Lords Sitting of 31 January 1997

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Oxford.

Vehicles (Price Indication) Bill [H.L.]
The Earl of Bradford: My Lords, I beg to move that this Bill be now read a second time.
The aim of the Bill is extremely simple: that new motor car prices will be quoted fully inclusive of delivery charges and number plates.
The anachronistic, confusing practice of not including delivery charges started in the days of purchase tax and was designed to avoid payment of a portion of that tax. It remained in place through the time of the car tax, but now that this has been removed there is no financial reason for it to continue any longer. Not to include number plates in the price of a car seems plain daft.
At least we have got rid of the strange practice of charging separately for seat belts. However, one still finds a plethora of different pricing scenarios from full on-the-road pricing, sometimes even including road tax and extended guarantees, to other cases where it seems that everything is an extra.
Gradually there has been a move within the industry towards all-inclusive pricing. However, this is still proceeding slowly and the Bill would put the final nail in the coffin. It would also ensure that there would be no backsliding in the future, as it is so easy for people and companies to revert to bad old habits if they see financial advantage in doing so.
Only this week, I received a press release from a major importer of Far Eastern manufactured cars in which it is stated that the on-the-road package price has increased from £590 to £610, effectively demonstrating that people have not changed their policy yet.
The Bill is being supported by the Consumers Association, which sees it creating a more transparent and simpler situation for car buyers, ending the confusion between on-the-road prices, often in rather smaller print, against prices exclusive of delivery and number plates. It is also supported by the Retail Motor Industry Federation and privately by many others in the retail motor trade.
The Society of Motor Manufacturers and Traders is sitting on the fence. It produced a rather strange letter opposing the Bill, addressed to me, which was never signed or dispatched. However, a copy was sent to the DTI. This has now been withdrawn by the society as it did not agree with the contents itself. I believe that it wishes to see an effective voluntary scheme put in place which it would attempt to police. That does, though, aptly demonstrate how confusing the present situation is.
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Considering the clear consensus that action is required, I hope that your Lordships' House will be content with my Bill. It is simple; it is progressive; there are no disadvantages. I hope that the Government and Opposition parties will give it their support. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—{The Earl of Bradford.)
11.10 a.m.
Lord Lucas of Chilworth: My Lords, in taking part in this short debate this morning, I should perhaps remind your Lordships of my interest. 1 have been involved for many years in the retail motor industry and to some, albeit small, extent I still am involved. I am grateful to my noble friend for his explanation of the Bill, which is, indeed, simplicity itself. I am slightly ambivalent about the progress of the Bill, however, as I do not believe that it is necessary. I have a number of reasons for so saying.
The background to the sale of new motor cars is merely numerical. For example, in 1995 about 1.94 million cars were sold and in 1996 just over 2 million were sold. Of those numbers, over half (in 1995, 53 per cent. and, in 1996, 54 per cent.) were sold to what one might call the professional buyer, people such as the rental companies and some of the banks—the big buyers. So the point made by my noble friend is irrelevant in that respect. It leaves about half the number being sold to what one might call the general public.
Two-thirds of all new motor cars sold have a part-exchange element in the transaction. So there has to be some negotiation as to that value. It follows fairly logically, therefore, that the indicated price is no more nor less than an indicated price. It is not a fixed price because that is only part of the transaction.
Lord Marlesford: My Lords, I apologise for interrupting my noble friend, but I did not follow the logic. He said that a large proportion of cars are sold to big buyers—the banks and so on. It did not seem to me obvious—perhaps he would explain—why that made my noble friend's Bill irrelevant.
Lord Lucas of Chilworth: My Lords, I was simply trying to suggest that over half the number of new motor cars sold are sold to those big buyers, who negotiate the price. Therefore, there is an irrelevancy in relation to half the sales.
Lord Marlesford: My Lords, so are they not charged delivery charges or for number plates? It does not seem to me obvious why everybody else should be so charged.
Lord Lucas of Chilworth: My Lords, if I were privy to every contract that a major buyer entered into with a manufacturer, I should be able to answer the question. All I know is that a price, probably different from that which may be displayed, would be negotiated by a big fleet buyer. I went on to say that two-thirds of purchases have a part exchange element. Therefore there is another element in the contract; namely, the value of the used motor car. There is no fixed price on that.

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I come to the remainder of the buyers. Certainly to my knowledge nobody pays straight cash. They take advantage of the multitude of purchase schemes that are available. Some are called personal contract plans. They could include leasing, hire purchase and so on. So there is another element of negotiation. In a sense, the displayed price, the so-called "recommended retail price" is rather meaningless as part of the entire transaction.
Lastly, I want to refer to that leading authority Chitty on Contracts. I quote from the 27th edition, volume I, published in 1994. Chapter 2, Section 2-007 deals with display of goods for sale. It says:
"As a general rule, a display of goods at a fixed price in a shop window or on a shelf … is an invitation to treat and not an offer".
The concluding lines of that paragraph state:
"The distinction between an offer and an invitation to treat depends, in the last resort, on the intention of the maker of the statement".
The maker of the statement in this case is the motor dealer; and the intention of all motor dealers in the retail trade is to offer a product for sale—an invitation for a buyer to come in and discuss a transaction. I have described quite briefly one or two of the elements that go into that transaction.
Further in Chapter 2, Section 2-008, headed "Other displays", says:
"The principles stated in § 2-007 above also apply to other displays … There is no perfectly general answer to the question whether such displays are offers or invitations to treat; the answer depends in each case on the intention with which the display was made".
It seems to me that any price indicator on the windscreen or a board sitting on the roof of the motor car is an invitation to treat—an invitation to negotiate. So the pricing is irrelevant. That is the irrelevancy that I see in the Bill.
I accept what my noble friend said about the manufacturing and retail industries moving towards an all-inclusive price. I understand that that is the subject of discussion between the industry and the Office of Fair Trading. It seems therefore that we have an invitation to enter into a transaction which involves buying a new motor car. It is negotiable and therefore any price indication in that regard is something of an irrelevance, which I see reflected in the Bill.
I would not force my view upon the House by opposing my noble friend's request that the Bill be read a second time, if he goes so far. But I do not believe that there would be any great benefit to the consumer.
11.17 a.m.
The Viscount of Falkland: My Lords, the noble Earl very clearly explained his Bill, which he described rather ominously, I thought, as "a simple Bill". That is rather like someone who prefaces his story or remarks by saying, "To cut a long story short". Those stories inevitably go on for a long time.
This matter has become rather complicated. It is not the fault of the noble Lord, Lord Lucas of Chilworth, who is an expert on this subject. But I have some
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sympathy with the noble Lord, Lord Marlesford, who intervened, in order to have further explanation of some of the noble Lord's remarks. Like other noble Lords, I suppose, over the years I have bought a number of vehicles, both cars and motor cycles, and have always been irritated by the retention of the additional charge for delivery and number plates. I am not so much concerned about number plates as about delivery charges.
With motor cycles, delivery charges represent quite a cost to the distributor. When a motor cycle arrives from the distributor or the manufacturer at the point of sale it sometimes arrives in boxes and has to be put together. That exercise takes many hours and then the vehicle has to be road tested to make it a vehicle ready to go on the road and perform according to the manufacturer's warranty. Most motor cycle dealers and indeed car dealers do that extremely well, but it is a cost.
I agree with the noble Earl that there is no reason nowadays to separate the delivery charges and the cost of the number plate from the total cost. As he so rightly said, it was originally arranged in that way in order to separate the charges from those which were subject to purchase tax.
It is an irritation. But if I understand the noble Lord, Lord Lucas, correctly, he is saying that if people are buying a car or motor cycle under a finance agreement, partly because of the mood they are in at that time—they are excited and not in a normal state of mind, particularly when it is a second-hand vehicle, though we are not talking about second-hand vehicles—they accept all the charges and will not be relieved of the charges when they enter into the agreement. If one wants to pay cash or pay immediately without going into a finance agreement, the first thing one does is say, "I do not want anything to do with the delivery charges and the cost of the number plate. You can knock that off for a start and whatever further discount you will give me". Usually one can obtain a generous discount, except for vehicles which are in demand at the time.
To me it seems a nonsense. It is like many other things that have arisen over the years—for example, food rationing which went on for five or seven years longer than in most other countries which suffered terribly during the war—and ought to be removed. It is illogical and irritating. I would like to see, as would the noble Earl, vehicles offered for sale at an inclusive "on the road" price. The manufacturers and dealers can sort out what that "on the road" price should be.
Perhaps I might add at this stage that it is extremely expensive to buy a vehicle in this country, whether it is a car or a motor cycle. A very good British motor cycle which is now extremely popular will be on sale in this country, when it arrives at the dealers, for around £10,000. In the United States, for reasons which escape me, it will be on the market for around £7,000. I do not understand that. People who are prepared to go through complicated paperwork are able to go to Denmark and make arrangements to buy a car for several thousand pounds less than the retail price at which they can buy it here. Most people cannot be bothered to do that, even if they have the cash to do so.

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There is a whole area which needs to be explored way beyond the simple measure—it is a simple measure—suggested by the noble Earl. I do not know what the noble Earl intends to do with the Bill. It has been an interesting debate and I shall follow it further outside the Chamber with the noble Lord, Lord Lucas of Chilworth, who is always so interesting when he speaks on these subjects. I am sure that the points in his speech which confused me and his noble friend Lord Marlesford will be made clear. Having said that, I support the noble Earl in whatever he decides to do.
11.23 a.m.
Lord Haskel: My Lords, once again I congratulate the noble Earl, Lord Bradford, on showing his concern for the consumer. He showed great concern that diners should not be ripped off over service charges in restaurants; now he is showing his concern for those buying motor vehicles.
It seems to me that the noble Earl is absolutely right. Number plates are required by law and customers cannot drive a vehicle away from a dealer without them. They are not an optional extra. Equally, delivery is not an optional extra. I agree with the noble Viscount, Lord Falkland, that we buy the vehicle from the dealer's showroom, not from the factory gate. The vehicle is delivered to the dealer before the consumer has decided whether or not to buy it.
The practice of plates and delivery being charged separately has grown up from the days of purchase tax. It is extraordinary that customers are not always offered a price "on the road". It would be good customer relations to do so. It would make for clarity.
I would say to the noble Lord, Lord Lucas, that there is a cost to quoting the law to customers. A confused customer is a wary customer. After all, every dealer wants the customer to come back and buy another vehicle. If there is argument and confusion over the price, the customer may feel ripped off or confused because he has been charged extra for items which are not a matter of choice. The customer is then likely to go elsewhere when he next wants to buy a car.
However, on these Benches we are committed to eliminating unnecessary regulation. Because it seems to me to be good customer relations to offer an all-in price, including delivery and plates, I wonder whether regulation is required. Is it not a matter for the motor trade? The vehicle industry has an active and effective trade organisation, in spite of its inability to write a letter. Could not the noble Earl persuade that organisation to introduce an inclusive price as part of a code of practice? Normally a code of conduct incorporates best practice, and most companies are anxious to carry it out, otherwise they will not remain in business for long.
There will always be special deals, and the law will not prevent that. In relation to the retail consumer, it is clear that some firms do not adopt that misleading approach. I saw an advertisement for a Peugeot 306 this week quoting an all-inclusive price. It also avoided the other trick of proclaiming one price in large letters and then again, in the smallest print, stating a much larger
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price for the car illustrated. That leads me to make one further comment. It is strange that that trick is acceptable to the Advertising Standards Authority. It could make a contribution to consumer protection by disallowing that kind of advertising.
We are in entire agreement with the noble Earl's objective of greater clarity. But could it not be more easily and effectively achieved by a code of practice rather than by regulation? The noble Earl is persuasive; perhaps he could persuade the trade to put its house in order—the alternative will be something much more draconian—if not now, then in the future.
Lord Marsh: My Lords, before the noble Lord sits down perhaps I may ask a question. Is not the reason the industry continues this practice because, when a customer begins to negotiate the price as the noble Lord, Lord Lucas, does, the large majority of suppliers have fixed a common "add-on" which can be anything up to 15 per cent. of the price where there is no competition at all across most of the industry? The actual additional cost of placing the vehicle on the road is normally estimated at a figure which can be anything up to 10 per cent. of the other retail price for the vehicle. There is no competition in that regard. The cost for the add-ons is always the same proportion, and it is a large proportion. That is why the industry continues the practice.
Lord Haskel: My Lords, the industry can surely get over that by quoting a price "on the road". That seems to be a practice which is being followed more frequently.
11.28 a.m.
Baroness Miller of Hendon: My Lords, I have listened to this short debate with great interest. I appreciate the concerns which prompted my noble friend Lord Bradford to present his Bill, and the clear way in which he explained it. His aim of promoting greater clarity in the manner in which the price of motor vehicles is presented to the public is a laudable one. Indeed, it accords with the Government's own aims of ensuring that consumers are given full and accurate information and that the price of goods and services is indicated in a transparent manner.
There is already a body of legislation in place designed to promote transparency in the giving of price indications for most goods and services—including cars—and it may be helpful if I first outline the provisions of the legislation.
The Price Marking Order 1991 applies to any goods—including motor vehicles—which are or may be offered for sale by retail, and also to advertisements which refer to the selling price of those goods. The order provides that, where the purchase of a product is dependent upon payment being made for ancillary goods or services, the price of the product shall be indicated in such a way as to make it clear whether it is exclusive or inclusive of the ancillary goods or services. The order further states that, where the price quoted is an exclusive one, the indication of the price of the ancillary goods or services shall be given as prominently as that of the product itself.

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It seems to me that this legislation goes a long way to meeting the concerns which underlie my noble friend's Bill. There can be no doubt that, properly applied, it offers no less than a clear and transparent means of letting consumers know, before they enter into a transaction, what they will have to pay for a product—in this case, a motor vehicle. However, there is more.
There is, in addition, protection of a more general nature for consumers in the form of the Consumer Protection Act 1987. Part III of this Act makes it an offence to give consumers a misleading indication as to the price at which any goods or services are available. It is the definition of "misleading" in this part of the Act that my noble friend's Bill seeks to amend. However, the "catch all" nature of this part of the Act is already designed to provide wide-ranging protection in any circumstances in which a price indication is given to consumers. It therefore has the effect of promoting transparency in any transactions involving any goods, including the retail of motor vehicles.
I recognise that my noble friend is seeking to go further than this. He wishes to see inclusive pricing made, in effect, compulsory for motor vehicles. As I shall explain, the Government have reservations about pursuing such a policy. Our general approach is to be sceptical of making such matters compulsory. But, even if we were persuaded that inclusive pricing for motor vehicles ought to be mandatory, the machinery exists for us to do that without a provision such as my noble friend is proposing.
Section 26 of the 1987 Act already empowers the Secretary of State to make regulations in relation to the circumstances and manner in which price indications may be given. That would certainly allow us to make inclusive pricing mandatory if we were convinced of the need to do so. It would be inappropriate and would not be economical use of parliamentary time to amend an Act of Parliament by primary legislation when that Act already contains provisions for making regulations to achieve the intended aim. Incidentally, Section 26 of the Act makes provision for a consultation process where the Secretary of State chooses to use his regulation-making powers—and for good reason: the importance of canvassing the views of all interested parties on a measure likely to have far-reaching consequences is self-evident.
Your Lordships may be aware of the existence of a statutory code of practice for traders on price indications made under Section 25 of the Consumer Protection Act. This already provides all manner of detailed provisions regarding specific aspects of the indication of price. Compliance with the code is not mandatory but deviation from its recommendations can be used to support a prosecution of a misleading price indication under the Consumer Protection Act. I understand that the code plays an important part in the interpretation by the enforcement authorities of the relevant provisions of the Act. My noble friend Lord Bradford is certainly aware of it and of the fact that review and revision of the code is currently under consideration by my department. Revisions to the code would provide a more flexible way of giving statutory encouragement to the use of
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inclusive prices. It is not something I think we should rule out altogether at this stage. But, as I have already suggested, before going down this route we would need to be persuaded that this is a proper matter on which we should be seeking to change market practice.
This brings us to the nub of the issue. Is this a matter on which we should be legislating? Given that there already exists legislation to prevent traders from misleading their customers, should we be prescribing the exact manner in which traders should indicate their ancillary costs? In such instances it is useful to ask—if this is such a good idea, why are not market pressures bringing it about? In fact, as I understand it, market pressures are leading to greater use of inclusive pricing. I refer to a new industry-led initiative on this issue. This, I understand, emanates from car manufacturers who are aiming to move to all-inclusive motor vehicle pricing over the course of the next 12 months. We regard this as a most promising initiative which should go a long way towards meeting my noble friend's concerns. I hope he will agree with me that this is the case and that he, like myself, will be watching closely for further developments in the coming months. It would certainly be highly inappropriate for the Government to consider any action before the full effects of this new initiative have been seen.
Should nothing come of the industry's initiative, I am sure that my noble friend and others will press on us the arguments for making regulations under Section 26 of the 1987 Act or for making a suitable amendment to the code of practice. As always, we shall listen very carefully. In doing so, we will wish to remain mindful of the Government's commitment to reducing the regulatory burden on business and continuing to do that. The idea of deregulation has been so well thought out by our party that I am sure the noble Lord, Lord Haskel, will not mind me commenting on the fact that he said that his party certainly wants to deregulate as much as possible. This is something which can be easily overlooked in the well-intentioned clamour to provide another layer of protection for consumers. However, too much regulation can work to the detriment of both businesses and consumers by unnecessarily tying business down with bureaucracy, increasing costs and reducing choice, thus achieving the opposite of the effect which is intended.
As I have said, we believe that the concerns of my noble friend Lord Bradford are likely to be met by the existing legislative protection and that, even if that were not the case, there are, in addition, regulation-making powers and the possibility of amending the code of practice to which I have just referred.
In addition, we have the new industry initiative which I have also just mentioned. In the absence of compelling arguments to the contrary, and also of any evidence of significant consumer concern on this issue, I hope my noble friend will understand that I cannot recommend the Bill to the House.
The Earl of Bradford: My Lords, it would seem that there is a large measure of agreement in your Lordships' House that the aim of my Bill is a laudable one, but that primary legislation is the wrong course of action.

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I should like to thank all the Members of your Lordships' House who took part in the debate for their contributions. There is clear support for the practice of all-in pricing for new motor cars, including motor bikes, as the noble Viscount, Lord Falkland, pointed out, and that this should be brought by means of a voluntary but effective code of conduct by the trade. However, it may prove, as has so often been the case in the past, that it will be difficult to achieve this with 100 per cent. support. In that case, let us keep the threat of government action hanging over their heads like a proverbial Sword of Damocles, in the hope that this will encourage them all to come into line. Accordingly, I beg leave to withdraw the Motion for Second Reading.
Motion for Second Reading, by leave, withdrawn.

European Communities (Amendment) Bill [H.L.]
11.39 a.m.
Lord Pearson of Rannoch: My Lords, I beg to move that this Bill be now read a second time.
It is a very great privilege to introduce this Bill in your Lordships' House today. As far as I know, this is the first time that a European House of Parliament has debated a Bill which could lead to its nation leaving the European Union. This debate is timely. It is now 25 years since the United Kingdom joined what we were told was a European Common Market and four years since our first debate about the Treaty on European Union, which had just been signed at Maastricht. It is time to take stock.
As I look down the long list of 37 distinguished speakers who are to follow, I confess to a feeling of vertigo. But I also cannot help wondering whether so many of your Lordships would have put their names down to speak in the Second Reading of a Bill such as this if it had been introduced even two years ago. I think not. I submit that the interest and disquiet which so many of your Lordships are thus showing today are a reflection of the growing antagonism to our continued membership of the European Union which now exists in the country.
Clause 1 of the Bill would remove the mechanism by which Community decisions are incorporated into UK law. It would also remove the superior jurisdiction over British courts of the Luxembourg Court of Justice.
Clause 2 would allow the Government, subject to parliamentary approval, to repeal or amend any legislation from which we suffer as a result of the sections repealed by Clause 1. I am aware that many of your Lordships will regard this as a fairly massive Henry VIII clause, and I share your Lordships' well-known dislike of Henry VIII clauses. But I do not see Clause 2 of the Bill as a Henry VIII clause so much as what I would prefer to call a "Moses" clause. I call it that because it would allow the Government to lead our people out of the captivity of the Treaty of Rome and to regain the sovereignty of this Parliament, that priceless right to self-governance for which the British people have sacrificed so much over the centuries, but
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which we have so wantonly thrown away. Yet only the prescient few foresaw this outcome 25 years ago, and so perhaps it is worth remembering how we got into this frightening predicament in the first place.
By way of background, we should remember that, even in its earliest days, the European Common Market—that forerunner of the EU—was never a healthy market which grew up between people who were freely trading together, with its political structures developing to reflect and strengthen that shared interest. It was devised after the war by European politicians for two principal reasons. First, the six founding nations wished to build a block which was capable of standing up to the growing menace of the Soviet Union; secondly, they wanted to dilute Germany into their new-fangled cocktail and thus prevent her from going to war with her neighbours yet again. These raisons d'être were entirely honourable at the time, but they do not stand up today, however much our Europhile friends may pretend that they do.
From our perspective it was understandable in the early 1970s that Britain, bedevilled by industrial strife, should have looked enviously at German and other European industrial success, and want to be part of it. Many British Conservatives, too, saw our membership of "Europe" as a safeguard against this country being taken over by the far Left, which remained a possibility until the 1979 general election. But neither of these reasons hold good today, either. The German miracle is turning sour and, as Mr. Roy Hattersley has so helpfully pointed out, "Labour started to support Europe when Europe went socialist".
So all four of these main inspirations for the Treaty of Rome are now redundant, yet the bureaucratic juggernaut which they spawned rumbles on. Those who wish to defend its continued existence seem to me to be reduced to slogans, or "Euro-slogans" as I call them, having lost the rational arguments. I have time to consider only four of these Euro-slogans today.
The first and most important slogan would be: "The Union has kept the peace in Europe since 1945, and is essential to preserve it in future". If that were so it would, of course, be worth putting up with almost any bureaucratic interference and economic disadvantage; but it is not so. NATO has kept the peace and NATO will continue to do so. The EU's first foray into peacekeeping, on its borders in the former Yugoslavia, was not a conspicuous success, and I am aware of no successes elsewhere. Yet Herr Kohl seems to be in good faith when he says, "European integration is in reality a question of war or peace in the 21st century". Indeed, it is this belief which appears to drive the German Chancellor more than any other. The trouble is that he is wrong. Democratic bourgeois nations such as the modern Germany do not provoke wars, whereas forced conglomerations of disparate nations do, especially when the lid is eventually forced off.
So the Government are surely right when they wish to avoid Herr Kohl's vision of a federal Europe, preferring their vision of a "Partnership of Nations". The Government's difficulty is that a majority of the other

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European countries are indeed prepared to sink their sovereignty into that "ever closer union of the peoples of Europe" which the Treaty of Rome clearly requires.
My second Euro-slogan—and perhaps the most widely chanted and deceptive Euro-slogan of all—is this: "We must be in the EU for our commercial survival. Inward investment would disappear if we left". But rational analysis shows that that is also untrue. The Government steadfastly refuse to carry out an objective cost-benefit analysis of our membership of the EU. It is therefore like the foolish businessman who negotiates the future of his company with a powerful predator without knowing the point at which he should get up and leave the table. The Government say that the benefits are self-evident and that leaving would be too ghastly to contemplate.
But there are now at least three highly respectable academic studies that show that we would be better off outside the EU, especially if we could negotiate a new relationship which gave us reasonable access to the single market. And why should we not do just that? Only 9 per cent. of our trade takes place with it against 11 per cent. with the rest of the world and 80 per cent. within the UK itself. We trade in deficit with our European competitors so they need us much more than we need them. So we ought to be able to do at least as good a deal with the single market as Switzerland has done in a bilateral free trade accord. That would free us from the socialist level playing field of Europe to pursue our wider interests in our domestic and world markets.
My third Euro-slogan would be: "We must get into Europe wholeheartedly, and persuade the others to see things our way". The trouble with this one is that most of the others want something very different. They want a federal superstate, and the treaty is written in terms which ensure that they will get it. I have wearied your Lordships before about how the treaty works, and so I hope that I will be forgiven if I do so again on this important occasion. Any change to the treaty wording requires the unanimous consent of all the 15 member states. The guiding light of the treaty and the court is clearly the "ever closer union of the peoples of Europe" in Article A. The others believe that that means the ever closer political union of the peoples of Europe. They do not agree with the Government when they suggest that means more inter-railing, more student exchanges and, no doubt, more cocktail parties around the embassies of Brussels.
If noble Lords have any doubt about the difficulty of achieving unanimity for any changes to the treaty which we might require, they should consider our failure to carry our views even in those large areas of our national sovereignty which we have, alas, ceded to the qualified majority vote. I refer here to all of our industry and commerce (thanks to the single market legislation), our environment, our transport, "European" culture (whatever that turns out to be), and the workings of the common agricultural and fisheries policies. There are 87 such qualified majority votes, of which 62 are required to carry a motion and 26 to block one. We have only 10 votes, and we are often alone.
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This is the system which makes us powerless to defend so many British interests, such as our art market, the impending destruction of which your Lordships debated on 11 th December last year and which the other place debated only two days ago. It is this system which also makes us powerless to preserve the independence of our world famous system for company takeovers, which the Commission wishes to improve by subjecting it to the Luxembourg Court, as your Lordships debated on the 14th of this month. The single market is not working as we hoped that it would.
I suppose I should say something about economic and monetary union (EMU). Personally, I do not believe that that is a bird which will ever fly, but if it is pushed off the top of the cliff by ignorant politicians I fear that it will do much damage when it crashes to the ground. The immobility of labour which exists in Europe will lead to such massive transfers of resources that I believe that civil unrest will become a real probability. At the very best, the Euro will be a hopelessly weak currency, and I cannot see how even Chancellor Kohl can sell it to the German people. Nor can I see how any serious political party in this country could commit the economic suicide of taking us into it ever—and that is about the only good news that I can see on the entire European horizon.
I suppose that I should also mention the hopeless fraud of subsidiarity, which we were assured during our Maastricht debates would be our shield against any further loss of self-government and against the mess we find ourselves in today with the single market, but which has proved to be the abject failure that some of us forecast at the time.
Then there is Community fraud itself, amounting to at least 10 per cent. of the budget or £7,000 million per annum and against which it is now clear that the Community has no intention of acting despite four excellent reports from your Lordships' House.
Looming on the horizon is the Committee of the Regions, which is the blueprint in the Treaty of Rome for bypassing national parliaments completely. I gather that it is about to start financing propaganda for EMU via local authorities. I fear that we shall hear more of that creature in the future.
I leave your Lordships with one last Euro-slogan. It is this: "Sovereignty doesn't really exist any more, so we have lost nothing to Europe". Those who peddle this one often point out that we share our sovereignty in NATO, or that international factors affect our exchange rates and interest rates. But we could leave NATO if we wanted to. The Treasury can and does respond to our unique economic cycles—and recently has been doing so very successfully.
It is not so with the Treaty of Rome, which we have signed for what it charmingly calls an "indefinite period". Under the doctrine of the acquis communautaire, enshrined in the Treaty, the Community never gives up a power which it has acquired. So the European Union is therefore a quicksand, a quaking bog which we have entered at our peril. It is politically redundant and for us it is commercially crazy, but there is no way out short of

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complete withdrawal. Only when all the others are convinced that we really are prepared to go might they agree to the changes that we need. But by then it will be obvious that we should go it alone anyway, and leave them to their grand but risky design. We would go in friendship, and they would heave a huge sigh of relief.
I am very grateful to all noble Lords who are to speak. If we can give the Bill a Second Reading today that may be the first small step on the road back to self-government and to freedom. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—{Lord Pearson of Rannoch.)
11.52 a.m.
Lord Taverne Lord Taverne 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, frankly, I am surprised that this Bill has been introduced. Given the views of the noble Lord, Lord Pearson of Rannoch, about the European Union, I would not have been surprised if he had introduced a Motion that we should discuss the possibility of withdrawal. However, the Bill in effect repeals the European Communities Act, which gave effect to the Treaty of Accession. The European Communities Act was masterminded by the late Lord Rippon of Hexham, whose untimely death a few days ago has been such a loss to this House. If this Bill is passed, we shall unilaterally renounce our obligations under the treaty. In fact, we would tear up the treaty which we solemnly signed in 1971 and which was later confirmed and approved overwhelmingly in a referendum. But there is no question of a referendum under this Bill.
For all its shortcomings, this House plays an important part in our constitution. It is not a school debating society, yet we are now seriously being asked to behave like a banana republic or the Soviet Union in the days of Stalin, and to scrap a treaty which it is said no longer suits us. What next? Are we next to tear up the Treaty of the Western European Union because we wish to distance our defence from the French and the Germans, scrapping treaties one after another?
How are the mighty fallen! Britain has a proud history of upholding the rule of international law. But now we are being asked to regard one of the most important treaties to which we are a party as a scrap of paper that we can discard unilaterally by a simple Act of Parliament. That alone will, I hope, make your Lordships reject the Bill.
I turn now to the substance behind the Bill. What would be the effect on our fortunes if the Bill were passed? It would end our membership of the single market because we would no longer accept any obligation to observe the rules which are an essential part of the single market.
Many Conservatives have boasted that the Single European Act and the single market was their great triumph. In that, I think they exaggerate their role, but they do deserve credit for the part that they played. The noble Baroness, Lady Thatcher, helped to create the
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single market by signing the Single European Act. I see that the noble Baroness is here today. There was a rather mischievous report in the Sunday Telegraph which also appeared yesterday in the Sun that the noble Baroness would be here to give silent support to the Bill. To introduce an oxymoron into the debate, the noble Baroness positively exudes audible silence.
However, I cannot believe that that story was right because the Bill would have us withdraw from the single market, which was partly the achievement of the noble Baroness. Sometimes it has been hinted that the noble Baroness did not fully understand the implications of the Single European Act. That is an absurd suggestion. Indeed, it is an insulting suggestion and 1 have far too much respect for the noble Baroness, who is the most formidable Prime Minister we have had since the war, to believe that she did not understand the full implications of what was one of the most important signatories of her premiership. The noble Baroness helped to create common rules which have to be adjudicated upon and enforced by an independent tribunal, the European Court of Justice, and we have greatly benefited from its rulings. Indeed, we have won most of our cases before the European Court. So much has the Court helped our cause that during the Maastricht negotiations it was the British Government who proposed that the powers of the Court should be strengthened and that it should have the right to impose fines. Its power to impose fines results from a proposal of the British Conservative Government.
Again, through the Single European Act the noble Baroness extended the system of qualified majority voting. Contrary to what the noble Lord said, that has greatly benefited this country. Perhaps I may give one example which in itself contradicts the economic case for leaving the European Union. Without qualified majority voting, Europe would never have been able to adopt a common stance in the negotiations for the Uruguay Round. We would never have been able to reach an agreement for a vast extension of free trade throughout the world which is greatly to our benefit and that of other nations. So, I am sure that the noble Baroness will oppose any Bill which seeks to destroy her admirable handiwork.
I turn in slightly more detail to the damage that would be done if the Bill were to be passed and we were to leave the European Union. It has been argued that we would save substantial costs. There is no doubt that the common agricultural policy is a minus and we would be saved the cost of that—or part of the cost—if we left the Union. But the costs of the common agricultural policy are declining. They were reduced by the MacSharry reforms and they will be further reduced on the enlargement of the Community. Everyone wants to see an enlargement of the Community and everybody recognises that it cannot be enlarged without further major reform of the common agricultural policy. On the other hand, the costs of leaving the Union would far outweigh the costs of the common agricultural policy—and they are mounting costs.
First, let us look at the question of foreign investment. This week we heard that Toyota was seriously worried about the possibility of our not being part of the single

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currency. Not long ago the head of Siemens made a statement that Siemens would never have invested what it has invested, and certainly would invest no more, if there was any question of our not belonging to the single currency. However, what is being suggested now is that we should leave the European Union. The worries of Toyota, Siemens and others would be multiplied in spades. Our departure from the Union would have a devastating effect on those foreign investors who come here for the good reason that we provide a solid base inside the single market.
Even more important would be the impact on our exports. The noble Lord suggested that we would not be deprived of free access to European markets. That would be a very rash basis on which to proceed. Already they have complained about the unfair competition from devaluation by those outside the monetary system. If one kicks people in the teeth, one cannot expect them to be very accommodating. If the European Union were to take a more protectionist line, we would not be inside the Union to fight against it, as we have in the past. So far as concerns discrimination, a barrier against us would affect 58 per cent. of our manufactured exports. Quite apart from the obstacles that they would have to face, it would be a huge upheaval for all those companies that had reorganised their operations to take advantage of the single market.
Lord Marsh: My Lords, I am grateful to the noble Lord for allowing me to intervene. Does he seriously suggest that in those circumstances a situation may arise in which Britain is the only country in the world that is debarred from trading in Europe?
Lord Taverne: My Lords, the possibility of favoured nation treatment, with consequent tariff barriers, is a very likely consequence of our renouncing the European Union. The reorganisation of companies, as they have testified, will cause them great damage if suddenly we leave the European Union.
Further, the loss that we would suffer from the extra barriers imposed against us would be a growing one. Every day our economy becomes more and more integrated with the rest of the European Union. Since 1973 our exports to the European Union have grown twice as fast as those to the rest of the world. It is wholly unrealistic to believe that suddenly those exports can be switched elsewhere. It would take many years and the loss would be irrevocable. It is not surprising that the business community in general is not only strongly opposed to any suggestion that the United Kingdom should withdraw from the Union but is very keen that we should play, and positively committed to our playing, a constructive part within the Union.
The issue goes beyond economics. The noble Lord suggested that we could do very well outside the Union as a kind of Norway or Switzerland. With great respect to those countries, our role in history has been very different. In the past we have made a valuable contribution to the civilisation of the world. We can and should still play an important part. But what part could we play and what influence would we have if we were
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outside the European Union? What importance would the United States attach to the views of Britain if it was outside Europe?
A strange malady has struck the Conservative Party. Only six years ago it was still mainly pro-European. No doubt John Major meant it when he said that we must be at the heart of Europe. Since then a certain Euro-septicaemia (to quote Sir Nicholas Henderson's apt phrase) has infected the blood of that party, and that fatal infection is spreading. Already we are half-in and half-out of Europe, and all the time we become more marginalised. Feebly we wave about a policy of boycott because of our own tainted beef. Predictably and inevitably, we retreat, surrender and are humiliated. We lose not only further influence but respect.
Slowly by salami tactics the Europhobes acquire control of the Conservative Party. First, they commit us to a veto at the Inter-Governmental Conference because we oppose an extension of majority voting which the rest support. Next, we accept that others can go faster than us and consign our country to a second tier and second level of influence. Next, they gain a virtual commitment against Britain joining a single currency. Then the party attacks the institutions of the European Union, particularly the European Court of Justice—institutions that are essential to the single market programme. Now they want to tear up the Treaty of Accession altogether.
We should have nothing to do with this damaging and shameful Bill. We should not allow Euro-septicaemia to blind us to our true interests or to tarnish our reputation in the community of nations. I beg to move.
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 Taverne.)
12.5 p.m.
Lord Bruce of Donington: My Lords, in the past I have on occasions felt a little lonely in participating in debates on the European Community. In saying that I bear in mind that my own country, whose interests I endeavour to promote, also feels a little lonely from time to time and has been sustained in her loneliness by the spirit of her people. I do not believe that we should forget these matters. It seems impossible now to debate questions affecting the European Union without provoking almost instinctive emotions one way or the other. Occasionally when I get up to speak on this subject, which I have studied for some years, I feel that people's eyes glaze over—I do not blame them—and they say to themselves, "It's only old Bruce again. We can afford to ignore this".
I emphasise to the House, without wishing in any way to speak against any of its inhabitants, that we live in very perilous times. There is widespread poverty throughout the world, particularly in the less developed and undeveloped countries, the very existence of which prejudices the continued peace—or perhaps semi-peace—that we enjoy at present. When one considers the standard of life that even the artisan in a member state of the European Union enjoys compared with that of the teeming millions in

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Africa, South America and elsewhere one ought to be aware of the time-bomb that is ticking away. That time-bomb cannot be disarmed unless a large number of the developing countries are permitted to export their raw material products and foodstuffs to Europe which at present they are prevented from doing by the operation of the common agricultural policy. The future of the common agricultural policy is bound up with the whole question of world security in that sense. Any question of enlargement, particularly to the immediate east of the European Communities, is quite out of the question so long as the CAP remains as it is. There is no way in which the noble Lord who has just addressed us can possibly dispute that.
The situation in Russia and the associated states by no means gives us cause for complacency. We know well that there are nuclear and other arms piles outside the control of the Russian state apparatus. We also know that due to the entrepreneurial spirit within the European Union some of them find their way into the European Union for cash. That is hardly a stabilising thought. So, it is of the utmost importance that European countries—I include not just members of the EEC, but Hungary, Croatia, Romania, Poland and all the rest of them—arrive at an ever-increasing agreement among themselves for the conduct of their affairs.
In May it will be 50 years since I was a part author of a Labour pamphlet—first in the series Keep Left—with the approval of my right honourable friend Aneurin Bevan, which advocated the establishment, ultimately, of a federal Europe. The term is not new to me in the slightest. That was in 1947. So one is no stranger to the subject. What one said at the time—one did not consider the incorporation of Germany at that stage—was that a growing together, possibly ultimately culminating in a federal union of all those countries, would be necessary to preserve the peace of Europe. So, speaking for myself, I am no stranger to this European "get togetherness".
On 23rd November 1962, to be precise, I published a pamphlet on the subject which went into great detail as to the pros and cons of the Common Market. I hope that I did it without generating the emotions that appear to be ebbing and flowing over this most important question. One thing I did note, however, was Mr. Reginald Maudling's observation in 1959, when he studied the matter, that of course it would mean—if we joined the Common Market on the terms that he understood at that time—an erosion of national sovereignty. From that moment I began to think more about it. I have thought more since.
I accept the necessity for the utmost co-operation of all member states in Europe and those outside. The closer we get together, the more we arrive at common ground, sanctified, if necessary, by making treaties. The more that happens, the more secure Europe, and indeed the world, will be. Therefore I am not against the most extensive co-operation that can be agreed by its peoples, functioning within a democratic society, that can feasibly exist. I am bound to say—I am open to correction—that only a minority of states at present in the EEC have had more than 40 years' experience of
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parliamentary democracy. Some of them have not yet gone as far as that. Therefore we have much to offer by example.
The way Europe has gone about this is the wrong way. The objective, within the ordinary limitations imposed by the UN Charter, the way towards a united Europe, capable of acting as an effective cultural, business, commercial, manufacturing and services entity, is not by diktat from above; it is not by the passing of statutes in Brussels or indeed anywhere else; it is by securing the active democratic consent of the people.
What we have done, or what we have been a party to, is to permit the state in which we now are, where all policy is dominated by institutions, not by people speaking through their own democratically elected representatives. The whole of the EEC structure is based upon the necessity for institutional power. It cares nothing about securing democratic consent. Even now of course it is spending £200 million, which arrived somewhat mysteriously in the European budget which we did not receive until it was too late to examine it, on propaganda from the European Commission trying to convince the population of Europe as a whole how wonderful the whole thing is.
What we should be seeking is approval from below—approval from the people whom we represent. Some of us, even in this House, have represented people from time to time. If I may say so, we may have achieved a certain legitimacy over the past six months or so. It seems therefore ironic that when another place possibly seeks to limit powers here, it is allowing powers to seep away every day in its ordinary business because of course the Commission churns out regulations.
Let us examine that Commission for a moment. The Commission is composed of non-elected people. It is accountable to no one, except on the basis of unanimity to the European Parliament, which is heavily dependent upon it. It is composed of appointed people. It is represented in every European Community organisation: it has representatives in with the Council of Ministers; it has representatives on the Economic and Social Councils; it has representatives on the Committee of the Regions; it even has representatives on the management committees and on the advisory committees. It has representatives everywhere. It even has its own embassies abroad, the money for which was found without budgetary authority. It spends money on that too. It is all-pervasive. It has the sole monopoly of originating proposals for legislation by either the Parliament or the Community. It has the sole right. No one else can propose anything. Therefore its grip grows and grows and grows.
The Commission has a flood—let no one tell me that it has not, because I examine it day after day, week after week—of paper coming out of Brussels, to a point where even the Scrutiny Committees of both Houses cannot possibly keep up with it. The Scrutiny Committee in the other place is way behind. There are hundreds and hundreds of proposals which it has not yet had time to consider. The Civil Service machine becomes clogged. The proposals often do not arrive for

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parliamentary scrutiny here until after they have been brought into law in the Council of Ministers, where, I should hasten to mention, of course the Commission is once again represented, as it is represented in COREPER and COREPER 2 and all the rest of the organisations.
When will we realise that the enactment of a flood of regulations and directives from on top, covering an ever-increasing field of competence, will not bring about the unity of Europe? It is a fact and it is already producing resentment.
Make no mistake about it. Europe and the Community has its own problems. Those were referred to in the course of the speech made by my right honourable friend in another place, Mr. Gordon Brown, when he spoke at a meeting in Bonn on 7th May last. He said:
"In Britain and Europe, unemployment is at catastrophic levels. Two million in Britain, seventeen million across Europe. Eight hundred thousand long-term unemployed in Britain, seven million across Europe. Six hundred thousand young unemployed in Britain, five million across Europe. It is the threat of unemployment which is responsible for the widespread jobs insecurity which is depressing confidence and growth in Britain and across Europe".
There is the further cause of immediate instability to which I have referred already. Once again, that is because of specific proposals made by an unelected and unaccountable body; namely, the Commission. We are now faced with a formula which it incorporated in detail in the Maastricht Treaty, which was not read by our own Chancellor of the Exchequer. It laid down the various proportions of national debt and borrowing and defined deflationary policies. Once again, they were all laid down without elected authority in the beginning.
It is that which is giving rise already to unrest in Europe. That is so in France and Germany, and in Spain, we have a classic instance. So bothered are the Spanish by unemployment that they now draw the attention of the electorate away from Spain by demanding control of Gibraltar. That is a classic method of diverting public attention away from what is happening in one's own country.
Those are the matters on which we should ponder and ponder very carefully. What is happening is striking right at the root of any residual power which we might have not only in Europe but in the world. The Commission, with the support of France and Germany, is bent upon enforcing a system on Europe which has yet to command the support of its people.
I do not try to say that those who believe to the contrary are somehow below the salt. There is room for plenty of views about this. Therefore, I hope that among those who believe exactly the opposite, my words will still find favour in the sense that they are worthy of examination. In that sense, I would hope that the House will re-examine the position to see whether that is the best way of achieving the unity which we all desire. It should not be by enforcement from above but by obtaining the full, hearty support of people in the country, who, after all, are the people who are principally affected.
12.24 p.m.
Lord Charteris of Amisfield: My Lords, I shall not detain your Lordships long. Indeed, I intend to be as brief as the Bill. I am not equipped to judge whether the Bill as it is drafted would achieve the objects it sets out to achieve. But it is certain that if it became law, the results would be lengthy and complicated.
I suppose that it is unlikely that the Bill will become law because it is likely to be killed by the Dissolution of Parliament which cannot constitutionally be long delayed. Nevertheless, I consider it of great value to have it and I should like to give my warm congratulations to the noble Lord, Lord Pearson, on bringing the Bill before us.
Why it is important that we should have the Bill and the value in it is that many people in this country are perplexed and troubled about our position in respect of Europe. The more serious discussion there is about it, the better. I hope that today's debate will serve to clarify my mind at any rate and I hope also that of many other people.
When we had the referendum on joining Europe, I voted in favour of doing so. But many people who did the same as I did feel now that they are getting something which they did not bargain for then. I feel a great deal of sympathy with the shrewd, industrious, Pakistani shopkeeper who has a corner shop near where I live in London. It is the sort of shop which appears to be open 24 hours a day and where you will be sold with the greatest courtesy one orange at 11.50 p.m. on Christmas eve. Your Lordships will know the sort of thing that I mean. I asked that gentleman what he thought about the European Community and how he thought it affected Britain, his adopted country. His reply was concise and picturesque. He said, "When we joined, we all had high hopes but it is a flop".
I believe that many people in this country share that view. But of course, it is not a flop. If it were a flop, it would not matter. But it is not. It is something which is of great significance and which is changing our history, and a great many people do not like that.
When we had that referendum, we were assured that we should not lose our sovereignty but merely that we should share it. I am afraid that it does not feel like that. It feels as though our sovereignty is slowly but irrevocably being comprehended or taken over by the tentacles of that great bureaucratic octopus that sits in Brussels and which I fear we do not seem able adequately to control.
Therefore, it seems the course which is being followed now must lead inevitably to a federal Europe. I do not believe that we are ready for that and it is so contrary to our history that I am not sure that we ever shall be. When the Minister replies, I hope that he will help me to see the truth of this matter and I ask three questions. First, are we heading inevitably towards a federal Europe and, if we are, is that the wish of Her Majesty's Government? Secondly, what real advantages do we obtain from our present position in Europe? Finally, what would be the results if this Bill became law and we had to renegotiate our position?
12.30 p.m.
Lord Kingsland: My Lords, one of the things that always characterises the interventions of my noble friend Lord Pearson in the European debate is the unfailing courtesy and good manners with which he expresses his view. I found his speech this morning refreshingly free of xenophobic assertions. I should like to think that that is the tone in which these matters will be discussed in our party from now on.
Before I make one or two general remarks about the state of play, I should like to make a technical point about the Bill. My noble friend touched on Clause 2 of the Bill and, quite rightly, mentioned that it is a draconian Henry VIII provision. Of course, my noble friend is as opposed to that as I am in our constitution. But sometimes such clauses in difficult circumstances have to be tolerated.
However, before my noble friend's Bill becomes law, there is one problem that must be addressed. Much of the legislation that implements European Community law in this country is delegated not primary. It is authorised by directives whose authority will fall away once this Bill is passed. Therefore, with great respect to my noble friend, what is needed here is a clause which preserves the content of that delegated legislation for the moment, until such time as Parliament has had a good chance to look at it. Otherwise, whole swathes of economic and social activity in this country will be unregulated by law—for example, the field of agriculture. No doubt we will wish to change some of the agricultural rules; but we would certainly want to do so in an orderly manner. If the Bill is to become law, it will need some careful scrutiny in that and other respects.
I was also much struck by the fact that there is no mention of a referendum in my noble friend's Bill. I am rather pleased about that. I think that there is a real danger that the attraction of referenda is beginning to erode representative government in this country. Indeed, technically, it is now possible for the nation to sit in front of television sets every evening and vote on parliamentary Bills. Why not? But I think that that would be an extremely dangerous path to follow. It is the job of political representatives to shape public opinion. Public opinion is often wrong. Where would we have been, for example, in 1981 if my noble friend Lady Thatcher had listened to what the general public were saying about her Budget, which dramatically changed the economic fortunes of this country? Where would this nation have been in 1938 if Mr. Winston Churchill had listened to public opinion about Munich? It is the job of political representatives to shape the nation's opinion. I believe that my noble friend's decision not to mention a referendum in his Bill is a positive blow for representative government.
I turn now to the next point that I should like to make on the Bill. Here, I am afraid, I shall differ from my noble friend and I apologise to him for that fact in advance. He mentioned, much later in his speech, our loss of sovereignty to Europe. But if we have lost sovereignty to Europe, he would not have been able to introduce this Bill—because we would no longer have
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the sovereign power to come out of Europe. So it is simply not true to say that we have lost our sovereignty by being in Europe since Parliament can still pass Bills to take us out.
The effect of being members of the European Community is that, while the Bill is in force, we have delegated certain powers of British government, in our national interest, to supra-national institutions which sit on the Continent. We are free at any time, in the space of a day if necessary, to take ourselves out of all of this if we wish to do so. That is what this Parliament of ours is here for. If we do not pass my noble friend's Bill this month, next month, this year or next year, we can still do so in 10 years' time because we still retain that freedom. Therefore, when we use the word "sovereignty", we must be very careful not to deceive the general public to whom we have a duty; namely, to let them know that they always have the option of coming out at that moment in time when they believe that it is no longer in the national interest to be in there. I see that the noble Lord wishes to intervene. I give way.
Lord Hamilton of Dalzell: My Lords, I apologise for interrupting my noble friend and thank him for allowing me to do so. Does my noble friend agree that the option will still exist if we join the single currency?
Lord Kingsland: My Lords, of course the option will still exist to come out, because the whole authority of the Community rests on the 1972 Act. Once you pull that away, the rest of the cards in the pack also fall away.
In conclusion, I should like to say something about the strategic picture in which to place our membership. When looking at the value of our membership of the European Community, it is very important to place the security aspect above all considerations. What is the biggest threat that this country could face in the future? To me it is this: it is the combination of the United States become isolationist again and Germany and Russia doing a new deal over eastern Europe—in exactly the same way as Molotov and Ribbentrop did over central and eastern Europe at the beginning of the Second World War. That is why what happens in central and eastern Europe is so crucial. We must find a way to organise the state system in central and eastern Europe which would prevent such a deal between Germany and Russia from happening again. If such a thing took place, the security of this nation would be in great peril. No one should be in any doubt about that.
With great respect to my noble friend Lord Pearson, I believe that he is making the same mistake—and I say this without any emotive intent—that Mr. Neville Chamberlain made in the late 1930s; and I am not talking about the word "appeasement". The great mistake that Mr. Chamberlain made about the security of this country was to think that what happened on the Continent of Europe did not matter to our security. We are in danger of making that mistake again if we draw back from intimate involvement. It is not a question of whether or not one is pro-European; it is a question of whether one is pro Britain's intimate involvement in

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establishing a secure Continent. That is the issue that we have to face, and we hear very little about it in our debates on the European Community.
It is my firm belief that it is only if Britain is involved in expanding the Community to central and eastern Europe and places that absolutely at the top of the agenda, way above the single currency, that we will persuade our colleagues on the Continent—namely, France and Germany—to follow that route. If we do not do so, I believe that we will face a very unhappy and dangerous future.
I believe that something of those thoughts can be put into the concept of flexibility which is being developed by my right honourable friend the Prime Minister. 1 should like to suggest one alteration. My right honourable friend is saying that flexibility is a good thing but we must have a veto if our colleagues want to go ahead faster than us. In the late 1940s, Mr. Winston Churchill took the opposite view. He had very mixed feelings about Britain's involvement in the Community itself. Indeed, depending on which speech one reads, one can either decide that he wanted to go in or stay out. However, that is not the point that I am trying to make. Mr. Churchill had absolutely no doubt at all about the importance of France and Germany becoming very close. That would not only prevent those two countries from going to war again, but it would also bind Germany into the West. That approach remains today, in my opinion, as important a foreign policy objective for this nation as it was for Mr. Churchill all those years ago.
Why I say that my right honourable friend the Prime Minister does not have flexibility quite right is this: we should be quite relaxed about France and Germany going ahead faster than us; that will not present a threat. The threat comes if Germany turns her attention elsewhere before we have expanded the Community to central and eastern Europe.
We should not in any way be a dog in the manger. It is all right for us not to want more Europe; but it is not all right for us not to want Europe to have more Europe. The Prime Minister's performance in the Maastricht negotiations was quite outstanding because he has won options for this country which suit us well. We can take them or not as we will. I share many of the views of my noble friend Lord Pearson about the single currency. I have always been a keen supporter of the gold standard. If the single currency were the image of the gold standard, I would be completely relaxed about it. I still think it is possible to shape it in that way. However, if I were a German, the last thing I would want would be the single currency, because Germany has built up a strong economy since the war based on the deutschmark and why should she give it up for something that is much less secure?
The single currency is a difficult issue. There is much to be said for hesitancy about it for economic reasons. However, we should not throw the thing over for ideological reasons. We had a successful single currency in this country from 1876 to 1914. I do not think any Member of your Lordships' House or of another place ever stood up, during those years, and said that that
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system threatened the sovereignty of this Parliament, or indeed of the nation. I think the matter needs looking at more objectively from a constitutional standpoint, even though, economically, I entirely accept the difficulties are profound. My right honourable friend the Prime Minister was quite right to take the position that he did in Maastricht.
I see that I have spoken for nearly 12 minutes and therefore I draw my remarks to a conclusion. I congratulate the noble Lord, Lord Pearson, on introducing his Bill—although I cannot, I fear, support it—because I think he has done something for Parliament. Let us keep these decisions for representative institutions because it is their task to shape our nation's future.
12.42 p.m.
Lord Moran: My Lords, we should be grateful to the noble Lord, Lord Pearson of Rannoch, for introducing this Bill as part of his unremitting efforts to alert us to the dangers we face from a tightly integrated Europe. It gives us a long overdue opportunity to debate the possibility of our seeking a new relationship with the European Union and restoring to Parliament the full control over our affairs of which it was deprived in 1972. For far too long this question has been dismissed as unmentionable.
Of course we need to be on good terms with other countries in western Europe. They are our near neighbours, our trade with them is large and important. We are Europeans, as they are. We should have the friendliest relations with them. But manifestly we do not. Our relationship with the other members of the European Union is one of constant friction, of row after row, of our constant isolation on issue after issue. We are continuously exasperated with them and they are continuously exasperated with us. Why is this? It is sometimes asserted—notably by the Opposition parties—that it is because of the obstinacy and obtuseness of the Government. I do not believe that. The causes are much deeper. Essentially it is because the aims and objectives of other EU member states (but not always their peoples) are fundamentally different from those of our Government. They want rapid progress towards a federal Europe and towards a single European country. Our aim, as set out in the White Paper on the Intergovernmental Conference, and most recently in the Foreign Secretary's article in The Times of 23rd January, is a partnership of nations, the grouping defined long ago by General de Gaulle as L'Europe des patries.
The reasons for this profound, and in my view unbridgeable, difference in approach lie in history. Many of the countries of the EU were overrun and occupied during the war. As a consequence, they lost confidence in the nation state and its capacity to safeguard the future of their peoples. Moreover, the problems in some western European countries, for example in Italy and Belgium, are so serious and intractable that their peoples have come to believe that they can only be solved in a wider European context.

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The case with us is different. Although some members of the political class undoubtedly shared the view that an independent Britain could not be made to work, their view has never been widely shared. We have not been successfully invaded or occupied since the Norman Conquest, and, although most people wish that we were better run, they have not lost confidence in Britain, nor do they want Britain to disappear. All the evidence is that they do not want to see us swallowed up in a European superstate.
The line taken in the White Paper, and in Mr. Rifkind's article, seems to me eminently reasonable. However, it runs contrary to the integrationist policies to which continental governments and the Commission are committed. Therefore I do not see that it stands any chance of acceptance by other governments. Mr. Rifkind says that there is a third way. I should like to think that he is right, but I cannot believe that he is. We are like a man going into a McDonald's and ordering a sole Colbert. It would be nice, but it is not available.
I have for a long time been concerned about the line taken by political parties in putting the problems to the British people. There has been a consistent failure to be honest with the public about what "building Europe" is. German leaders are far more candid. Our political leaders shy away from admitting that "ever closer union", as set out in the first paragraph of the Treaty of Rome, and in Article 1 of the Treaty of Maastricht—to both of which we subscribed—means just that; ever closer union. It can only mean steady, unfaltering progress towards a single Europe.
It is sometimes argued that the idea of a single European country is a fantasy. The Prime Minister said in another place on 29th June 1992, of what he called a "central European state",
"We do not want it … it is an unreal prospect—the stuff of nightmares for a few people".—[Official Report, 29/6/92; col. 592.]
My former colleague, Sir Nicholas Henderson, wrote in the Economist on 23rd November 1996,
"The myth that the closer union desired by continental countries will amount to a United States of Europe … should be exploded".
Yet the founding father of the European Union, Jean Monnet, who of all people may be presumed to have known what the enterprise is about, wrote in his memoirs,
"We … are heading for our objective, the United States of Europe; and for us … there is no going back".
Jean Monnet was also founder of the action committee for the United States of Europe.
If there was ever any doubt about where Europe is going, it should have been removed by the Treaty of Maastricht. As some of us pointed out during the 1993 debates, it was a massive centralising measure. Yet it was forced through by the Government with ruthless Whipping in another place, and in this House the Whips ensured that a massive majority voted down the proposal of the noble Lord, Lord Blake, for a referendum. I still cannot understand how a government who oppose a federal European state and stand for a partnership of nations can have signed and commended to Parliament the Treaty of Maastricht. The whole burgeoning
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structure of the EU is directed towards creating a single country. Only a person with his head in the sand could think otherwise.
It has been sad to see on this—the greatest issue of the day—the lack of any official opposition in Parliament. Party leaders seem concerned only to suppress the doubts of their supporters. Mr. Major has not been successful at that, while Mr. Blair announces from Amsterdam that he will not tolerate dissent by Labour candidates. It has been left to the press and a few individuals in either House to provide the main criticism of what the politicians are doing. The BBC often seems inclined to follow the Liberal Democrat line.
It is however clear that people outside this House are increasingly uneasy. The Daily Telegraph poll published earlier this month showed that 38 per cent. wanted to leave the EU, 56 per cent. opposed a single currency and 69 per cent. opposed handing powers to a European central bank. What worries me is that the parties are not telling the people what the choices really are. They talk about what interests them—influence, the need for a seat at the table, though they are only offered a seat below the salt. They are not giving the people a chance to decide on the future of our country. I firmly believe that government should be on the basis of consent. On this great issue we do not have it.
Where then do we go from here? Staying as we are is not an option. "Ever closer union" is being achieved day after day by the ratchet, the one-way transfer of powers, the sacrosanct aquis, by steps Chancellor Kohl describes as "irreversible".
We have, I think, two choices: either co-operation in ever closer union and acceptance that we shall be dragged into a federal Europe, or a renegotiation of our entire relationship with the EU. Essentially I think that our policy should be, "Loosen up or leave".
Our present situation, which might be described as "pay and obey", is bad enough. The loss of substantial chunks of our independence since 1972, when the Acts of this Parliament became subordinate to European law, has only recently become clear to the people of this country, with the destruction of our fishing industry and the spectacle of the Minister of Agriculture going hat in hand to Brussels begging to be allowed to export gelatine and being turned down flat. There is, naturally, increasing irritation with the hectoring attitude of the Commission—M. Santer is no better disposed than M. Delors—and the criticisms of European leaders. I recently saw a briefing note distributed to MPs by the Commission's London office before the fisheries debate on 16th December in another place. It contained this paragraph:
"Calls for Britain to declare a 200-mile exclusion zone are unrealistic. Such action would completely isolate Britain in Europe, close EU export markets to British fish and threaten other trading interests. It is unlikely that such a policy could be implemented without the use of physical force".
If when I was an ambassador I had used language like that in briefing local parliamentarians, I think that there would have been demands for my recall. I should be

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glad if the Minister, to whom I have given notice, would let me know how the Government have reacted to this extraordinary briefing.
We are all familiar with the bureaucratic nightmare of Brussels and the flood of regulations assiduously chronicled by Christopher Booker. Some time ago I stopped outside a bookshop in Wales and saw in the window a small card saying,
"There are 56 words in the Lord's prayer, 297 in the Ten Commandments, 300 in the American Declaration of Independence and 29,911 in the EEC directive on the export of duck eggs".
We are familiar, too, with our wholly disproportionate budgetary contribution, with the waste, folly and fraud of the common agricultural policy and the failure and contradictions of the common fisheries policy.
The prospects are even worse—for VAT on food and children's clothes, for our having to provide huge sums to underwrite unfunded European countries' pensions, for the end of the pound sterling and the handing over of control of our economy to unelected central bankers in Frankfurt, and perhaps for a demand that our oil reserves be made, like our fisheries, a common resource.
It seems to me clear that we cannot go on as we are, locked into an irreconcilable conflict of aims which infuriates all sides and can lead nowhere. We must seek a new relationship, something that will rid us of the CAP and the CFP and the burden of our disproportionate contributions. There are of course aspects of the EU that we would want to preserve—for example, the single market and co-operation on environmental matters.
There are a number of alternatives. There is the European Economic Area to which Norway now belongs. That happy and prosperous country has joined the single market but is not involved in the CAP or CFP or bound by the Maastricht acquis or by European law. This seems to me almost exactly what we ourselves really want. Alternatively, there is the Swiss model of a free trade area, or the standard non-discriminatory most favoured nation relationship which covers current EU trade with the United States and Canada.
If we were outside, would that be a disaster? First, I do not believe that even an angry continent could or would simply put up the shutters against our exports. Self-interest is the most potent of all factors. They sell us more than we sell them. Then successive GATT rounds have reduced tariffs from the high levels at which they were when we joined the Community to an average of just over 3 per cent., and for many goods the levels are now zero. Any future trading relationship would have to take account of GATT and World Trade Organisation principles, notably non-discrimination and MFN status.
Despite the inept remarks of the chairman of Toyota—not echoed, I note, by spokesmen for Nissan and Honda—I believe that, as other Japanese business leaders have pointed out, investment depends on moderate wage levels, modest tax levels, political and social stability and honest public administration. The real threat to business might be the collapse of a single currency created by fudge.
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We should gain financially if we were out by being freed from making a budgetary contribution of some £3 billion a year and from paying our share of the CAP. We would have a small but prosperous fishing fleet operating within our 200 mile limit.
Above all, I believe that taking back control of our own affairs and being once more responsible for what we do might well give us an enormous shot in the arm, a great boost to national self-confidence, the sort of enthusiasm we saw briefly during the Falklands campaign when we were under the inspiring leadership of the noble Baroness, Lady Thatcher. It would be exciting, a challenge to our capabilities. I believe that our relationship with the principal countries of Europe could well be much better if we were outside the EU. We would once more take our natural place as both a European, Atlantic and world power. This would, I believe, be a far happier country.
It follows that we should take back our freedom of choice by repealing the European Communities Act 1972. To that end the preliminary steps proposed in this Bill are to be welcomed. It would be a signal that we meant business and the key to a better future for ourselves and our children.
12.56 p.m.
The Earl of Clanwilliam: My Lords, the noble Lord, Lord Moran, has done a remarkable hatchet job which I shall find hard to follow, but I shall try.
As my noble friend Lord Pearson said, his Bill is timely and, I believe, conforms in some respects to some of the opinions held by the party that we both support. It is also vital that the matter be thoroughly debated in Parliament for the benefit, among others, of other European Parliaments as well as our own people. I shall, therefore, vote for a Second Reading if it comes to a Division.
With reference to the amendment proposed by the noble Lord, Lord Taverne, I spoke in the previous debate that he initiated and referred in particular to the excellent security provided by NATO, and only by NATO, in the world of today. I spoke of the dangers of imposing currency regulation before political cohesion had been established; and of the dangers of political upheaval that would inevitably follow.
On that subject, perhaps I may refer noble Lords to the seminal speech of the noble Lord, Lord Dahrendorf, a Member from the Benches of the noble Lord, Lord Taverne, reported at col. 1451 of the Official Report of 24th July. The noble Lord spoke in the debate on the Select Committee on the European Communities and demonstrated clearly the dangers that would follow from the "ins" and "outs".
So much has been said already on this vexed question and there still remains today an enormous controversy among all those whose judgment I respect. Having listened to President Chirac in his speech to both Houses, and this week to the French Ambassador—whose name I cannot pronounce—at the recent Euro-Atlantic dinner, it is evident to me that the French and the Germans have their own agenda in the form of a treaty signed between them in 1963. I note that the

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noble Lord, Lord Bruce of Donington, wrote a pamphlet in 1962. Perhaps they were frightened by that pamphlet into forming a treaty for themselves.
It is clear that Paris will run Brussels, and Bonn and the Bundesbank will run Frankfurt and the euro. That leaves the UK with no substantive role in the EU. For whatever reason, perhaps our own naivety, and certainly through the single-minded determination of the German Chancellor and his major partners, we find ourselves side-lined in Europe.
We need to act to preserve a climate of benevolence between ourselves and the EU. Noble Lords have clearly pointed out that that is singularly lacking at the moment. Above all, we need to be disconnected from Europe before the member states finally and irrevocably sign up to a federal system. To establish our future in Europe on a sound footing and to meet the needs and aspirations of our country, we should negotiate a separate treaty, perhaps as a protocol to the 1963 treaty. Because France and Germany are the driving force, they are the ones who will control and administer the EU of the future.
We have been the upholders of international law in the past and the treaty which we signed, the Treaty of Rome, is not an international treaty but a local one. As regards ourselves, I believe that we have a separate agenda. We carry a different cultural instinct in the English-speaking world—the dreaded Anglo-Saxon world, if you will—and we are an island on the Continental shelf. But we are separated from Europe, as an observer and helper. We would fulfil that role with greater emphasis if we were separated from it politically.
We have a parliamentary democracy in which the Executive is constantly held in check by Parliament, as we know only too well, whereas France and Germany have republican democracies in which the presidential office is staffed by enarques or their like and they can govern by decree. Our styles are different, and our strategies have been different too. Indeed, it has been our tradition to keep Europe divided, but we must now recognise that that policy has been finessed by the Franco-German pact. So we must be pragmatic, we must treat with them.
Some of the terms that we should negotiate would include many which have already been mentioned: immediate access to and consideration of all Brussels edicts which should be put to our Parliament and implemented, after amendment if necessary. We would undertake to be no less environmentally communautaire than existing and future members and remain in the single market. We would withdraw our representative from the EU Court of Justice and our laws would be passed by Parliament and administered by our courts. We would agree a rate for the pound against the euro. In this way, the pound would relate to the hard euro reminiscent of the hard ecu first proposed by my right honourable friend the Prime Minister.
We would jointly undertake with the ECB not to devalue or revalue without discussion and then only in our joint interest. The Bank of England and the ECB would provide equal access to all financial document processing relating to the euro and pound sterling.
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We would remain in NATO and withdraw from any commitment to the WEU. References have been made to the importance of the WEU. I suggest that it is a vestigial operation and unlikely to be of any value. We would also withdraw from any proposed EU foreign policy co-ordination, except by special treaty.
We would continue to co-operate in building common defence equipment, ships and aircraft and to exercise jointly with other forces. We would commit our Armed Forces only independently, as now. We would look to see the continuation of the present close association between the UK and EU companies. We would assist in any way other European countries who wish to join the European Union, so long as they meet the complete convergence criteria.
We could be equally helpful to the EU by joining with them in arrangements with GATT. There is no reason why, if we were separated from Europe, we should not be able to co-operate equally with any part of the world in any requirement on trade.
We would look to see the continuation of the present close association between our own and European companies. We would negotiate to withdraw from the CAP and carefully renegotiate the common fisheries policy. That would be a nasty subject; it might infuse great rage in the Spaniards but we would have to do it. We would commit representatives to sit on any committees or bodies set up by the EU with their consent and without a vote. We would be in every way communautaire but would retain the final right of all decisions to our Parliament and courts. We would be free to exercise our worldwide cultural and economic contacts in the English-speaking world.
It may be a form of à la carte system, but we are about the only country that seems to have serious reservations about full membership of the EU. Everyone else appears to be scrambling to enter. Cynics would say that they are perhaps more anxious to receive the benefits than contribute to the costs. In that respect, it is better that we should be out.
Perhaps I may refer to a communique from the Free Monetary Council in Paris last November, following the call by President Giscard d'Estaing for the devaluation of the franc fort. Among other things it stated that the present arrangements for monetary union were unrealistic and dangerous; that the arbitrarily defined convergence criteria take no account of the real situation of European economies; and, given the fact that the ecu has been abandoned and that Frankfurt is to be the seat of the ECB, it is clear that the euro is nothing but an enlarged deutschmark. That came from the Council of Paris.
It is also the opinion of senior members of the City establishment, whom I hold in great regard, and also my own opinion that the single currency, if started on time, will collapse in some six or eight years through political upheaval. That will indeed be a grave outcome and will be far more dangerous to the peace of Europe than any expansionist enterprise by Germany that it is supposed the EU will contain.

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We must surely all be united in determining that our own Parliament is superior to Brussels. We are discussing the 1972 Act, and there is the taint of deception about that Bill. It is not what was said—perhaps it was glossed over—or, to be fair, what was ignored. The point is that we have now woken up to the hard fact that what was proposed as an aspiration in 1972 has become, as though at the stroke of midnight, the concrete proposal of today, in the face of the stated better judgment of our own Cabinet and Government. We are now at the point of decision.
The UK is a highly competitive enterprise economy and, if I may address my remarks to the noble Baroness, Lady Thatcher, it is largely due to her that we are so, despite the rising value of sterling. To maintain our position, won with such determination, we need more privatisation, less regulation, less spending, more savings and to keep inward investment flowing. All that will be lost to Brussels bureaucracy.
Let there be no doubt about it. If the single currency goes ahead under present prevailing circumstances, there will be a disaster of such proportions as we cannot now conceive. It would be inimical to our interests and a serious force for disruption. Imagine the cost to industry of changing over to the euro, to something which is virtually irreversible and at the same time totally unworkable. There will be a collapse of industry throughout Europe. Indeed, the concern is implicit in the terms of the Bill, which I support. I believe that it must be properly and immediately debated, and I look forward to the remarks of other noble Lords.
1.8 p.m.
Baroness Ramsay of Cartvale: My Lords, how depressing it is that of all the ways we could be discussing the future of our own country and the continent of which we are a part, we are doing so on the basis of the negative and retrograde proposal in this Bill. I am very grateful to the noble Lord, Lord Taverne, for his amendment, which I sincerely hope will be carried.
At this time, with ever-increasing interdependence economically and socially, with the necessity of regional and international co-operation in confronting transnational problems such as terrorism, drug trafficking, organised international crime, like money laundering, and with the foreign policy issues on our own continent requiring a regional response, it baffles understanding that it can be thought that Britain should leave the EU.
I agree with the leading European politicians who recently, in a variety of speeches, have said that we cannot preserve a national independence that we do not have. We already are deeply dependent on each other. We are dependent in every possible way: economically, politically, environmentally and in the fields of defence and security. What country can stand alone? Certainly none in Europe. Why should we want to do so when we can have more weight, power and effectiveness as a group? It seems incomprehensible that one has to rehearse all the advantages that come from being a member of the European Union when they appear so
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evident as to be taken for granted—except, I am afraid, by those who confirm the adage, "There are none so blind as those who will not see".
There are two main categories of rational argument as to why the Bill is profoundly misguided: the positive benefits to the UK in being in the EU and the dire consequences of being out. Let us look at just some of the concrete, practical and down to earth gains of being in.
The EU gives Britain a market of 360 million people and UK sales to the EU are three times greater than the combined exports to the United States, Japan, China, South East Asia and Hong Kong. In 1994 we sold more to France alone than to the whole of the Commonwealth, and more to Germany alone than to the United States. The single market led to a great reduction in red tape and to the scrapping of 10 million Customs forms a year for UK firms alone, saving them £135 million annually.
The EU's leverage in the World Trade Organisation negotiations provided in 1993 the best deal for decades, securing the largest tariff reductions in post-war history. The EU strength in the WTO negotiations is one of the reasons that other countries clamour to join the Union. The WTO is dominated by the strength of the United States, Japan and the EU.
Britain receives massive regional aid from the EU. Scotland alone has received £2.5 billion from the Regional Development Fund since its inception in 1975.
Lord Pearson of Rannoch: My Lords, perhaps the noble Baroness will give way. I do not want to speak for long. Does she agree that the "massive regional aid" which the European Union so generously gives us is merely deducted from the money that we have already given it? If we did not give it, we could spend it as we want.
Baroness Ramsay of Cartvale: My Lords, no, I do not agree with the noble Lord. The cost of our contributions to the EU last year worked out at something like 60p. per week per head. I do not think that that is a big contribution. Certainly it does not equate with what comes back.
Lord Stoddart of Swindon: My Lords, would the noble Baroness give way?
Baroness Ramsay of Cartvale: My Lords, no, I am answering the noble Lord, Lord Pearson of Rannoch. I would rather finish doing that before I give way to answer another question.
Germany and France make bigger percentage contributions to the European Union than we do. We always talk as though we are the greatest contributors, but we are not. Germany and France already pay more than we do and in the very near future Sweden, Austria and the Netherlands will overtake us in contributions. I think that we get more than we give to the EU. I give way to my noble friend.
Lord Stoddart of Svvindon: My Lords, I am much obliged to my noble friend. She just said that we get more from the European Union than we put into it. But the fact of the matter is that the latest figures show that our net contribution—after all payments and receipts—is £3.5 billion, which in fact, we would be able to spend as we wished rather than as dictated by others.
Baroness Ramsay of Cartvale: My Lords, I shall leave the noble Lord to sort out whether it is thousands or millions and deal with the point in principle. We are not just about adding up columns of figures. What one contributes and what one gets back is made up in many different ways. No doubt those noble Lords who know so much about the European Union realise that it is very difficult indeed to sort out the exact arithmetic of the transactions connected with the Social Fund. I shall now continue with what I was saying.
Britain attracts large amounts of inward investment into poorer regions because foreign firms see Britain as a springboard for entry into the single market. A 1995 CBI survey found that 68 per cent. of the companies polled believed that EU membership had attracted inward investment.
Contrary to tabloid mythology, the European Court and Commission ensure, for the benefit of Britain, that other member states obey single market rules. Telecommunications is a very good example of that. Public contracts in other countries have been opened up to British firms. The Italian Government were forced to allow sales of Jaguar cars, among other things, and British veterinary drugs; the French Government were forced to allow British Airways to fly to Orly, Paris, and to let Sotheby's hold auctions in France. I could continue with the list but I hope that I have given your Lordships enough to paint the picture.
Lord Hindlip: My Lords, I must make a comment on the noble Baroness's remark. Neither Sotheby's nor my own firm are allowed to hold auctions in France. We are still barred.
Baroness Ramsay of Cartvale: My Lords, that is not my information. My information is that we are now allowed to do so. Perhaps the noble Lord could try again and find that he can succeed.
Baroness Williams of Crosby: My Lords, perhaps the noble Baroness will give way. I want to point out that as of January 1998 we shall be able to hold auctions in France. I think that is the serious point to make.
Lord Hindlip: My Lords, I must protest again. That simply is not true. The latest information, of only last week, is that the French wish to delay our entry into France until 1999 at the earliest. The French Prime Minister himself has taken a hand in this.
Baroness Ramsay of Cartvale: My Lords, of course the French have been objecting to Sotheby's and whatever firm the noble Lord is talking about, whose name I do not know. The French have been trying to keep them out of France but the Commission and the
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Court have made sure that in principle they are now allowed back into France. If the French Government are employing delaying tactics, that is exactly what we would probably do in the same circumstances. But the matter will be resolved in the noble Lord's favour. I hope that he will feel relaxed about that.
Let us now look at some of the consequences of leaving the EU or, indeed, changing our status. Certainly, the Bill proposes to leave it. British companies would have what has been called "regulation without representation". Our firms would have to abide by EU trade regulations but we would have no say in how those were decided. British companies could not appeal to the Commission or the Court for action against protectionist measures elsewhere in Europe. We should lose many jobs that exist because of inward investment which has come here for access to the single market. Surely we did not need the statement on Wednesday by the President of Toyota to know that. Millions of British jobs depend on the WTO negotiations. As I have already pointed out, the WTO is managed by the so-called trading superpowers: the United States, Japan and Europe. Our influence is only as part of the EU.
Our citizens would lose the benefits of freedom of movement throughout the EU with rights of residence, travel and of work. Recent years have seen a major change in the scope and nature of organised international crime, particularly drugs. We require to be fully involved in regional police co-operation, such as Europol. We would lose our right to have a say in EU environmental policy decisions which can have a major impact on pollution levels in Britain and indeed on the competitiveness of British firms. Again, I could go on, but your Lordships will be relieved to hear that I do not think I need to.
On 1st July this year Britain will enter the troika of the European Union preparatory to becoming, on 1st January, 1998, the President of the European Union. I should like to think that we shall enter the troika under a new Labour Government and, very importantly, determined to further the positive goals of Britain, inside the EU. If we allow negative voices to triumph or our national internal divisions to paralyse us, then we shall not only harm Britain but also Europe, and I do not think that future generations will understand us or forgive us.
1.21 p.m.
Lord Gray: My Lords, I support the Bill of my noble friend Lord Pearson and welcome the opportunity to discuss what should now be the way forward. When in 1972 I spoke and voted against our entry into the Common Market, it was primarily because, beyond the immediate considerations, I saw a blueprint for a federal European state—something that no economic benefit could make acceptable to me. I was of course pigeon-holed as xenophobic or antediluvian. I thought myself realistic. At the time when I opposed Maastricht I had been upgraded to a Eurosceptic. Now, with serious studies suggesting that there might be life after Europe, I am in danger of becoming respectable.
Today's debate affords an opportunity to go on the attack and challenge Euro-complacency and Euro-resignation. For years there has been almost a

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conspiracy of silence born, I suggest, of a comparative consensus among politicians of all persuasions that it is better to concentrate on detail and drift with the generality of Euro-manoeuvrings rather than be called bad Europeans. I do not level that criticism at British politicians alone. One only has to read the speeches made by continental politicians to find flat contradictions and Euro-waffle, depending on the audience addressed.
No matter what is being, or has been said by whomsoever, the reality is that a single European state with the UK as a province—or parts of the UK as separate provinces—is on the agenda of ardent Europhiles and those bureaucrats dedicated to its realisation. We should demand that our politicians admit that the agenda exists, whether or not they subscribe to it. The electorate must be asked for its opinion. No mandate exists for a superstate. No general election will produce a mandate. A referendum alone will suffice, preceded by an honest campaign untrammelled by external interference or concern as to what other Europeans may think.
We are not past the point of no return. But the Bill has been brought before us when time is running out. Some believe that we can deal with monetary union in isolation. That may be a respectable opinion. I find it ridiculous because I hold that strict central financial control cannot be divorced from central political control, no matter how one dresses it up. That point is illustrated by the current disagreement over it twixt France and Germany.
I have railed against the notion of a European state. It behoves me to say why. I have said why before but this is an occasion when I feel it reasonable to repeat my views. I see the idea as running contrary to the current thrust of history; as denying the proposition that legislature should be accessible and responsive to its electorate, who should feel that they are ultimately in control of their destiny. Furthermore, by the nature of its existing institutions, the European Union denies the balance between executive and legislature which we have held is of paramount importance. I believe that our electorate would give the thumbs down to a European superstate and perhaps the gesture would be replicated in some partner states.
Slightly fancifully, my prescription for the current malaise of Euro-dither would be to banish the Commission, its servants and acolytes to a desert island—without their mobile phones—while the elected representatives of the nations, regardless of party, thrash out our collective future—if there is to be one, or decide otherwise—and produce choice for referendum decision.
On the subject of that desert island—which hopefully would not have any inhabitants for the Commission to organise—perhaps that body would turn its collective mind to trying to bring some order to what is presently an unsatisfactory state of affairs in Europe. It could produce constructive thinking about the common agricultural policy and how to assist the European
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ombudsman in persuading European institutions to respond to demands for accountability and about fraud and other pressing problems.
Coming back to the real world, the present state of the Community is in urgent need of overhaul. We should address that before going forward in any direction at all. Let us face up to reality and grasp the nettle of essential reappraisal before we create a Babel in Europe with the risk of dire consequences. Let us pass this Bill and send a warning tingle down the collective European spine.
1.30 p.m.
Viscount Exmouth: My Lords, I welcome the opportunity afforded us by the noble Lord, Lord Pearson of Rannoch, to debate this highly important issue, in which I have a profound interest, having been resident on the Continent for a number of years and particularly through having benefited from parentage of both Anglo-Saxon and European origin, which probably amounts to some sort of qualification for a declaration of interests!
In 1963 President de Gaulle referred to Britain's application to join the European Economic Community with the following words:
"Her nature, her structure, her economic position differ profoundly from those of other continentals",
to which might be added, her geographical location also makes her different. Historically, our democracy is older and more stable than that of other countries within the European Union, all of which have been overrun, conquered and occasionally ruled by others or by alien political systems. Their borders have chopped and changed for centuries. They are accustomed to such upheavals, while we are not.
The continental countries therefore have an overriding need to unite as a single entity and to share allegiance to one flag and one army, with no national borders which should provide them with a degree of security that history will not repeat itself.
The economic and fiscal advantages of becoming a fully integrated member of the European Union cannot be quantified in the short term. Only after several years of total immersion will economists be able to acclaim that an economic miracle or an economic disaster has taken place. I have yet to read a non-governmental publication which believes in the former.
It is unlikely, however, that monetary union will succeed without a common fiscal policy and central collection of taxes and redistribution, issues which would appear to be unacceptable to this country.
There are factors of great importance to consider, factors of national importance, which, if not addressed at this stage of our involvement with the EU, could lead to anarchy within a superstate and civil unrest on the streets of Europe.
The people of the British Isles are disenchanted, confused and concerned over the European question. They have elected a government to power so as to be kept fully involved and advised over directives emanating from Brussels: directives, some of which appear to have no common sense attached to them and are not even tabled

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for debate in another place; directives issued by unelected faceless people—so-called Eurocrats; directives which sometimes appear to benefit only a few countries at the heart of Europe; directives which remove our sovereignty over national waters, waters which my forebears gambled their lives upon in defence of the nation; and, yet to come, a directive which will instruct us to transfer Britain's gold and foreign currency reserves to the new central bank in Frankfurt, as members of a single currency. Perhaps we should have just handed it all over in 1940, along with our sovereignty, nationality and independence—all that which those brave men of these islands laid down their lives for.
Is this what we want from our involvement with Europe? Is this the promised dream from which we were led to believe we would benefit as a member nation of the European Community? British people voted to join the European Economic Community in 1975. They did not vote to become members of a federal European union. Do we truly wish to lose our national pride along with our parliamentary sovereignty and also lose our ability to decide what would suit us a nation?
We must preserve our identity and all that we have inherited and worked for over the centuries. I believe we can do so as an independent country within a European free trade area. Members of a European Union will, in due course, lose their cultural diversity and become mere clones of one another, while countries will simply be referred to as regions. Such changes are guaranteed to undermine the very foundations of the United Kingdom.
I am reminded of the biblical adage, which, if slightly modified, would read as follows:
"What will it profit the nation if it gaineth the whole of Europe and in so doing suffers the loss of its own soul?".
The people of the British Isles have had enough outside interference with their lives and are now looking for positive, constructive guidance on all aspects of the 40 year-old Treaty of Rome and its subsequent interpretation by the bureaucrats in Brussels, Strasbourg and Luxembourg. The people of these isles need to be informed and be given the opportunity to examine the citizens first charter. They should also be given the right to stay in or to opt out of the European Union. Let the people decide. It is their inheritance and therefore their constitutional right to do so.
Will they want one parliament, one government, one supreme court, one currency, one police and defence force, one flag and one national anthem for all members of the union?
Have we lost our self-confidence as a nation? Are we truly unable to prosper as a free, independent country? Are we going to continue to support this undemocratic alliance?
1.36 p.m.
Lord Buxton of Alsa: My Lords, I want to mention briefly some items with which I am familiar myself but which have not yet been mentioned and possibly may not be mentioned this afternoon. I am therefore keeping off all the splendid and eloquent comments on the general issues.
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My items are also mentioned on the basis that I do not believe there is any stopping the juggernaut and that in due course, by a process of use of the ratchet, persuasion, bullying and probably deals, Europe will finish up with majority voting. It is on the basis that there will be majority voting that I want to raise these points.
No protest or argument at IGC will avoid the ultimate if we have majority voting. Majority voting, when it takes place, will apply to the Falkland Islands. There is gossip and talk in this respect. There will one day be a heavy vote in favour of the handing over of the Falkland Islands and their British citizens to Argentina. Spain and Italy will see to that. At the moment, Spain and Italy are great allies of the bureaucratic machine in Brussels. I can think of all the answers that will be forthcoming to dispel anxiety. But, as far as I am concerned, they should be wisely discounted because they may well prove meaningless. As I have so often found, as the juggernaut drives inexorably forward, everything that is said here in answer to questions turns out to be invalid.
Gibraltar is another example. It is again in the news. Because of the glittering attractions in Europe for Mediterranean countries, Spain is not going to be satisfied just with largesse on a truly staggering scale, nor with being awarded traditional British fisheries and quotas by the Italian Commissioner—for which, incidentally, she has been promoted. Now that things are really on the move for Spain with the Commission, the sabre rattling has already begun, as noble Lords will have seen in their newspapers in the past 48 hours.
And what about the Channel Islands? The writing is already on the wall, because one of the most disgraceful incidents in our history occurred very recently and passed almost unnoticed. The FCO and the Ministry of Defence did absolutely nothing about French fishermen invading Channel Island waters. If ever there was a case of sucking up and looking away from reality, that was it. Those islands will be a ripe plum for majority voting if the FCO happens at the time to be sucking up to France.
The sinister aspect in all these matters is that Whitehall, perhaps understandably—I can see how it arose and what the problem is—is now the dedicated ally of Brussels. The Front Benches of all parties seem powerless and certainly Ministers are no longer in direct control of everything that goes on. Whatever party wins the next election it will really make no difference. An iron vice has been forged between Whitehall and Brussels. I thank profoundly the noble Lord, Lord Pearson, for introducing this Bill. It is only his Bill, or something like it, which can loosen the vice and restore the initiative for Ministers and Parliament, and therefore the respect of the British electorate.
Over the years I have raised many issues in this House. I have had numerous letters from Ministers, and replies to questions and discussions. They have always insisted rather vehemently that their decisions are not dictated by Brussels and that there is no loss of sovereignty. But it has always turned out that that was wrong. Now, somewhat quaintly, Sir Edward Heath has blown the gaff. Stung by charges that he surrendered

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sovereignty, he now no longer denies it and insists that he always told us that he was surrendering sovereignty. What on earth are British citizens supposed to make of that?
He calls it "pooling sovereignty". Pooling sovereignty is impossible—
Noble Lords: Hear, hear!
Lord Buxton of Alsa: My Lords, pooling is totally false. I was born during the First World War; I served for seven years, in the Second World War, and I have had 40 years in business. I have a good deal of experience of mergers. One can have a merger between two people, but in the course of time, or instantly, the stronger partner assumes complete control. The second, or weaker partner, is made president and everyone else is floated off. If there are more than two, the situation becomes complicated. If there are three organisations it is virtually impossible. When one talks about double figures, there is only one way in which a merger can be dealt with, and that is to have a strong bureaucratic dictatorship which nobody can contradict.
It is interesting to refer to the point made by the noble Lord, Lord Bruce of Donington, about propaganda and an EC cost of £200 million. Sir Edward Heath objected strongly, in an article about surrendering sovereignty, to Sir James Goldsmith spending £20 million of his own money. I personally prefer people who put their own money where their mouth is. I dread the prospect of cohorts of bureaucrats from Brussels coming here constantly, partly at our expense, and worst of all with that valiant Englishman Sir Leon Brittan, espousing one side of the argument—on even one occasion to the point of attacking our ancient friend, Canada, when Spain was pirating their fisheries. But Sir James Goldsmith's expenditure is peanuts. There will be 10 or 20 times more spent by these bureaucrats who, as the noble Lord, Lord Bruce of Donington, assures us, have no budget anyway. It will be our money and we are going to be flooded with propaganda on only one side.
1.44 p.m.
Lord Wyatt of Weeford: My Lords, I would like to congratulate the noble Lord, Lord Pearson of Rannoch, who has started something that will not go away and given it impetus. I believe that the debate that he has initiated will help to start educating the public, who are woefully ignorant of all the issues involved. The most important issue at the next election is Europe and not the economy. We all know about the economy and how well it is doing. But we are drifting like sleepwalkers into the stranglehold of Europe without seeming to realise where we are going. To a large extent that is the fault of the political leaders, who are always trying to conceal their views or giving them a different meaning. At the moment there is a clear difference between the three parties on this issue.
General de Gaulle was quite right when he rejected Macmillan's appeal for support in signing the Treaty of Rome. General de Gaulle knew that it would never fit the United Kingdom. He knew that we would never
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fit in with people on the Continent, whose languages are different and who have no particular kinship with us. He knew that the United Kingdom will always be more pro-American than pro-European. They are our children. We help them and they help us when the chips are down. We have the same language and culture; the same tradition of democracy and the same attitude towards the law. Even as regards the stock exchanges, what matters is not what goes on in some miserable bourse in Paris or Frankfurt as regards the English market. It is what happens overnight on Wall Street, and vice versa. We are linked economically far more to America than we are to the European Continent. It is impossible for us to be part of a federal Europe. European countries have very scant acquaintance with democracy and they have docile parliaments. They can be led in any direction that takes a leader's fancy. In any case, those leaders override the opinions of their own public.
In this country, resentment against the European courts, with an alien Continental legal system overriding ours, rises steadily, and so does resentment against the ever-increasing encroachment of European bureaucracy in our affairs, particularly when it has nothing whatever to do with competition but is merely an attempt to extend the range of the federal notion. There is a great deal of resentment, too, at the pressure coming from Europe and the spending of our money on propaganda in this country in order to say what a good thing the single currency is.
I support the Government's position, which is one of extreme doubt that a single currency will ever happen or that we shall ever join it. That view has been marred only by the Chancellor of the Exchequer, who seems to be a most interesting character. I am very fond of him. He has been shrewd and able in conducting the economy following the lines set originally by the noble Baroness sitting a few yards away from me and by Norman Lamont. But the Chancellor has really screwed up on this subject. He declares that he does not want to join the exchange rate mechanism again because it will be very damaging. Nevertheless, he wants us to be in a single currency. Joining the ERM is an essential prerequisite for going into a single currency. If we had been in a single currency, with our interest rates dictated by the Bundesbank or an extension thereof, he would not have been able to vary interest rates, as he chose to do—in my view he has done rather wisely in his conduct of the Exchequer—and we would be unable to have our own system of taxation. That would be quite impossible if we had a single currency.
The country needs to know the differences between the parties more clearly than it does now. Perhaps I may use a form of shorthand to describe the situation. The Labour Party is committed to joining up to the social chapter, with all the terrifying consequences that that would have for this country's employment and exports. It is in favour of qualified majority voting, which the present Government do not want to extend any further. The Labour Party believes in closer integration with Europe. It does not want this country to be isolated in Europe. But you have to be isolated if you are going to

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stand up for British interests against all those rogues in Europe, as closer integration is merely a push-over leading to federalism.
To be fair to the Liberal Democrats, they are quite honest. They say, "Yes, we do want a federal Europe. We do believe that Britain is a second-rate country and needs to be governed from abroad so that our Parliament at Westminster is really nothing more than a glorified county council". They say that we should admit that and accept our place as a declining nation.
I do not accept that. I believe that we have some of our greatest days ahead of us. You can never beat the British people. Lots of people have tried but have never succeeded. There is a pulse that throbs in this country which will assert itself, which will be ingenious and which will always overcome all difficulties, if allowed to do so by government.
As far as the Government's position is concerned, Mr. Major is very much in favour of rolling back the powers of Brussels. He resists further encroachment. He clearly does not want the single currency. He "who runs may read"—"Watch my lips" and all the rest of it. In that respect, he is like many members of the Labour Party and it is absolute moonshine to suggest that despite the draconian orders issued by dictator Blair, all Labour Members of Parliament are madly in favour of the single currency or Mr. Blair's approach to Europe. Clearly, they are not. The overwhelming majority in this country is in favour of the stance taken so far by Mr. Major. As long as it is clearly explained to them, they can see where it leads.
I do not think that we have anything whatever to fear economically if we leave the Community. From 1990 to 1995 an increasingly adverse balance of payments trade in invisibles arose with Europe. In 1991 our adverse current account with Europe was £6.5 billion. By 1995 it was £14.25 billion. I repeat that that is the adverse balance. We were importing more from Europe than we were exporting. Even with the European Free Trade Association our current adverse balance is over £7 billion a year, making a total minus quantity with Europe of £21 billion. They need us much more than we need them. Our surplus comes from the United States, Canada, Australia, parts of the old Commonwealth, South Africa, Saudi Arabia, India and Asia—from anywhere in the world except from Continental Europe. We now have a superior balance of trade with the rest of the world despite the fact that we carry the burden of that £21 billion deficit a year with Europe.
Other European countries are crippled by their social welfare payments and the social chapter, which we have opted out of. That is why they are in such a mess and that is why their unemployment is rising as ours is decreasing. In my view, we can dictate our terms for reverting to the original concept of a common market as a loose, free trade association. The GATT rules will prevent Europe from putting up barriers to exports from this country. It is impossible for Europe to do that now. The gentlemen from Toyota have nothing to worry about if we do not join the single currency. We would remain the country pre-eminent in the entire world in terms of inward investment. What the gentlemen from
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Toyota should be worried about is what would happen if we were to join the social chapter and the single currency. Our production costs would soar and we would be in exactly the same economic mess as the rest of Europe.
1.55 p.m.
Lord Braybrooke: My Lords, I too am delighted to have this opportunity to speak and to support the noble Lord, Lord Pearson of Rannoch, in this debate on the European Communities as I suggest that we are now facing a more severe threat, albeit in a slightly different form, than that which we faced in 1940.
I must declare my interest. I voted against the Common Market in 1975—not because of any antipathy towards nations trading together or joining in a common trading market, but rather through a passable knowledge of history. Perhaps some of your Lordships may agree that in order to foretell the future it is essential to know something of the past.
Your Lordships may or may not agree that none of us changes. By "none of us", I mean that the aspirations and temperaments of individual countries do not change. The Irish do not change; we do not change and certainly the Germans and the French do not change, looking back at past performance. In the case of the Germans, we are now experiencing a third attempt at European domination, but this time by economic means rather than force of arms. Our aspirations and temperaments remain in the same vein over the centuries, and whereas at one time big was beautiful, it now appears that many countries want to have a say in running their own affairs. One only has to look at the break-up of the Soviet Union to see that—and I am sure that the Scots and Welsh—and maybe even the Cornish—would agree.
I suggest that we are all the same as we always were, as is written in that delightful prayer by Canon Scott Holland. Why are we dallying, therefore, with thoughts of transforming ourselves into a small part of a socialist, federal republic of Europe where all our sovereignty and individual laws would be prostituted to the mistaken ideals of a latter day Soviet Union? Almost daily we are giving up our sovereignty. In my view it is quite disgraceful for us to throw away the freedom which was granted to us by the sacrifice so freely given by millions of men and women in two world wars.
So far, I have been dealing mainly with the sentimental or emotional aspects of what I believe to be running against the tide. To use a well-known adage, in spite of the fact that figures can lie and liars can figure, I suggest that if we try to look at the facts as nearly as we can ascertain them, the reasons against our becoming part of a federal, socialist republic of Europe are even more illuminating.
First, the largest three net providers of cash to this Tower of Babel are Germany, Great Britain and the Netherlands in that order. Why, one may ask, should we fund other countries which are quite capable of pulling their socks up if they so desire? Secondly, I ask why we should join a series of economies which are going downhill because of the power of their

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unions. One has only to look at recent events in Germany and France, let alone Greece, to see that. Why, indeed, should we join countries whose pension industry is seriously underfunded? Here we can look at the recent figures of all the major European countries: Germany, France, Italy and Spain. If we become fully federalised, we would undoubtedly have to contribute to their pension funds, whatever they may promise now.
We are a parliamentary democracy and proud of it—and we have been a parliamentary democracy for many more years than any other member of the European Community. Why do we desire to throw that away in order to be ruled by unelected commissioners and the European Court, who have little knowledge of the United Kingdom, save that they are probably rather jealous of us? Why, I ask, should we be joining declining economies whose cost base is unsustainable? I know that 40 per cent. of our exports is alleged to be with the single market, but at least 50 per cent. goes elsewhere.
We have a deficit with the Common Market but elsewhere our trade is growing fast. While I cannot put my hand on my heart and give your Lordships absolute statistics, in the past five years that I have given to companies in Essex Queen's Awards for Industry and Technology on behalf of Her Majesty the majority have done more trade with the rest of the world than with the Common Market.
I believe that at the moment we have one of the better economies of the world. Why should we wreck it by joining the declining dinosaurs of Europe? With the existence of GATT and WTO we cannot be penalised on trade if we withdraw from the Common Market. We have a deficit with the Common Market, so any tariffs would hurt them rather more than us. Can we allow our foreign policy and Armed Forces to be controlled by Brussels and European MPs? Although this is whistling in the wind, do we need European MPs in any event? Surely, they are extraordinarily expensive luxuries and can easily be replaced by a Minister for Europe in each country who should—I repeat "should"—be more than capable of handling Common Market affairs. The closure of the European Parliament would save all taxpayers throughout Europe an enormous amount of money. I believe that the cost of each member approaches £500,000. Other noble Lords tell me that the correct figure is £1 million.
Of late the Government have been trying to do away with an additional tier of government in the shape of the county councils. Yet we still have an immensely expensive and, I suggest, totally unnecessary gravy train in the form of bureaucrats and Euro MPs who search hard to justify themselves. Perhaps England has spent the past 40 years or so looking for a new role since losing its empire. I suggest that we appear to have found it. We have a low tax environment, a mobile workforce and an increasingly vibrant economy. In contrast, the leading European countries, Germany and France, have intolerant unions, labour laws and rising unemployment. They have had a very satisfactory 40-year run but they are now definitely over the top and are falling behind.
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In my view, to join a federal Europe is to put ourselves in very much the same position as West Germany found itself in when that country took on East Germany with all the consequences thereof.
Do we really want to submerge ourselves in such a socialist quagmire? I do not believe that this is a matter of party politics. Either we grasp our freedom and the future that lies in the palm of our hand for the asking or we surrender to the mistaken Utopian, and largely socialist, dreams of yesterday's men. Our future trading possibilities and potential lie more with the developing countries than with the old world. Let us not deceive ourselves. If we agree to a universal currency, a universal VAT rate and uniform taxation arrangements, we shall no longer run our own country and the last vestiges of sovereignty will disappear for ever.
Enormous credit belongs to our Prime Minister for our current healthy economic position. We are in danger of being dragged down by Europe and all our success could be lost for ever. Thus far, I have never formed the opinion that we should disengage ourselves from Europe. However, we are being swamped by directives drafted by unelected foreigners who neither understand nor care about our laws and customs. It appears that the terms of the treaty signed by Sir Edward Heath 20 years ago are less and less appropriate to Great Britain today. We have spent the past 17 years trying to rid ourselves of socialism, and yet Europe is a socialist state where Nanny knows best. This was not what we fought two world wars for. It would be shameful to surrender by the back door all the gains that had been won with such enormous sacrifice in 1914 and 1939. It is our right and duty to stand firm and be counted.
2.5 p.m.
Lord Hardinge of Penshurst: My Lords, I too thank my noble friend Lord Pearson for introducing this Bill and for his efforts in furthering a cause in which I believe. I was 17 in 1938 when the whole country, from Westminster to both ends of the United Kingdom, was torn apart by the policy known as appeasement. Party politics were transcended by other greater loyalties. The second great political crisis that I lived through was Suez in 1956. We now face the third and perhaps greatest crisis of all. We are well on the way to surrendering to foreigners the governance of the United Kingdom. Put like that, it sounds absolutely incredible. Goodness knows what my father, his father or some of my friends who died in World War II would have thought of it. But I will not discuss the rights and wrongs of it. Others will do that better than me.
I have one simple suggestion that may resolve the whole mess. I submit it to your Lordships with very great humility as I am no expert on parliamentary procedures. At the risk of appearing naive, I suggest that the Government order a referendum to be held on, say, 31st March. That would transform the election debate both before and after the result was announced and put it in its proper place—at the top of the agenda. Experts tell me that in the time available it would be impossible to pass the necessary legislation to hold a referendum. I do not entirely accept that. It is surprising how quickly governments can act if they want to. If one postponed

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other business—in some cases it would be no great loss—and rushed through this measure, surely it would be possible to put the legislation in place in two whole months. Who would oppose it? The only problem would be the phrasing of the question. Another advantage is that it would eliminate Sir James Goldsmith's party and the UKIP, for both of which I have considerable admiration.
I strongly support the Bill of my noble friend Lord Pearson, but let us not prolong the agony. The Prime Minister is known for his boldness in politics. Will he now consult the people, hold a referendum and unite his party?
2.8 p.m.
Lord Stoddart of Swindon: My Lords, I should like to congratulate the noble Lord, Lord Pearson, on bringing forward the Bill. The discussion that we have had so far justifies it. Of course, I shall support the Bill at the end of the debate. However, socialists believe in government of the people, for the people and by the people. At the present time in Europe one does not have socialism but corporatism—big business, big government, big bureaucracy and little democracy. Corporatism is a deadly danger to all of us, whatever "ism" we embrace.
I say to the noble Lord, Lord Taverne, that, because people like myself and others want Britain to continue to be governed by her own people and institutions, that does not make them Europhobes. I wish that people like him would stop implying that. It is an insult, because of all the people I know who have reservations about our place in Europe, none of them hates Europeans or any country in Europe. Indeed, we love them. We just do not want to be ruled by them. That is the difference. Perhaps he wishes to be ruled by Europeans. I do not call him an Anglophobe for that.
In 1972 when we joined the Community no mandate was given to that Government. What Mr. Heath asked of the British people in 1970 was to negotiate—no more and no less. Yet, despite that, a Bill altering our constitution was brought forward to Parliament and passed by just eight votes. There was no referendum about whether or not we went in. Let me correct those who have said that there was. There was a referendum as to whether we remained in on renegotiated terms. So the British people were never asked in the first place whether they wished to join what was then a common market.
It has always been a source of amazement to me how, in 1972, parliamentarians in two short clauses of a slim little Bill containing only 12 clauses could divest themselves of so much of their power to legislate, hand it over to a polyglot junta sitting in a foreign capital, and render our own courts subservient to the European Court of Justice—a court incidentally of the collective, dedicated to the furtherance of a political objective, which is the united states of Europe.
Members of the House of Commons at that time, such as Enoch Powell, Peter Shore, Douglas Jay, Dick Body, Derek Walker-Smith, and many others, warned that the 1972 Act did more than join us in a common market;
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that, in fact, we were on the road to a federal or unitary European state. They were derided then. They were told that they were talking nonsense, telling lies, but in actual fact they were right then, and their arguments are still sound today. That is why we have this Bill before us—because those arguments are still sound today.
That Parliament was frightened into passing the 1972 Act. Members were told of the dire consequences if they did not go in; how we would lose trade; how our economy would be damaged if we did not go in. As it so happens, our economy has been damaged severely because we did go in. Let us make no mistake about that.
I think that it was my noble friend Lady Ramsay who said that Europe was a market of 360 million people. I would remind her, and the rest of the House, that out there in the world there is a market of 5,000 million. If we want to develop our trade and have increased trade, it is in the real world—the world of 5,000 million—that we should be developing. That is where the dynamism is at the present time—not in the backwater of Europe but out there in the Far East, the United States and South America. Those are the markets that we should be developing at the present time.
Baroness Ramsay of Cartvale: My Lords, 1 thank my noble friend for giving way. Does he accept that when we spoke of a market of 360 million, that is a single market of which we are an integral part. It is as if we ourselves were part of the 360 million and that market. After that, we can trade with other parts of the world. One cannot compare being part of a single market of 360 million people with trading with other parts of the world as one British national entity.
Lord Stoddart of Swindon: My Lords, in fact of course the whole thing is a diversion, because what we did was to put our efforts into trading with a market which is building and manufacturing exactly the same goods as we are—the most difficult market in fact that we could develop. It has diverted us, as one of the leading trading countries in the world, from our real task of exporting to areas where our goods are in great demand, and which people would like to buy. That is the truth of the matter. We have been diverted from a real and good purpose.
When the 1972 Bill was being debated, we were told that there was no alternative—that Britain's future was in Europe—just as we are now being told by the political élite in Europe, including the elite in the UK, that there is no alternative to a single currency and further integration: indeed, no alternative to a country called Europe, to use the words of some German political leaders.
I remind noble Lords that it is just 24 years since we joined the Common Market. To hear some people speak, one would think that Britain had no existence before January 1973. Yet it was in Britain that modern democracy was shaped and moulded. It was here in Britain that the world's modern industrial system was ushered in through the Industrial Revolution. We won an empire, and voluntarily liquidated it. We have saved Europe and the world from a motley crowd of dictators

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on at least three major occasions in the past 200 years. Indeed, Britain has given self-government to all its former colonies; yet the people who supported that policy are the very ones who now deny that Britain can survive as an independent self-governing nation. What nonsense it is. What absurdity it is.
Why is it that what is good for our former colonies is no longer good for Britain? Let them tell us that. Of course conditions were different in 1972 and preceding years. One understands that. Our country was facing particularly serious difficulties—financially, economically, socially and politically. But instead of having the spirit to tackle those problems with courage and vigour, our then querulous, wimpish leaders took what they thought was the easy way out by imposing proper disciplines from without this country rather than from within it.
It was madness to impose long-term and far-reaching obligations on Britain just to deal with what was an internal and short-term problem. Let me put a test to noble Lords, especially noble Lords opposite. If the 1972 Bill containing the odious Clauses 2 and 3 were put before them today for the first time would they vote for it? Would they vote for the 1972 Bill today? Indeed, would the Government introduce such a Bill? Would they dare to introduce it? After all, they are promoting the successes of Britain not because we are members of the European Union but in spite of that fact.
The Government say that our economy is successful because it is not constrained by the incubus of the Social Chapter and is not constrained by over-regulation, sky-high wages, penal social costs and huge public debt. That is what the Government are saying, is it not? Am I right or am I telling lies? Is that not what the British Government are telling the British people at present?
Would they really bring forward a Bill which, in the long-term, could put at risk all those factors which they insist are the elements of long-term economic success for our country?
Above all, the Bill before us is about the restoration of parliamentary self-government. Those who wish to vote against that had better understand what they are doing: they will be voting against the restoration of parliamentary self-government and the restoration of the supremacy of Her Majesty's courts. It is an issue which transcends party politics. It is an issue which is neither Right nor Left in political terms. It is whether in the time ahead, we are to be a free people or slaves to a polyglot, supra-national empire.
2.22 p.m.
The Earl of Bradford: My Lords, like my good friend Mr. Bill Cash in another place, I voted in favour of staying in Europe in the last referendum for many seemingly sensible reasons. Apart from believing in the fine ideals and in banishing for ever the future prospect of another major war in Europe, we imagined that we would be part of a Community that believed in fair and unsubsidised competition, where all the complications and duties involved in transporting goods across internal boundaries would be done away with. We wanted to see
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a Community that would grow economically and ensure we had an enlarged European home market sufficiently big to compete effectively with the other large world powers.
We did not believe that we were voting to create a federal Europe, but a federation of sovereign states with a common goal. Instead what have we got? We have a Community of fudge, compromise and humbug, where we obey and apply the directives but are branded as the worst Europeans by those that bend the rules 180 degrees in their favour. We may have reduced the tariff barriers, but others have found effective ways of keeping our goods out, especially those from Japanese transplant companies, while we have enthusiastically opened our market to all.
We have privatised British Airways and British Steel and seen them grow into stronger companies, contributing to the Exchequer instead of being a burden on it. But we have come up against inefficient state owned competitors refusing to rationalise properly and receiving hidden, or more frequently open, handouts from their governments. Thanks to a combination of higher employer's contributions to taxes and the social chapter, we have witnessed the sad situation of once proud, high growth economies reduced to a position of stagnation, accompanied by unemployment rates that used only to grace certain southern European countries.
We have replaced an efficient system of support payments to farmers, which ensured during the post-war period that British agricultural production leapt both in terms of output and efficiency, by the inherently inefficient common agricultural policy which, despite attempts to modify and improve it, is still creating over-subsidised surpluses at huge cost to European consumers and taxpayers alike.
Two particular problems preoccupy my mind as we stand on the verge of European monetary union: first, the incredible fudges that are being carried out by various nations to meet the convergence criteria; and, secondly, the problems of unfunded pension provisions by certain countries. The various diverse means that countries are using to reduce their budget deficits vary from France taking over the future pension liabilities of France Telecom, thereby injecting a one-off surplus of £4.27 billion, to Italy's use of severance pay funds set aside by state companies pending privatisation, also releasing over £4 billion.
If the problem of unfunded pensions is provided for in calculating figures for overall national debt, neither France, nor Germany, nor Italy would qualify for EMU, as it would result in figures far higher than the 60 per cent. allowed for in the Maastricht criteria. The unfunded liabilities are calculated to be 69 per cent. of GDP in France, rising to 107 per cent. in Italy, with the overall largest loser being Germany, with a magnificent 122 per cent.
However, despite all the present problems in the EU that are leading to a clear call from many that, like Norway, we would be better off being out of it, I cannot agree with them. Surely we should be trying to reform the EU from within rather than from without, when we would actually stand no chance of achieving any

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changes. Europe is vital to us, representing around 44 per cent. of all our export earnings, and our membership has certainly helped Britain to reach the enviable position of attracting the major share of foreign inward investment in the EU. Surely that would be affected adversely if we leave, even if we did remain in the free trade area.
Instead we must use the intergovernmental conferences and force onto the agenda realistic discussions of the issue of monetary union. Surely if countries are made to realise the consequences of ignoring the fudges over the convergence criteria and the problems over unfunded pensions, and that these costs will inevitably come to roost on the holy and the unholy alike, how then can they truly support going ahead to disaster?
It is quite apparent now that if the German people were allowed an input on EMU through the holding of a referendum, they would not support a single currency, as they have started to realise that they would end up bailing out southern Europe for ever. The position in France is thought to be a similar one, as the policy of the franc fort has created enormous economic problems.
We must firmly push the suggestion that all the countries whose governments wish for monetary union should allow their citizens the chance to express their opinions through referenda, as, when all the major political parties support one view—as is the apparent case in Britain—what choice do people have? None of us, with the odd exception, wants the EU to fall apart, but surely that will be the inevitable outcome of the present rush. Would it not be sad if that original dream turns into a nightmare instead? That has so often been the fate of unnatural federal alliances. Look at what has happened to the USSR, Yugoslavia and Czechoslovakia. We must ensure that the members of the EU do not repeat their mistakes by making sure that our voice in Europe is the voice of reason and common sense, instead of just objection and protest.
2.30 p.m.
Lord Belhaven and Stenton: My Lords, in introducing the Bill, my noble friend Lord Pearson is addressing what is the most important question facing this country at the present time. I cannot help wondering whether that is why we are reduced to discussing it on a Friday!
Our forefathers in the 17th century had to address a similar question, which was the most fundamental of all: who rules the country and what is the foundation of the Government's sovereignty? At the conclusion of a period of civil war and turbulence on an unprecedented scale, it was determined that the country must be governed by consent and that the fountain of that consent would be Parliament. It was further concluded that the control of money was the foundation of sovereignty and that the money should be firmly under the control of Parliament. The exercise of arbitrary power by the Sovereign was to be ended for all time. The extension of the franchise to all the people took over 200 years after that time, but the principle has remained the same. That principle was finally ended by the Treaty on European Union called "Maastricht".
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The Sovereign no longer exercises arbitrary powers. That prerogative is now with the European Union, with its Commission and Council of Ministers. We are now to a large extent governed by decree. This arbitrary power is exercised not by our native Sovereign but by a group of bureaucrats in a foreign country.
The powers which the Commission already has might well be envied by Charles I. When and if there is a single European currency, he might certainly envy it. Already Ministers have been powerless in the BSE crisis, where, as I see it, our so-called partners seized the chance to attack and if possible to destroy our most efficient industry, agriculture. We are far better fanners than they are and far better beef producers, so we have been forced to slaughter thousands of healthy animals. Her Majesty's Government can do nothing about it, except to protest and say that it is outrageous, which it is.
In the past, and not so long ago, we had a British Commonwealth and our sister nations came to our aid when we were in trouble. In 1939 they declared war on our behalf, although most of them had no direct interest in our quarrel with Germany. We have new partners now and it seems to me that their reaction to the difficulties which this country faces is to take advantage of them and to make them worse.
The major countries with which we have been asked to merge have no record of political stability. France, Germany, Spain and Italy have all gone through periods of major turbulence in this century. France, our nearest neighbour, has had 10 constitutions since 1789—I counted them several times. The process of unification between those countries may or may not help to make them more stable, but I suggest that, even for them, the pace of change at present has become too fast and may well end in disaster when the full implications of what is happening now are realised by their peoples. In my view, to be asked to pool our sovereignty with such unstable countries is foolish in the extreme.
I understand from this week's Spectator that there was a movement afoot in the Union to set up a commission on racism and xenophobia, which was happily vetoed by Her Majesty's Government. It is supposed by some Euro-enthusiasts that those of us who oppose the Union—those of us who will not in any circumstances stick European flags on our car windows—are xenophobic. Perhaps we would be suitably dealt with in re-education camps. But in the meantime I very much resent the charge of xenophobia.
As a Scot I cannot be a Little Englander, but I value the Union with England and think it preferable to a union with any other European country I can think of. I have a Polish wife; I have cousins who are half Chinese; and I have other cousins who are half Peruvian. My family therefore goes from China to Peru. I spent a very happy part of my childhood in France, which I loved and still love. Therefore, I do not believe that I can be accused of being xenophobic. The advantage of France is that it is French. I do not wish to become French or to live under the government of France. The same goes for Poland, China, Peru and the rest—vive la difference!

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I turn to an important point which was raised during Question Time last week by the noble Lord, Lord Richard. He asked why it was, if the European Union was such a bad idea, that all those countries in central and eastern Europe were hammering on the door to get in. Unhappily, he is not present in the Chamber but, if he reads Hansard, I can give him the answer. It is security against the resurgence of Russian expansionism. Last summer I spoke to a very pleasant young Russian who said to me, "Russian has no frontiers". My wife, who is Polish, took his meaning faster than I did! He was speaking perhaps half in jest, but, nonetheless, to those people who have been freed from Russian domination in the past eight years what he said was very significant.
Also, just over a year ago, I met a high official in the Bank of Poland and asked him what his views were on Poland's entry to the European Union. He answered that he would rather Poland was in NATO. I believe that that says it all. I take the view put forward by the noble Lord, Lord Bruce. These countries will not get in unless the CAP is reformed; but that is not going to happen. Therefore, with the possible exceptions of the Czech Republic and Slovenia, the countries in central and eastern Europe will go on hammering until they become tired of it. If they do get in, which is unlikely, they might find that they have exchanged one system of arbitrary rule for another and they may not enjoy it as much as most of them appear to believe they will.
The original idea of a common market was good, but, unhappily, we are not discussing that today. Therefore, I return to my noble friend's Bill that is before your Lordships. The question which my noble friend raises must be faced very soon. The impetus towards a totally federal Union is gathering force and is supported by the Commission and by the French and German Governments among others. The situation is extremely serious and it is going to become worse as the single currency gathers momentum. Very soon we shall have to decide whether this country is to be ruled by the decrees of the Commission and the Central Bank or by Parliament, as it has been these past 300 years. I believe that we throw away what our forefathers fought for at our peril.
A European federation is not a recipe for avoiding war, as some have said; indeed, it may well be the opposite. The European Parliament, whose buildings seem to have cost so much money, can never properly represent the people who elected it. With 13 or more languages, it simply cannot function as a parliament ought to do. This House would be reduced to bedlam by such a proliferation of tongues.
The frustration which will be caused by imposing the system which is being imposed on Europe—on the most argumentative and intelligent peoples in the world—could lead to explosions of terrible anger. I am doubtful that Britain can influence the European Union at this stage—we hear so much about that. If we were ever able to do it we should have done it long ago. I do not believe that the federalists in Europe will listen to us or that they will want to do so. I no longer accept the argument that we can influence the Union from within. Those days
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are gone and are unlikely to return. We must set a more sensible course for this country, or very soon we will not have a country left to argue about. I support my noble friend, and if it comes to a vote I shall be with him no matter how long it takes.
2.38 p.m.
The Earl of Carlisle: My Lords, it is a privilege and an honour for me to speak for the first time in one of your Lordships' debates. I, too, congratulate the noble Lord, Lord Pearson of Rannoch, on introducing the Bill. I do so for the following reasons. He allows us to put forward our views; he tests the strength and feeling of this ancient assembly; he enables us to hear from Her Majesty's Government what their policy is and what their policy is not; and he enables me to say that, however much I congratulate him on his sincerity, I am diametrically opposed to his views and to the views of his supporters.
When the Bill was introduced I went back to basics. I obtained a copy of the July 1971 White Paper, The United Kingdom and the European Communities. Paragraph 29 states:
"Like any other treaty, the Treaty of Rome commits its signatories to support agreed aims: but the commitment represents the voluntary undertaking of a sovereign state to observe policies which it has helped to form".
Nothing has changed in the past 25 years. We are voluntary members of the European Union. We joined as a nation; we signed a treaty. When I was an undergraduate at Oxford University, my noble friend who, unfortunately, sits on the other side of the House—namely, Lord Dacre of Glanton—who I am proud and pleased to see is present in the Chamber—informed me that between 1933 and 1940 Hitler signed 23 treaties, and he tore up the lot. We know what the consequences were for our people and all the people of Europe. Let us never go down that path again.
I declare an interest: I live and work in eastern Europe, but the eastern Europeans call it "central Europe". I live in one of the three Baltic states—the free and independent republic of Estonia. I have worked for the British Council and in the National Defence and Public Service Academy of Tallinn. Estonians, like the other nine nations of central Europe, are hammering at the door of the Foreign Offices of western Europe demanding, asking and beseeching admittance into the European Union. They expect us—first, us—to assist them.
Next week a very high-powered delegation from Estonia will visit this country. I am very pleased to say that members of that delegation will be having lunch with the Secretary of State for Foreign Affairs in the other place. I hope that he will listen to them. Why are they coming here rather than Bonn, Paris or Rome? They are coming here because they trust us. They trust us because between 1918 and 1920 our nation, which had the largest and most powerful navy in the world, created through the skill of the servicemen and the prescience of Lloyd George (our last Liberal Prime Minister) the free and independent Baltic states. So they are coming here to say, thank you. They are coming to us because they admire our culture. Moreover, they are

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coming to us because they believe that we are a part of Europe. Are we going to tell them, "No we are not"? Are we going to tell them that we voted in the House of Lords that we want out? They represent but one country of the 10. Let us think very carefully before we vote for the noble Lord's Bill.
There is an ugly rumour sweeping through eastern Europe that our Foreign Office would sacrifice the interests of the smaller states in eastern Europe for better relations with Russia. I hope that the noble Lord on the Government Front Bench would dispel that rumour because it is dangerous and damaging. In 1938-39 the Prime Minister never went so far as to sacrifice the independence of the Baltic states to satiate Stalin's voracious appetite.
I shall not keep your Lordships much longer, but I wish to conclude with the following point. The Leader of the Government, the Prime Minister of England in another place, is the Member for Huntingdon. That constituency produced the Lord Protector who protected Britain and made his name resound throughout Europe. When this Bill reaches another place, I only hope that the right honourable Member for Huntingdon will stand up and state clearly where and how the Government stand on the future of Europe. If he does not do so, he will go down in history not like his great predecessor Cromwell, but like another predecessor and one who became Prime Minister 60 years ago. I refer to Neville Chamberlain. Please, my Lords, throw out this Bill.
2.46 p.m.
Lord Tebbit: My Lords, we have just heard a most interesting speech but one which has yet another interesting aspect to it. I believe it was that very rare creature the "semi-maiden", if I am not mistaken. I say that because I believe that the noble Earl has only spoken in this House before on a Starred Question, and that his speech today was his first contribution to a major debate. The noble Earl is, of course, to be congratulated on a speech which we all enjoyed enormously, even if we did not perhaps all agree with everything he said. In particular, I should say that I share his feelings towards the people of central Europe, as he properly described it, especially those in the Baltic Republics. However, it would be a tragedy if they found themselves losing their independence once again, this time by consent.
Speaking as a former Member of the other place, I occasionally find myself extremely depressed by the low standing into which the other place has fallen. I must say that I am encouraged by the fact that the public regard for this House seems to be steadily increasing at the same time. It is no wonder. For, today, we have already had a quite extraordinarily good debate on a matter of enormous importance. The other place does its best to be silent on these issues and, indeed, it now does its best to suppress such debate. Above all, I do not want to be partisan today but I wonder whether future Labour Peers will come here under an oath that they will only talk in this place in accordance with the wishes of the current leader of the Labour Party. That is what seems to be required of future Members of the other place who take the Labour Whip. I am disappointed that we have
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not heard today from the one group of usual suspects in such debates; namely, the former Commissioners. I suppose that at least shows that they have some discretion, even if not too much valour.
I believe that there is a sickness in our body politic. Indeed, I must say that I enjoyed the very good second-hand joke that the noble Lord, Lord Taverne, used in his speech about septicaemia in our body politic. Second-hand jokes are usually the best. However, that septicaemia is a parliamentary septicaemia: it is Brussels which is in the blood of this Parliament; and it is the European Union which is threatening this Parliament, as has already been said by so many noble Lords today.
In passing I would say to the noble Lord, Lord Taverne, that he should not make too much of the issue of Toyota. All of us who have been in this business for many years, particularly those of us who have spent much time in Brussels, know what is going on. The Toyota motor car company has a large factory in this country. Quite reasonably it expects to build its next one in either Spain or Germany. But it could not do so without an enormous subsidy because the costs of production are so high in those countries. It is now engaged in buttering up the Commission to get the clearance for the subsidy which it would need to be able to establish a factory in either Spain or Germany.
It has been a privilege for me today to have heard what I would regard as one of the finest speeches I have heard in my parliamentary career, and what undoubtedly will be the finest speech today. It was made, of course, by the noble Lord, Lord Stoddart of Swindon. I think he spoke for all of us. I am so glad that he made that distinction between socialism and corporatism, for we are not being threatened by socialism from Europe—not even they are that silly! It is corporatism which is the threat to us. We should all stand four square on one principle above all, to which the noble Lord alluded, and that is the principle that, whether we have a socialist government or a corporatist government, or a capitalist government, or a liberal government—that is unlikely as there are now no Liberals left in the Liberal party—is a matter solely and absolutely for the people who live in these islands and no one else. That is at the heart of this debate which my noble friend has introduced today.
My noble friend Lord Kingsland was slightly glib on the subject of sovereignty. Of course we are sovereign today in the sense that if we took through a Bill to repeal the 1972 Act we would be out of the European Union. If I may say so, that is slightly theoretical sovereignty in one way because, although we could do that, if we voted—not so much us, of course, because it is not our business; I refer to the other place—to reduce the rate of VAT on domestic heating to 4.5 per cent., we would all be hauled off to the European Court of Justice and it would be overruled. We are not even allowed to zero rate repairs on church buildings. It seems to me that there is a loss of sovereignty of some kind there. My noble friend is right in that we could fully regain our sovereignty by repealing the 1972 Act. We could do it by Act of Parliament. But by the time we had entered into a single currency, and by the time we had seen our gold and dollar reserves on the train going through the tunnel towards Frankfurt, could we still do it by an

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Act of Parliament, or at what stage down the road would it have to become an act of rebellion to regain our freedom? I am not sure about that.
If we should enact this Bill, it would not take us out of the European Community but it would bring about a crisis over Britain's membership. More than that, it would bring about a crisis over Europe's destination. That crisis would have to be resolved. Sooner or later a crisis, or perhaps more than one of that kind, will arise in the Community. That is because above all there is a headlong conflict over the shape, structure, purpose and the destination of the Union, and because the existing institutions which were designed by six member states cannot work in a management sense, let alone a political sense, for a Europe of 20 or more states. Indeed the proliferation of summits and IGCs suggests that already the basic structures of the Union are in some difficulty.
The problem of the shape or the destination of Europe is best illustrated by the views of two of Europe's leaders. These are the words of Chancellor Kohl on 3rd April 1992 in referring to the Maastricht Treaty,
"The treaty about the European Union initiates a new decisive stage of the European unification which will create in a few years what the fathers of modern Europe dreamt of after the last war, the United States of Europe".
Noble Lords will notice that he did not refer to a union of sovereign nation states, nor even to a federal Europe. He referred to a United States of Europe. I do not rely upon press reports of the Chancellor's words but upon the press release from his own office. It was not widely published in English but it was available in German.
Further, there is the view of our own Prime Minister. On 1st March 1995, he referred in the other place to what he called,
"The often unspoken fear of many people … is that Europe might develop into a super-state".—[Official Report, Commons, 1/3/95; col. 1062.]
That may represent the fears of many people, but it is the aim of Chancellor Kohl. The Prime Minister went on to describe exactly that United States of Europe towards which Chancellor Kohl is working. The Prime Minister then said (at col. 1062) quite rightly in my view, that he would,
"find such a Europe wholly unacceptable for this country … if that were to be the future, it would not be a future that would be suitable for this country".
In short, the Prime Minister was saying that if it came to a choice between the ambitions of Chancellor Kohl to form a United States of Europe, and withdrawal from the European Union, the Prime Minister would choose withdrawal. That is the only natural and normal interpretation which can be placed upon his words. While in public the advocates of withdrawal deplore and denounce every step along the Maastricht road towards the United States of Europe, and while in public we are criticised, in private the extreme advocates of Europe hope that we shall succeed. I think that the creation of the USE would bring about a reform of the institutions of the European Union in one direction.
We know the views of M. Delors on this matter. He has a clear plan and it is similar to that of Chancellor Kohl. It was his proposal that the European Parliament
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should be the democratic organ; that the Commission should be the executive arm; and that the Council of Ministers should become a senate, which prompted my noble friend Lady Thatcher's most famous short speech, "No, no, no". That was not just a negative repeated three times for emphasis, but a no to each of M. Delors' three proposals.
Neither Chancellor Kohl nor M. Delors is stupid, nor should we treat them as bogeymen. They are serious politicians with a clear and unambiguous proposal for the future political structure of Europe. As ever with Continental schemes for European constitutions, their scheme can be made to look good on paper. They have had lots of practice at drawing up constitutions on the Continent of Europe. It would in theory deal with the acute problem of threatened paralysis in European decision making. At the heart of that problem—we Eurosceptics must recognise it—is, of course, the national veto. That is why it is so much under discussion today. How could the present system of governance of the European Union work if, say, Malta and Cyprus, let alone Latvia, Estonia and Lithuania, were members, all with a national veto? It simply would not work.
There are only three rational solutions to the problem. One is Chancellor Kohl's solution: the establishment of the United States of Europe. That at least in theory would work. It would work in practice until the revolution. The second solution is the complete break-up of the European Union. That would work too; the problem would disappear. There is a third: the abolition of the national veto except for treaty amendments other than, one would hope, the admission of new members.
The first solution is clearly unacceptable to this kingdom and probably to the people of Europe as a whole. The second, the complete disintegration of the European Union, would, I think, be a matter of real regret not only to most Europeans but this country too. I take the view of others in the debate who have said that it would be a great tragedy if relationships between members of the European Union were to be poisoned for ever by the dispute in which others wish to drag us in one direction and we wish to restrain them from going in the direction they wish to go.
The third solution, the option of abolition of the veto, would seem equally unacceptable. But there is a way in which it would be acceptable to me: that is if the jurisdiction of the European Union were to be restricted to those matters where the absence of a veto was acceptable. Broadly speaking, it seems to me that that would comprise matters vital to the operation of the single market. It was not, after all, the European Union that we joined; it was the European Common Market. That is where our interest lies.
Under that option there would be the exclusion of monetary or political union, and the exclusion of foreign, defence and justice policy from the jurisdiction of the European Union, to name but a few. Perhaps I may say this to my noble friend Lord Kingsland. Such a concept would not prevent member states from entering economic, monetary and political union of the kind that we have in the United Kingdom. Why should Belgium

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and Holland not enter a union if they wish? Why should not Germany and France enter a union if they wish? There is no reason at all. After all, we are members of the European Community as a union of England, Scotland, Wales and Northern Ireland. Those countries could well achieve their unions outside the Treaty of Rome. If there were to be a Franco-German republic, they would be a member of the European Community; they would have one seat at the table just as our union has; and the world would go on perfectly well.
There is an alternative way in which we can all achieve what we want within Europe—those countries their union and we our common market. They can give up their sovereignty to each other; we can retain ours and remain a self-governing parliamentary democracy. Sooner or later, decisions on these matters will have to be made. We cannot continue to procrastinate.
The history of the European Union to date has been like a rather long game of rugby. Occasionally the Kohl team sees the ball and makes an occasional brilliant run towards the goal. More often the ball is concealed or passed backwards from time to time, or disappears into a maul. The defenders of national sovereignty push one way, the advocates of the United States of Europe push the other, and year by year we who defend national sovereignty are pushed back closer to our 20 yard or 20 metre line (or whatever it is). It is time the ball was kicked long and hard the other way, preferably back into touch for a while, in order that we can think how we can save Europe from itself.
I am not one of those who think that it is any longer credible that we can persuade our partners to make Europe in our image. They do not wish to do that; they will not do that. We are in a minority, and that we have to accept. Nor do I think it proper that we should always be a brake on their progress as to what they want to do. Wisely or unwisely, our partners have an agenda. If we can devise a means by which they can satisfy the needs of their agenda, and we can satisfy the needs of ours, that is surely the right way to go.
If it were enacted, the Bill would create the crisis in Europe which is needed for the discussions to begin to make a serious effort to solve those problems. That is why I commend it to the House.
3.7 p.m.
Lord Willoughby de Broke: My Lords, I am grateful to my noble friend Citizen Pearson for introducing this important Bill. It is important because it is something of a milestone. Even four years ago, as he admitted, I guess that the Bill would have found little support in this House. Many of us hoped, even if we did not quite believe, that what we had signed up to in the Treaty of Accession and the Single European Act was a Europe of freely co-operating nation states within a true single market and a deregulated economy, with NATO as its ultimate defence.
That is light years away from the actuality, from where the past four years have brought us. The Maastricht Treaty was, I believe, the catalyst for change. The debates on that treaty in this House, and its painful passage through another place, sent out clear signals that
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we were signing up to a Europe that was very different, a Europe that was going to drag us in a direction which we might not wish to take, yet we would be powerless to stop that progress.
In the three-and-a-half years since Maastricht those fears have been confirmed. The ratchet effect of Euro legislation—the salami slices about which my noble friend Lord Tebbit warned us in those debates three years ago—has dragged us "irreversibly and irrevocably" (they are two key words in the Maastricht Treaty) towards a federal Europe.
We are told by those who should know better that, "Europe is moving our way", that no politician in Europe wants a federal Europe. But perhaps I may quote Chancellor Kohl speaking in 1990. He said:
"We hold fast to our commitment to building a United States of Europe".
Perhaps I may cite the Prime Minister of Italy in an interview with Le Figaro in October 1996. He said:
"The role of the IGC is to lay the foundation of a federal Europe".
The president of the Bundesbank has repeatedly and clearly stated that monetary union means political union. Perhaps they all had their fingers crossed.
My noble friend Lord Buxton mentioned sovereignty and the fact that we have been told that we must pool our sovereignty. I do not understand how one can pool sovereignty any more than one can pool virginity. One either has it or not. We have a European flag, a European anthem, a European citizenship, a European Court of Justice, the Commission, the European Parliament (if one can dignify it by that title), and, if any country except Luxembourg qualifies, probably a single European currency. What are these if not the trappings of a federal Europe? If something looks like a duck, walks like a duck and quacks like a duck—then it is a duck.
I support the Government in their attempts in the IGC. Their position is quite clear: that they are opposed to further political integration, that they want no increase in majority voting, that they wish to retain the veto, that they wish to curb the powers of the ECJ and the pretensions of the European Parliament, and that they want reform of the common agricultural policy and the common fisheries policy, which has been such a disaster to this country.
My noble friend Lord Bradford, who is not in his place at the moment, believes that we still have a chance. But sadly we shall not get anywhere with that agenda. It is totally at odds with the wishes of most other members of the European Union.
At least the Commission is refreshingly frank about the way forward. In its policy paper for 1997 it states:
"The Commission intends to promote the dynamic interpretation of its right of initiative".
In other words, more of the same. It goes on:
"Subsidiarity and proportionality must not be used as a pretext to call into question all that has been achieved and to return to the intergovernmental method which is neither efficient nor democratic".

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Am I alone in finding it rather strange that we should be lectured by the apparatchiks of the Commission on efficiency and democracy? Perhaps it is mere self-interest—more intergovernmentalism means less Commission.
It is time to stop burying our heads in the sand, time to stop pretending, against all the evidence, that Europe is moving our way. It is time to look coolly at our national interest and ask ourselves whether we want to be members of a federalist, centralist, over-regulated, subsidised and bureaucratic European Union run by a Brussels soviet, pushing policies that are making its members poorer not richer, putting them out of work not into work, and which is fast being left behind not only by America but by the countries of the Pacific rim? None of them, I may add, see the need either for central government or for a common currency. To go on as we are, pretending and hoping to be good Europeans, yet failing so miserably is, as was said of Austen Chamberlain,
"Always playing the game and always losing".
The thought of walking out of Fortress Europe gives our Euro-enthusiast friends a fit of the vapours. I wonder why. Europe costs us dear. This year alone our contribution to the European Union budget will be £9.6 billion gross. That is about half our defence budget, to put it into perspective. The CAP costs each family in Britain £1,200 a year. Surely we could give half that away and still have some kind of agricultural policy which would reward the farmers and allow them to produce cheap food and have a £600 bonus per head for every family in the land. That must be a relatively attractive programme which the Government may think about.
Our annual trade deficit with Europe is about £10 billion a year, £90 billion over the past 10 years. In that context, I should like to nail just two of the misconceptions or imprecisions which have gained currency through repetition. They are, first, that 60 per cent. of our trade is done with the European Union. Wrong. Taking visibles into account, 57 per cent. of our trade is done outside the European Union. Secondly, there is the misconception that our exports to Germany are equal to those of the United States of America and Japan put together. Wrong again. According to the Central Statistical Office figures, total exports in 1995 to Germany were £32 million; to the USA and Japan combined £63 million. That is, therefore, nearly twice as much.
Finally, membership of the European Union costs us dear because only 10 per cent. of our total economic effort is directed towards Europe. Yet the cost of the single market regulations which have been so widely touted fall upon 100 per cent. of the British economy, 90 per cent. of which does not trade with Europe at all.
I much admired the speech of the noble Viscount, Lord Exmouth. He asked whether we were still a proud nation that can fulfil its own destiny. Surely we can stand on our own feet. I agree with the noble Lord, Lord Stoddart.
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Eighty per cent. of our foreign investment is already outside Europe. We are the only oil exporters in the European Union. We hold the key to the richest fishing grounds in Europe.
It is no good trying to make our flesh creep with threats of retaliation or sanctions of some kind if we dare to think of withdrawal. Why would our trading partners in the European Union put up trade barriers against us when the balance of trade is so strongly in their favour? By doing so they would damage their interests. That is hardly a likely scenario. As the noble Lord, Lord Moran, pointed out, there are perfectly good precedents in outside, loose relationships with Europe. He gave the examples of Norway and Switzerland, each of which has different arrangements with the European Union and both of which have access to the single market. Both remain free and successful.
The Bill of my noble friend Lord Pearson will give power back to Westminster. Like the noble Lord, Lord Stoddart, I too ask my noble friend on the Front Bench whether the Government would now introduce an Act such as the European Communities Act 1972. Would they do that now? That is a good question. As my noble friend Lord Pearson put it well in his article in The Times today, to enact the Bill would alter our relationship with Europe: we would be transformed from recalcitrant tenants into friendly neighbours. I strongly support the Bill and will vote against the amendment of the noble Lord, Lord Taverne.
3.16 p.m.
Lord Harris of High Cross: My Lords, in an idle moment in preparation for this debate, I found myself jotting down, almost at random, odd words, names and memories that suggested reasons for doubting the benefits of continued membership of the so-called European Community. It started with the "process". We did not join an institution: we have found out that we have joined a process. Starting from the Common Market, we get: EEC, EC, EU and now the chilling word "USE". Then come free trade, GATT, NAFTA, Hong Kong; or CAP, CFP, fraud, Fortress Europe, level playing field, acquis communautaire. How about democracy? MEPs, expenses, lobbying, Italian bidets, ruling elites, Delors, QMV, takeovers.
What became of mutual recognition—one of the great notions of bringing trade closer together? Instead we have harmonisation, metrication, condoms, buses, Bangemann, prawn-flavoured crisps, abattoirs, Air France. How about the famous opt-out? There is the social chapter, double-think, ECJ, 48-hour week, pensions. Those are my fragments and jottings. If they could be explained, each of them is a clue to another nail in the coffin of continued UK membership of the Union. They help to explain why, however much it tries, the United Kingdom can never penetrate to the heart of Europe.
Consider the fraud-ridden agricultural policy or the iniquitous fishing quotas and subsidies or the partisan Court of Justice, the cabalistic Commission, the high-handed ban on beef exports, the brazen proposal to commandeer all foreign exchange reserves.

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Taken separately, they may not be sufficient to drive us out. But, taken together, they can hardly be dismissed as aberrations, to be bargained away by endless point by point negotiation.
If we stand back and view the situation against the long, illiberal history of Europe, my scattered clues provide cumulative evidence in support of the conclusion of the noble Lord, Lord Tebbit, that there is a fundamental incompatibility between these free, democratic, outward-looking islands and the complacent. closed, corporatist Continental system. The United Kingdom's accession in 1973 can now be seen as an attempt to graft some practical common sense on to le grand projet. Alas, like many hopeful transplants, the operation has ended in rejection.
Britain's failure can certainly not be blamed on lack of trying. Indeed, at Maastricht, in return for dubious opt-outs and insertion of the meaningless word "subsidiarity", Mr. Major was forced to agree to nonsensical vapourings about "common citizenship", "reinforced cohesion" and:
"common foreign and security policy … which might in turn lead to common defence".
To our Continental partners NATO has become an Anglo-Saxon intrusion.
Britain's inability to penetrate to the heart of Europe is not due solely to a Franco-German monopoly of political initiative, about which I have spoken before. From the start, this European racket we now find was not only a post-war marriage of convenience between a guilty husband and a jealous wife but a compact to achieve French ends through the deployment of German muscle. More fundamentally, we are confronted by an economic, philosophical, Franco-German Maginot Line, which is the polar opposite of Adam Smith's liberal internationalism, which I uphold.
In Germany, we can detect the influence of intellectuals such as Hegel, Goethe and List, all of whom in various accents preached the often mystical primacy of state authority. That was brought home to me vividly at a recent conference in Vienna, where an old friend of mine, who is one of the most distinguished economists in Germany and whom I have known for 20 or 30 years, came up to me furtively to assure me that he still shared my opposition to EMU but could not say so in Germany for fear of being marginalised as unpatriotic. That fear was underlined by Herr Kohl's boast:
"The future will belong to Germany when we build the house of Europe";
or his recent taunt that Margaret Thatcher could not accept:
"Germany ending the century a winner and her own nation a loser".
French intellectuals, for their part, combine a worship of Cartesian rationalism with high-flown chauvinism. A classic example was displayed in a recent letter to Le Figaro, urging that the headquarters of the United Nations should move from New York to Paris because, the correspondent claimed, Paris is:
"geographically, culturally, economically and politically at the centre of the world".
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Amid such familiar hostility from across the Channel, what are we to make of a former Foreign Secretary who touchingly proclaimed his faith as:
"It is scarcely possible to see Europe as anything other than the necessary vehicle, the central fulcrum, the basic lever for Britain to exercise the influence which it wishes in the world'".'
Tell that to the Marines!
Another gem of Euro-bunkum came from Sir Leon Brittan, who I am surprised to see is still speaking English. After Maastricht, he angrily threatened Euro-sceptics that voicing doubts about monetary union would seriously reduce the prospect of the Eurobank siting its headquarters in London. Tell that one to the Bundesbank!
It is not only the French and the Germans who look to the state for salvation. A few months ago, Mr. Flynn was interviewed by the BBC "Today" programme, following a case in Britain in which a policewoman had complained of over-enthusiastic advances from a male policeman. The Social Affairs Commissioner reduced the usually jocular John Humphreys almost to silence by solemnly proposing to consider inaugurating in Brussels a level playing field in sexual harassment.
The truth is that the Continent is pervaded by a totally distinct mindset. It exhibits a different concept of democracy, manipulated by ruling elites relying on phoney consensus but threatened periodically by social breakdown. In contrast, the UK relishes a more adversarial style but moderated by tolerance and its enviably long history of stability. To make matters worse, we have different legal systems. David Pannick, QC, and Fellow of All Souls has explained that:
"Community law accords a lower priority to textual precision than English law".
He quoted the words of Sir Thomas Bingham:
"The interpretation of Community law involves not the process familiar to common lawyers of laboriously extracting the meaning from the words used, but the more creative process of supplying flesh to a spare body and loosely constructed skeleton".
That has got the Union right. He went on to say that such broader interpretation is guided by:
"a broader view of what the orderly development of the Community requires".
It is not quite saying that you make it up as you go along, but you keep injecting your own vision into your judgments. We have been warned!
In conclusion, as the noble Lord, Lord Tebbit, said, and I absolutely agree, we should let continental Europe go ahead and construct itself a political cage, if that is what it wishes. It would leave us, like most of the world, outside, to trade freely with them and with wider, more dynamic markets in the East as well as in the Americas. Above all, let us reassert confidence in our ability to build up a vigorous, flexible economy which can continue to adapt itself to ceaseless changes in products, processes, global trade and competition.
We should take heart. If Germany can square France and cook the books to impose a 1999 timetable for the euro, early failure and recriminations will assuredly follow.
3.27 p.m.
Lord Hamilton of Dalzell: My Lords, I think that a majority at least on this side of the House agree—as the noble Lord, Lord Stoddart, said, the Government talk a great deal about it—that one of the main financial benefits that the United Kingdom derives from its membership of the European Union stems from its opt-outs from the Social Chapter and monetary union—a competitive and flexible labour market and a variable exchange rate. That is paramount in bringing in foreign investment. It seems to me a colossal irony that the one thing which recommends our membership of Europe is something for which we have opted out. In a sense it is giving us the ability to cheat. We are the only country allowed to run in the walking race.
However, if one wants to know the true implications of our membership of the Treaty of Rome, one has only to listen to my noble friend Lord Cockfield, who, I am sorry to say, is not in his place, to give us another go at it; or my right honourable friend Sir Edward Heath, the founding father of our membership, to learn how, having signed the Treaty of Rome, a process has been started which will relentlessly continue until full European Union has been attained.
Under the Treaty of Rome, everything, including the concept of the single market, because of the level playing field principle, which at present we claim to approve, has to be seen for what it is: an engine of unification. The concept of the level playing field is to remove differentials in working practices, wage rates, social security payments, health and safety, rates of VAT et al. How much longer will it be before unified tax is on the agenda and for how much longer will our opt-outs be tolerated?
On the assumption that free trade between the nations of Europe is obviously desirable, we allow this process of achieving it to trespass increasingly on the domain of sovereign governments and hence their electorates while its bureaucratic processes are, in practice, a travesty of free trade. Its destination has always been a single currency and that seems to be the sticking point. Regardless of what my noble friend Lord Kingsland says, it would lock us into the system. It is irrevocable, and the practical problems of extracting oneself would be immense. Regardless of what we thought at the time, this is what we signed up for and then agreed in the 1975 referendum and, accordingly, we are told there can be no turning back.
There has been much debate about whether the British people were misled in the referendum. I believe that question is interesting but irrelevant. In the first place, a vast number of new electors, too young at the time or even unborn, have joined the electoral role. They should not have views imposed upon them by previous generations. Also, an electorate can change its mind in the light of subsequent events. If that were not so, we would still be bound by nationalisation and other socialist policies inflicted upon us by governments after the war, mercifully now changed. They have even been abandoned by the parties opposite. What is so different about the Treaty of Rome that, after all this time, it should be treated as though it had been written on tablets of stone?
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If I was as determined as Chancellor Kohl—now in the twilight of his career—or the Commission witnessing the movement in public opinion in Europe, to make certain that the unification of Europe was established, I would do what they are doing now. I would hasten the imposition of a single currency with the object of locking the people of Europe into the system before any aspirations for self-determination could break out. They may not succeed. I hope they do not. It would be disastrous if a generation whose time is nearly passed was allowed to force its will upon the future so that it could not be changed. It would not be a recipe for political stability and the peace that it engenders. I pray that, at least, we are never part of it.
For those reasons, it is my belief that the Government's vision of a Europe of nation states, which in principle I support, will, inevitably, bring it into conflict with the Treaty of Rome. My noble friend's Bill may not find acceptance today in your Lordships' House, but I have no doubt that, one day, the electorate will find a way of demanding its reappearance.
3.32 p.m.
The Earl of Liverpool: My Lords, I should like to join with other noble Lords in congratulating my noble friend on introducing this Bill and for so clearly setting out its objectives. It seems to me that its main purpose, as has already been said, is to endeavour to restore power to politicians in this country, and that is devoutly to be wished. I am sorry that the noble Lord, Lord Taverne, moved his amendment. I believe that that will be seen, both in your Lordships' House and in the country, as an attempt to stifle a Bill on perhaps the most important issue affecting our lives today. When the time comes, as I suspect it will, I shall vote for my noble friend's Bill.
What is wrong with trying to maintain the principle for which I submit the vast majority of us thought we were voting in the 1975 referendum; namely, a partnership of trading nations in Europe? There are those who say that we were naive not to realise that a vote in favour at that referendum inevitably carried with it a sort of sub-agenda leading to monetary and political unification. But I have asked many friends and cannot find one who believes that that was the case at that time or thought that that was what they were voting for.
My noble friend Lord Braybrooke, in a powerful and moving speech, paid tribute to the countless thousands of our service men and women and our allies who gave their lives in the last two great wars defending our country and our freedom. My father was one of the many killed in action in the late summer of 1944 on the Italian front near Florence, so I and many other war babies who grew up never having known their father or mother are poignantly aware of the sacrifice our countrymen made.
What were they defending? I suggest that they were defending our right to self-determination; our democratic right to govern ourselves and make our own laws; and our right to maintain our long history of sovereignty. I believe that we are now at a turning point

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in our destiny. No one now denies that entering the EMU carries with it a political agenda which is both federalist and bureaucratic.
The scourge of the dreaded EC directives—which, for some strange reason I cannot quite understand, are so assiduously and zealously implemented by our own officials—will continue to wreak havoc with our right to govern ourselves. One only has to read the excellent book by Christopher Booker and Richard North entitled Castle of Lies—I was only able to buy it with difficulty and am pleased it is selling well; I suggest that it should be compulsory reading—to see endless examples of what I am talking about.
There is an interesting Labour poster which I have seen around London in the run-up to the election which reads something like, "£10.50 a week on food". But we all know that there is an upcoming directive that we will not be able to do much about which will put VAT on food, shoes and anything else which at the moment is zero rated. The Labour Party therefore has the message on the poster right—enough is enough—but they should be referring to the European Community, not the Conservative Party.
There are alternatives. The publication entitled Better Off Out by the highly respected Institute of Economic Affairs shows us the way. We must not allow ourselves to be frightened by warnings of dire consequences. In the early 1950s when the first steps on the road to a common market were taken, average tariffs stood at 40 per cent. and on some products were as high as 100 per cent. But that has all changed. Today tariffs stand at an average of a mere 3 per cent. and in some cases 0 per cent. Those figures are not likely to hold us back in securing an increasing market on the world stage.
There are many differing views about inward investment, so it would be wrong to rely too heavily on the warnings from Mr. Hiroshi Okuda of Toyota. With the indulgence of the House perhaps I can quote two other influential Japanese women. The first is Haruko Fukuda, deputy chairman of Nikko Europe. She says that investment from Japan and other Far Eastern countries to Britain were attracted by,
"Lower costs of employment, a low level of corporate taxation, political and social stability, and comparatively honest public administration".
That is an important point. The second person is Noriko Hama of the Mitsubishi Research Institute who has been on record as saying,
"Like it or not, the World is a more seamless and borderless place".
She goes on to say,
"Britain's inability to become wholly European may count as its greatest asset where inward investment from Japan is concerned".
My noble friend Lord Tebbit gave an intriguing reason why Mr. Hiroshi Okuda made his remarks. So I do not think that we have too much to fear there. Franklin D. Roosevelt said in his inaugural speech to Congress, "We have nothing to fear but fear itself. I entirely agree with that.
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The protagonists for a fully integrated Europe say that we cannot afford to be out of Europe and that all sorts of terrible things will happen if we are. But will they, my Lords? Our net contribution to the EC each year—it depends on which figures one uses—is around £6 billion. That amounts to a burden of some £1,200 each year for every family of four. Just think of what we could do with that money if it did not have to leave these shores. My right honourable friend Norman Lamont has called the European Union yesterday's idea. I entirely agree with him, and many noble Lords have spoken in that vein today. It is a strange quirk of fate that later this year we shall be handing back Hong Kong, one of the must successful colonies ever known on this planet. This could be the crystallising moment when we pick ourselves up and go forward into the 21st century, with pride, walking tall and embracing our destiny.
3.40 p.m.
Lord Whitty: My Lords, despite many excellent and fascinating speeches, I have found this a deeply depressing occasion. I know it is a tradition in this House to give a Bill a Second Reading—as a new Member, I do not want to breach tradition too easily—but I find myself compelled to support the amendment of the noble Lord, Lord Taverne.
Over the past 18 months I have had the privilege of visiting every European Union country. Our many friends there—great Anglophiles—are bewildered by our attitude. They are disappointed by our performance, and that has culminated in total exasperation over the attitude of the British Government to the beef boycott. I have also travelled around Britain and have seen equal bewilderment. That is understandable. The noble Lord, Lord Moran, pointed out that politicians have not been honest with the people. That is probably true. Unfortunately, the politicians who wish to make a positive case for Europe have not been successful in doing so or have tried to repress it, while politicians who wish to make a case against Europe have exaggerated and distorted the facts. The vacuum that has been left by politicians has been filled by some of our more rabid media, particularly the Murdoch-owned press.
In so far as the eyes of Europe are on this debate—I hope that they are not too closely on this debate because, in general, there is a great respect in Europe for the Select Committees of this House on European Affairs—they will be somewhat bewildered again. They will see the spectacle of the British aristocracy not only advocating the reversal of the Treaty of Rome but almost advocating the reversal of the Norman Conquest. I say that because the road down which the noble Lord, Lord Pearson, is asking us to go is not a reclamation of British history but a rejection of British history. For 900 years the ruling classes of England, and indeed of Scotland, have engaged themselves fully, negatively and positively, in European affairs. Even Henry VIII, who was mentioned at the beginning of the debate—he had a number of entanglements with Europe—a couple of years before he passed the Act of Supremacy declaring England as an empire was himself putting in a bid to be Holy Roman Emperor. He always was a bad loser.

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We have been involved with Europe dynastically, culturally and economically for centuries. There was a brief period when the balance of our economic fortune did not rest with Europe. It was a period perhaps of a century. But that began to end before the First World War. In 1913 our physical exports to Europe were 13 per cent. They are now 55 per cent.
I recognise that in this debate consistency has not necessarily been evident and has not necessarily been a virtue. Both political parties have changed their view from time to time over the past 30 years. I myself have been consistent. I voted yes in the referendum and I knew what I was voting for. I thought until today that my noble friend Lord Bruce had been equally consistent on the opposite side, but I learnt today that he wrote a pamphlet on a federal Europe in 1947. But the most glaring inconsistency is that of the Euro-sceptics within the Conservative Party. I noticed that the honourable Member for Stafford was standing at the Bar just now. Earlier this week, in a debate on Europe in another place, he explained his support for the Single European Act, and the majority voting which went with it, by the fact that that was concerned with trade. However, 80 per cent. of the regulations which are so castigated by the Euro-sceptics and so ridiculed by the tabloid press are concerned with the implementation of the single market. Everyone—even the noble Lord, Lord Tebbit, today—is in favour of the completion of the single market. One cannot have it both ways.
Lord Tebbit: My Lords, I am most grateful to the noble Lord for giving way. Why does he feel that the inconsistency of Mr. Cash and indeed of those like me who supported the Single European Act is any greater or any more worthy of castigation than the inconsistency of the leader of his party?
Lord Whitty: My Lords, I have already said that both major parties have changed their views on Europe. However, we are talking about a situation where only this Wednesday the honourable member for Stafford made it clear that he not only supported the Single European Act in 1986 but still supported the Single European Act today. That is the inconsistency.
We have not had from any speaker today a viable alternative to our constructive engagement in Europe. Perhaps in the 1960s there was a strong argument for developing Commonwealth links and Commonwealth preference. But now even New Zealand has less than 5 per cent. of its trade with the United Kingdom. There may have been a case—I doubt it—for a more constructive North Atlantic arrangement, whereby Britain would somehow become an honorary 51st state or, more likely, an honorary Puerto Rico. Even if we thought we could have a more constructive and positive relationship with North America, it must be evident from the trend of American policy that, whether it is in 10 or 30 years, America is gradually disengaging from Europe, politically, financially and militarily, and Europe must stand on its own two feet and co-operate among its member countries in order to replace what has been a valuable American presence.
The Earl of Onslow: My Lords, those of us who take a different view from the noble Lord are not anti-European. We just think that the organisation is rotten and incompetent.
Lord Whitty: My Lords, the noble Earl brings me exactly to the point. While there are some who advocate an analogy with Switzerland and Norway, it is quite clear that Britain is not the same as Switzerland and Norway. We are a large trading nation and still a medium-sized power. What I think the noble Earl's intervention indicated is a renegotiation of our relationship with Europe. I cannot understand how in international relations any more than in any other walk of life one can expect to get a better deal if one is half a member of a club than if one is a full member of a club. There is a basic inconsistency on the part of those who castigate our partners in France and Germany for giving us such a hard time within the EU. They think that once we declare our intention to leave or half leave, our partners will suddenly turn into benign negotiators and give us more than we had while we were inside. That is not human nature and it is not international relations.
Much has been made of the issue of sovereignty. Sovereignty is indeed an issue. But we have pooled our sovereignty in the European institutions in the same way as we have pooled our sovereignty in other international organisations. By pooling one's sovereignty, one is always engaged in a process of negotiations. Negotiations always make for a bumpy ride. For example, sovereignty over our currency has not necessarily brought us great benefit. We have been subject to market forces. When I first went to Germany as a teenager in the 1950s I got 12 deutschmarks to the pound, but I am now lucky to get 2.5. There are many good arguments against the single currency both in principle and in detail as regards the timetable and the conditions, but advocacy of the self-fulfilling right to devalue is not a good argument against the single currency.
Britain has always engaged in Europe and we have done so principally to restore the balance of power or on behalf of the democratisation of Europe. Our friends there want us to do the same again. Even if we accept that the European agenda is over-dominated by Germany and that there is massive democratisation necessary in the European institutions, the answer is not isolationism, but to engage with our allies—those in the new democracies of Spain, Portugal and Greece, for whom the European institutions provided the support to emerge from the totalitarianism of fascism, and the old democracies of Scandinavia and the Low Countries, who all want to see Britain engaging, in part to dilute the Franco-German axis and in part to democratise the institutions of Europe.
At the beginning of the debate the noble Lord, Lord Pearson, referred to Clause 2 of the Bill as a "Moses" clause. My knowledge of scripture may not be as great as that of some noble Lords present, but my recollection is that Moses led the children of Israel into the desert

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for 40 years. My fear is that if the noble Lord's Bill is passed here today, he will be leading us in exactly the same direction.
3.52 p.m.
Baroness Elles: My Lords, it is indeed a pleasure to follow the noble Lord, Lord Whitty. In fact, I was wondering whether there are any more Members of your Lordships' House who were going to say anything in favour of membership of the European Union. So it was a great relief to hear what he had to say and to recognise that he was the fourth out of 24 Members of the House who spoke in favour of our continued membership and gave us much courage. Many noble Lords will disagree categorically with everything that he said, but I totally agree with all that he said.
I would like to take this opportunity to thank my noble friend Lord Pearson for giving us the chance to debate this particular subject, which has not been debated for some time in your Lordships' House. It has given us the opportunity to get the views of Members of your Lordships' House. Luckily, they do not represent at all a large percentage of the British population. They are either hereditary Peers or appointed by the Queen so they cannot claim, luckily, to be representative of the general totality of the British people, although some of them would obviously like to think so. I do not doubt that they do that on a perfectly good and sound personal basis.
However, thanks to my noble friend Lord Pearson, we are debating a matter which is very important to us and to the future of this country. It is a matter which needs very considerable thought and discussion. Our membership of the European Union is more than just a policy, as the noble Lord states in an article in today's The Times. We are bound by a treaty, which has no concluding date, to membership of the European Union. Nevertheless, I agree with him that we could leave the European Union if that is what the majority of the British people so decide. If that is what they wish, we could come out of the European Union. But that is the bottom line and, as far as I am aware, there is absolutely no evidence, except in your Lordships' House, to show that that is the case and that is what people generally want.
It is worth looking briefly at the evidence of the benefits brought by membership. As regards the economy, according to recent figures our average income is as high as it has ever been. A report in the yesterday's The Times shows that even the lowest one-fifth of the population have seen a good increase in their incomes. The United Kingdom is now a country where the increase of annual expenditure has never been so low, which is of benefit to all our citizens. The United Kingdom takes a very commendable position among the member states of the Community. We are half-way between the lowest and the highest, which is about 7 per cent. or 8 per cent.
Our exports to other EU countries amount to 60 per cent. of the total value of goods exported. I believe that my noble friend Lord Willoughby de Broke gave a completely different figure. We all have statistics
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available, which are based on different parameters. I am reminded of the famous statement about statistics: "If you have your head in the oven and your feet in the fridge, you are averagely comfortable". I believe that is about where we are on the figures. But I believe that one must accept that a large proportion of our exports go to other member states, whatever argument one has about 55 per cent. or 60 per cent., or whatever it is.
If we were to come out of the Community, exports would be subject to import duties and VAT. The free movement of people within the EU would no longer be available to us as it is today. Unemployment is another area in which the United Kingdom, under the present Government, has made vast improvements, with a continued decrease, month on month, in unemployment. We are the country with the lowest percentage unemployment figure among our major allies in the European Union.
There is no evidence to support that these figures would not change for the worse if we were no longer members of the EU. It would be idle speculation based on idle wishful thinking. That is something that I have noticed in all the speeches so far. I can understand the deep reasons why noble Lords do not want to be members of the EU, but they have not explained to us where the alternative outlets will be for our exports which at the moment have a very high standing in the world and in the European Union.
Lord Tebbit: My Lords, I am grateful to my noble friend for giving way. There is simply no reason to believe that, if we left the European Union, the Germans would be so upset that they would refuse to send us motor cars or refrigerators, that the French would not want to send us cheese, milk or apples. By the same token, if they wish to continue trading with us, they will have to allow us to trade with them. Of course we can go on selling things to them.
Baroness Elles: My Lords, I am afraid that my noble friend has not convinced me. That is a matter which has to be decided in the future. At the moment there is no guarantee that countries which export within the Community to the United Kingdom would wish to continue to do so or to do so in the same totality that we are currently exporting to other members of the European Community.
Lord Pearson of Rannoch: My Lords, before my noble friend leaves this point and further to the intervention of my noble friend Lord Tebbit, does she agree that we trade in deficit with the other countries of Europe and that they trade in surplus with us? Therefore, does she further agree that they are most unlikely to want to abandon that trading relationship? Does she not agree that, at the very least, they would have to think about the effect on their fancy new currency—if it comes into being—if they were to cut off their noses to spite their faces in that way?
Baroness Elles: My Lords, my noble friend brings up a very good point. If a new currency is introduced it might be very difficult for the countries of the European

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Union to export to us because, if we do not have a single currency, how will we pay for the goods? What will be the relationship between the pound and the single currency? We do not know. I am not saying that it may not be marvellous and wonderful; we may do extremely well. But there is no proof which I or anyone else in this House can provide to say, "We will come out and all these countries with their surplus products will flood us with cheap goods". There is no evidence for that and, therefore, it is a question mark over our future.
If one looks at other opportunities which we have at the moment—
Lord Stoddart of Swindon: My Lords, I am much obliged to the noble Baroness for giving way. I have great respect for her commitment and intellect. She is asking for proof of what will happen if we come out of the European Union. Perhaps I may remind her that before we went into the Community we traded with it on the basis of a surplus. The truth is that since we joined the Community we now trade with it at a deficit, which has amounted to £100,000 million since we joined and in 1995 it was £6,000 million.
Baroness Elles: My Lords, that does not alter my argument. The fact that we trade with other member states but sell less than we buy is our fault, not theirs. It is up to us to be able to increase production. As far as I understand it, the argument still exists that we are trading with countries in the European Community, but I wonder whether that would continue on the same basis if we were to come out of the Community.
I should like to talk for a moment about the opportunities which are now available to so many of our undergraduates, students and young people generally. Under the ERASMUS scheme, young students can take part of their university course at a university in another member state. I suppose that that is quite a small point among the many major points that have been made by noble Lords today, but the fact is that the advantage to those young people is enormous. They can make friends and have contacts which, even on their return to college in this country, can last throughout life. Opportunities are available to our young people to learn, to earn, to travel and to study abroad—if they wish to take advantage of them. Would those opportunities be available to our young people if we left the European Union? I do not know, but that is a question that we must face. We do not know whether our young people would be able to continue to benefit from opportunities that are available at the moment to all students in the European Union. I do not know whether that door would be closed to them if we were to leave the Community. I am not saying that it is of vital importance, but I am saying that it is a matter of some importance to young people generally who want to be able to mix as equals with their peers throughout 14 other countries.
I should like to mention other more important issues. There is the question of the very existence of NATO. Other noble Lords have rightly said that NATO has guaranteed the peace in our area of the world for the past 50 years. I do not think that anybody would deny
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that. You do not have to be pro or anti-Europe—or whatever the current phrase is—to say that NATO is our bulwark against any threat from any other part of the world. However, it is also true to say that without the close links that exist between European Union member states, there could well have been strife. It is not one denying the value of the other, but the one is of additional value to the basic standing of NATO. It is only necessary to see where severe fighting and massacres have occurred in recent years—in Bosnia, for instance—to recognise that there is more peril for those outside the EU even on our own continent than for those who live within the safe boundaries of the European Union.
If there is one matter for which we can be thankful, it is that the existence of the EU has guaranteed peace in the region for so many years. It is generally accepted—I have heard this on all sides in all member states which I have had the pleasure (or not) of visiting—that war is no longer a threat to the member states—
Lord Bruce of Donington: My Lords, I am most grateful to the noble Baroness for giving way, but before she leaves her point about peace in that area of the world, would she not agree that the unilateral intervention of Herr Kohl in recognising Croatia without any consultation with his allies in the European Community was to some extent a destabilising action in the area which precipitated the grave events that happened thereafter?
Baroness Elles: My Lords, I agree absolutely with the noble Lord. One does not have to be totally pro-European (or whatever is the phrase that one likes to attach to somebody who makes such statements) to accept that mistakes are made. I agree that it was a serious error. It was due to the German Foreign Minister of the day that that particular issue was resolved on their own account without discussing the matter with other member states of the Union. It was regrettable. I totally agree with the noble Lord—
Lord Taylor of Gryfe: My Lords, I am sorry to intervene, but I should like to point out that the noble Baroness has been interrupted four times now by Members of this House who have already spoken in the debate. Is it not time that we introduced a little order into the matter and prevented the continued interruption of speakers by noble Lords who have already spoken?
Baroness Trumpington: My Lords, I would submit that the noble Lord is taking up even more time.
Lord Taylor of Gryfe: My Lords, of course I am, but so far I have not taken part in the debate. I have listened with great patience and I hope to vote at some stage, but this cannot go on indefinitely—
Lord Graham of Edmonton: Oh yes it can!
Baroness Elles: My Lords, I am just following the procedures of the House. If noble Lords choose to intervene, I have no option but to give them that

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opportunity and right. I am grateful to the noble Lord, Lord Taylor, for his intervention, but if noble Lords wish to intervene when I say something that upsets them, they have the right to come back at me and I have the right to reply. However, I am grateful for that intervention.
As I have said, there is one issue for which we can be thankful—and that is that the existence of the EU has guaranteed peace in the region for so many years. It is generally accepted that war is no longer a threat within the European Union among its members. This is a vital point. As a history student—having read not only from the Middle Ages onwards, but earlier than that—as far as I know this country has never lived with such a situation in its history. We have had peace for 50 years. We have been members for the past 20 years and I believe that we can now sit back and believe that our children will not be involved in a local war within what are now the 15 member states. We must be grateful for that. Whatever one's views about the European Union, I do not think that one can deny or overlook that fact and say that it is irrelevant to our future. It is very important indeed.
Membership of the Union does not mean renouncing our nationality. I do not believe that that is in question; on the contrary. The Maastricht Treaty is not anybody's favourite reading. Indeed, we have been reminded that one of our Cabinet Ministers said at the time that he had not read the Maastricht Treaty—I cannot believe that he has not read it now. However, the fact is that even the Maastricht Treaty, with its faults, states clearly in Article F:
"The Union shall respect the national identities of its Member States, whose systems of government are founded on the principles of democracy".
That means that the nationalities of member states are fundamental to the status of those countries within the Community. There has been much talk about us ending up with a United States of Europe, but I believe that even Chancellor Kohl—and many criticisms have been made of him today and of his statements going back to, perhaps, 1990 or 1991—has said recently that he does not intend there to be a United States of Europe. It is a pity that some of my noble friends did not also use that quotation.
Lord Pearson of Rannoch: My Lords, I apologise if I irritate the noble Lord, Lord Taylor, but the quotation that I gave from Chancellor Kohl, whose statement,
"European integration is in reality a question of war or peace in the 21st century",
was made at the University of Louvain a year ago.
Baroness Elles: My Lords, that is a question of war and peace, not a United States of Europe. I accept what my noble friend has said with regard to that quotation.
My next point is that the benefits from this period of peaceful existence are there because we enjoy the system of parliamentary democracy that all other member states enjoy. It is precisely because new applicants for membership have recently acquired or reacquired their parliamentary methods that they look to membership of the EU to ensure that those methods survive and are
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maintained. That must be of fundamental importance to the future of Europe as a whole. Whether or not we are a member of the EU, surely this is something that no one wishes to see denigrated or not put into effect. Other states outside the Union are working towards a firm and consistent form of parliamentary democracy which, through membership of the European Union, will be sustained and maintained.
Finally, our country, with its individual approach to production management and other skills, has—as of today, I understand—drawn inward investment from Japan alone to the extent of 60 per cent. of all inward investment to the EU. Many noble Lords have referred to the statements by Toyota. Clearly, like statistics, they can be quoted in whatever way one wishes. However, these investments would almost certainly not be made in future in the United Kingdom if we were no longer members of the EU. I do not believe anyone would deny that the Japanese would not be the only investors to hold that view. Exactly what the president or chief executive of Toyota said is irrelevant, but that was made clear to all concerned.
There are many valid and fundamental reasons why membership of the EU remains crucial to the financial and economic standing of the United Kingdom. As many noble Lords have said, it is easy to demand withdrawal, cut ourselves off and lose our friends and allies, but that is not a wise or fair decision to take for our present and future. It will be time to evaluate the proposals of the Intergovernmental Conference and take part in the decisions which set out the future course of the EU when that conference terminates. I do not believe that it is sensible to try to evaluate now what those decisions will be. It is for us to state our position as we see it and to see how far that is followed by the results of the IGC.
There is no evidence to guarantee that the future of our country will be safe. I refer particularly to the poorer people here. Only yesterday in The Times there was a statement that the income of even the lowest quintile—which I believe is the correct word—had greatly increased and that those people were comparatively better off, to put it bluntly. If we came out of the Union, what guarantee could be given by noble Lords who were concerned about the depression apparent in so many parts of the country 20 or 30 years ago that people could be led out of that terrible situation and guaranteed a firm future? I do not know of any noble Lord of any party or view who could provide to the poorer people of this country a guarantee that their quality of life would be maintained in the face of the economic situation in which this country would find itself.
Lord Graham of Edmonton: My Lords, perhaps the noble Baroness will allow me to intervene. As always, she holds the attention of the House, but the Companion quite clearly states that speeches beyond 15 minutes are undesirable. Even allowing for injury time, which she is entitled to claim, bearing in mind that we have already heard 20 speakers and there are another 15, perhaps the noble Baroness will consider and reflect.
Baroness EHes: My Lords, I am most grateful to the noble Lord. I apologise to the House if I have carried on for too long, but I have been interrupted several times. I have three more lines. I do not know what my noble friend Lord Pearson has in mind as to the progress of this Bill, but it will do nothing to contribute to the world standing of the United Kingdom, nor to its future economic prospects, nor to the moral and social standing of its people.
4.13 p.m.
Lord Vinson: My Lords, I too am deeply indebted to my courageous and noble friend Lord Pearson for introducing this Bill. Those of us who expressed doubts about the long-term benefits of European Community membership are often accused of being little Englanders or lacking in vision through an inability to see the benefits that others see from the grand redesign of Europe. But one does not have to be over 50 to realise that, as so often in politics, the law of unintended consequences manifests itself. Of course, all of us want to see continuing peace in Europe and welcome the benefits that can come from a common market, but I venture to suggest that it is precisely because we seek peace and prosperity that we are fearful of the consequences of a fully federated Europe. We believe that it will bring political and social instability.
I was a member of the CBI Grand Council for many years and on the President's committee but, when I listen to its debates on Europe, I am struck by the total absence of regard to the political rather than the economic dimension. Like many—it forgets that the one depends on the other. Man does not live by bread alone.
Our democratic system is no doubt imperfect, but we simply cannot take it for granted that, if we alter it on a major scale—which is precisely what Maastricht followed by European monetary union will do—the system will hold. Our democracy just works. People do feel that they can, to some extent, affect their future and right wrongs through the present system.
We are currently represented by one MP to approximately 75,000 voters. In the European Parliament there is one MP to approximately 500,000 voters. So there is little chance of the elector seeing his elected at surgery on a Saturday morning. There is little chance that his MP can nobble some Brussels official to put right a wrong; there is little chance indeed that the MP will have sufficient time to answer his enormous correspondence; and there is little chance that he himself can affect the issues as part of a small minority in the European Parliament. Without serious debate, we shall have stretched the democratic elastic by a factor of seven to the extent that it will surely snap. Of course, as was said earlier, Belgium, Greece, Italy and others who have near unworkable democratic systems can see advantages in joining an apparently more stable whole. But their existing political tensions will be exacerbated. Trying to get things done through the democratic system will be near impossible; like punching a jelly, it will wobble to no effect. Increasingly people will become frustrated and localised anarchy will inevitably break out as people take the law into their own hands.
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The recent French lorry drivers' strike demanding to retire at 55 (which they got) is a manifest example, as was the strike that followed it in Greece.
Noble Lords will remember how the American War of Independence triggered. It did so on the slogan, "No taxation without representation". That is precisely the condition that full European monetary union will bring about. It is well said that those who ignore the lessons of history are forced to re-learn them. We should take note.
When a nation cannot control its fiscal and monetary policy, it is effectively no longer self-governing. There will be little left for the House of Commons to do, except acting out the make belief of power—debating the price of dog licences. More seriously, the only mechanism that Brussels will have for adjusting the inevitable national economic tensions is the use of convergence funds—throwing money at the problem.
It has been well said that economic regional disparities are really exchange rate problems writ small. If Liverpool could have operated with a devalued pound some 15 per cent. cheaper than the rest of the United Kingdom, it would have attracted inward investment without the need for government aid. In the past, nations adjusted their trading disparities by valuing or revaluing their currencies. With fixed exchange rates under EMU, it will not just be regions like Liverpool that will become economically out of line, but whole nations will come out of line. Robbing Peter to pay Paul through the use of convergence funds to try to adjust this would not only be wholly counter-productive; it would be quite impossible for it to be in any way effective at national scale. Major social tensions will arise.
We are bombarded with statistics on the likely economic advantages of ever closer union. But there is almost a conspiracy of silence about the fraud, waste and inefficiencies that the system brings with it. For example, at this very moment, the Government are authorising the expenditure of a quarter of a billion pounds to slaughter perfectly healthy cattle prematurely, none of which is destined to come into the food chain. All done as a token political gesture—like medieval witch burning—so that other members of the committee controlling our exports can feel that our guilt has been expiated. Like naughty children we are not even allowed to export gelatin-based wine gums. And all this is before we are even fully federalised.
At this moment, billions of ecu are also being spent in building unnecessary roads and superstructure in the remotest parts of Ireland, Portugal and Greece in an effort to stimulate their economies: modern pyramid building on a massive scale, but seldom criticised because it is all part of the grand design of Europe.
Increasingly many of our legislators, both in this country and abroad, are professional politicians. They are not personally involved, hurt or affected by being in front-line contact with waste, over-regulation and inefficiency. Their eyes are half closed while they contemplate their visionary designs for Europe. Where you stand depends on where you sit—and they are sitting very comfortably, thank you.

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Meanwhile, lower down in the anthill, the population begins to seethe with anger. It seethes over the way in which our fishermen have been treated. It seethes over the inefficiencies of the common agricultural policy. It seethes when excessive regulation from Brussels prevents perfectly rational and normal economic activity. Above all, it begins to seethe when our laws are second-guessed by a bunch of second-rate judges over whom our democratic system has no control. That is a manifest example of our loss of sovereignty.
EMU, and with it the inability to control our monetary and fiscal policy, will blow the lid off the democratic kettle. I fear for Europe. Those who call for ever greater political and monetary union in Europe subconsciously predicate those advantages against a background of political stability. But that is unlikely. The democratic deficit is too great.
The grand design for a federated Europe sows within itself the seeds of its own destruction. It is a future which does not work. It is for that reason that I join with others today in saying that Britain must renegotiate its position and repatriate many of the powers that it has given to Brussels. If it is unable to do so, it would be quite wrong to remain a reluctant member of a club in which we shall feel increasingly uncomfortable. The visionary design for Europe is fatally flawed: like the "Titanic", it is heading for disaster. If we cannot change its direction, we should make timely plans to disembark.
4.21 p.m.
Lord Milne: My Lords, at this point in the debate almost everything has been said which can be said. Therefore, I am sure that the House will be relieved to hear that I shall be very brief.
Liberty of action is very dear to me. I was a PoW during the war and I do not relish a Europe which Germany will lead. It will be led by Germany for Germany. Unless we are prepared to take a stand soon, our citizens will find that more and more of their MPs cannot help them or help the Government to take correct decisions. We have experienced that already in a small way in relation to the export of live cattle. Questions will be asked as to how all that was allowed to happen.
It follows that we should not surrender liberty of action unless we are absolutely certain that what we receive in exchange is much more valuable. To my mind, that has not been demonstrated. Our pattern of trade and circumstances are different from those in Europe. Regulations for one country do not necessarily suit another. The government of a sovereign country must have the authority to act in the very best interests of their country.
On that aspect, we have always been half-hearted about Europe. We joined under world conditions which have since changed. The late Lord Keynes said, "When circumstances change, I change my mind". We should now reassess our position. Costly decisions are looming as the federal tide sweeps on. A single currency is politically motivated and it is irreversible. As has been shown, opt-outs are fragile. The longer we delay, the more difficult it will become.
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Extension of the EU to the agricultural east, which is now on the agenda, would surely expose the cost and near impossibility of applying a unified structure across the board. In each country, as unemployment soars, people are questioning the need for EMU. That must be the moment at which to press for a flexible approach. We cannot be excluded from the Council and we shall very likely receive support.
Europe will be much better served by contented partners than by unwilling subjects. That is something on which, surely, we can all agree. With those brief comments, I support the Bill.
4.25 p.m.
Lord Bowness: My Lords, I, too, pay tribute to my noble friend Lord Pearson for putting the issue so starkly and clearly in order that there is no doubt that we are discussing the precursor to leaving the European Union. However, I must say to him that it is with regret that, not being a natural rebel, I am at odds with most of my noble friends on this side who have spoken. It is perhaps with greater regret that one year to the day since I was introduced in your Lordships' House I find myself in a position that I had not wished to be in perhaps so quickly. To some extent, I am comforted by the knowledge that I am not at odds with Her Majesty's Government on the issue.
It is a matter of extraordinary regret that after 20 years of membership of what is now referred to as the European Union—I do not propose now to distinguish between the Union and the Communities—we in the United Kingdom should still ponder on whether our destiny rests with our neighbours and our Continental partners, with whom we share the Continent of Europe and, despite what has been said, a common culture. We share a culture and a commonality with our partner states which is considerably greater than with other countries.
I wish that our membership would cease to be an issue and that we could start to share the hopes and ambitions of our European partners and those who founded the Union. Of course it is appropriate that we should discuss how much or how little should be done at a European level. Of course we should discuss what the functions and powers of the European institutions should be. Of course we should discuss and argue the policies which we follow in regard to what is done at a European level. Indeed, how many of those policies should be changed? Many of us are unhappy about them.
In connection with domestic policies, we address the role of government and of distant institutions within our own countries. However, in the context of Europe, if such debates are to take place rationally there must be a recognition that the European Union is not and never was, even as the old European Economic Community, merely a trading bloc, with rather elaborate rules and means of enforcing them. It is and was always intended to be an organisation with not only a trade but a political agenda. I am not one who believes that we in the United Kingdom were in some way misled. I can call no better witness in that than Sir Teddy Taylor, who, writing in the Telegraph about Sir Edward Heath, said:
"I can confirm he made it abundantly clear that membership would lead to further Euro-integration'".

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Sir Teddy Taylor's statement must be unimpeachable evidence in that regard.
The problem is that, for whatever reason, many people in this country have chosen largely to ignore the political imperatives which drive our partners and have not given much consideration to the vision which many of them have of a united, peaceful and prosperous Europe. The hopes of a peaceful and prosperous Europe can surely be shared by everyone. Of course I understand that there are questions about the practicality and there may be questions about the desirability of some of the measures which from time to time are proposed to achieve that end. However, I do not believe that that invalidates the objectives.
The desire for peace and stability requires more than merely a trading bloc. Economic union was always going to be a means to an end. The driving force was that Europe should not be torn apart again by war. I know that reference to peace may irritate some noble Lords who have spoken today. However, I believe that the potential instability in eastern and central Europe on the eastern borders of Germany still makes that a valid point.
My direct involvement with the European Union over the past two-and-a-half years has been as a member of the United Kingdom Delegation to the Committees of the Regions. Perhaps I may say to my noble friend Lord Pearson that that does not make one a member of the European political elite; nor does it mean that one is sharing in an elaborate gravy train. The gravy is very thin, as at least three other Members of your Lordships' House who are members of the United Kingdom delegation can testify.
Moreover, in connection with the Committee of the Regions, I should point out to my noble friend that we are not mounting a propaganda war for Europe, financed and funded through local authorities. One of the Commissioners has suggested that, because members of the committee hold locally elected offices, they are people who are well equipped to take to the population the message of Europe and what Europe is about. I must stress to my noble friend that no funds have come with that. Therefore, it is for the likes of the noble Lord, Lord Tope, and myself merely to advocate, if that is our wish, what Europe is about. But we do so with no funds whatever.
Membership of the Committee of the Regions has taught me, first, that the vision of a peaceful and prosperous Europe can be spoken about in other member states without embarrassment. I fear that the mere articulation of the words brings about shivers of embarrassment in the United Kingdom. Secondly, even those who would willingly accept a definition of "federalist" do not suggest institutions or a model remotely similar to the governmental institutions of the United States of America or of other federal states. Perhaps no one knows the precise form in which those developments would take place—if, indeed, they do take place. Of course I accept that such development would need the support of the peoples of the individual member states. But if you accept that there is a political
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dimension, however much or however little is done at European level, there must be rules, laws or a democratic element and institutions responsible to the Union, the member states and their citizens.
Unless we try to share the vision that other member states have, our time in Europe will be troubled. It is unfortunate, to say the least, to try to equate what the Union seeks to achieve with what was set out to be achieved by empire or by force of arms. It is also perhaps unfortunate to criticise member states which have been unfortunate enough to be invaded or which suffered from undemocratic peace in their history. From my experience with ordinary people who are working in ordinary organisations and very close to the people, I know that they have a deep belief in democracy and in the European concept.
It is difficult for us to say that we have no part to play. Sacrifices—as referred to in the House today—made by many thousands of our citizens in Europe are a testimony to the price that we have paid for instability and war in Europe in this century alone. It seems to me to be inconceivable, when Europe is changing so fast and when the old certainties of the cold war period have broken up, that we are anything other than intimately involved with the rest of our partners in the Union in confronting the issues of enlargement and ensuring that the new freedoms of the East do not lead to instability in parts of the Continent that would spill over and would have affected us even when we were a major power with a major empire.
We cannot deal with all that through a trading agreement, a trade area, as something that we can pick up and put down at will. Our European future is the same as the future for the other European states. So let us try to see what motivates them in their desire to make the Union work and try to share their vision. Of course, let us argue our case; indeed, it would be unwise to do anything else. However, with great respect, I must tell my noble friend that, if at the time of Maastricht the weight of opposition to the concept of Europe and the European Union had been as great as it was post-Maastricht, it is at least a fair question to ask whether we would have been able to negotiate, with the agreement of our partners, the kind of opt-outs that we did.
I believe that if a major part of the British Parliament were to support this Bill today, it would do irreparable harm to the negotiations that my right honourable friend the Prime Minister and other Ministers in the Government will try to carry on on behalf of and for the benefit of Britain. Our position must be firmly to be in and of Europe. We should not accept without question everything that comes forward by way of policies and proposals, but we need to be there; it is an integral part of all that we have worked for to achieve peace and prosperity in Europe.
Finally, we should not believe that everything which is done is wrong. I noted in a paper published by the Economist—therefore it was not an organ of the European Commission or of the European Parliament—three brief items which I should have thought would commend the Union and some at least of what it does

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to some of my noble friends. In connection with the French post office, the competition commissioner has decided to publish the long-awaited notice on the obligations of post offices under the Union's founding treaty, against the wishes of the French Government.
The Commission has ruled against the Belgian telephone operator, Belgacom, which has been told to scrap its loyalty card because it is anti-competitive. I remind my noble friends that the Committee of the Regions might also obtain their support as regards some of the things that it wants to do. Representatives of the German Lander have rejected a tourist policy on the basis that they believe that should be done by member states, and in their case the German Lander. Therefore not all that comes from Brussels is about large centralising government. Much of it concerns competition and taking functions to the places and levels where they belong.
Lord Pearson of Rannoch: My Lords, before my noble friend sits down, as he has joined my noble friend Lady Elles in one of my Euro slogans, which is, "The Union has kept the peace in Europe", will either of my noble friends inform the House whether they think that war would have occurred in the communities, as they have existed since 1945, without the European Community's legislation and the Union? Do they really see it breaking out in future among those countries? I would be interested to test that Euro slogan.
Lord Bowness: My Lords, of course I do not know what would have happened if the European Union had not existed. It is a valid and important point that there is potential instability on the eastern borders of the Union. Our colleagues in the European Union would be anxious that we remained part of it, because it is the stability of the European Union that will help maintain stability on those eastern boundaries. I am sorry if my noble friend thinks that that is a slogan. Of course we all believe that those who hold a different view speak in slogans. Loss of sovereignty and Brussels cocktail parties are perhaps the slogans of my noble friend.
4.38 p.m.
Lord Swinfen: My Lords, at the time of the referendum on the Common Market I was in favour of remaining in the Common Market. I am still in favour of membership of a common market. I am not, however, in favour of the United Kingdom being subsumed into the single European state, which is what the European Union is designed to become.
Whenever I talk to people in all walks of life outside this place, the vast majority tell me that they are happy with the idea of a common market but have no desire to be submerged into a single European state. The management of currency and financial affairs is part of a nation's sovereignty. However, under the European Union treaty preamble of "ever closer union", title to all national assets of the member nations will be pooled and put on the asset side of a single currency's pan-European balance sheet.
1402
That, in my view, would include our oil and gas reserves as well as our gold and foreign currency reserves which under Protocol 3.1 (indent 3) of the Maastricht Treaty will be claimed by the European Central Bank. The United Kingdom's latest published estimates of proven and probable reserves of oil come out at 10,250 million barrels, which at a Brent crude market price of 23.09 dollars are worth 235 billion dollars. The estimate of our remaining gas reserves is 1,350 billion cubic metres, which has a market value of 192 billion dollars. Those total 427 billion dollars or £265.21 billion. At the 1996 estimates of the United Kingdom population, 58.784 million, that equates to the removal from British control of over £4.5 million of oil and gas assets for every man, woman and child in this country.
When answering the debate, can my noble friend the Minister point to any one of the 246 numbered articles, 36 lettered articles, or any of the 17 protocols or 33 declarations in the Treaty on the European Union signed at Maastricht which safeguards this nation's greatest single asset?
It has been suggested that we are sharing sovereignty with other member states in the European Union. It is not seen that way by most people in this country. It feels as though it is being stolen.
The constitution of this country, which on the whole works well, has come about by evolution. If the politicians would allow the original common market to evolve, we might eventually, peacefully, arrive at an acceptable United States of Europe—but it would probably take some generations. By forcing the pace—I suspect in some cases for a place in history—I fear that these impatient politicians risk instability if not revolution.
I cannot support the amendment of the noble Lord, Lord Taverne, but will support my noble friend Lord Pearson in his Bill, which has given us an excellent opportunity to discuss the matter.
Lord Pearson of Rannoch: My Lords, I am sorry to interrupt yet again. I have to take issue with my noble friend Lord Swinfen on one matter. It is not something I like doing. He suggested that the people in this country regard their sovereignty as being stolen rather than ceded. Surely my noble friend will agree that we are paying our European competitors billions a year to take it.
Lord Swinfen: My Lords, I do not mind what word is used, but I know that the vast majority of people in this country feel that they are losing their sovereignty. Whether it is stolen or ceded matters not. It appears to be disappearing at an ever increasing rate.
4.44 p.m.
Lord Monson: My Lords, as the noble Lord, Lord Belhaven and Stenton, mentioned earlier today, nine days ago the noble Lord, Lord Richard—I am sorry that he is not in his place—in deriding Eurosceptics who were suggesting that there might be possible advantages in withdrawal from the EU, commented at col. 681 of the Official Report of 22nd January that,
"It is passing strange that no fewer than 10 countries are hammering on the door".

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What the noble Lord, Lord Richard, forgot to mention was, first, that the President of the Czech Republic had not long ago cast doubt upon the purported advantages for his country of full EU membership, hinting instead that a free trade agreement might be preferable. The noble Lord, Lord Beloff, spoke shortly before the noble Lord, Lord Richard. He said that what the Czech Republic, Poland, Hungary, Slovakia and Slovenia want is access to EU markets—in other words, access without burdensome trade or quota barriers. Ideally they would welcome the additional protection which NATO membership would confer. More than that they do not necessarily need.
The noble Lord, Lord Richard, also omitted to mention that Malta—to some people's surprise—recently voted out the incumbent Euro-enthusiastic government and voted in the relatively Euro-sceptic Malta Labour Party. No one who has studied consistent recent opinion polls in Scandinavia and Austria will be surprised at that. The fact is that, apart from a small, zealous, political elite and a few starry-eyed idealists, most of the ordinary people of western and southern Europe now regard the EU, as it has evolved, not with positive unbridled enthusiasm but rather as the lesser of two evils, from their various national perspectives.
The Belgians acquiesce in things they dislike about the EU because membership helps to mask the mutual hatred between Fleming and Walloon; the Luxemburgers, because it enables them to strut tall upon the European stage; the Dutch because they fear Germany; the Finns because they fear Russia, the Italians because they despise Rome; the Irish, Portuguese and Greeks because they have done extremely well economically out of the EC, funded largely by Germany with some assistance from the United Kingdom. The Greeks also acquiesce because they fear Turkey; the Spanish because they have done almost as well economically as those other three countries from subsidies and also because membership makes them feel wholly European rather than partly African: the Pyrenees are flattened, so to speak, notwithstanding that, as the noble Lord, Lord Buxton, pointed out, Spain's attitude to Gibraltar is more than a little African in character. One remembers that Nkrumah used to claim that the Canary Islands rightly belonged to Ghana.
The French acquiesce because they are Colbertians, centralists by inclination and tradition and also because they seek to play Greeks to the German Romans; and the Germans because they crave respectability after the events of the early 1940s and because they crave above all affection. Whether those German cravings will survive the submergence of their solid and stable deutschmark into a euro, gravely weakened, as the noble Lord, Lord Braybrooke, pointed out, by, for example, a French government which capitulate to every group of strikers demanding retirement on unaffordable full pensions at the age of 55, seems doubtful.
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Speaking on 30th October last year, the noble Lord, Lord Healey, pointed out that 65 per cent. of Germans now oppose a single currency. I guess that that proportion has risen considerably since then.
Until fairly recently, the advantages for those countries seemed more or less to outweigh the disadvantages. What are the disadvantages? Many of them have been pointed out by noble Lords this afternoon and I shall not go through them, but there are a few more: the interfering bureaucratic nature of the EC, which was so well described by Mr. Douglas Hurd as "interfering in the nooks and crannies of our everyday lives"; and what the noble friend of the noble Lord, Lord Taverne, Lord Dahrendorf, rightly castigated fully two decades ago as "obsessive harmonisation".
As has been pointed out on a number of occasions by many people, the ancient nation states of Europe have less freedom of action in many spheres than Delaware or Rhode Island. Is it not shameful that we are no longer allowed to decide on the routeing of our own new motorways or on the optimum quality of our drinking water? Is it not shameful that we are no longer allowed to measure the height of horses in hands and we are no longer allowed to export British beef to those countries that positively want to buy it? Is it not shameful that after 1999 it will become a criminal offence for a shopkeeper to sell a pound of apples or potatoes to an old lady?
The conscientious—some might say over-conscientious—Nordic states with their Lutheran or Calvinist traditions, have felt obliged to obey all these interfering directives, with the result that there now seems to be a majority there in favour of withdrawal, or at least a watering down of the treaty.
The Mediterranean countries, on the other hand, adopt a more pragmatic attitude: namely, to grab the material benefits of the EC (why, after all, look a gift horse in the mouth?), while simply disregarding those directives which happen to irritate them. Sixteen months ago to the day, as it happens, I revisited Sicily after an interval of more than a quarter of century. I was struck by the prosperity, much of it funded by EC handouts, but above all by the joie de vivre of the people. Spurning EU health fascism and political correctness, they ate and drank to their heart's content and smoked like chimneys. In total defiance of EC directives, not a single motorist wore a seat belt—least of all the police—and no more than 1 per cent. of motorcyclists wore crash helmets. It is that contemptuous—and successful, I may say—dismissal of interfering EC rules which explains why there is so little vigorous opposition to the bossy and objectionable aspects of the EU in the Mediterranean countries. Since they have no intention of bowing to those rules, they rightly figure that there is no point in wasting time opposing them.
The British Government thought they would cleverly remedy that and spread the pain more evenly by pressing, during the negotiations over the Maastricht Treaty, for fines to be levied on disobedient nations,

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such as Spain and Italy, and they were successful in doing so. We heard earlier this week that fines had been proposed for those countries for misdemeanours which concern their countries and their countries alone. However, that policy in itself is unlikely to change attitudes sufficiently quickly. Moreover, fines levied on Mediterranean countries are often, in practice, waived or sharply reduced, partly for purposes of horse trading and partly for fear of riots or civil unrest breaking out in those volatile countries, which could spill over into the EU as a whole.
No, to counter apathy in the face of centralising zeal—apathy on the part of those countries whose inhabitants have no present intention of obeying tiresome laws and directives—a stimulus is needed in the form of this Bill or something very like it. The reason is that once Britain leads the way, the disillusioned Scandinavians are likely to follow and the worm may even turn in Germany at long last. Once the recipient countries see the prospect of subsidies from the donor countries drying up, their complacent apathy will evaporate overnight and pressure for looser arrangements—for example, the repeal of the acquis communautaire—and rules to ensure that the EU's competence is rigidly confined to matters of genuine cross-border significance as opposed to bogus cross-border significance will become, one trusts, almost universal.
That is only partly a matter of being hard headed and financially prudent. The noble Lord, Lord Cockfield, who I am sorry to see is not in his place, constantly maintains, unlike my noble friend Lord Moran, that the Treaty of Rome has nothing to do with an ever closer union between states but extols an ever closer union between the peoples of Europe. If he is right, that can only mean one thing: friendship and voluntary co-operation—compulsory co-operation is worth nothing. Indeed, one could say that an ever closer union between states is totally incompatible with an ever closer union between peoples. The latter has to be gradual, voluntary (once again) and unforced. After all, a good neighbour is one who is always friendly and lends help when assistance is needed but otherwise does not pry or interfere. A bad neighbour—the neighbour from hell—is one who barges his way into your house at any time of day or night and starts trying to bully you into altering the furnishings and decorations or prevent you from building an extra room onto the back, forces you to give up certain foods and drinks and orders you to put a fireguard around your fire.
This Bill, albeit indirectly, would reduce the ability of bad neighbours to interfere and would indeed reduce the number of potential bad neighbours, so to speak. Acceptance of the Bill, paradoxical though it may seem to the noble Lord, Lord Taverne, and his friends, would be a step towards fostering good neighbourliness within Europe.
Viscount Montgomery of Alamein: My Lords, before my noble friend sits down, does he think that we will continue to enjoy the trading advantages that we
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currently enjoy if we withdraw from the European Union? Furthermore, does he consider that our influence on matters to which he referred earlier in his speech would not be enormously diminished if we withdrew? In those circumstances we would have very little influence at all.
Lord Monson: My Lords, we would still be members automatically of the European Economic Area and also retain the advantages of the GATT negotiations. There would be few difficulties, for reasons explained by other noble Lords—I do not want to go into them again—and we would have the same advantages as Norway and Switzerland. My point in regard to influence is that it would act as a stimulus to other countries who are also dissatisfied with the obsessive harmonisation and over-regulation. It might cause them to exert pressure to make a change.
Lord Pearson of Rannoch: My Lords, perhaps I can put it to my noble friend who intervened—
Noble Lords: Order!
Lord Pearson of Rannoch: My Lords, before the noble Lord, Lord Monson, sits down, perhaps I can put it to my noble friend—
Noble Lords: Order! Order!
4.56 p.m.
Lord Hindlip: My Lords, this is perhaps a difficult moment to come in. I suspect that everybody is getting tired and slightly fractious.
I take issue with one thing said by my noble friend Lady Elles—who I am sad to see is not in her seat—who said that she did not feel that the EU in its present form was unpopular. The reason we are all still here so late is that it is unpopular. I take issue with her also when she says that noble Lords do not have a sense of public opinion. I believe we do. That is why we are here. Still, I shall try to be brief and come in in the middle of what I had intended to say. That is appropriate because once again I must address the question raised by the noble Baroness, Lady Ramsay of Cartvale, concerning English auctioneers.
As chairman of Christie's I should perhaps declare an interest in the question of English auctioneers operating in Europe. The noble Baroness was quite right in saying that it was the intention that we should be allowed to operate in Europe by the beginning of 1998. That may sound slightly odd, given that we have now been members of the EU for 24 years and are still barred from operating there. In fact, that date has now been pushed back to 1999 at the earliest because the enabling legislation which was to have gone before the French Parliament this autumn has not done so. In effect, therefore, General de Gaulle's veto lives on for us.

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On looking back—the noble Lord, Lord Wyatt, mentioned this—General de Gaulle, who was a brilliant man, may have been right. Since the Norman conquest Britain has had an uneasy relationship with continental Europe. It has different priorities and different preoccupations. France and what was to become Germany have always been preoccupied with internal European politics. France has pursued its own interests vigorously and skilfully, and still does but in a bureaucratic and centrist way.
I suggest that historically, and still, Britain's trade and ambitions lay outside Europe. We pursued them with equal vigour but in a laissezfaire fashion. We have been at our most successful when we have avoided European politics and European wars. We have suffered most when we have become too closely involved, even when we appeared to win.
In the 1950s there appeared to be a convergence between our historical perspective and Europe. But after 25 years of European experience it appears that nothing has changed. Europe still looks inward and we must still look outwards from Europe to achieve our own goals and prosperity.
If anything, Europe is more bureaucratic than it ever was. It is blinded by dogmas like harmonisation and the pursuit of the elusive—and probably illusory—level playing field, and blighted, as many noble Lords have pointed out, by petty disputes about beef, chocolate, olive oil and now airlines. It is also weighed down by the huge expense of the common agricultural policy and by a parliament which is, as other noble Lords have said, overhoused, elected by few and understood and listened to by fewer still.
If this is the destination of the train to which my noble and learned friend Lord Howe of Aberavon was referring when he made his famous speech attacking our greatest Prime Minister, I would prefer to wait at the station. My right honourable friend the Prime Minister is still urging us to do that. But we cannot wait for ever and it may be that the time has come for Britain, with its strong economy and strong inward investment, notwithstanding what we heard from Toyota, to distance itself from Europe.
1 have to say also that, in the business I work in, it costs 50 per cent. more to employ someone in France to do the same job as someone in England and his take home pay is less. We know the reason. It is the Social Chapter which the Front Bench opposite is so keen to implement here. What is worse is that in most European countries, as my noble friend Lord Bradford pointed out, state pensions are unfunded. They will eventually break down and impose appalling burdens on those states.
The time has clearly come to rethink our relationship with Europe. We have heard much talk about being at the heart of Europe. We have failed to be at the heart of
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Europe, and it is by no means all the fault of our partners that we are not. Our diplomacy has been unequal to the task of breaking down the historical differences. Europe still needs us, as other noble Lords have said, and we still need Europe. Few would want Britain to stand wholly apart from the continent, but if we are always to be the odd man out we will be in an equally bad position.
There is a painting in the Tate Gallery of the professors of the Royal College of Art, painted in the 1950s by someone I was lucky enough to know, Rodrigo Moynihan. He depicted himself and his colleagues in a group with one man standing apart. That was the painter John Minton. He was a good painter and a clever man but he stood apart from his colleagues. As he grew more isolated, he grew more depressed and in the end he killed himself. If we stand for ever part of a group, but not a part of it, we will probably kill ourselves too.
Our relationship with Europe at the moment is like that of an engaged couple who had known each other since childhood. They thought they loved each other. They got engaged, they promised to marry but they kept on putting off their wedding because, as they really got to know each other, they knew they would never really be happy. But because they could see no way out, they married. Legally bound and with all the responsibilities of parenthood, they fought more and more and they finally and acrimoniously divorced. They would have been much better off breaking off the engagement, not marrying but remaining friends. But they lacked the courage to admit they had made an honest mistake.
With sadness and not a little foreboding, I have come to the conclusion that this is where we are in our relationship with our European friends—and friends they are. I shall therefore vote for my noble friend's Bill and would urge other noble Lords to think very carefully about what has been said in the debate before they oppose it.
5.5 p.m.
The Earl of Onslow: My Lords, it is extremely interesting that this House is sitting at five o'clock on a Friday afternoon. It is interesting because I genuinely believe that this debate is very representative of the debates which arise whenever politics are discussed in pubs, clubs, dinner parties or wherever it may be. That is reflected in the balance of the speeches made in your Lordships' House today.
In Scind in the 1860s there was a dashing cavalry subaltern called Jacob. He was regarded in the bazaars of Scind as a brave protector of the poor. Sixty years later, Jacob Sahib had become a fat, bloated tyrant—in other words, the bazaaris of Scind had changed their mind.
I came to this House just after my father died and just before the European Communities Bill was introduced. I wanted to make my maiden speech on that Bill, but I was sat upon by the Earl of St. Aldwyn and the noble Earl, Lord Jellicoe. I was told that I was to wind my trunk in; that I was a young man; I was not to be arrogant and I was to keep quiet. It is the only time that I have ever taken that advice, for which I apologise.

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I was going to say that I saw the future of Europe as a federal state and as the successor to the Holy Roman Empire or to the old western Roman Empire. I thought that that was a good thing, so I do not believe that we can be told that we did not believe that federalism was on the menu. However, I have come to change my mind totally. I am a Euro-fanatic. My civilisation is Europe. I am moved by the sufferings and the greatness of European art, of politics, philosophy and music. No other continent has ever contributed so much to world civilisation. Therefore, I am a Euro-fanatic.
But that does not stop me from believing that the present arrangements for the governance of Europe are extremely silly. It is ridiculous to expect that von Bredow's Uhlans are going to charge up the hill at Marly-la-Tour or that Louvois is going to sack the Palatinate; or that the Italians are going to beat up some other Italian in the neighbouring village and that Europe is going to go to war in that sense. We are now grown up. The Black Prince is not going to shoot up Poitiers with bows and arrows. We are grown up and have grown out of that. We have grown tired of it.
But what we have to do is to make sure that we trade and sell each other widgets. "Unless you have the spice trade you cannot have Tintoretto". The only way to enrich ourselves is by the buying and selling of widgets.
So we put in place a thing called the common agricultural policy, which is about the most widget-distorting thing that has ever been invented by the wit of mankind. I have a cousin who is a young Member of your Lordships' House. He has approximately 8,000 acres of good agricultural land in Suffolk in hand. His area and set-aside cheque, on any normal calculation, would be about £1 million. His forebear had a nice brewery outside Dublin, so it does not take a lot to guess who he was. On the other hand, if one is an unmarried mother in a high-rise flat in Scunthorpe and one treats one's children to margarine because it is cheaper than butter, one pays £2,000 per tonne as a tax on the import of margarine.
Can there be anything worse than that? One taxes the poor and increases the price of food at that level to pay the noble Earl, Lord Iveagh, or the noble Lord, Lord De Ramsey, who is another big fanner, and, to a lesser extent, myself. I love that cheque when it arrives, so do not think that I blame them for taking it because I do not. But is it right that the tax on the poor is increased so that we get those cheques? It has not done the farming industry any good. It has not helped the villagers in the Massif Central. There are deserted villages in Burgundy. The CAP has not solved social problems; it has simply resulted in arrangements which distort world trade.
I served on the committee of your Lordships' House which looked into the effects on the CAP of the arrival in the Union of Eastern European countries. It was concluded unanimously that it was impossible for those countries to join with the CAP as it is. There is no likelihood of the CAP being changed sufficiently to
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allow them in. Because we need peace and prosperity in Eastern Europe, it is important that we buy everything that those countries can sell. We do not. The other day the Germans actually quibbled over the quota of half a lorry-load of raspberry juice—I cannot remember whether it came from Poland, Romania or Bulgaria. It was one of those sort of places. We cannot allow that sort of behaviour to determine our trade with Eastern Europe. We must import. We must buy from those countries. The EC-Polish trade agreement is full of restrictive practices. It contains provisions which enable the European Community to buy from Poland what it does not produce while ensuring that the Poles are not allowed to export to the European Community those things that it can produce more cheaply. Furthermore, the fisheries policy is a bad policy. The Namibians, the Canadians and, above all, the Norwegians all run much better fisheries policies.
So far, I have shown, I hope, that about 60 per cent. of the European Community's budget is spent on disastrous projects. I have not mentioned the fact that we subsidise the Greeks and the Italians to export poisonous tobacco at the same time as insisting on putting health warnings on our cigarette packets. What a silly way to behave. Indeed, what an evil way to behave. We are not allowed to use that tobacco in Europe because it is too carcinogenic, so we sell it under subsidy to other people. That cannot be right.
Unless an immense grip is taken over Europe—we have been saying for 25 years now that we can influence it from inside; I suggest that we are not influencing it from inside to as great an extent as it needs—we whose traditions are those of Locke, Adam Smith and the liberty of the subject are in conflict with those whose traditions are those of Rousseau, Nietzsche and Colbert. To end it all, I would rather be badly governed by the present Prime Minister with the prospect of being worse governed by Mr. Blair than be well governed by Bismarck, Kohl or Chirac.
5.12 p.m.
Lord Ashbourne: My Lords, I must apologise for speaking in the gap. I put down my name to speak but it somehow got lost in the system. In any event, I shall not detain your Lordships for long.
As I understand it, the Government are united in their desire to see Britain as an important member of a European Union which is a partnership of nation states. That means, in effect, an enlarged, flexible and outward looking community that concentrates on free trade, deregulation and competitiveness. Do we not want a Europe which can compete with Asia and North America—in effect, a world beater; not a Europe which is inward looking, protectionist and bogged down with job destroying social regulation? We should reject the Left-wing agenda of a federal superstate run by Brussels, as the Prime Minister made clear recently when he said:
"I'm not going into, and have never shown any enthusiasm whatsoever for, a centralist Europe, a federalists' Europe".

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Should we not be putting British interests first and fighting in Europe for our national concerns? Indeed, the Prime Minister recently made clear his determination to defend the national interest when he said:
"There are a lot of things in the treaty that frankly are an anathema to us, that we will not be able to accept, and I have made that absolutely clear… if we are right I don't mind being isolated".
As I understand it, our position on economic and monetary union is also clear. Britain will take part in a single currency only if the Government decide that it is in the national interest so to do given the circumstances at the time. Our opt-out remains in place. If we do not join we will retain control of domestic economic policy and there is no question of fines or other sanctions being imposed on us. We will be affected by EMU whether we participate or not, so it is vital that we retain our position at the negotiating table.
The staunchest advocates of European integration have always acknowledged that economics is merely the handmaiden of a new political order. According to my noble friend Lord Tebbit in such a system national parliaments would become little more than rate-capped county councils, while no less a figure than Hans Titmeyer, President of the Bundesbank, has emphasised that a European currency will lead to member nations transferring their sovereignty over financial and wage policy as well as in monetary affairs. It is an illusion to think that states can hold on to their autonomy over taxation policy.
In conclusion, I believe we should remain within the European Union, negotiating vigorously for the things we believe in, while refusing to join the single European currency, as I do not believe that the British people wish to give up control of interest rates, taxation and, even more, sovereignty than they have already ceded.
Earlier this week I had an anniversary. These anniversaries were joyful occasions many years ago. In later years I find them rather less joyful. I shall soon be able to say that perhaps I am one of the more mature Members of your Lordships' House. I received my first Euro-birthday card. I thought that I should share it with your Lordships because it is a good reflection on the present debate.
Lord Graham of Edmonton: My Lords, perhaps the noble Lord will allow me to remind him of the rule in the Companion relating to those who speak in the gap.
Baroness Trumpington: My Lords, the noble Lord was left off the List.
Lord Ashbourne: My Lords, the inscription on the Euro-birthday card is as follows:
"Here it is! The very first Euro-birthday card! Under new regulations, the imperial standard 'Happy Birthday' has been replaced with a simplified 'Euro-greeting', so … merry enjoymenting of a non-specific ongoing sequential annual event or
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events which relate specifically to that event hereafter known as 'the event' of birth in as much as a specific lime or instant of time shall be attributed to the event as previously determined in accordance with the regulations which refer to the event in question, being wholly or in part the event under discussion, to wit and pertaining to the non-specific event to which it has already been certified that contains a time reference appropriate to the yearly period which it is desirous to refer to as the event as specified".
I will not weary your Lordships further. It is this kind of thing that some of us find most offensive within the European Union. I believe that your Lordships would be assisted by having a practical example of what is being discussed.
5.18 p.m.
Baroness Williams of Crosby: My Lords, I should like to add my voice to those who have congratulated the noble Lord, Lord Pearson of Rannoch. Although my party and I cannot agree with the general thrust of what he wants to achieve, it is important and valuable to have a debate on a matter of such significance to the United Kingdom. I hope that there will be many more such debates. The more widely the public understand what is at stake, the more likely they are to support those who wish the United Kingdom to stay within the European Union.
I find one aspect of the noble Lord's Bill disturbing. The noble Lord has himself admitted that the second clause of his Bill is an almost classic example of what is sometimes referred to as a Henry VIII clause which seeks to achieve major objectives through statutory instruments. It is a profoundly unparliamentary and undemocratic way to bring about changes in legislation. This surprises me. As the noble Lord, Lord Pearson, and other noble Lords are aware, some of us very strongly support the idea of holding a further referendum should there be any major change in the United Kingdom's relationship with the European Union.
Those who, like myself, strongly supported the concept of a referendum in 1975 when we decided, by a substantial majority, to join the European Community, as it then was, would find it astonishing to undo that commitment by an Act of Parliament conducted largely through statutory instruments. That hardly seems to us to show trust and belief in the democratic method.
This has been an extensive debate. Some of it I have enjoyed greatly, and some of it—I shall talk about it in a few moments—I found rather shaming. Let me turn first to some of the points noble Lords have made. One point many noble Lords have made has been to the effect—it was expressed with great strength of feeling by the noble Lord, Lord Braybrooke—that basically Europe is conducted by bureaucrats, and in his view they would be better on a desert island. He was not even gracious enough to offer them a choice of eight records to take with them to the desert island, no doubt including Beethoven's "Ode to Joy" which would make a Eurobureaucrat on a desert island very happy for a very long time.

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The truth of the matter is that the number of bureaucrats who conduct the high level administration of the EU is somewhat fewer than those who serve Birmingham City Council; and every directive has to be approved by the Council of Ministers and the European Parliament. The European Commission, although it may initiate directives, has nothing whatever to do with deciding whether they go ahead or whether they do not.
Most of the directives to which noble Lords object have been approved and agreed to by the member of the Council of Ministers who comes from the UK. I must reiterate that that process is not one on which the Commission has the final word.
Many noble Lords have referred to the fact, as they described it, that sovereignty has been lost to us. They have indicated that this is the first that they have heard of it. Perhaps I may remind them of the obituary of our distinguished and noble colleague, the late Lord Rippon of Hexham, who again and again in 1972 on the occasion of the original legislation to enter the European Community made it absolutely plain that there were political objects in mind. Perhaps I may quote from yesterday's obituary in The Times:
"On all these occasions he"—Lord Rippon of Hexham—
"displayed remarkable candour—particularly about the underlying political objectives of the Community, something that was subsequently to do his reputation no harm".
The Times referred to what Lord Rippon of Hexham said not in 1996 or in 1995 but in 1972 when the political objectives were made absolutely plain.
In addition, some noble Lords have discussed the impact of the EU on our economic well being. The noble Baroness, Lady Ramsay of Cartvale, spoke to great effect on that matter. Let me therefore, for reasons of time, add only two more things. The first is that the trade between this country and its neighbours and colleagues in the European Union has increased nine times over since we entered the Community. That compares with a six times increase in our global trade; in other words, we have consistently traded more with the EU than with the rest of the world, and our proportionate balance of payments has moved into a better position with the EU than with the rest of the world. In 1995, the last year for which I have figures, the balance of trade deficit with the rest of Europe was £4 billion; the balance of trade deficit with the rest of the world was above £11 billion. The noble Lord, Lord Tebbit, referred, I thought in somewhat slighting terms, to the fact that in future, Toyota might go to Germany or France because of large-scale subsidies being paid to get them there. The implication of the noble Lord's words was that investors would abandon the United Kingdom for France or Germany because of the scale of the subsidies that they were paid. I have just checked and my understanding is that the amount of subsidy paid to the LG company by the United Kingdom government to go to South Wales, where its largest investment was opened only the day before yesterday, was no less than £200 million; that is, an estimated £30,000 per job. I do not think that that is necessarily wrong. I delight in the additional help to
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the economy of Wales. But we really must not pretend to ourselves that in some odd way, our neighbours in Europe pay huge subsidies and we pay nothing at all.
Lord Tebbit: My Lords, perhaps the noble Baroness will tell the House how much subsidy Toyota received to come to this country. I understand that it was none whatever.
Baroness Williams of Crosby: My Lords, I have been addressing myself to most recent events and not to those of some little while ago. I do not know how much Toyota was given to come to this country. However, I do know—and I have given the House the figures—precisely the amount paid to the most recent major investor.
A number of noble Lords have said over and over again that in their view, we should not suffer if we were to leave the single market. They point to the General Agreement on Tariffs and Trade, now the World Trade Organisation, as a reason why we should not undergo any degree of discrimination were we to leave. If that were true, why did the noble Baroness, Lady Thatcher, determine, when she was Prime Minister, and I think rightly, that we should join the single European market? Why was she prepared to swallow something she disliked very much—qualified majority voting—to get us inside the single market instead of outside it? Do noble Lords suppose that the noble Baroness would have been prepared to pay that price for us to enter the single market had she not believed that there was any advantage?
It was clear what the advantage was. It was that we came within a single market where the laws of the Community itself press continually towards a level playing field. In the past few days alone, the market for telecommunications has opened up in a way that the head of British Telecom has indicated is of great benefit to his company. The market for electricity is being liberalised in a way which will benefit greatly some very competitive companies in the United Kingdom. That is all due to the single market and the single European law which operates within that market.
There are two other matters which I wish to mention briefly before I sit down. The first is the dreaded social chapter. With great respect to the noble Lord, Lord Hindlip, the dreaded social chapter has absolutely nothing to do with the on-costs of Germany, France or Sweden or any other country in terms of the way in which they subsidise their welfare state. For example, we pay for the National Health Service directly out of income taxes and other direct taxes. France and Germany pay for it largely by an additional tax on labour. That has been true for years, long before the European Community came into existence. France, Germany and Italy paid for their welfare state out of on-costs on labour. That has nothing to do with the social chapter.

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So far, the social chapter has done just three things. It has proposed that there should be consultation in large firms. It is very difficult to see what is so wicked about that. It has proposed that there should be parental leave, and many millions of people in the United Kingdom would welcome that opportunity; for example, to look after a sick child. And wickedness of wickedness, it is proposed that there should be a limit of 48 hours not on the number of hours that someone can work if he chooses to work more but it is said that employers should not be able to compel people to work for more than 48 hours if they do not wish to do so. For the life of me, I simply cannot see what is so wicked about that.
I turn to the last point that I want to make, but it is a very big point. Years ago, when the noble Baroness, Lady Thatcher, spoke in the debate in 1975 at the time of the accession of this country to the European Community, as it then was, she said:
"I believe with a number of honourable Members who spoke yesterday that the paramount case for being in is the political case for peace and security".
She went on to say:
"The Community opens windows on the world for us which since the war have been closing. It is already a strong and already a major influence in the world".—[Official Report, Commons, 8/4/75; col. 1022.]
I do not quote that passage in order to embarrass the noble Baroness. I have a great deal of respect for some of the things that she has done—not all of them, but some of them. However, she was absolutely right; the major purpose of the European Community, now the Union, was and is political.
It is beyond me to understand why in this House we do not recognise the amazing achievements of the past 50 years. We have peace in Europe; peace in a continent which has twice ripped our families apart. I believe that the Community has a great deal to do with peace in Europe. It is easy to say that it does not if you do not happen to have seen the effects of civil war in Europe.
I believe that the reasons for the fall of the Berlin Wall had a great deal to do with the way in which Europe showed that prosperity and freedom could live alongside one another; a proof which went across to communist countries and showed them that there was another and a better way. I believe that the European Community has everything to do with the fact that Germany has been able to unify peacefully. It has been a difficult unification, but not a single life has been lost in its achievement. Finally, I believe that the European Union offers the troubled peoples of eastern and central Europe the opportunity to live in a stable continent.
I shall conclude by commenting on the remarks made by the noble Lord, Lord Wyatt of Weeford. He told us that in his view the only alliance that really mattered to this country was the alliance with the United States.
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He said that that was the absolutely crucial alliance. But the strange thing is that the United States, where as some noble Lords know I spend a great deal of my time, is a passionate supporter of European integration. Perhaps I may quote the words of the former ambassador from the United States to the European Union. In only 1995, Mr. Stewart Eizenstat said:
"We support the European integration movement wholeheartedly and in supporting it we have never been a passive bystander. We are an active champion of European integration".
Last year his words were echoed by President Clinton on his visit to Germany and this year his words are being echoed in the efforts to try to create a transatlantic agenda between the United States and the European Union. The United States is interested in an alliance with Europe, not just in an alliance with the United Kingdom.
We live in a globalised world. We may not wish to; we may wish that it were different. Many of the speeches that we have heard today were based upon the desire to turn the world back to another time which no longer exists. In that globalised world, we should not insult some of our partners, as we have done, by saying how little they understand democracy and how little they understand parliaments. It is for us to assist and help our neighbours in Europe to create a stable continent in a stable and peaceful world. I believe that that is our mission; not the mission of a second-rate country but a mission to which we should all be called with everything that we have. I hope only that those who believe in this vision, as I believe that for a long time many of those in the Labour Party did, will come with us tonight and vote against the Second Reading. I hope that the same will apply to those on the Conservative and Cross Benches who see this vision.
5.35 p.m.
Lord Haskel: My Lords, this has been an extraordinary debate—extraordinary because 38 speakers must be a near record for your Lordships' House on a Friday, and because of the extraordinary discontent which many noble Lords have shown with Europe. Are we really representative of the great British public, as the noble Earl, Lord Onslow, suggested? While thanking the noble Lord, Lord Pearson, for introducing the Bill, I must say that I find it dangerous and backward-looking. I say backward-looking because it would put our economy into reverse by diminishing the value of the single market and dangerous because it will affect our culture and diversity. I seek to defend them both from within, not from without. I share the concern expressed by my noble friend Lord Whitty about the inconsistencies and the rewriting of British history that we have witnessed today.
Many noble Lords who have spoken assume that our economy and our culture can be separate. In 1997 that is impossible. Trade intrudes on all aspects of our life

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and culture. It affects the lives of everyone, not only those in business and industry but also those in all other walks of life—in education, medicine, the arts, the professions and the public service. Indeed, it affects everything from the air that we breathe to the lives that we live.
Noble Lords who support the Bill want to pick and choose our relationships with an extraordinary presumption that others will agree to that—an à la carte kind of relationship, as the noble Earl, Lord Clanwilliam, called it. Cherry picking is only possible with the agreement of others and it is dangerous to assume that the others will agree. How much more constructive is the shared vision of which the noble Lord, Lord Bowness, spoke.
The cherry picking contained in the Bill of the noble Lord, Lord Pearson, will only encourage opportunistic and short-term business activity. It will deter long-term serious investment and a commitment to progress. We shall return to goods being stopped at frontiers to pay duties, products having to comply with different laws and services not being subject to competition. That is what it means to be a "stand alone", as many noble Lords wish. Is this what the noble Lord seeks to encourage—a kind of stand-alone, Albanian pyramid scheme economy such as we have recently been hearing about? Far more attractive are the advantages of the single market about which my noble friend Lady Ramsay spoke.
The hostility of many speakers supporting the noble Lord's Bill towards our relations with Europe is making it more difficult to complete the single market and secure the benefits. In doing this, they are helping to undermine the very culture which they are seeking to preserve. The single market is the biggest trade commitment that we have. Since 1991, Europe has become our home market and that is why we have interdependence not the dependence, or loss of sovereignty, about which many noble Lords complain. Parliament still rules. The noble Earl, Lord Carlisle, reminded us that this is a voluntary arrangement. Incidentally, now that I have mentioned the noble Earl, perhaps I may congratulate him on his maiden speech—that is, if it was indeed his maiden speech.
As a result of the single market more jobs exist, inflation is lower and gross domestic product is higher; indeed, the noble Baroness, Lady Elles, gave us the details. Most companies, whether in manufacturing or services, directly or indirectly have customers, suppliers, agents, representatives, warehouses, distributors, investors and all kinds of business partners throughout Europe. Many noble Lords want to end this or want companies to renegotiate such relationships. There is no economic case for it. Those relationships are developing and changing by the minute, and it is right that that should be so. There are also the relationships being developed by young people about which the noble Baroness, Lady Elles, spoke. Those relationships are
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developing because, generally, business and society feel that there is an agreed framework. That agreed basis makes the single market possible. But this Bill will undermine that agreed basis. Business cannot develop relationships if countries can pick and choose the rules on which those relationships are based. It is just impossible.
The noble Lord, Lord Moran, spoke of friction. This Bill will make that worse, not better. Rule one for a successful economy is stability. We could throw away years of work and the competitive value built up during that time. This Bill would mean our withdrawal from the single market. There are those who believe that completion of the single market is dependent on a single currency. A decision whether or not to enter into a single currency on 1st January 1999 is a political decision which can be made only when all the facts are known and the European Council has reported.
The political decision of the United Kingdom must be determined by the national economic interest. The prize is reduced transaction costs and currency stability. Many exporters wish we had currency stability at the moment. Should there be a positive decision in relation to the single currency, Labour will put this to the people of the United Kingdom through a referendum.
The Earl of Onslow: My Lords, will the noble Lord clarify something for me? If the baby of the single currency can be perfectly formed, is the Labour Party in favour of it or not? I could also address this question to my own Front Bench; I suspect I shall get no answer from either of them.
Lord Haskel: My Lords, the Labour Party is united on the wait and see policy.
To protect our culture and way of life, the economy needs to grow. It needs to find more sources of revenue and more areas of activity, not fewer, which would be the result of withdrawing from the single market. For growth we need to look outwards. The noble Lord's Bill, and its supporters, look inwards to try to protect jobs and sovereignty. That is totally unrealistic. We gave up our economic sovereignty years ago. Our economic sovereignty is based on reaction to global markets, not controlling them. Our legal sovereignty is intact, as the noble Lord, Lord Kingsland, reminded us.
A few noble Lords have spoken about protecting employment. Do they not think that our partners in Europe also want to do that? Of course they do. The Commission has made employment a priority through a confidence pact. Sweden put forward proposals during the preparatory stages of the intergovernmental conference to make employment a priority goal for the European Union. Noble Lords may remember that the Irish Government put forward a similar treaty for discussion at the Dublin Summit in December; in effect, a kind of employment chapter.
Lord Young of Graffham: My Lords, I remind the noble Lord that some 10 years ago when I was Employment Secretary, unemployment in Europe was 15 million and rising. The Commission at that time made employment a priority. Today, the figure is 18 million and rising—that is, 20 per cent. higher—but unemployment in the United Kingdom, which is free from many of these restrictions, has fallen by a third.
Lord Haskel: My Lords, I do not dispute the figures; what I suggest is that we and the rest of Europe are possibly at different stages of the economic cycle.
In some ways this employment chapter is a counterweight to the rather monetarist Maastricht criteria for EMU. Sadly, these items have hardly been debated, but this is not the time to go into the details of these proposals.
A cornerstone of the Government's economic policy is to encourage inward investment, and that has been successful. Much of this inward investment has occurred because we are the preferred gateway into the single market. My noble friend Lady Ramsay gave us the details. Were we to start to interfere with the basis of our relationship with this market—as would happen if the noble Lord's Bill became an Act—I have no doubt that much of that investment would dry up, in spite of the reassuring remarks of the noble Earl, Lord Liverpool. Forty per cent. of our manufactured exports are from these foreign-owned companies, and very welcome they are. The noble Lord, Lord Tebbit, spoke of subsidies. I believe that he was being rather selective. What about Jaguar? What about Ford? What about British Aerospace, which had to give some of the grants back?
I happen to think that we have been able to develop the single market, and will be able to continue to develop it, because all the countries involved have a similar view of citizenship. It is that view which has enabled industry and politics to work together. This is the basis of our common enterprise. The European institutions about which many noble Lords complained are the servants of this enterprise, not its masters.
Many noble Lords seem to think that it is the nation state that we have in common. Viewed from Europe, the concept of the nation state has caused two world wars and incalculable suffering—caused by the xenophobia which the noble Lord, Lord Belhaven, says does not exist. The noble Earl, Lord Liverpool, and the noble Lord, Lord Braybrooke, spoke of sacrifices in two world wars. I hope that the European Union will prevent the need for those sacrifices in future.
The single market and the concept of citizenship have got along very well together and that is the basis for our future prosperity and the protection of our culture and society. By extending those ideals to Central and Eastern Europe we shall prevent discord and disharmony there too, and help our security because what happens there affects us. The noble Lord, Lord Kingsland, reminded us of that.
1420
Trade has been, therefore, a successful instrument of policy, serving the national interest and at the same time adding to the well-being of the people throughout the European Union. This is the moral imperative. That is why we must stay in Europe and fight our corner. The noble Lord's Bill will put this into reverse. That is why it is dangerous and backward looking.
I turn for a moment to the Motion of the noble Lord, Lord Taverne. It is a well understood convention in your Lordships' House that at Second Reading of a private Member's Bill the official Labour spokesman refrains from expressing a party view. Nevertheless, it will be clear to the House where my feelings lie. I agree with the noble Lord, Lord Taverne, that we cannot unilaterally tear up a solemn international agreement. On the Labour Benches there is no Whip and the Labour Front Bench will abstain. However, I fully expect that on our Benches there will be those who will both support and oppose any vote which may take place.
5.47 p.m.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, I have listened with great interest and attention to this long and important debate. Many views have been expressed and many points raised. I shall try to be brief and at the same time touch a number of the themes raised while spelling out the Government's position. There will be a number of smaller points to which I shall have to respond by letter to noble Lords. There seems to be some doubt as to whether the speech of the noble Earl, Lord Carlisle, is his maiden speech. However, he made one important point to which I wish to respond. The Government fully support the accession of the Baltic States to the European Union, and indeed of all applicant countries when they are ready. This process of enlargement is not dependent on the development of relations with Russia, although that is an important issue to us as well.
The Bill before us draws us to the very nub of the European debate. To repeal the provisions for enforcement of Community rights and obligations in this country would leave us in breach of our international obligations under the European Community treaties. In such circumstances we would have no choice but to withdraw from the EU.
The real issue then—I do not think that there is disagreement among your Lordships on this—is this country's membership of the European Union. The Government are clear that membership is in the national interest. First, it is directly relevant to our prosperity—no prosperity, no jobs. Membership of the single market widens opportunity for our companies and choice for our people. It is crucial to our huge success in attracting inward investment—40 per cent. of all United States and Japanese investment in Europe.
Our place in the EU is equally relevant to a wider interest in stability and security in Europe and beyond. For the past four decades, together with NATO, the European Union has helped ensure an unprecedented period of peace among the nations of western Europe. Today it is one of the most effective mechanisms in

1421
forming a common front against drugs and organised crime and for working together to clean our environment. The European Union always has been and must remain more than a mere free trade area.
I recognise that many people sometimes feel a sense of frustration at our dealings in the European Union. So do the Government. Partly this reflects a justified dissatisfaction with specific policies such as the agricultural policy or the common fisheries policy. Partly it reflects a deeper anxiety about the possible direction the Union might take in future.
We cannot and do not ignore such concerns. We continue to urge reform of policies to which we object, like those on agriculture and fish, and an end to restrictive practices. However, it is much easier to spin flowery rhetoric about the European Union's alleged deficiencies than it is to grapple with the detail, prior to achieving improvements in the national interest.
In the intergovernmental conference we are taking a clear and uncompromising line on issues such as more majority voting in the Council. We anticipate a tough negotiation. But the Government are clear that no case has been made for further harmonisation and any transfer of decision-making to Brussels.
So we must and shall continue to argue and work for the sort of European Union which we believe is right: a partnership between nation states, working together through agreed systems of decision-making where that brings real advantage. We seek an enlarged Union that is a foundation of peace, democracy, prosperity and the rule of law across our continent, and an open Union active in wider global co-operation.
As for trade, if we left the European Union, we would have to reach the best arrangement we could with our erstwhile and by then disaffected partners. A number of noble Lords find it attractive to pluck from the tree the various European policies which are obviously in our interests and to abandon the rest. But let us not be under any illusions about this. Quite apart from the acrimony such a divorce would generate, the World Trade Organisation's arrangements provide nothing like the same degree of open market access as the single market. I do not see much attraction in a free trade relationship that would leave us subject to the same European Union obligations as now but without the voice we now have in framing the rules—to coin a phrase, "obligation without representation".
The Common Market needs common rules with common European-wide institutions like the Commission and a strong and independent court to enforce them. Otherwise, it will dissolve into an anarchy of cheating. We know that the Court's functioning can and must be improved. That is why we have tabled proposals to that effect in the IGC.
In other areas as well, we continue to seek changes to rules where they are now deficient, as with the common agricultural policy. We continue to oppose new proposals that are not sensible. But accepting the obligations of co-operation does not and will not mean accepting every idea that may be put to us from Brussels or elsewhere in Europe. The difficulties or frustrations
1422
we may encounter in the European Union are entirely inadequate grounds to throw away the advantages and opportunities we gain from membership.
As I have already explained, the Government believe firmly that the European Union has been and remains an essential foundation of stability and prosperity in our continent, from which our own countries cannot be separated. Membership of the European Union, acceptance of the European Union's obligations, is not a matter of selling out our sovereignty. It is about co-operating with our partners to enable us collectively to pursue shared goals in a way and to an extent that we could not contemplate each on our own.
There are difficult decisions ahead for the European Union. Next year decisions must be made on moving to Stage 3 of economic and monetary union. Let us be clear: whether or not we take part in that process, a failed single currency would damage our own prosperity and interest. Just because we might not be directly involved does not mean that we would not be directly affected. We face equally fundamental challenges in preparing for enlargement to embrace the new democracies to the east. That is important, as my noble friend Lord Kingsland pointed out. This requires great effort on their part to prepare and hard choices on ours in respect of present policies. But enlargement is central to reuniting our continent and spreading and extending peace, prosperity, democracy and the rule of law. The nations of central and eastern Europe are in no doubt of that. And this work is, as the Government said in the Partnership of Nations White Paper last year:
"at once an historic responsibility for Europe and a long-term British interest".
Economic and monetary union and European Union enlargement are of direct relevance and importance to the United Kingdom. We should be directly involved in the decisions taken on them.
Meanwhile, there is a real debate being held about Europe itself. What kind of Europe should we and our partners aim to build? In June, in Amsterdam, Europe's leaders will conclude the intergovernmental conference that is reviewing present European Union structures. We have a clear agenda for the Union. We want a Union that is outward-looking, free-trading, democratic and flexible; a Union that respects the diversity and promotes the enterprise of its peoples; a Union above all that embodies our vision of a partnership of nations.
People have sometimes scoffed at the idea that the European debate is going Britain's way. But in reality today's European Union bears the hallmark of our approach. After all, it is no longer based, even if it ever was, on the concept of a small core of countries moving inexorably ahead towards ever more centralisation, as if propelled by some kind of Marxist dialectic.
Today's European Union is a careful balance between subsidiarity, supranationalism and intergovernmentalism. Today's debate is about flexibility, to reconcile the legitimate wish of some to integrate more closely with the equally legitimate wish of others to rest where they are.

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Increasingly, Britain's approach is determining Europe's economic agenda. It is there in the single market, as my noble friend Lord Tebbit pointed out. It is there in the liberalising, positive role played by Europe in the world trade talks. Do not let us forget that there is no greater champion of that policy in the councils of the Community than this country. If we were not there, it does not necessarily follow that that free trade impetus would remain.
Is it not also striking that today countries across Europe are following a trail blazed by Britain throughout the 1980s and 1990s, much of it following the lead of my noble friend Lady Thatcher? I refer to the path of privatisation, deregulation and labour market reform. They are not doing it only because of EMU. They are doing it because they know that to succeed in a single market and an increasingly competitive global economy they have little choice.
I invite those who say that that is simply British propaganda to listen to the words of Ruud Lubbers, the former Dutch Prime Minister, who last April said:
"France and Germany, the engines of Europe, had better realise how strong the development of the British economy has been … the UK is reacting better to the globalisation of the economy than Germany or France. The UK has a tradition of open markets, a tradition which has become stronger since the 1980s".
Of course, some of our partners have a different concept of Europe. They press their vision as we do ours. This country's interest is not to withdraw from that debate. It is to continue to argue and work for the kind of Europe that is in the United Kingdom's interests and, we believe, in our partners' interests as well. We have argued successfully before. We can do so again now.
It is not the Government's practice to oppose Private Members' Bills at Second Reading in this House. Therefore, if a Division is called today, the Government will abstain.
Lord Harris of Greenwich: My Lords, perhaps I may ask the noble Lord a question. He has just made a statement about the traditional attitude of the Government to Private Members' Bills which puzzles me a little. I should like to ask him why he said that, given the fact that in the lifetime of the present Government when I put forward a Bill introducing proportional representation into local government, all Ministers were brought in to vote and Government Whips were posted outside to stop Conservative Peers from leaving the Chamber. Can he explain to me why there has been such a radical change of attitude, given the fact that it is in the lifetime of the present Government that this has happened and that the then Leader of the House and the Government Chief Whip were among those who voted?
Lord Inglewood: My Lords, I have no knowledge of the incident to which the noble Lord refers and therefore cannot by definition respond to it. However, if a Division is called today the Government will abstain. I should conclude by making clear that our view is that this Bill is contrary to government policy and to Britain's interests.
6 p.m.
Lord Pearson of Rannoch: My Lords, I am extremely grateful to everyone who has spoken in this debate, though I appreciate that it has technically taken place on the Motion of the noble Lord, Lord Taverne. By my calculation 28 of your Lordships have been supportive of the Bill and only 10 spoke against it. While I repeat my gratitude to noble Lords who supported it, I shall confine my summing-up to the 10 who spoke against the Bill.
Taking them in the batting order in which they took the crease, the noble Lord, Lord Taverne, was guilty of two Euro slogans which I did not have time to mention in my speech. The first was that British business favoured the EU. I am afraid the noble Lord has been listening to the hierarchy of the CBI which, as we all know, has a somewhat distorted view of this matter, no doubt because its members hope for knighthoods and so forth. Perhaps I may remind the noble Lord that the Federation of Small Businesses voted to leave the European Union altogether. And if the noble Lord was to consult the Institute of Directors, he would find a very different view to that of the CBI.
The second Euro slogan mentioned by the noble Lord was that we need to be in the EU to sit at the top table of world affairs. He asked what the USA would think if we were out of the EU. The last time I heard anyone say that we needed something to be at the top table of world affairs was when we were discussing keeping Trident; and we kept it. What about the Security Council? Is it not so that our Armed Forces are the finest in the world? I fear that that sort of statement from the noble Lord is more resonant of Suez than of the future which this country should be facing.
My noble friend Lord Kingsland, in a helpful intervention, pointed out that delegated legislation might not be covered, and therefore withdrawn by the Bill. He may have a point and I trust he will table the relevant amendment when we move to the Committee stage. My noble friend also congratulated me on not mentioning a referendum in the Bill. I share his view on that. I believe the Conservative Party should win the next election by putting clear blue water between ourselves and the Benches opposite and by promising a complete renegotiation of our relationship with the European Union after we have won the election. I have to say that I fear we may not win it unless we adopt a manifesto of that kind.
My noble friend Lord Kingsland also went on to say that we have not lost sovereignty, hence the ability to discuss this Bill. He said that Parliament could get us out of the EU; it would fall away if we wanted it to. But I must put it to my noble friend that if we were to join EMU that situation would no longer prevail. He also wisely mentioned the situation of the United States becoming steadily more isolated. Some of us cannot help wondering whether that is because Europe is concentrating so much on the Western European Union. He rightly pointed out what a danger it would be if Germany and Russia were to get close together again. But I do not see why all those matters could not be dealt with by the UK and its European partners by intergovernmental co-operation.

1425
Moving on, the noble Baroness, Lady Ramsay of Cartvale, pointed out the benefits that we have in a market of 360 million people. From what I said in my introductory remarks, I trust the noble Baroness will agree that we would keep our access to that market. The noble Baroness also made the remarkable statement that she felt the single market had led to a reduction in red tape. I can only recommend that the noble Baroness reads the book, Castle of Lies, by Mr. Christopher Booker and Mr. Richard North and we can then discuss the matter again.
The noble Baroness also opined that the Luxembourg Court of Justice makes the others obey the single market. I am not sure whether British Airways feels that it is very fairly treated and I do not know what she would have to say on the matter of steel subsidies.
Baroness Ramsay of Cartvale: My Lords, does the noble Lord not think that British Airways is rather pleased that it was given permission to go into Paris Orly when the French Government had tried to say no?
Lord Pearson of Rannoch: My Lords, I was referring to some difficulties that British Airways may have with plans in the United States of America.
The noble Baroness said one more remarkable thing. She said that if we were out we would have regulation without representation. But she should be aware that that is exactly what we have with regulations—which are issued by the Commission, which do not even go through this Parliament and which the Commission is using more and more. It is a Commission regulation which threatens emtryl, so essential for our pheasant rearing. It is a Commission regulation that threatens the use of set-aside land for charitable purposes.
The noble Lord, Lord Stoddart of Swindon, in what I agree was perhaps the best speech I have ever heard in your Lordships' House, asked the Government whether they would introduce the 1972 Act today. I have to notice that my noble friend on the Front Bench did not reply.
My noble friend Lady Elles suggested that our debate was not representative of the British people's view and that we could leave the EU if the people so decided. However, the leadership of both parties appears to be in favour of staying in the European Union, and therefore I do not see how we are going to test the view of the British people unless we have a referendum. But I make no imputation to my noble friend Lady Elles that she is considering joining Sir James Goldsmith in this matter.
My noble friend also said that it would be the poorer people in this country who suffered if we left. I do not quite know how she squares that with the fact that our membership under the common agricultural policy costs the average family £1,250 per annum.
I come to my noble friend Lord Inglewood on the Front Bench, who I fancy has a number of letters to write. He certainly has one or two to write to me. He mentioned that the EU was valuable for collaboration on drugs, organised crime and the environment. I just wonder why we need the European Union for that. He said that the Government were pressing their view of a
1426
partnership of nations, of keeping the veto and not having any more qualified majority votes in Europe. But he did not answer the question as to how the Government will achieve those objects when the others are so obviously against them. He said that there would be acrimony if we left. But he did not answer the point that we trade in deficit with them. They need us more than we need them. He who pays the piper calls the tune.
I come finally to the contribution of the noble Baroness, Lady Williams of Crosby, who at least agreed that the Bill and our debate have been valuable. She may not have been here earlier when her noble friend Lord Taverne was not in agreement with her and said that it was more or less scandalous of me to have introduced this matter as a Private Member's Bill. But perhaps that is the Liberals for you.
I would go further in that regard because, although I was not there at the time, I understand that both the noble Lord, Lord Taverne, and the noble Baroness, Lady Williams, voted against the Second Reading of the European Communities Act 1972. In fact, I think the date was 17th February 1972.
I heard a rumour that the Liberal Democrats have done this Bill the rare—perhaps unique—honour of issuing an official—
Baroness Williams of Crosby: My Lords, I do not want to detain the House but the noble Lord must be aware that I was one of the 71 Members of Parliament on the Labour Benches who voted with the Government in favour of the European Community.
Lord Pearson of Rannoch: My Lords, I cannot remember which party the noble Lady was in on the 17th February 1972. She will forgive me if I am confused as her history has proceeded.
I heard a rumour that the Liberal Democrats have done this Bill the rare, perhaps unique, honour of issuing an official three-line-whip against its Second Reading tonight. I do not recall ever seeing the Liberal Democrat Benches so well attended as they are tonight. It is up to them, of course. But I fear that they are sending a message to the people of Britain that they do not want to repatriate self-government to this country. I trust that that is not a message that your Lordships' House will wish to send to the nation, so I must ask your Lordships to vote against the Motion in the name of the noble Lord, Lord Taverne, and in favour of the Bill.
Lord Taverne: My Lords, perhaps I may very briefly answer one point made by the noble Lord, Lord Pearson. I did not say that it was scandalous to raise the issue. I would have been in no way opposed to his raising the issue in the proper form of a Motion. What would be scandalous would be for this House to pass a Bill which tears up the treaty unilaterally. The hour is late and it would not be appropriate for me to answer all the points made in various speeches and they have all been very interesting speeches.

1427
I wish to refer to only two speeches. First, I should like to make one general, brief observation. What I found somewhat disturbing and unattractive about many of the speeches made in favour of the Bill was the general, somewhat smug assumption of superiority about our way of doing things, unlike those unfortunate Continentals. That was not true of the noble Lord, Lord Pearson, who presented his case very fairly.
Personally, in some spheres I prefer our way of doing things and in others I believe that we have a lot to learn from our partners in the European Union. But overall the record of the past few decades hardly suggests that our institutions are so infinitely superior as one nation after another has overtaken our standard of living.
The two speeches to which I wish to refer very briefly are, first, the admirable maiden speech—as I understand it was—of my noble friend Lord Carlisle. He made a very interesting point about the attitude of Estonia. It is very interesting that such a country should be so keen to join a union which a number of noble Lords are so keen to reject. He was told by the noble Lord, Lord Tebbit, in a very patronising remark, that the Estonians did not know what was good for them. Presumably, that would also apply to the Poles and the Czechs. The noble Lord, Lord Tebbit, said that, having just recaptured their independence, they would now be giving it away by consent.
Lord Tebbit: My Lords, the noble Lord himself is behaving in an extraordinarily patronising way. What I said was not patronising, but an expression of an opinion that that would be the result of their entry into the Community. That is not patronising.
Lord Taverne: My Lords, I believe that the noble Lord was being patronising in saying that the Estonians did not know what was good for them and also suggesting that the Czechs, Poles and the Hungarians did not know what was good for them. If that is not patronising I do not know what is.
It is extremely relevant that there are so many nations which have either recently joined or who are queuing up to join the European Union when, apparently, according to those who moved the original Bill, this union is something to be rejected at all costs.
There is one last point that I wish to make. I am somewhat surprised at the attitude of the Front Benches. It is not the fault of the noble Lord who was not aware of the fact that this has happened before. Given the way that they voted on the introduction of proportional representation in local government—which they did oppose and on which they voted—when it is a matter of such importance as our future in the European Union, the noble Lord made a speech saying that this Bill was utterly unacceptable to the Government and then said that they would not be voting themselves. It means that the vote which will take place will be a vote which is not representative of this House. However, it is an important issue and I wish to press my amendment. I hope that noble Lords will support it.
6.14 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 51; Not-Contents, 52.

Division No. 1

CONTENTS

Ackner, L.

Lester of Herne Hill, L.

Acton, L.

McNally, L.

Addington, L.

Meston, L.

Alderdice, L.

Montgomery of Alamein, V.

Annan, L.

Murray of Epping Forest, L.

Avebury, L.

Norton. L.

Bath,M.

Ogmore, L.

Bowness, L.

Ramsay of Cartvale, B.

Bradford, E.

Rawlings, B.

Cadman, L.

Rochester, L.

Carlisle, E.

Rodgers of Quarry Bank, L.

Craigavon, V.

Russell, E.

Donaldson of Kingsbridge, L.

Simon of Glaisdale, L.

Elles, B.

Skelmersdale, L.

Ezra,L.

Strabolgi, L.

Taveme, L.

Geraint, L.

Thomas of Gresford, L.

Halsbury, E.

Thomson of Monifieth, L.

Hamwee, B.

Tope, L.

Harris of Greenwich, L. [Teller.]

Tordoff, L.

Hayhoe, L.

Wallace of Saltaire, L. [Teller.]

Hilton of Eggardon, B.

Whitty.L.

Hooson, L.

Wilberforce, L.

Jenkins of Hillhead, L.

Williams of Crosby, B.

Kennet, L.

Wilson of Tillyom, L.

Kingsland, L.

Wright of Richmond, L.

NOT-CONTENTS

Ailesbury, M.

Leigh, L.

Alexander of Tunis, E.

Liverpool, E.

Annaly, L.

Massereene and Ferrard, V.

Ashbourne, L.

Milne, L.

Barber of Tewkesbury, L.

Monson, L.

Bauer, L.

Moore of Wolvercote, L.

Belhaven and Stenton, L.

Moran. L.

Birdwood, L.

Munster, E.

Blake, L.

Onslow, E.

Braybrooke, L.

Pearson of Rannoch, L. [Teller.]

Bruce of Donington, L.

Rankeillour, L.

Buxton of Alsa, L.

Rennell, L.

Charteris of Amisfield, L.

Romney, E.

Clanwilliam, E.

Somerset, D.

Cross, V.

Stoddart of Swindon, L.

Dacre of Glanton, L.

Swinfen, L.

Derwent, L.

Tebbit, L.

Exmouth, V.

Teviot, L.

Grantley, L.

Tombs, L.

Gray, L.

Torphichen, L.

Hamilton of Dalzell, L. [Teller.]

Vinson, L.

Hardinge of Penshurst, L.

Vivian, L.

Harris of High Cross, L.

Waterford, M.

Hindlip, L.

Wharton, B.

Holderness, L.

Willoughby de Broke, L.

Jenkins of Putney, L.

Wyatt of Weeford, L.

Resolved in the negative and amendment disagreed to accordingly.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at twenty three minutes past six o'clock.