HL Deb 17 June 1998 vol 590 cc1585-99

4.12 p.m.

The Lord Privy Seal (Lord Richard)

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the meeting of the European Council which he chaired in Cardiff on 15th and 16th June. My right honourable friends the Foreign Secretary and the Chancellor of the Exchequer, and my honourable friends the Minister of State at the Foreign Office and the Economic Secretary, were also present. Copies of the conclusions have been placed in the Libraries of both Houses. The Statement is as follows:

"I should begin by thanking the City Council and the people of Cardiff for their warm welcome and hospitality. I congratulate them wholeheartedly on the arrangements for the summit, which were universally admired. Cardiff itself looked marvellous and did great credit to Wales and this country.

"This European Council had four main themes: economic reform and employment; enlargement and the necessary accompanying policy reforms; the future development of the EU; and foreign policy issues, notably Kosovo. We also discussed a range of other questions which touch the lives of ordinary people: the environment, crime and drugs, the millennium bug. The Finance Ministers issued a statement on the world economy, a copy of which is attached to the conclusions.

"We had an important and valuable debate on the economic reform programme needed in Europe if the single currency is to succeed. There were four aspects to this: first, employment. At Luxembourg last November, the European Council agreed a set of employment guidelines aimed at promoting a skilled, trained and adaptable workforce and flexible labour markets responsive to economic change. Under the UK presidency, all 15 member states have submitted national action plans putting these guidelines into effect. We agreed at Cardiff that the next steps were concrete measures on life-long learning, with a particular emphasis on older workers; strengthening equal opportunities; promoting new ways of organising work; revising tax and benefits systems to improve incentives to work; and developing a culture of entrepreneurship. The need now is to implement the national plans. The guidelines themselves will be revised in December.

"Secondly, the European Council endorsed broad economic guidelines to co-ordinate national economic policies. These incorporate commitments on macro-economic stability but also commitments on structural reforms of the labour, product and capital markets—essential if member states are to promote growth and employment and remain competitive in the face of globalisation. The guidelines also emphasise the need for reform to remove regulatory burdens on businesses. We established a process to exchange best practice and monitor progress to ensure that these commitments are lived up to.

"Thirdly, the single market. Good progress has been made on strengthening the single market during the last six months, for example through agreements on telecoms and gas liberalisation injecting genuine competition into these markets. The European Council agreed that the Commission should work on an extended scoreboard containing indicators of effective market integration and price differentials, as a tool for benchmarking progress in creating a genuine single market. The existing scoreboard has already helped implementation of single market measures by member states to improve from 73 per cent. to 82 per cent. in the last six months. We invited the Commission to table an action plan to improve the single market in financial services, and emphasised the need to promote competition and reduce distortions such as state aids. These are important commitments. Perfecting the single European market is vital for trade and investment.

"The fourth area was the need to promote competitiveness and entrepreneurship. We were all fully agreed on the vital role of small companies in creating new jobs and wealth; and on the need for action to produce the best possible environment to encourage entrepreneurs. This means in particular increasing access to capital and cutting unnecessary regulation. Action in these areas was agreed.

"Fundamental economic reform is essential if member states are to be able to compete and create jobs in the global market-place, and therefore essential for EMU. The measures agreed at Cardiff represent a new strategy to achieve this. I would draw the House's attention to two points: the degree to which this strategy reflects British thinking about competitiveness and the direction of reform, and the unanimity across Europe that this is the right way forward.

"Our second major theme was enlargement and the policy reform needed for this. Enlargement negotiations and the accession process were successfully launched in March. The Commission also tabled then a package of proposals on the reform of EU policies and their financing—the so-called Agenda 2000. These proposals would, for example, reform the common agricultural policy and save the consumer at least £1 billion per year in lower prices. The European Council agreed a deadline of March 1999 for reaching agreement on the package, with final adoption before the European Parliament elections next June.

"A crucial part of the negotiations will concern the EU's future financing. There has been a good deal of press speculation about the position of the German and other governments over their net contributions to the budget. No doubt member states will continue to make their case for change in one direction or another. For our part, I made it clear that I will maintain the UK budget rebate, which cannot be changed without the agreement of the Government and this House.

"As part of our enlargement debate, we discussed Turkey. The UK presidency has worked hard to restore positive EU/Turkey relations following the down-turn at the end of 1997. The Cardiff conclusions re-emphasised that Turkey's candidature to join the EU must be treated on the same basis as those of other candidate countries and endorsed a new strategy towards Turkey. The Commission has now said it will come forward with proposals for financing to overcome the existing impasse in this area. It is too soon to say definitively, but I believe this will help put this important relationship back on the rails and provide a basis for future progress.

"On the foreign policy side, we issued a strong declaration on Kosovo, condemning the use of indiscriminate violence by the Federal Republic of Yugoslavia and Serbian security forces. If President Milosevic does not take steps to comply with our demands on dialogue, refugees, international monitoring and an end to violence, he should be in no doubt about our united resolve. We wait to see whether his discussions with President Yeltsin yesterday lead to the necessary changes on the ground. Meanwhile NATO planning and UN Security Council consultation continue.

"We also discussed our serious concern about the Middle East peace process, where the EU remains supportive of US efforts. We called on India and Pakistan to take early steps to adhere to the international non-proliferation regime. We expressed support for Indonesia, provided a credible economic reform programme is followed, and underlined the need for an acceptable solution to the problems of East Timor, including the early release of political prisoners.

"The European Council gave its support to the Northern Ireland Peace Agreement, and agreed that the EU should continue its active role in promoting peace and prosperity there.

"We also discussed the environment and crime and drugs. We agreed on the need to implement the Amsterdam Treaty provisions on integrating environmental protection into EU policies. My right honourable friend the Deputy Prime Minister has begun this process during the UK presidency by bringing the work of the Transport and Environment Councils together, and ensuring that the next three presidencies are committed to an agreed programme. I am also delighted that one hour ago the Environment Council in Luxembourg concluded the EU's burden-sharing arrangements to implement the legal obligation agreed at Kyoto for greenhouse gas emissions. This is an important step towards a cleaner world.

"In Cardiff we welcomed the excellent progress made in implementing the action plan on organised crime. We endorsed the key elements of the EU drugs strategy for the period 2000 to 2004 and asked the Council and Commission to develop a comprehensive plan for action.

"Heads of Government also had a wide-ranging discussion of the future development of the EU. We face big challenges: the introduction of the euro; enlargement; tackling unemployment and social exclusion; combating organised crime; giving the Union an effective voice in the world. There was agreement among EU leaders that, if the Union is to meet these challenges in a way that has the confidence of our citizens, it must ensure that people feel less remote from the political processes and institutions of the EU; that they can support European solutions to shared problems without fear of losing their national identity. This means increasing the democratic legitimacy of the European political process and making a reality of subsidiarity—being ready to co-operate where that is the right way of solving common problems, while reassuring our peoples that Europe will not encroach on national or regional freedom of action in areas where the state or indeed local authorities can best take responsibility.

"There was widespread acceptance that the solutions do not simply lie in more centralised decision-making and that we need to find a more effective relationship between Europe's institutions and our national governments and parliaments. We now have to take those principles and make them the centrepiece of future European reform. The informal Heads of Government meeting in Austria in October will begin that process.

"We also agreed that, once the Amsterdam Treaty is ratified, we will move on to the institutional issues not resolved at Amsterdam—notably the size of the Commission and vote re-weighting. Finally, we asked the Commission and Council to pursue work on improving their efficiency and organisation and to report on progress in the next presidency.

"I was also delighted to welcome Nelson Mandela to Cardiff, to join my European colleagues in paying tribute to his extraordinary leadership in South Africa, and to take the opportunity to discuss with him the prospects for completion of an EU/South Africa co-operation agreement. We are agreed now to complete the negotiations by the early autumn. I understand that only 1 per cent. of the issues still remain to be resolved.

"I believe the Cardiff European Council marked a solid step forward towards a more effective and better accepted European Union. We agreed, without rows or drama, on a series of substantive points to equip our countries and peoples better for the future.

"At the start of the UK presidency I outlined five objectives: building support for a third way in Europe—economic reform, combining economic dynamism with social justice; launching EMU; getting enlargement off to a good start; taking forward common action on crime, drugs and the environment; demonstrating that Europe could be a force for good in its relations with the outside world. These objectives have been met. As important as anything else for Britain, after years of negative and destructive posturing that isolated Britain in Europe but did not advance our interests, we have re-established strong, positive relations with our EU partners. Those relations, not before time, are transformed and for the better. That is good for Britain, for Europe and for Britain in Europe. Cardiff was the proof of that. My Lords, that concludes the Statement.

4.24 p.m.

Viscount Cranborne

My Lords, the whole House will, as usual, be grateful to the Leader of the House for repeating the Statement. It is in many ways a Statement of which I suspect many of us hoped for great things. After all, it marks the end of the British presidency.

Perhaps I may ask the Leader of the House whether he regards the last six months as a success. In answering that question he may want to bear in mind a number of matters. For example, first, a growing number of commentators are worried that the economic events in the east will spread westwards and that we may shortly have to face economic difficulties, both in Europe and America. Secondly, he will bear in mind that the number of trouble spots around the globe is proliferating and those trouble spots are both potential and actual. They include, self-evidently, parts of central, southern and eastern Europe, right on the borders of the European Union. Thirdly, he should bear in mind that proliferation of nuclear weapons is now a serious reality and that civil nuclear power stations in eastern and central Europe are an increasing cause for concern; and, finally, that the European Union faces the problem of endemic unemployment and the need, in the interests of political as well as economic stability, to ensure that that endemic problem is attacked.

Will the Leader of the House also accept, in answering that question, that we on this side of the House are pleased to see that the communiqué acknowledges the importance of those matters and, indeed, in 97 paragraphs and two appendices, catalogues a good few of them? Will he also accept that in particular we welcome the continued commitment to enlargement, to fighting organised crime, to budgetary discipline, to the completion of the single market, to job creation, to the environment, to small business, to reform of the CAP, to market access for Third World economies, to subsidiarity and to the expressions of good will for the resolution of virtually every regional crisis we can think of?

But what has the British presidency actually brought to a conclusion? As I so often follow the advice of the Leader of the House, I looked beyond the Statement to the communiqué. All we have in the communiqué is expressions of good will and assurances that progress is being made. The Prime Minister said the: people's agenda was jobs, the economy, crime and the environment". What has happened on those fronts? On jobs, in this country the Government seem to have adopted the former European Union agenda: the social chapter, the minimum wage, more public spending and more union power. Is it surprising that today, with what I can only describe as delicious irony, the Government have announced the first rise in unemployment for 26 months? Can the Leader of the House advise us as to why the European Union proposes to reverse the problem of unemployment by the adoption of what are after all rather old-fashioned methods? All the communiqué talks about is action plans which will "require further evaluation". Can the noble Lord tell us of one decision, as opposed to merely a report on progress, which will create one more job as a result of the Government's six months of hard work?

On the economy, of course we welcome the assurance on the Budget rebate and look forward to supporting the Government in their battles which will no doubt come to pass on that front. Does the Leader of the House think that the fudged criteria which enabled the 11 joiners to sign up to EMU is a sound basis for stability? That is, after all, a quality much hoped for in the communiqué. Does the noble Lord really think that in, say four years, the economies of the 15 will have converged, or will they have diverged?

Should we take it from the Prime Minister's remarks in Cardiff that he is now in favour of joining EMU as soon as he thinks that he can get away with it, by getting a yes vote in a referendum? May we have an assurance that the Treasury will not try to shadow currency movements in Europe meanwhile?

Can the Leader of the House say what are the Government's plans for tax harmonisation with our European partners? Is it the Government's aim to work for and achieve that? If so, on what basis?

On crime, we welcome the commitment in the communiqué, but I see that the European Union is again waiting for reports—this time from the United Nations. I hope that the urgency of the language will be mirrored in action.

On the environment we welcome the announcement that is in the Prime Minister's Statement, but clearly not in the communiqué, of what is happening in Luxembourg in adhering to the Kyoto agreement. The language of the communiqué covers a remarkable paucity of achievement with fine sentiments. Friends of the Earth called the summit's work not much greener than a multi-storey car park. Does the Leader of the House agree?

We see nothing of substance on enlargement. Does the noble Viscount agree with the Finnish Prime Minister that enlargement has become more problematical in the past six months, not less? However, I agree with the Leader of the House that the communiqué"s language on Turkey is a great deal more reassuring.

As the European Union is clearly against independence for Kosovo, what will the Government do if there happens to be an overwhelming majority vote from Kosovos for independence? Perhaps that is the great question that we should never raise, but it is one that ought to be envisaged and addressed.

I could find no mention of NATO in the communiqué although the Prime Minister rightly mentioned it in his Statement. I hope that the Leader of the House will be able to reassure us that the entire European Union, whether or not members of NATO, supports the actions that NATO is taking.

The communiqué covers a pretty poor performance over the past six months. Is it any wonder that the European Parliament voted down a Motion praising the British presidency? That seems a remarkable event, coming from an assembly dominated by the Prime Minister's ideological allies.

I wonder whether your Lordships recognise the following words: We are on the brink of the new millennium, where radical, modernising programmes of reform are the only way to achieve decent modern societies for all our people. Here we recognise the authentic voice of the Prime Minister. They are fine sentiments with which none of us could disagree, using words chosen by focus groups, serving as a substitute for action and a mask for increasing failure. Does it remind the Leader of the House just a little of the style of the communiqué?

4.33 p.m.

Lord Rodgers of Quarry Bank

My Lords, I too thank the Lord Privy Seal for making a Statement to the House. I know that he will understand that I say with no disrespect that the Statement could have been written in advance of the Cardiff meeting. Most of the events over the past two days, if events there have been, have already been well reported overnight. I confess that those who participated in the conference will remember it most for the surprise and pleasure of being in the great city of Cardiff and for the fringe event of the visit by Nelson Mandela—each of which provides the top or tail of the Statement.

The meeting was marked more by aspirations than decisions. I share in that respect many of the views of the noble Viscount, Lord Cranborne. I looked carefully under the heading of economic reform and employment but could identify nothing that represented a real decision with measurable consequences. I was particularly struck by this sentence in the statement: We established a process to exchange best practice and monitor progress to ensure that these commitments are lived up to. That phrase could have been repeated at almost every stage in the statement. The Lord Privy Seal shakes his head but I believe that he would be very hard pressed to point to any clear decision, the consequences of which will be plain. On the other hand, although that is typical of the Statement as a whole, it is an honest Statement, in so far as it refers to the two days in Cardiff as being a solid step forward. Those of us with experience of Westminster and Whitehall know that is Whitehall-speak for marking time. This was a marking time European Council at the end of a rather lacklustre presidency. While we welcome a number of aspects of the Statement and its more open and positive tone—very different from under the previous Government time and time again—the Government were mistaken to raise expectations that they could not wholly fulfil.

Certain elements or points in the Statement appear to have been agreed at Cardiff, although with uncertain consequences. We can applaud, for example, the references to democratic legitimacy and subsidiarity. We can take some comfort from those passages. The truth is—and I hope that the Lord Privy Seal will comment upon this—that there will be a diminishing role for Britain within the European Union as long as we are sidelined by our inability to decide when and in what circumstances to join the EMU. It is a strange matter that in the past six months of Britain's presidency a major historic decision was made to launch the euro, yet we were standing aside when we should have been participating and playing our part.

Does not the Lord Privy Seal agree that on the difficult but central question of the development of the European Union, were the Government to make a firm decision to set a clear timetable for joining EMU, we would find—as we did on other occasions in the past—that public opinion would swing to believing that that is the right way for Britain to go and that Britain should go in that direction as soon as possible?

4.37 p.m.

Lord Richard

My Lords, I am grateful to the noble Viscount, Lord Cranborne, and to the noble Lord, Lord Rodgers of Quarry Bank. When I listen to the noble Viscount on these occasions, I feel sometimes that there is a slightly farcical air to our proceedings. As I repeated the Statement made by the Prime Minister half an hour after he had made it, the noble Viscount had the opportunity to witness the Statement being made either in the Chamber or on television, and then to repeat his leader's response in the other place. All the quotations from the Prime Minister of Finland that the noble Viscount threw at me were those that Mr Hague saw fit to use in the other place.

For every quotation about the British presidency the noble Viscount can throw at me, I can provide a thicker file of foreign opinion that the British presidency has gone rather well. The noble Viscount asked whether we had had a good six months. In all candour I believe that we did, for three major reasons. We have re-established decent working relations with our European partners. After the history of the past decade that is a major achievement, to put it mildly. We have seen the successful launch of European monetary union. To get that off the ground successfully in the past six months is, again, a major achievement. Thirdly, we have seen enlargemet off to a flying start. Again, I have to say that that is a major achievement. So, if the noble Viscount asks what are the major achievements of the past six months, those are.

The noble Viscount asked a number of detailed questions. The main one of substance seemed to be: what has the summit achieved except for words? That was repeated to a certain extent by the noble Lord, Lord Rodgers. In relation to jobs, for the first time in the history of the European Union—at one time I had some modest responsibility for trying to look after employment throughout the affairs of the then European Economic Community—national plans to deal with unemployment were brought forward by each member state.

In relation to the decisions at Cardiff, the agreement on reinforcing the development of a skilled and adaptable workforce and so forth was agreed unanimously. It was said, Orientations which guide our future work on employment shall include: reinforcing the development of a skilled and adaptable workforce, including through lifelong learning; particular attention should be paid to older workers; strengthening action on equal opportunities by ensuring that equality between men and women is mainstreamed in all employment policies … tackling discrimination against the disabled … promoting new ways of organising work, where necessary by reviewing the existing regulatory framework at all levels, to combine flexibility and security; reviewing tax and benefit systems to make it easier for employers to create new jobs and more attractive for employees to fill them; developing a culture of entrepreneurship and encouraging the growth of smaller businesses". That is what all the members states signed up to. In addition, the Council agreed that the Commission should monitor progress in those directions. That is new. In my experience it has not happened before that specific commitments have been made in that way, endorsed unanimously by the European Council and to be monitored by the Commission.

The noble Viscount had a certain amount of fun with the Government saying that everything had been put off. But he misunderstands the nature of the European Council. The object of the Council, at the end of the presidency, is to review the progress being made on a number of ongoing issues. In our view, as I set out at the beginning of the Statement, the important ones are the economic reform policy, to which everybody signed up; the centrality of unemployment in national and economic policies; progress on enlargement; and progress towards EMU.

At a European Council meeting of this nature, though I was not there and do not know exactly what happened, they seem to try to review past progress and give those measures an encouraging push in the right direction. I do not accept for an instant that our presidency has been the sort of failure characterised by the noble Viscount, nor has it been as padded as the noble Lord, Lord Rodgers, seemed to characterise it. We have achieved the aims that we set for ourselves at the beginning of the presidency and the Government deserve credit for that.

4.43 p.m.

Lord Barnett

My Lords, I can assure my noble friend that I am not disappointed with the six months presidency—primarily because I was not expecting too much. My noble friend referred to improvements in the single market. Does he accept that the greatest improvement was for 11 member states to recognise that a single currency would provide the greatest improvement to a single market. My right honourable friend the Prime Minister is quoted in the press as having made one or two significant statements in Cardiff which implied some improvement in our position. Can my noble friend tell us whether there has been any significant change in what the Prime Minister said and in our position on the single currency?

Lord Richard

My Lords, my noble friend tweaks me, not for the first time. In answering questions in another place this afternoon, the Prime Minister was asked a specific question. He repeated government policy in plain and unmistakeable terms and said that it had not changed.

Lord Hurd of Westwell

My Lords, will the Leader of the House acknowledge that perhaps it was a mistake, at the beginning of the presidency, to puff up the prospects in the way that was done? Will he accept that it is not possible for anyone, simply by taking the chair of the Council of Ministers for six months, to lay the foundations for a new heaven and earth, as was advertised at the beginning of the presidency? Is it not inevitable, since those were empty flourishes—the Leader of the House knows this perfectly well—that some disappointment and criticism are now inevitable, as evidenced not just in what my noble friend said, but also in the objective description reported in the Herald Tribune today?

In particular, can I press the Minister on enlargement? Is not the timetable for enlargement receding rather seriously? It is not so long since the Poles were told that they would be in by the year 2000. So much has to be done by existing methods in this round of enlargement on agriculture, on the budget and on institutions, which has not been done. Can the Leader of the House give some indication, if all goes well, of when we might expect the five candidates in what is called the first wave to achieve entry?

Lord Richard

My Lords, I do not believe that I can give a date. However, I agree with the noble Lord about the nature of the presidency of the European Union. Of course we cannot achieve a new heaven and earth in six months. That is not a contradiction; we may be able to achieve the foundation of what might in time become a new heaven and earth. One can move things along so that progress in that direction is intensified and accelerated. With respect, when one looks at the whole of the six months, certain major achievements took place in European development under the British presidency. I am not claiming that it was necessarily all due to the British presidency, but I totally disclaim the allegation that it happened despite rather than because of it.

In relation to enlargement, the UK presidency successfully implemented all elements of the remit from the Luxembourg Council. Cardiff welcomed those achievements and looks forward to further rapid progress. What happens next? Progress will inevitably continue. The EU will provide targeted aid for countries where they need it. We will regularly monitor their progress. We will continue working on the negotiations for the next stage. It is now for the applicant countries to submit their detailed negotiating positions. That has not yet happened. The EU must then decide how to react. In our view it is vital that we maintain the momentum of this process.

Cardiff did not perpetuate the divisions that emerged at Luxembourg which, after all, established an all-inclusive process within which individual countries could advance on merit. In relation to the targets, it confirmed them and looks ahead to the first of the regular reports on each candidate's progress towards succession.

I played a minor part in the Commission at the time that Spain and Portugal were negotiating their entry. It is an extraordinarily complicated process and on this occasion it is even more complicated because of the changes that will take place in the policies and in the structures of the Union as well as in the necessary processes and adaptation that have to take place in the applicant countries. No one should underestimate the difficulties of the process. We got off to a solid start. The negotiating process started and we look forward to maintaining that momentum.

Lord Stoddart of Swindon

My Lords, perhaps I can ask one or two questions of my noble friend. First, I am glad that there has been no change in Her Majesty's Government's policy on the single currency. I wonder whether the Prime Minister had a few words with M. Chirac on the Frost programme when he said that the euro would topple the United States dollar as the main currency in the world. Is not that a little xenophobic? Perhaps M. Chirac should be told that that does not go down well in this country.

It has also been reported that the Prime Minister said that the United Kingdom would be prepared to relinquish further areas of policy to qualified majority voting. Is my noble friend able to give some further information about that? If that were the case, would it not further reduce the powers of Westminster, and therefore the power of the people, to whom our Prime Minister wants power returned?

With regard to financing the European Union and enlargement, the understandable desire of Germany to reduce its large net contribution was presumably discussed. This must affect enlargement, especially if existing member states which are net recipients see their largesse from the EU being severely reduced. Was that discussed and were any conclusions reached which are perhaps not in the report?

Finally, there is an item in the report about reviewing tax and benefit systems. What does that mean? Does it herald yet more power even over taxation for the institutions of the European Union?

Lord Pearson of Rannoch

My Lords, perhaps I may—

Lord Richard

My Lords, I think I had better answer my noble friend Lord Stoddart before I answer his clone on the other side, if I may put it not unkindly—unless he is going to ask the same questions. I do not know what President Chirac said. I do not know whether my right honourable friend the Prime Minister knows what President Chirac said. And I certainly do not know what my right honourable friend the Prime Minister would have said about what President Chirac was supposed to have said had the Prime Minister known about it. So I cannot answer my noble friend's first question.

The euro may well become a reserve currency. There is little doubt about that. But it is not a question of challenging or competing with the dollar. As I understand it, there was no discussion of QMV at Cardiff. Certainly, there is nothing in the conclusions. There was a general discussion of the financing of the Community in which various countries set out their positions. The communiqué is extremely guardedly careful about the way in which it sums up that discussion—"no decisions were taken". As far as I know, nothing was discussed at Cardiff about reviewing tax and benefit policies.

Lord Pearson of Rannoch

My Lords, I am grateful to the noble Lord the Leader of the House for describing me as a clone of his noble friend Lord Stoddart of Swindon. I at least regard that as considerably flattering. I must apologise to the House because I had forgotten that the Leader of the House takes each question in turn. I thought that he took them all in one lump.

May I press the noble Lord on the question put to him by my noble friend Lord Cranborne to which I did not detect an answer in his reply to my noble friend? He asked whether, as part of the economic reform programme which is required for successful EMU, whatever that turns out to be, tax harmonisation will be very much on the agenda. Is that so, and what is the Government's view on it?

I find it extraordinary that the Leader of the House can say that enlargement has got off to a flying start, because it clearly has not. I think the noble Lord will agree that for enlargement to take place considerable reform of the common agricultural policy is necessary. He mentioned that there would be a deadline in March 1999 for that. Perhaps I may put one very specific question to him. Does Germany support such reform of the common agricultural policy, without which enlargement will be impossible?

Finally, the noble Lord said that the Prime Minister is rejoicing in his project of making a reality of subsidiarity. Surely he must agree that the reality of subsidiarity is in the wording, and that is what makes it a fraud. If the noble Lord will refer to our debates on 21st May (at cols. 1778–1803 of Hansard) on the Third Reading of the European Communities (Amendment) Bill he will see that subsidiarity was exposed precisely as such a fraud and that it cannot possibly do the job which the Prime Minister in his charm offensive with Brussels appears to think that it can. It was a fraud when it started. To realise that one has merely to concentrate on the first 10 words which allow subsidiarity only to apply in areas which are not in the Community's exclusive competence. The Amsterdam Treaty has made that worse. It underlines the acquis communautaire and it underlines Article 6.4 of the treaty. Is it not time that the Labour Government realised that subsidiarity always was and is still a fraud?

Lord Richard

My Lords, if I may say so, that comes ill from a noble Lord who at one time was passionate about the concept of subsidiarity. As I recall the discussions that took place over the Maastricht Treaty, in which he played a prominent part—I had a modest role in getting the Bill through the House—subsidiarity was a concept that was coming vigorously from the other side of the House. If I am wrong about what the noble Lord's views were, I apologise to him.

Lord Pearson of Rannoch


Lord Richard

Very well, my Lords, I have got it wrong.

Lord Pearson of Rannoch

My Lords, will the noble Lord be good enough to put that in writing? If he consults Hansard for the entire process of the Maastricht debates, he will see that I never believed in subsidiarity, that I was always against it and that I divided the House against it on more than one occasion.

Lord Richard

My Lords, in that case, I apologise. He asked whether I would do so in writing. I will send the noble Lord tomorrow a copy of the Hansard in which my apology appears.

I was asked whether part of economic and monetary union is tax harmonisation. As far as I know, that was not discussed at Cardiff. What I am doing is making a Statement about what was discussed at the European Council in Cardiff. The noble Lord said that enlargement had not got off to a flying start and asked, "What about the CAP?" I put back to him, "What about Agenda 2000?", which is well on the Community agenda and, one hopes, will be resolved in the course of the next 12 months—by March 1999, if I remember rightly.

The noble Lord also referred to subsidiarity and asked whether it is a fraud. He thinks it is a fraud. My right honourable friend the Prime Minister does not think it is a fraud. He believes that it is perfectly possible to devise a relationship between the European institutions and the member states in which more decisions are taken by the member states and fewer—but, in the words of M. Santer, perhaps better decisions—are taken at the centre. That seems to be a sensible concept and one which I hope will gain the approval not only of a majority of this House but indeed of the country as a whole.

Lord Bruce of Donington

My Lords, I wish to make three points of a non-controversial nature on the Statement delivered by the Prime Minister in another place. I found it a little remarkable—this has been a matter of concern to all members of all parties—that there was no mention at all of the prevention of fraud in Community institutions—I would emphasise that—or any incisive statement that there is a real determination among the institutions and in the member states to deal with fraud. It is relegated to about three words in paragraph 56 of the President's conclusions, which are made available together with the speech of the Prime Minister.

My second point arises on the British contribution. I had rather hoped that the Prime Minister would take a slightly more robust attitude than he in fact did towards the British net contribution and the abatement arrangements that are made. I would have liked him to say that the position on the United Kingdom's abatement is not negotiable and that there will be no concession on that.

Finally, I was a little worried about Annexe 2 to the presidency conclusions relating to Kosovo. I noted with some regret that the remainder of the member states did not take the more incisive view backed by action taken by our own country together with the United States with regard to the operation of NATO over the question of Kosovo.

Lord Richard

My Lords, as regards the last point, I believe that my noble friend is wrong. My information is that there was unanimity on the question of Kosovo. The European Union is not a military organisation. If action is to be taken, clearly it would have to be done by NATO.

As regards the first point made by my noble friend about fraud, the communiqué does not bear out his strictures. It says, The European Council stresses the importance of sound financial management and fraud prevention. In particular, it calls on the institutions to ensure that the opportunities provided by policy reform are used to introduce policies and procedures which are as fraud proof as possible and which encourage a high standard of financial management. It also underlines the importance of preparing the enlargement candidates to participate in the Community's finances". I would have thought that the Government's position on fraud is pretty well known. As far as I know, it was reiterated at Cardiff. I cannot accept my noble friend's strictures concerning the UK budget rebate. Perhaps I may repeat two sentences from my right honourable friend's Statement. He said, There has been a good deal of press speculation about the position of the German and other Governments over their net contributions to the budget. No doubt Member States will continue to make their case for change in one direction or another. For our part, I made it clear that I will maintain the UK budget rebate, which cannot be changed without the agreement of the Government and this House". I would have thought that that was fairly clear and unequivocal.

Lord Beloff

My Lords, can the noble Lord confirm that the discussion about bringing the institutions closer to the people means accentuation of the role of national parliaments rather than the transfer of further powers to the European Parliament?

Lord Richard

My Lords, I do not believe that there was any discussion at Cardiff which would lead to the conclusion or implication that the European Council was in favour of transferring more powers to the European Parliament. The discussion that took place with the president of the European Parliament in Cardiff was more concerned with looking at the terms and conditions that the members of the European Parliament possess at present rather than contemplating that it should be given greater powers.

Lord Grenfell

My Lords, will my noble friend the Leader of the House be surprised to hear that there is at least one noble Lord on the Back Benches who believes that the six-month presidency was rather a good one under the circumstances? Does he not agree that the March 1999 deadline for completing the deal on the Agenda 2000 package of reforms necessary for enlargement is a very ambitious one? Does he further agree that that is an absolutely necessary deadline because if it is not met there will be very serious slippage?

Does my noble friend also agree that as regards what the noble Lord, Lord Hurd, said concerning slippage, there are two very good reasons why the enlargement process will take longer than originally contemplated? The first is that nothing will happen about reform until after the German elections. Secondly, the candidate countries themselves are now beginning to realise, as they enter the negotiations, just how complex they are and that they would rather they took longer and got it right than that the negotiations were rushed and they got it wrong.

Lord Richard

My Lords, I believe that my noble friend is quite right on his first point. When the European Union is taking decisions it is very helpful to have a deadline to which it has to work. Therefore, the imposition of the deadline for Agenda 2000 does two things; namely, it concentrates the minds of those who have to take the decisions and, secondly, it makes the decisions themselves more likely.

Concerning the second point made by my noble friend, he again is quite right. The enlargement process is extremely complicated and more so than some of the others. I believe I said a little earlier this afternoon that we have to look not only at the ways in which the enlargement countries adapt to the Union, but also at the ways in which the Union will have to adapt to them. What is extremely significant in some ways about enlargement is that decisions on it have been taken at all because the complexity of the issue is immense. However, the political and economic advantages of an enlarged Community are also immense and therefore worth the complexity and the difficulties of the process.

Lord Cocks of Hartcliffe

My Lords, my noble friend—

Lord Carter

My Lords, time is up.

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