brought on stream in the light of legislative and appropriate experience and, if necessary, by using guidelines and amending this order in future. I found no sense of urgency in those words. Surely abused children deserve better.
I should be grateful if the Minister would take note of the concerns expressed, certainly in this Chamber tonight, and convey them to the Minister who has charge of the appropriate department. Nevertheless, having said that, of course one welcomes the order so far as it goes, but there is still a long way to go.
11.16 p.m.
Baroness Denton of Wakefield: My Lords, I thank noble Lords for the concerns expressed and the issues raised on the order. Perhaps I may say, first, that I shall most certainly convey those concerns to my honourable friend, but I shall try to deal with some of them at this stage.
My noble friend Lady Faithfull is indeed a good and true friend of children. We welcome the constant interest in Northern Ireland that she shows. I know that social workers in the Province greatly appreciate her knowledge which she shares so generously with them. If, as she suggested, we are to work out solutions to the problems which we face in this area, many of those solutions will be due to the work of my noble friend.
The issue was raised of the involvement of social workers in the consultation process. A working group was set up representing the various departments of the Government, the social security boards and the NSPCC. It was established by the RUC to examine staff training needs and to put programmes in place. It was considered appropriate to leave those arrangements to the persons qualified to set them up, and they drew on the experience of practitioners in England and Wales. I understand that social workers were not directly included as such. I hasten to assure my noble friend that that was not from oversight but in the expectation that they would be represented by staff from the area boards. In Northern Ireland we have the advantage of integrated health and social services. The social workers to be involved in the case of child witnesses will be thoroughly trained and their views taken into account.
There has been a keen desire to see this legislation come to Northern Ireland. Provisions have been eagerly awaited both by the police and by child welfare agencies because—the noble Lord, Lord Holme of Cheltenham, drew attention to the fact—the record of the Province relating to sexual abuse of children is not one of which any single person could be proud.
We are aware of all the research which is being undertaken. A seminar held in Northern Ireland on 17th June on the video recording of children's evidence heard from researchers and academics throughout Great Britain that it is not the legislation in England and Wales that has presented difficulties, because the legislation is permissive in setting out the conditions under which video recordings may be admitted in court. An early draft of the research by the University of Leicester has

391
been seen by Home Office officials and did not recommend any legislative changes. But it is considered that any recommendations for change will relate to procedural matters. I am delighted to reassure my noble friend that if such suggestions are accepted they can be incorporated in non-statutory guidelines for interviewing child witnesses.
I said that training was well under way and I believe that the earliest commencement date for the order would be in June. However, I again assure my noble friend that commencement would not be sought until a core of trained staff was in place.
My noble friend raised the issue of the Judicial Studies Board in Northern Ireland. Such a board has recently been established and I have no doubt whatever that it will wish to involve itself in the preparations for the implementation of the arrangements. We look forward to that happening.
The cost of the legislation, when fully implemented, will lead to an increase of £0.6 million in capital and £0.15 million in the current public expenditure. The cost will cover buildings, video equipment and training. Again, I assure noble Lords that this is not an area in which the Government would try to exercise cuts. The responsibility to children is much too important.
The decision on the guardian ad litem would be for the courts in Northern Ireland, and I shall continue to take a personal interest in the matter. The noble Lord, Lord Holme, mentioned an important issue: the balance between the protection of the child and ensuring that justice is done. The balance is a key matter. We must recognise that the provisions for by-passing committal proceedings and fast tracking are aimed at bringing cases of that nature to court as quickly as possible so that the child can remember clearly the events that have taken place and not at a distance. That is, of course, a problem for witnesses of all ages. Such evidence as is available to the Government does not suggest that children's memories are any less reliable than those of adults; if anything, the contrary is considered to be the case. The reliability of such evidence must always be a
392
matter for the court to consider in individual cases. I am convinced that no one involved in such matters has anything but a full commitment to their responsibilities.
I know that the House has enormous respect for the Pigot Report, as we have heard on previous occasions. We considered that it was important to implement the principal recommendation that children should be able to give evidence by video recordings. It is not easy for Northern Ireland to go ahead at any great speed because the courts look to case law from England and Wales and we should learn from decisions that have been made here. So we would not look to introduce radically different arrangements for the giving of evidence. Practitioners in Northern Ireland, with their relatively limited resources, have always found it extremely valuable to be able to build on experience in England and Wales on the operation of legislation. I can assure noble Lords that we do that and will continue to do it.
As was drawn to our attention by the noble Lord, Lord Prys-Davies, my honourable friend in another place pointed out that the Government have not ruled out the possibility of implementing other Pigot recommendations at a later date. But that will be done in the light of experience with the present provision. I hope that in this area we are never ever satisfied that we have found the solution and that we shall continuously examine to see whether there are better ways of dealing with the problem. I can assure the noble Lord that the sense of urgency will be applied, but not at a speed which may mean that we put these young people at risk and in difficult circumstances where justice could be prejudiced.
This is an important order for Northern Ireland. It is important for the children of Northern Ireland. I hear the concerns that noble Lords have expressed, and I shall share those with my colleagues. But taking into account those concerns, and assuring your Lordships that we will handle this matter with the greatest of care and caution, I commend this order to the House.
On Question, Motion agreed to.
House adjourned at twenty-six minutes past eleven o'clock.