Sitting of 21 February 1983

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS

  Australia (Message of Sympathy)
  Mr. Speaker: I have to inform the House that on Friday I took upon myself, in the name of the House, responsibility for sending a message to Sir Billy Snedden, the Speaker of the House of Representatives, Canberra, before Australia's day of national mourning:
  "The House of Commons sends heartfelt sympathy at this time of sorrow in Australia.
  George Thomas
  Speaker".

Oral Answers to Questions
  TRADE

    Exports/Imports
    Dr. John Cunninghamasked the Minister for Trade whether he has conducted any recent studies into the export performance of different sectors of the economy over the last decade.
    Mr. Cunliffeasked the Minister for Trade whether he has conducted any recent studies into the degree of import penetration in different sectors of the economy over the last decade.
    The Minister for Trade (Mr. Peter Rees): The statistical services of the Departments of Industry and Trade regularly collect and publish statistics on export performance and import penetration. A study of these covering the last decade was published in the June 1980 issue of Economic Trends. More recent data were published in the issue of British Business dated 21 January 1983. Both publications are available in the Library.
    Dr. Cunningham: Is the Minister aware that our trade balance in manufactured goods has fallen from more than £5,000 million in 1977 to only £225 million last year? Is he further aware that rising imports coming into either static or falling home markets are devastating British manufacturing industry, where 1·5 million jobs have been lost since this Government came to office? Given that industrial—
    Mr. Speaker: Order. That is too long. It is not fair to the House.
    Dr. Cunningham: Given that disastrous decline—
    Mr. Speaker: Order. I have just said that it is not fair to the House. The hon. Gentleman has asked a question, and two further questions.
    Dr. Cunningham: I want to ask the Minister what he proposes to do about it.
    Mr. Speaker: Order. This is the only way to control it.
    Mr. Rees: I am afraid that the hon. Gentleman has misread the statistics. If he had fastened on to the fact that exports, for example, increased last year by 8 per cent. in value and 1 per cent. in volume, against a background of contracting world trade, he would know that his fears were completely unfounded.
    Mr. Cunliffe: I have examined the figures that are available in the Library. Is it not manifestly clear that other countries do not now abide by the British Queensberry rules when it comes to fair trading? Is it not time that they accepted that retaliatory measures will be taken against countries that are guilty of unfair trade practices? Is it not an act of criminal folly for the Minister to ignore such practices at the expense of the wholesale decimation of our textile, engineering and motor industries?
    Mr. Rees: The hon. Gentleman and the House should take comfort from the fact that textile exports are worth £2 billion a year. In any case, when other countries have discriminated unfairly against our exports we have taken and are ready to take, action in these cases. I hope that the hon. Gentleman will make specific allegations rather than wild general statements, so that we may assess their validity.
    Mr. Sims: Will my hon. and learned Friend confirm that one of the best export performances over the past decade has been that of the Scotch whisky industry? Does he accept that that industry can maintain its performance in the present difficult overseas conditions only if it has a firm home market base? If so, will he mention that fact to his right hon. and learned Friend the Chancellor of the Exchequer, lest he be tempted to add to the industry's burdens?
    Mr. Rees: I pay tribute to the export performance of the whisky industry. The House may be interested to know that between January and November last year total exports were worth £800 million, of which £188 million went to the European Community and £64 million to Japan. I am sure that my right hon. and learned Friend will take full account of what my hon. Friend said.
    Mr. Archer: Does the hon. and learned Gentleman recognise the need to identify those sectors of industry with prospects for growth and where the spin-off may stimulate the economy? Has he had an opportunity to study the recent paper by Mr. Geoffrey Chandler, the director general of NEDO? On reflection, does his noble Friend the Secretary of State now regret his outburst at the February meeting of NEDC in response to this serious and sensible initiative?
    Mr. Rees: Mr. Chandler's paper was interesting, and I believe that it gave rise to a stimulating discussion. However, the record is confidential. I do not know how the right hon. and learned Gentleman knows about the detailed contributions of individual members. Perhaps he will explain in due course.
    Mr. Marlow: The questions refer to "different sectors". Did not British Leyland increase its exports by about 25 per cent. last year—its best performance for five years? Is that not some measure of the success that is now taking place in the heartland of British industry and being built on at the moment?
    Mr. Rees: My hon. Friend is right to draw attention to British successes instead of dwelling overlong on false stories of gloom. In addition, the exports of British automotive products are strongly in surplus.

    Monopolies and Mergers Commission
    Mr. Canavanasked the Minister for Trade how many times since May 1979 a recommendation from the Monopolies and Mergers Commission has been overruled.
    The Minister for Consumer Affairs (Dr. Gerard Vaughan): The Government have not followed the commission's recommendations in three cases.
    Mr. Canavan: Instead of hon. Members listening to the monkey, is it not about time that the organ grinder himself was brought from the House of Lords to the Bar of this House to explain why he is jeopardising the jobs of more than 3,000 Scottish workers at Anderson Strathclyde by abrogating his responsibilities and allowing the Monopolies and Mergers Commission to be overruled because he happens to be lining his pockets out of shares in a racist company—
    Mr. Speaker: Order. I am satisfied that that remark should be withdrawn. No one can be an honourable man and a Minister and line his pockets at the same time. The hon. Gentleman must withdraw that charge.
    Mr. Cryer: He has the shares; he does not hold them for charity.
    Mr. Speaker: Order. The hon. Member for Keighley (Mr. Cryer) must stop that running interruption. I am addressing the hon. Member for West Stirlingshire (Mr. Canavan).
    Mr. Canavan: I rephrase my words and say that he is filling his pockets with money from shares in Charter Consolidated.
    Mr. Speaker: Order. I am talking about a charge of dishonour in the accusation that a Minister of the Crown is lining his pockets at the public expense. The hon. Gentleman will withdraw that remark.
    Mr. Canavan: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. No point of order arises on that. I have asked the hon. Gentleman to withdraw his accusation.
    Mr. Canavan: I shall withdraw it and replace it with the words, "filling his pockets out of shares in a racist company such as Charter Consolidated."
    Mr. Speaker: Order. I believe that that is the company about which the Secretary of State overruled the Monopolies and Mergers Commission. I give the hon. Gentleman one last opportunity to withdraw that remark. Otherwise, I shall have to instruct him to leave the House.
    Mr. Canavan: I am not withdrawing something which I know to be true.
    Mr. Speaker: I direct the hon. Member for West Stirlingshire to withdraw from the House for the rest of this day's sitting.
    The hon. Member withdrew accordingly.
    Mr. John Fraser: Why did the Secretary of State for Trade not declare his interest in Anderson Strathclyde at
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    the time that he made the decision to refer the bid to the Monopolies and Mergers Commission rather than at the time that the commission announced its findings?
    Dr. Vaughan: As the House knows, my right hon. and noble Friend the Secretary of State behaved with perfect propriety. Because of his shareholding, he has distanced himself from both the report and the decision. I think that that was correct, and so did the court.
    Sir Russell Fairgrieve: Is it not a bit odd for a nation such as Scotland, which has sent its people all over the world to run other people's industries, to be so frightened of itself that it cannot accept a sensible rationalisation in Scotland's interests? The proper people to decide the issue are the shareholders of Anderson Strathclyde. It should not be done by a statutory body taking a subjective judgment about the public interest.
    Dr. Vaughan: I am glad that my hon. Friend has raised the matter. There are two important issues here. One is that we are discussing an engineering company with a great international reputation which needs its overseas markets to carry on its business. The other is that we are discussing the implications for Scottish employment. The Monopolies and Mergers Commission recognises the need for the company to have its international base and my hon. and learned Friend has recognised that in his decision.
    Mr. Maclennan: Does the Minister realise that it is a serious matter when a member of the Monopolies and Mergers Commission feels prevailed upon to resign because of the Government's attitude in this case? Does he recognise that the entire management of the Scottish company is deeply worried about the implications for Scottish employment? Why have the Government paid so little attention to the considerations that have been in the minds of those who know the companies interests best?
    Dr. Vaughan: I do not accept that the Government gave little attention to this matter. My hon. and learned Friend set out the reasons clearly in the press notice, which was issued on the report's publication, and in his statement to the House on 22 December. Professor Bain's resignation is regrettable, but it was a personal matter. Members of the Monopolies and Mergers Commission are free to make public statements of their views.
    Dr. Bray: Why did the Secretary of State not make his interest known in the press release that was issued by the Department, but only when I raised the question with the Prime Minister at Question Time that afternoon?
    Dr. Vaughan: As I have said, these events take their course, and my right hon. and noble Friend made his statement in a perfectly proper way at the right time.
    Mr. Beaumont-Dark: Does my hon. Friend accept that one of the important points that many hon. Members have made about the Monopolies and Mergers Commission is that too many people think that it should have the final say? Is it not proper that the House should have the final say as to what is in the public interest? Otherwise, we are handing over the Monopolies and Mergers Commission to those who were not elected. Should not we reinforce public control, not those who are selected to control?
    Dr. Vaughan: The matter was established clearly by the courts recently. The primary function of the Monopolies and Mergers Commission is to investigate and

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    then to report on any matters that are referred to it, including whether those might be expected to operate against the public interest. It is then the Government's responsibility to decide what action, if any, is necessary.
    Mr. John Fraser: Will the Minister now answer my question as to why the Secretary of State did not declare his interest on 2 June 1982 when he made a decision to refer the matter to the Monopolies and Mergers Commission, rather in December 1982 when he received the report?
    Dr. Vaughan: The hon. Gentleman is trying to go over ground that has been fully investigated. There is no point in going further.

    Competition Act 1980
    Mr. Campbell-Savoursasked the Minister for Trade whether he will review the operation of the Competition Act 1980.
    Dr. Vaughan: I have no present plans to do so.
    Mr. Campbell-Savours: Will the Minister amend the Competition Act 1980 to define precisely what is an anticompetitive practice? Is not the solicitors' monopoly on conveyancing an anti-competitive practice? Are not the Law Society's rules preventing solicitors from advertising a form of anti-competitive practice? Do they not both act against the public interest? Will the Government do something about it?
    Dr. Vaughan: We have no plans at the moment to alter the Act. If the hon. Gentleman wishes to raise points where he believes that there are difficulties, I should be glad to look into them. I should say that the present Government have done more to extend competitiveness and to improve trade in that area than any previous Government.

    European Community (British Exports)
    Mr. Knoxasked the Minister for Trade what percentage, by value, British exports to the European Community have represented of total exports in each of the past three years.
    Mr. Peter Rees: In 1980, 1981 and 1982 United Kingdom visible exports to the other countries of the European Community represented 43 per cent., 41 per cent. and 42 per cent., respectively, of the United Kingdom's total visible exports.
    Mr. Knox: Will my hon. and learned Friend confirm that since we joined the EC in 1973 our exports to the Community have increased more rapidly than our exports to other parts of the world? If we were to withdraw from the EC, would not that trend be put in sharp decline?
    Mr. Rees: It is true that the other countries of the EC provide our fastest growing export market. Indeed, of the top 10 countries to which we export, about seven or eight are members of the EC. That healthy export trend might be imperilled if we were to follow the absurd advice of the Labour party and withdraw, on whatever basis, from the EC.
    Mr. Roy Hughes: Will the Minister reveal to the House the value of manufactured goods being imported into Britain and paid for with precious North sea oil
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    revenue? Is it not time that the Government realised that the undermining of our manufacturing industry is putting so many of our people out of work?
    Mr. Rees: The hon. Gentleman conveniently overlooks the surpluses that are generated by non-manufactured exports, by oil exports and by exports from the service sector.
    Mr. Kenneth Carlisle: How many of these exports come from companies in this country set up with foreign investment? Does my hon. and learned Friend believe that such investment would continue if we withdrew from the Common Market?
    Mr. Rees: It is true that the United Kingdom is a favoured base for investment by, for example, United States and Japanese companies. It is very likely that if we withdrew from the European Community on the basis suggested by the Labour party that trend would not continue.
    Mr. Straw: Is not the reality that the 43 per cent. figure includes oil and services and that our record on the export of manufactures and semi-manufactures is much worse? Do not almost two thirds of our exports of manufactures and semi-manufactures go to countries outside the EC? If our export record to the EC is successful, how does the Minister explain the fall in our proportion of exports of manufactures to the EC in each year since 1979'?
    Mr. Rees: The hon. Gentleman, like his hon. Friends, is highly selective in his choice of statistics. A Fairer approach is to consider total British exports, including the exports that have been achieved in the service and oil sectors. I have already demonstrated that our exports, by volume and by value, increased in 1982.

    Motor Vehicles (Imports)
    Mr. Huckfieldasked the Minister for Trade whether, in order that assemble-only operations shawl not take place, he will now introduce legislation requiring a minimum domestic content for imported motor vehicles sold in the United Kingdom, either based on numbers of units sold, or with provision that such units must have specific United Kingdom manufactured components or parts.
    Mr. Peter Rees: No, Sir. Such legislation would not be in the long-term interests of the United Kingdom.
    Mr. Huckfield: Does the hon. and learned Gentleman accept that the recent decision of British Leyland to import Rover gear boxes from France merely epitomises the problem that now faces all motor car assemblers in this country in that they are increasingly importing engineering and other advanced components? Does the Minister further accept that at least 31 countries already have some minimum domestic content legislative requirement and that there may soon be similar legislation in the United States? Is he aware that if we do not have similar provisions we shall not have a motor vehicle industry for much longer?
    Mr. Rees: The hon. Gentleman is wrong to refer to the Ottinger legislation in the United States, which would be extremely damaging to the free flow of world trade. It is a matter on which we have made representations. The hon. Gentleman overlooks the successful export record of

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    British automotive manufacturers. It is true that some motor car manufacturers in this country are importing a considerable number of components from abroad. However, it is a two-way flow. I am sure that British motor manufacturers are capable of judging their best commercial interests.
    Mr. Stokes: Is my hon. and learned Friend aware that the British components industry is unfortunately in some difficulty and that it should be more competitive in both quality and price? Is this a matter for the industry alone, or is there any way in which the Government can help?
    Mr. Rees: My hon. Friend draws attention to the difficulties. He will recognise, as I am sure the whole House will, that the industry has a good export record. I do not believe that it would assist the industry, this country's economy, or the consumer, if legislation of the kind suggested by the hon. Member for Nuneaton (Mr. Huckfield) were introduced.
    Mr. Cryer: Is the hon. and learned Gentleman aware that the Government seem to do little to prevent the decimation of British manufacturing industry and are not prepared to introduce legislation of the kind requested? Does this not contrast strangely with the Government's view of farming, where Ministers are prepared to control imports of UHT milk to protect British farmers? Do not the Government believe that domestic manufacturing industry is worth some regulation of trade, or are they prepared to see the whole thing go out of the window?
    Mr. Rees: The hon. Gentleman overlooks voluntary restraint arrangements that offer a measure of temporary protection, particularly in respect of automobiles of Japanese manufacture. The import of UHT milk is a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food.
    Mr. Hal Miller: As there is unlikely to be time for legislation before a final decision is taken on the Nissan project, will the Minister do his part to see that any requirement on component content in that project is based on direct manufacturing costs, not on ex-works price?
    Mr. Rees: My right hon. Friend the Secretary of State for Industry has made it clear that we welcome the possibility of investment by Nissan in this country. We would be even more enthusiastic if Nissan gave some assurance about local content. The point put by my hon. Friend is well made.

    Spain (Balance of Trade)
    Mr. Hal Millerasked the Minister for Trade if he will make a statement on the trend in the balance of trade with Spain in 1982 (a) overall and (b) in manufactures.
    Mr. Peter Rees: In 1982 the total of visible trade between the United Kingdom and Spain moved into approximate balance, but the growing trade in manufactures remains in deficit.
    Mr. Miller: As the EC appears to be unable to deal with our grievance against Spain over the grossly distorted tariffs applicable to the automotive trade, will my hon. and learned Friend say whether the Government are now considering what unilateral action should be taken?
    Mr. Rees: My hon. Friend is a little premature in saying that the Commission is unable to address itself
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    effectively to this question. There have been considerable negotiations in Brussels and in Madrid, and the Commission will be reporting to the Foreign Affairs Council tomorrow. My hon. Friend would be well advised to await the outcome.
    Mr. Sheerman: If the Minister continues to fiddle while manufacturing exports dwindle, and if he does not take measures to remedy the situation, we shall be further down the road towards an undeveloped economy, exporting raw materials and sucking in highly sophisticated manufactured goods. Is he aware that this is a crisis that the Government have failed to recognise?
    Mr. Rees: The flaw in the hon. Gentleman's argument is that our manufacturing exports are not continuing to dwindle.
    Mr. Beaumont-Dark: Does my hon. and learned Friend accept that many manufacturers, including the Ford Motor Company, are taking an unfair advantage of tariffs in Spain, whereby the Spanish charge 10 times the tariff that we charge? Is he aware that, whichever party forms the Government, many people in the west midlands do not believe that this state of affairs should be allowed to continue and that we, as Members of the House, will not allow it to continue?
    Mr. Rees: My hon. Friend has discussed the tariff imbalance with a number of my right hon. and hon. Friends and with me. We are aware of it. It is for that reason that we brought strong pressure to bear on the Commission to enter into negotiations with the Spanish Government.
    Mr. Archer: Does the hon. and learned Gentleman not have a sense of urgency about this matter? Is there not some need in the EC for the equivalent of the smoking gun reaction in America towards unfair trading? Can he give the House any idea of how long it will take before the EC takes sone action? Alternatively, will the Government take action?
    Mr. Rees: References to the smoking gun come ill from a member of the previous Government. So far as I am aware, that Administration was supinely unaware of the growth of the problem.

    Inter-regional Air Services
    Mr. Colvinasked the Minister for Trade if he has had any recent discussions with his European counterparts on the deregulation of inter-regional air services; and if he will make a statement.
    The Under-Secretary of State for Trade (Mr. Iain Sproat): As I reported to the House in my reply to a question from my hon. Friend the Member for Preston, North (Mr. Atkins) on 23 December, ministerial discussions on the proposed Community directive to liberalise the approval of new inter-regional air services failed to reach agreement for the third time shortly before Christmas. This was a most disappointing outcome, but I still very much hope that when we return to the subject at the next Transport Council on 6 June it will be possible to agree at last on a measure that should benefit both the airlines and their passengers.
    Mr. Colvin: I wish my hon. Friend better luck next time. Does he agree that deregulation would not only help

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    Britain's third level airline operators but would also take some of the pressure off London's airports by stimulating the development of regional airports? When he goes back to the conference table, will he ensure that the seat limit for the aircraft covered does not fall below 70 because of the proposal by British Aerospace to introduce its advanced turboprop aircraft which has only 65 seats?
    Mr. Sproat: Yes. I shall bear my hon. Friend's last point strongly in mind. This measure should help both regional airports and third level airline operators. It is a determined part of the Government's policy to help the regional airports, as we have done at Manchester and Leeds-Bradford among others.
    Mr. McNally: Does the Minister realise that his statement that he now hopes for progress in June following three failures is disgraceful and that it brings the whole process of negotiation into discredit? What new action does he propose to try to get movement? Will he bear in mind that it would be sensible for any agreement to take account not only of airlines and regional policy but of the development of the aerospace industry itself, especially the fact that British Aerospace has the right aircraft for the right routes ready to go into production?
    Mr. Sproat: I shall certainly bear in mind the hon. Gentleman's final point, but I cannot accept his sad advice that, because I did not succeed at first, I should give up. We shall go on trying. When we started the process there were only two European countries in favour and eight against. At the latest meeting there were eight in favour and only two against. We shall win in the end.
    Mr. Squire: Will my hon. Friend continue the pressure, which I know he is applying as hard as he can, to achieve an agreement, because it would be a concrete example of the advantages of European co-operation?
    Mr. Sproat: I am grateful to my hon. Friend for those remarks. He is right. I hope that all our European partners will agree with him in the summer.

    Multi-fibre Arrangement
    Mr. Stottasked the Minister for Trade if the full details of the new bilateral agreements under the multifibre arrangement have yet been published.
    Mr. Peter Rees: The Council regulations containing details of the provisions of the new MFA bilateral agreements, together with all the 1983 quotas, have now been published in the Official Journal—L.374, dated 31 December 1982. A copy is available in the Library. The texts of the individual bilateral agreements will be submitted to the appropriate Committees of both Houses in the usual way, once they have been formally signed, and will be deposited in the Library.
    Mr. Stott: Bearing in mind that the textile and clothing industry is an important part of British industry, is it not serious that details of imports into this country are not yet available? How will the Minister monitor import penetration and ensure that imports do not exceed the level that he negotiated under the MFA?
    Mr. Rees: The hon. Gentleman may not have been able to digest my main answer. The 1983 quotas are available, but they are long and complex and about 600 groups are involved. It will take a little time to work out all the
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    details. They are being run through the Commission's computer, but I assure the hon. Gentleman and the House that we shall be able to monitor imports effectively this year and we shall make certain that countries stick to their quotas.
    Mr. Bowen Wells: Is my hon. and learned Friend aware that some textile manufacturers in this country, notably Gents of Barnsley, are exporting to such countries as Hong Kong and Japan? Does not that suggest that the MFA should be eased to ensure that other textile manufacturers in this country make their products competitive and of a design that is attractive to export markets, instead of seeking protection?
    Mr. Rees: My hon. Friend is right to draw attention to the healthy aspect of the clothing and textile industry. Exports are running at £2 billion a year and some bold and imaginative companies have broken into the Hong Kong and Japanese markets, and deserve congratulations.
    Mr. Woolmer: The Minister glossed over the unavailability of statistics. How could he sign an agreement and put it before the House when, even now, he does not have details of the quotas on imports up to 1986?
    What is the Minister doing about reducing restrictions on our exports of clothing and textiles to such countries as America, Australia and Brazil, whose tariff barriers are vast compared with our modest restrictions?
    Mr. Rees: It was possible for the Commission to assure us that the figures negotiated would be comfortably within the set global ceiling. Strong representations are continually made about tariffs of individual developed countries, but the hon. Gentleman will realise that a solution cannot necessarily be achieved immediately by unilateral action.

    Balance of Trade
    Mr. Chapmanasked the Minister for Trade what were the United Kingdom balance of trade figures for the last month for which figures are available and for the year to 31 December 1982.
    Mr. Peter Rees: The current account of the balance of payments in December 1982 was in surplus by £822 million. The balance for 1982 as a whole is estimated at a surplus of £4·6 billion.
    Mr. Chapman: While I welcome those figures, which presumably would be improved further if one took into account invisible earnings, will my hon. and learned Friend tell us whether he feels that the recent depreciation in the value of sterling is likely to help or to hinder the United Kingdom's balance of payments during 1983?
    Mr. Rees: The figures that I gave take into account invisible exports, which make an invaluable contribution to our export figures. The service sector provides employment for 11½ million of our fellow countrymen. The depreciation of sterling against some other currencies will certainly increase the export opportunities of certain sectors of the British economy.
    Mr. Ioan Evans: Will the Minister not be too complacent about those figures? Have not the Government received £40,000 million from the sale of North Sea oil, which is included in the figures that he gave? Will he also

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    confirm that in the current financial year there is a £5,000 million deficit in manufactured goods with the Common Market alone?
    Mr. Rees: The hon. Gentleman's final figure is wrong. On a balance of payments basis, the surplus of trade in manufactures last year was about £2·4 billion.
    Sir Anthony Grant: Will my hon. and learned Friend confirm that the figures do not substantiate the myth being perpetuated by the Opposition that our manufacturing industry has failed to contribute to our economy? Will he state clearly that our manufacturing industry has held up remarkably well at a time of trade recession and that, because of Government measures, it is probably in a better position to compete in the world?
    Mr. Rees: My hon. Friend, who has great experience in these matters, is right. I pay tribute to the export record of the British manufacturing industry. I dissociate myself from the distorted messages of gloom coming from the Opposition Benches.
    Mr. Archer: Since £4·4 billion of the £4·6 billion balance to which the Minister referred is represented by oil, is the hon. and learned Gentleman not disturbed by the fact that Morgan Guaranty and the OECD agree that Britain's prospects of long-term recovery are being irreparably damaged, that the CBI is troubled about continued unemployment, that the French Finance Minister is asking for international reflation and that even the American Government are abandoning Reaganomics? At the previous Trade Question Time the Minister suggested that I had not been in my job long enough. Is it possible that he has been too long in his?
    Mr. Rees: I am so glad that the right hon. and learned Gentleman is feeling more at home in his present position, but he gave us a series of random, unconnected and largely baseless forecasts. As he mentioned France, I should tell him that the French ran a deficit on their current account last year of about 80 billion francs—about £7½ billion. So that was not a very helpful comparison.

    Film Industry (Review)
    Mr. Maxtonasked the Minister for Trade if he has yet completed his review of the film industry; and if he will make a statement.
    Mr. Dormandasked the Minister for Trade if he will make a statement on the policy of Her Majesty's Government towards the film industry.
    Mr. Sproat: A statement will be made as soon as my review of the industry is complete.
    Mr. Maxton: Is it not disgraceful that the Under-Secretary can give us such an answer when we were promised that the review would be completed by the autumn of last year? Will he complete the review as quickly as possible, consult as many people as possible and give the House an assurance that the review will be designed to help the British film industry and will not be simply a cost-cutting exercise?
    Mr. Sproat: I am reluctant to cross swords with the hon. Gentleman about completing the review by the autumn of last year, because we had hardly started it by then. I have said many times that we hope to finish taking evidence in about March and to publish our conclusions
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    in about June. That is the timetable to which we shall stick, and I assure the hon. Gentleman and the House that the review is designed to help and that it will do so.
    Mr. Dormand: Is it not clear, from the ending of the quota system and the threats to the Eady levy, to the National Film Finance Corporation and to the interim action committee, that the Government have no intention of maintaining a British film industry? Does the Under-Secretary agree that some of the most successful films of recent years, which have won international acclaim, would not have been made without public money? Will he have second thoughts about the disastrous proposals that are now being talked about?
    Mr. Sproat: The answer to the hon. Gentleman's first question is no, and with regard to the implications of his second question, these are the points that we are taking into account in our review.
    Mr. Pollock: In carrying out this review, will my hon. Friend bear in mind the problems faced by provincial cinemas, whereby only one picture is allowed in the schedule over holiday periods? Is my hon. Friend aware that, for example, during the Christmas break many young children in my constituency, including my six-year-old daughter, were able to see the film ET, but were denied the chance to see the film Sleeping Beauty because of the arrangements between the film distributing companies? [HON. MEMBERS: "Disgraceful".]
    Mr. Sproat: My hon. Friend makes a good point. I am aware of the problems in Elgin and how hard my hon. Friend is fighting to overcome them. The House may not know that similar problems are occurring in Glasgow, and I am surprised that the hon. Member for Glasgow, Cathcart (Mr. Maxton) did not bother to mention that in his supplementary question. This matter has been referred to the Monopolies and Mergers Commission and I hope to receive its report within a few weeks.
    Mr. Woolmer: In his review of the financial support schemes for the British film industry, will the Minister take into account the fact that in six weeks as many people will watch films on video as will watch films in cinemas in a year, and in a week they will see as many on television as they see in cinemas in a year? Will the Minister consider extending the principle of the film levy—rather than abolishing it—to reflect present-day realities and to ensure that money from video and television audiences finds its way into the film industry to ensure a thriving and flourishing British film industry, which thereby helps not only the industry but the viewers?
    Mr. Sproat: It was precisely because we are aware that moving image technology these days covers television, videos, cable and satellite as well as cinema that I set up the review. I am considering whether to abolish or extend the levy.
    Sir William Clarke: Does my hon. Friend agree that the Government have helped the film industry in that the 100 per cent. capital allowances have been extended from two to five years?
    Mr. Sproat: I am glad that my hon. Friend has drawn attention to that. It is certainly something of which the film industry is deeply appreciative.

    Balance of Trade
    Mr. Proctorasked the Minister for Trade whether he will introduce new initiatives to improve the United Kingdom's world trading position.
    Mr. Peter Rees: The British Overseas Trade Board and the Export Credits Guarantee Department are constantly examining their services and facilities to ensure that they meet the needs of United Kingdom exporters.
    Mr. Proctor: Does my hon. and learned Friend agree that one new initiative might be the creation of free ports, an initiative which has all-party support and which would provide new trading opportunities, new investment and new real jobs?
    Mr. Rees: My hon. Friend and the House may know that a working party has been set up under the chairmanship of my hon. Friend the Economic Secretary to the Treasury. It will take a close look at this problem. I know that my hon. Friend the Under-Secretary made a distinguished contribution to the proceedings.
    Mr. Campbell-Savours: Is not the United Kingdom's trading position with France prejudiced by the introduction of measures against that country over the importation of milk that are transparently dishonest and unworthy of the British people?
    Mr. Rees: There is no evidence that United Kingdom exports to France have been so prejudiced but I am sure that the general proposition made by the hon. Gentleman will be noted by my right hon. Friend the Minister of Agriculture, Fisheries and Food.

    Heliport
    Mr. Wellbelovedasked the Minister for Trade if his Department will study the effect on London of the development of a short take-off and landing airport or heliport on the Thames bank opposite Erith town centre development.
    Mr. Sproat: Study of the impact of such individual development proposals is for the local planning authorities in the first instance. I understand that the local planning authority, after consulting other local authorities concerned, has already granted permission for the private helicopter pad to which the hon. Gentleman refers. However, it will not offer the permanent facilities for public helicopter services that the London area needs. A separate planning application to build a STOL port in Docklands has recently been called in by my right hon. Friend the Secretary of State for the Environment and will thus be the subject of a public inquiry.
    Mr. Wellbeloved: Is the Minister aware that both these proposals threaten danger and unacceptable disturbance to the local communities, and that the heliport on the banks of the Thames has met with widespread disapproval since the local authorities granted planning permission?
    Mr. Sproat: The heliport at Rainham marshes has been granted permission for only some 30 movements a week, so will not be very disturbing. There will be a public inquiry about the STOL port, and the hon. Gentleman and his constituents, and anybody else, are free to give evidence to it.
    Mr. Haselhurst: Will my hon. Friend have particular regard to the effect that the establishment of the STOL port could have on reduing the number of movements of smaller aircraft at Heathrow?
    Mr. Sproat: Yes, among the many things that we have to take into consideration with regard to Heathrow and other airports, the point that, my hon. Friend has made will be borne in mind.

    Origin Marking
    Mr. Wallerasked the Minister for Trade if he has any plans to amend the regulations relating to marks of origin.
    Dr. Vaughan: I am aware of my hon. Friend's great interest in this and I am glad to tell him that I am currently reviewing the origin marking order introduced in January last year.
    Mr. Waller: I thank my hon. Friend for that reply. Is he aware of the great number of prosecutions that there have been recently relating to the fibre content of imported cloth, particularly from the EC? As the Trade Descriptions Act 1972 defines the country of origin as that in which the last processing act took place, does my hon. Friend agree that that is not very helpful to the British consumer who wants to buy British?
    Dr. Vaughan: I am looking at this, and I am aware of the difficulties, as is my hon. Friend. I have asked the trading standards service for an urgent report on this and other difficulties, and have underlined my concern that the order should be effectively enforced.
    Mr. Cryer: Does the Minister accept that one of the greatest difficulties concerns garments that are made up of imported cloth but which, because they are assembled in the United Kingdom, are marked "Made in the United Kingdom." This is highly deceptive and the Minister has already promised to review the order, but time is slipping by. When will he introduce amending legislation so that people know whether the cloth is made in the United Kingdom?
    Dr. Vaughan: I am aware of the difficulties about this. I underline that I am most anxious that people should be able to identify British goods of quality, and the origin marking is an important factor in this. The basic message is a simple one—where British is best, buy the flag.
    Mr. Neil Thorne: When my hon. Friend looks at this matter, will he bear in mind that, because of the complexity of the manufacture of a number of goods these days, the parts often come into the country and are only assembled here? Therefore, will my hon. Friend look at the possibility of showing what percentage of the manufacture has been carried out here before allowing manufacturers an origin marking saying that the goods are made in Britain?
    Dr. Vaughan: Yes, I am considering that.
    Mr. Sheerman: Will the Minister send one of his civil servants to Greece to look at the cloth being sold in so many of the markets and shops and see the many fraudulent markings such as "Made in Huddersfield", "Made in Yorkshire" and "All British Wool"? Can the Minister put a stop to this? We have had promises in the House year after year, but nothing has been done. Cannot the Minister's civil servants afford to fly to Greece?
    Dr. Vaughan: I am aware of the problems in this kind of trade, and with other kinds of counterfeiting. This was why we recently set up a counterfeiting unit in the Department of Trade, under my hon. Friend.
    Mr. Dykes: Is my hon. Friend satisfied with the EC initiatives to protect origin marks and the related and specific question of trade marks? As we are the world leaders in trade mark matters, will my hon. Friend press to have the EC trade mark centre established in Britain?
    Dr. Vaughan: We are pressing hard for the European trade mark centre to be located here, as it will be of great value not only to us but to Europe.
    Mr. John Fraser: Will the Minister make regulations to extend origin markings to advertisements so that, for instance, with motor vehicles sold under a well-known British name, people will know whether they were manufactured in Britain, Belgium or Spain?
    Dr. Vaughan: Yes, we are looking at this, but, as the hon. Member will know when it comes to advertisements, particularly for such things as mail order goods, there are difficulties over publishing times and knowing from where the goods are coming. We shall have to see to this.

    Balance of Trade
    Mr. Strawasked the Minister for Trade when, on present estimates, he expects the net contribution of oil to the balance of trade to begin to decline.
    Mr. Peter Rees: It is not the practice to forecast at this level of detail.
    Mr. Straw: Is not the reality that, having squandered North Sea oil revenues on 3½ million unemployed, and having caused a collapse of British manufacturing industry twice as large as that which occurred during the great slump between 1929 and 1931, the benefits of North Sea oil will run out faster than was previously expected, particularly given the drop in the oil price? In those circumstances, the Government have no possibility whatever of securing a firm foundation for manufacturing to replace what we shall lose when the oil runs out.
    Mr. Rees: The hon. Gentleman talks about reality, but he lives in a world of fantasy. I do not know why he should share his bad dreams with the House. Last year's manufacturing exports were up by 8 per cent. in value and by 1 per cent. in volume, at a time when world trade is contracting. That does not demonstrate that we live in an industrial wasteland.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call the Front Bench and to allow one minute extra at 3.30 pm.
    Mr. Archer: Will the hon. and learned Gentleman use this occasion to comment on reports that the Treasury is threatening the aid and trade provisions and the future of export credits, and that his Department is very sensibly resisting such a mindless and doctrinaire step? If those reports are accurate, will he permit me to wish him more power to his elbow?
    Mr. Rees: I am grateful for those extremely courteous observations by the right hon. and learned Gentleman. I will not confirm what he has to say. We attach considerable importance to the role of the export credits guarantee department and to the ATP programme.

  OVERSEAS DEVELOPMENT

    "Common Crisis"
    Mr. Tom Clarkeasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the report of the Brandt commission, "Common Crisis".
    Mr. Frank Allaunasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the policy of Her Majesty's Government towards the conclusions of "Common Crisis" by the Brandt commission.
    Mr. Ioan Evansasked the Secretary of State for Foreign and Commonwealth Affairs what action is proposed on the Brandt second report "Common Crisis" recommendations.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind): My right hon. Friend the Minister for Overseas Development is in the Falkland Islands at present and has asked me to reply.
    The Government welcome the Brandt commission's timely memorandum. It will be carefully and constructively studied. We share the concern of the Brandt commission about the very serious economic difficulties facing developing countries.
    Action in the areas covered by the memorandum will be under active discussion at a number of international meetings in 1983. We shall approach these meetings constructively with the aim of agreeing practical action where appropriate.
    Mr. Clarke: Does the Minister agree that his statement and the report are worthy of the widest possible debate, including an early debate in the House? Does he further agree that such debate would improve the editorial appreciation of the report by such newspapers as The Daily Telegraph and the Financial Times?
    Mr. Rifkind: As the hon. Gentleman will appreciate, those are matters for the Leader of the House, but I understand that he is sympathetic to a suggestion of that kind, and no doubt the matter will be pursued in the usual way.
    Mr. Allaun: Is it not a fact that Willy Brandt has returned to this issue because Governments, including ours, have done nothing about it? Would not helping the poorer nations of the world help us too, because they would then be able to afford our goods and provide jobs for our unemployed?
    Mr. Rifkind: The second Brandt report contains a number of detailed proposals, a considerable number of which have already been accepted by the United Kingdom Government and by several other Western Governments. We acknowledge the importance of the report and there will be opportunities at several conferences this year—for example, the economic summit at Williamsburg and the UNCTAD conference—to consider the matters in greater detail.
    Mr. Ioan Evans: Will the Government seek to implement the recommendations of the second Brandt report, having done very little about the first report? As both reports refer to the massive arms expenditure in the

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    world, with £600,000 million being spent in preparation for war, while 800 million people are living on the borders of starvation, why can we not divert the arms expenditure to help the underdeveloped countries?
    Mr. Rifkind: Concerning arms expenditure, the best advice that the hon. Gentleman could give would be to the Governments who seek to purchase arms. If their perceived needs for arms were reduced, no doubt their resources would be available for other purposes.
    The hon. Gentleman is quite wrong to suggest that the United Kingdom Government have not responded to the Brandt recommendations. With regard to the recommendations in the second report, the IMF has recently doubled the useable resources available. The United Kingdom has waived aid loans to developing countries. We have already ratified the common fund on commodities. We are already a member of six commodity agreements and we have supported the proposal for a World Bank energy affiliate. Those are examples of Brandt recommendations that have already been accepted by the United Kingdom Government.
    Mr. Bowen Wells: I congratulate the Minister on his constructive response to the second Brandt commission report—perhaps we may call it "Son of Brandt". Is he aware that the report recommends that global negotiations should be started as quickly as possible at the United Nations? Is he also aware that our ambassador to the United Nations said, at a meeting in this House, that those negotiations were virtually dead? Will the Minister do something to revive those negotiations, in accordance with the Brandt report recommendations, and help them to get under way at the earliest moment?
    Mr. Rifkind: I agree with my hon. Friend about the desirability of global negotiations going ahead. The only thing that prevents it happening at present is that certain detailed amendments have been suggested by Western countries to the G77 group of developing countries. If they felt able to respond on some of the few detailed points that remain outstanding, there would be nothing to stop global negotiations beginning.
    Mr. Brocklebank-Fowler: Do the Government intend to increase substantially their contribution to IDA at the earliest possible opportunity, and will they support even larger resources being made available to the IMF?
    Mr. Rifkind: The United Kingdom was the first of the major donors to release its full contribution to the IDA sixth replenishment. That shows the importance that we attach to this form of international assistance.
    Mr. Hooley: Will it be the policy of Her Majesty's Government to support the creation of special drawing rights and to allocate them particularly to developing countries?
    Mr. Rifkind: As the hon. Gentleman may be aware, that matter was on the agenda of the recent meeting of the interim committee of the IMF, chaired by my right hon. and learned Friend the Chancellor of the Exchequer, at which important progress was made.
    Mr. Beaumont-Dark: Has the Minister seen the figures showing that more children die every three days from starvation than died at Hiroshima? Does he agree that that shows the enormous amount of work to be done to capture the understanding and concern of the people of
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    Britain and the rest of the world? What are the Government doing to make the facts clear to our people, and what can the Brandt commission do to make those facts known to the rest of the world?
    Mr. Rifkind: I am sure that measures to combat child deprivation would command support on each side of the House. For the forthcoming year we are giving the greatest amount we have ever given to UNICEF, and that will he an important contribution to dealing with the problem.
    Mr. Guy Barnett: Is the hon. Gentleman aware that we are very encouraged by the speech that the Foreign Secretary made in response to the Brandt report, and also by the remarks that the hon. Gentleman is making this afternoon? They are in considerable contrast to the complacent response to the first Brandt report. Does the hon. Gentleman recognise that, after three years of delay, "Common Crisis" regards the present world situation as a matter of emergency and believes that we shall be facing catastrophe unless action is taken fairly quickly?
    Has the hon. Gentleman noticed a considerable shift in thinking on economic policy within the United States Treasury? As a consequence of the hon. Gentleman's encouraging remarks, can we expect a considerable shift in the economic and financial direction of the British Government?
    Mr. Rifkind: I am grateful to the hon. Gentleman, at least for his earlier remarks. I think that the Western countries have responded and that they have recognised the urgent need for action of the kind suggested. In the North-South dialogue, the North consists not only of the Western countries but of the Socialist countries from the eastern part of Europe, including the Soviet Union, where the contribution towards assisting in the North-South dialogue has been very poor.
    The Williamsburg sun-unit will provide an opportunity for the West to develop further some of the aspects of the Brandt recommendations.

    West Indies
    Mr. Proctorasked the Secretary of State for Foreign and Commonwealth Affairs what is the current level of aid in total and to each country in the West Indies.
    Mr. Rifkind: In the past financial year we provided £25·8 million bilateral aid for countries in the Commonwealth Caribbean. In addition £6·1 million was disbursed by the Commonwealth Development Corporation. Details of our aid to individual countries will be published in the Official Report.
    We expect to provide a similar amount in total in the current financial year.
    Mr. Proctor: Will my hon. Friend tell the House whether there is any legislative bar to the use of aid funds to help those people from the West Indies who are here and wish to return to their own islands, or to spending the aid on new towns or training facilities in the West Indies, so that such people may take advantage of them when they get there?
    Mr. Rifkind: I believe that the House would clearly expect that moneys voted for overseas aid would be used for overseas development. The wording of the relevant legislation is that such aid should be used for

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    "promoting the development or maintaining the economy of a country or territory outside the United Kingdom or the welfare of its people".
    Mr. Dalyell: Compare that £30 million with the £880 million price tag that is now put on Port Stanley airport. When the Minister for Overseas Development returns from the Falklands, will the Minister ask him what is his priority?
    Mr. Rifkind: I believe that the hon. Gentleman speaks neither for the House nor the country when he makes such a point. The vast majority of people in the country recognise the obligations that we have properly undertaken in the south Atlantic.
    Following are the details:

    British Bilateral Aid to the Commonwealth Caribbean 1981–82

    Country

    Gross Public Expenditure

    (of which CDC) £

    Anguilla

    1,341,619

    —

    Antigua

    750,232

    —

    Bahamas

    29,050

    —

    Barbados

    4,627,584

    (4,000,000)

    Belize

    3,814,269

    (150,000)

    Bermuda

    2,648

    —

    British Virgin Islands

    1,350,033

    —

    Cayman Islands

    160,645

    —

    Dominica

    1,480,776

    —

    Grenada

    38,522

    —

    Guyana

    1,761,020

    —

    Jamaica

    6,989,372

    (1,572,000)

    Montserrat

    1,350,470

    —

    St. Kitts/Nevis

    735,797

    —

    St. Lucia

    1,795,944

    (370,000)

    St. Vincent

    825,548

    —

    Trinidad and Tobago

    66,161

    —

    Turks and Caicos

    4,776,784

    —

    Total

    31,896,474

    (6,092,000)

    Somalia
    Mr. James Johnsonasked the Secretary of State for Foreign and Commonwealth Affairs what was the sum total of aid given to Somalia for the years 1980, 1981 and 1982 respectively.
    Mr. Rifkind: The total development assistance given to Somalia in the years 1980, 1981 and 1982 was approximately £1·4 million, £1·1 million and £1·5 million. The 1982 figure is provisional. In addition, food aid and disaster relief have been provided, and special assistance has also been made available for refugees in Somalia. I am circulating details of these amounts in the Official Report.
    Mr. Johnson: Bearing in mind that Ethiopia, with the aid of the Soviet Union, is making constant attacks upon Somalia, is bent upon the destabilisation of the Horn, and has created at least 1 million refugees who have to be looked after in Somalia, cannot the Government give a little more than they are doing at the moment? In the wider context, cannot the Minister talk to his fellow Ministers
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    and get them to do something, together with the Americans, the EC and others, to deal with the destabilisation of the Horn and so prevent a disaster in the north-east of Africa?
    Mr. Rifkind: The hon. Gentleman is right to emphasise the refugee problem in Somalia. Over the past three years the United Kingdom Government have given some £2 million towards helping to deal with it. The sums to be given in general aid for Somalia for the next year are likely to represent a modest increase.
    Mr. Sever: I recognise the Minister's anxiety about this matter. Will he also accept that the stabilisation of Africa may depend on the outcome of current circumstances and that, apart from the aid problem, the area's political importance deserves recognition?
    Mr. Rifkind: I assure the hon. Gentleman that the Government recognise that the Horn of Africa is a sensitive area that deserves the recognition of its problems, such as the hon. Gentleman has mentioned.
    Following are the details:

    Aid to Somalia in 1980, 1981 and 1982 included, in addition to development amounts (figures are rounded):

    1980

    1981

    1982

    £

    £

    £

    Food Aid

    1,400,000

    1,200,000

    1,000,000

    Disaster Relief

    2,000

    141,000

    —

    Financial Years

    1980–81

    1981–82

    1982–83

    £

    £

    £

    Refugee aid (cash grant to UNHCR)

    500,000

    1,000,000

    500,000

    Sir Anthony Grant: On a point of order, Mr. Speaker. Do you recall that approximately a year ago you rightly reproved me and a number of other hon. Members for having tabled identical questions on the Order Paper since it had the effect of depriving hon. Members with questions in between of the opportunity to ask those questions? I recall apologising. Do you not think that questions 38, 49, 50 and 53 are sufficiently near in content as to be almost identical and that, if this practice continues, it will have the effect of preventing hon. Members with questions on different subjects getting the ear of the House?
    Mr. Speaker: With respect, I believe that there is one difference. The hon. Member is correct about the event a year ago, but there is considerable interest on both sides of the House in the second Brandt report. I honestly felt therefore that it was different in degree from the last occasion.

  Ordered,
  That the Merchant Shipping Bill [Lords] be referred to a Second Reading Committee.—[Mr. Garel-Jones.]

European Community Budget
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.
3.33 pm
The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I beg to move,
That this House takes note of European Community Documents Nos. 4348/83 (Amended proposal for contracting loans under the New Community Instrument for the purpose of promoting investment within the Community), 10960/81 (Mandate of 30th May 1980—Report on the application of the Financial Mechanism), 5980/82 and 8874/82 (Commission's second and third reports on the implementation of supplementary measures in favour of the UK), COM(83)23 (Preliminary draft supplementary and amending budget No. 1 for 1983), the subsequent draft supplementary and amending budget No. 1 for 1983, 4417/83 (Proposal for a Council regulation amending Regulation No. 2744/80 establishing supplementary measures in favour of the UK, 4418/83 (Proposal for a Council regulation establishing specific measures of Community interest relating to energy strategy) 11125/82 (Communication from the Commission on the compensation for the UK: the subsequent solution), 4826/83 (Commission communication on the future financing of the Community); and supports Her Majesty's Government's efforts to negotiate arrangements for the Community budget which will ensure that the sharing of burdens between member states is equitable.
The motion lists 10 documents relating to the Community budget which the Scrutiny Committee has recommended for debate. I should like to thank the Scrutiny Committee, under the chairmanship of the hon. Member for Birmingham, Erdington (Mr. Silverman), for all its work and for recommending the documents for debate. The debate is about the European budget and our contribution to it. It falls to me to report to the House, because I am the Minister who represents the Government on the Budget Council. The Scrutiny Committee has not recommended for debate the Labour party document recently published by the hon. Members for Liverpool, Walton (Mr. Heffer) and Aberdare (Mr. Evans). No doubt, however, they and others will talk about it. They will try to turn this debate, as they do all European Community debates, into a debate about whether we should be in or out—a kind of rehash of the debates that took place leading up to the referendum organised by the Labour Government in 1975. The Government believe that the issue was settled by the people, who voted 67 per cent. in favour.
Nevertheless, I cannot resist sharing a few gems from the document with the House before I come to the Community budget. The most important reason for the growth in our trade with Europe, which grew from 20 per cent. in 1958 to 43 per cent. in 1982, is given by the hon. Gentlemen on page 5 of their document. It states:
"It has come about through the growth of foreign travel and the use of international languages."
Tell me another! On page 32 the document states:
"On women's rights decisions of the European Court have conferred some benefits but they fall short of the Labour party's intentions in this area."
Watch out, chaps!
Mr. Peter Shore: The Financial Secretary is in a somewhat bantering mood. May I turn him to a rather more serious course? He has referred to the increase in the percentage of Great Britain's exports to the EC. Will he tell us what percentage of our increased exports are oil exports and what has happened to manufacturing exports over the past 10 years?
Mr. Ridley: I shall be delighted to give the right hon. Gentleman that information if he will specify over which period of years. Perhaps he will put down a question and I shall give him full and accurate information.
As the House knows, in December the European Parliament rejected a supplementary budget which made provision for our budget refunds for 1982. We were naturally disappointed by that vote, but we saw it as a stage only in the process and the Finance Council agreed the following day that it would respect the agreement of 26 October on our refunds for 1982. If would then do all that it could to have it implemented. The Commission undertook to ensure that the United Kingdom and Germany would not be put in a worse position than was intended under that agreement. The Commission has honoured that undertaking.
In response to the rejection of the 1982 supplementary budget, the Commission prepared a revised supplementary budget, this time for 1983, which the Council broadly endorsed and sent to the Parliament. As hon. Members will know, in its plenary session in February Parliament voted to adopt the new budget. It also gave opinions on the two draft recommendations which provide the legal basis for our refunds. Therefore, the way is now open for the Council to adopt regulations and for the Commission to grant us our basic refund for 1982 of £630 million gross or £500 million net as agreed last October.
Mr. Tony Marlow: Although these refunds will be coming in, they will be late, and late money deserves interest payments. Will we, in effect, be in the same position as we would have been had we had the money at the right time? Are there any strings attached in terms of people going through our books and deciding what we can spend money on?
Mr. Ridley: I shall be coming to the second point raised by my hon. Friend, but on the first point I assure him that the Commission deposited the money in an account in London so that we did not pay interest on it and we had full use of the money. It did not cost us anything.
With the exception of some hon. Members on the Opposition Benches, the House will welcome the outcome. Now that it is virtually all over, I should like to share three thoughts with the House about these events. First, on the problem of budgetary imbalances, I believe that there is a new sense of urgency in the Community—a new mood of realism, a feeling that there must be a lasting solution and that things will not be quite the same again. Indeed, the rejection of the budget may prove to be a blessing in disguise, although I agree that the disguise seemed extremely good last December.
Between the rejection of the 1982 supplementary and the adoption of the 1983 supplementary there was urgent and highly constructive debate among Council, Commission and Parliament. I took part in it. I spent a great deal of time in Brussels and Strasbourg. I believe that the Parliament has come a long way towards persuading the Council of the urgency of finding a lasting solution to the problem of unfair budgetary burdens. We have been arguing since we came to power for such a solution. The Parliament, by using its powers over the budget, has insisted that progress must be rapid. I also think that the Parliament appreciates that, with the best will in the world, putting a lasting solution in place is bound to take time and that interim arrangements will be needed to pave the way for that lasting solution.

667
This new sense of purpose is heightened by the Commission's announced estimates of the next budgetary positions of individual member states for the calendar year 1982. They show that before refunds our net contribution for 1982 was about 2 billion ecu, or £1·2 billion. That has made it clear to everyone that the problem has not gone away.
My second thought on looking back is how right we were not to over-react in December, as the right hon. Member for Stepney and Poplar (Mr. Shore) typically did. We judged at the time that the best course would be to see whether we could turn the events of December to good account. I believe that we have done that. I pay tribute to the good counsel and good sense of British Members of the European Parliament at Strasbourg. We worked closely with them, particularly our friends and colleagues in the European democratic group.
Thirdly, the Council reached the agreement with the Parliament without making unacceptable concessions. In its rejection of the 1982 supplementary last December, the Parliament drew attention to a number of specific issues in addition to the urgent need for a lasting solution to the budget problem instead of ad hoc arrangements—the staging of payments of grants to the United Kingdom and Germany; the need to integrate the payments with Community policies, not least energy; and the classification of expenditure as obligatory or non-obligatory. The agreement finally reached covered all those points in a manner satisfactory to us. I shall explain how.
On the staging of payments, the Council agreed that grants should be paid as to 90 per cent. immediately, with the remaining 10 per cent. following certification of expenditure on programmes attracting grants. That repeats the arrangements made for our 1980 and 1981 refunds.
The Council agreed to the Commission's proposal for dividing our refunds between supplementary measures of the type that we received for 1980 and 1981 and special energy measures under a new regulation. About £230 million of our total gross basic refund of £630 million is to be granted under the new energy regulations. Grants under that regulation will be classified as non-obligatory in accordance with existing practice for other Community expenditure on energy. The agreements reached among the institutions on these matters are reflected in documents Nos. 5 to 8.
I should now like to take the House through the budget refunds that have been won over the past three years by the Government.
Mr. Teddy Taylor: Would the Minister be kind enough to tell the House what happens if the budget committee of the European Assembly is not happy with the way in which we have spent the money on special energy measures? What happens if it feels that our allocation is not in accordance with its view of what are special energy measures?
Mr. Ridley: The list of qualifying projects is nearly completed and will soon be agreed. I assure my hon. Friend that there is no likely difficulty about finding adequate candidates to absorb all the money provided and, indeed, much more.
Mr. Marlow: Could my right hon. Friend tell the House—this is the important part—where the power resides? Who can finally decide whether we get that money?
Mr. Ridley: The processes are now complete except for the final approval by the Council. That money will now be paid. We are discussing the end of this particular saga. But I must tell my hon. Friend—although I am sure that he knows—that there are two budgetary authorities, the Council and the Parliament. The budgets must be agreed by both before they can become legal.
I would now like to take the House through the budget refunds that we have won over the past three years. The refunds already received for 1980 and 1981 amounted to over £1·4 billion net of our gross contributions. We expect to be granted next month a further £500 million of basic refund for 1982. If the Commission's latest estimates for our net contribution for 1982 are confirmed, we should be entitled to further repayments under the risk-sharing arrangements. That brings our total net refunds over the three years to about £2 billion. That shows what can be done by patient negotiation and perseverance.
I hope that it will not be thought immodest if I point out how our record compares with that of the Labour party. The Labour Government, in their infamous renegotiation of the terms of entry, secured agreement to a financial mechanism regulation designed to reimburse some of our gross contribution in certain circumstances. How much money have we had from that regulation? Not one single ecu. The right hon. Member for Stepney and Poplar did not read the small print which prevented us from qualifying. The second document listed in the motion gives that very small print.
Mr. Shore: Did the right hon. Gentleman agree the original mechanism, not merely in principle? Did he vote for the package of renegotiation when it came before the House in 1975? Did he not have the opportunity with his colleagues to renegotiate the financial mechanism? Since the renegotiation of the financial mechanism in 1980, has the situation improved? Have we received a single penny under the renogiated financial mechanism?
Mr. Ridley: I voted to support the Labour Government"s attempts to improve our refunds from Europe. I imagine that the right hon. Gentleman will vote in favour of our very much more successful attempts to do the same.
On the second point, yes, we did renegotiate the financial mechanism and, no, we got nothing out of it, and the right hon. Gentleman knows that perfectly well. It was overridden by the agreement of May 1980 under which we got the full refund. That is much more successful than anything the right hon. Gentleman did.
Mr. Julius Silverman: When the May agreement was brought before the House, did not the Government make a strong point that there were two elements in it—the financial mechanism and the supplementary measures? At that time the Government attached great importance to the financial mechanism, even though we have not had a penny from it since.
Mr. Ridley: Yes, and that shows how wise it is to provide two triggers. If the first trigger does not succeed, at least the second does.
The Labour party has made much of the cost of our membership being £1 million a day on average since we

669
joined the Community. In the Labour Government's last three years of office, the United Kingdom's contribution was £1 million a day in 1977 and £2·25 million a day in 1978, rising to more than £2·5 million a day in 1979.
The Opposition amendment relates to our estimated net contribution of £616 million for the financial—not calendar—year 1982–83. That figure is taken from the recent public expenditure White Paper. However, special factors have inflated the figure for the current year. We had an unusually high VAT rate in 1982 and our basic refund for 1982 assumed that our net contribution would be much lower than it turned out to be. We are therefore due to receive extra refunds later this year through the risk-sharing arrangements. When one adds to that the fact that nearly £2 billion has been returned through our efforts, the House can judge whose stewardship of our European budgetary affairs has been more successful.
The greater part of our refunds for 1982 will again take the form of supplementary measures, but 400 million ecus, or £230 million, will be for special energy measures. The draft regulation makes it clear that the new special energy measure will be confined to the United Kingdom and Germany. They do not amount to a new Community energy policy.
The document referring to the new Community instrument has a separate subject from the other documents for debate. It demonstrates a positive and helpful aspect of the Community endeavour, which will be unwelcome to Opposition Members. The facility is designed to cover borrowing in the Community's name to help to finance projects in member states in energy, industry and infrastructure. The aim is to back up member countries' efforts to stimulate investment and to try to control unemployment. The further 3 billion ecus now being approved will cover an additional category of "other productive sectors" and, as before, the Council will continue to authorise each tranche of borrowing and to lay down guidelines on lending. I commend that constructive development.
The vital question, however, is that of finding a long-term solution to the financing, including our own budget problem. The most positive result of recent events has been the growing consensus in the Community about the urgent need for a lasting solution. Discussions between member states are now beginning. They will not be easy, but there is no need for pessimism. The hon. Member for Walton wrote in his infamous document:
"Any agreed restructuring of the EEC budget is most unlikely given the balance among the Member States".
In the same paragraph he alleged that West Germany's
"budget receipts and contributions have tended to be broadly in balance".
Such ignorance is worrying. Germany's net contribution has not been £1 million a day; it has been more like £3 million a day. It is necessary to approach these discussions constructively and optimistically with a firm determination to find a lasting solution which, as the motion states
"will ensure that the sharing of burdens between member states is equitable."
The second to last of the documents listed in the motion contains ideas for interim arrangements which the Commission put forward last autumn. The last of the documents, the Commission communication about the future financing of the Community, is relevant to the long-term solution. The Commission's paper on future financing contains a number of far-reaching ideas which if implemented, would have major implications for the
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scale of the Community's expenditure and revenues. The paper is clearly a discussion document. The Commission has imported our term "Green Paper". It is not a firm set of proposals; firm proposals are promised for this spring. The green paper begins by calling on the Community to develop and extend non-agricultural policies and produce a better balance in the budget between agricultural and other spending. That general objective is one that we endorse.
The Community's expenditure on agriculture has fallen from over three quarters of the budget when we took office to about two thirds now. As to the development of Community policy, we recently published a booklet called "Positive Approach" which sets out some of our own ideas.
The green paper then suggests that the extra financing needed for the development of Community policies should be found partly by containing the growth of agricultural expenditure—an objective that we share—and partly by increasing the Community 's revenues or own resources. We do not share the Commission's views on the need for extra own resources. No one has yet demonstrated that an increase in own resources is necessary. If agricultural expenditure is properly controlled, the Community's existing revenues should provide the necessary financial resources for the development of Community policies and, indeed, for enlargement.
It would be wrong to rule out the idea of changes in the structure of own resources as opposed to the total of their yield. Our budget problem arises because we pay into the Community budget much more than the Community pays out to us. That is primarily because we are not a surplus agricultural producer. One obvious contribution towards solving the problem would be to restructure own resources so that we pay less. The Commission's paper discusses the possibility of a new resource, based on the value or value-added of agricultural production in each member state. Our share of that would be considerably smaller than our share of VAT own resources.
If VAT own resources were to be partly replaced by an own resource based on agricultural production, it could make a useful contribution towards reducing the United Kingdom's budgetary burden. It would be even better if it were based on the production of agricultural surpluses. The green paper states, rightly, that one objective of any reform of the Community's financing system should be to contribute to the correction of budgetary imbalances between member states, but it does not contain specific proposals. There are some hints in the sections dealing with the proposed new agricultural own resources and financial equalisation systems. We shall make it clear to the Commission that it should give special attention to this crucial problem in its further work between now and the spring.
Our views on the nature of a lasting solution were summarised in Brussels earlier this month by my right hon. and learned Friend the Chancellor of the Exchequer. Copies of his statement are in the Library. We want an arrangement that will solve the problem of unfair budgetary imbalances once and for all and which, once implemented, will remove the need for budget refunds and take the entire subject off the Community's regular agenda.
Mr. Eric S. Heifer: The right hon. Gentleman says that the views of the Government

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were outlined by the Chancellor of the Exchequer in his speech on 8 February, but the Chancellor said nothing—nor has the right hon. Gentleman today—about the other proposals in the document, one of which is:
"Any new development of the Community's financing system should, in the Commission's view, reflect and enhance the role of the directly elected European Parliament."
An important part of the document is the suggestion to strengthen the Parliament and the Commission, the introduction of majority voting, the introduction of all-round harmonisation and reducing the House of Commons to a regional body. Is that the Government's view? Are they prepared to give us a categorical assurance that they will not accept that proposal, as the Minister was prepared to give about not increasing the one per cent. VAT?
Mr. Ridley: My right hon. and learned Friend's statement was made on the same day as the publication of the Commission's green paper, so of course he did not refer to it. They were coincidental. On budgetary contributions, the Parliament seems to be on the same side as the vast majority of hon. Members. We must see how the matter evolves. The powers of the Parliament are laid down in the treaty and it would require major upheavals to change them. We should not consider the matter deeply on a day that has been set aside for discussing the budgetary imbalance.
The solution should include the development of Community policies as one component, but there is no way in which that could solve the problem completely. A lasting solution is likely to require changes in the financing of the Community as well. My right hon. and learned Friend the Chancellor of the Exchequer mentioned two practical ideas in this connection. They are ideas—not proposals—which would solve the problem with minimum disturbance to the Community's existing arrangements. One is that the VAT liabilities of member states now bearing excessive budgetary burdens might be reduced by placing an upper limit on them. Such limits should be calculated by reference to relative prosperity and GDP. The other is that the VAT liabilities of net contributor countries might be reduced to take account of the difference between their shares of CAP receipts and their contributions to CAP expenditure, this relief being progressively phased out for more prosperous net contributor countries.
The Government are being constructive and optimistic. I do not disguise the fact that hard negotiation lies ahead. The Government will continue to negotiate with determination in the interests of this country. I commend this approach to the House.
Opposition Members are totally preoccupied with the idea of withdrawing from the Community and retreating into isolation and protectionism cloaked in international rhetoric.
The document of the hon. Members for Walton and for Aberdare contains one gem, with which I would like to close:
"The Labour party is an internationalist party. We believe in a wider European unity. We hope that eventually the whole of Europe will be under a democratic Socialist system."
It is curious that those countries which find it necessary to include the word "democratic" in their titles are always countries which do not practise democracy. An example is the German Democratic Republic. Why does Europe
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have to be under a socialist system? There has been no shortage of socialist governments in the European Community, including the last United Kingdom Government. Why are United Kingdom Socialists so different from French or German Socialists? Do the Opposition want Europe to be like the east European satellites? Would it not be better if those countries were free members of the European Community? One of the important points about the European Community is that it helps to avoid—and this is what the Opposition say they want—the whole of Europe falling under a democratic Socialist system.
Mr. Heffer rose—
Mr. Ridley: That is the kind of European Community from which I for one would certainly wish to withdraw.
I ask the House to support the motion and to reject the amendment, if the Opposition have the temerity to move it.
4.4 pm
Mr. Peter Shore: I beg to move to leave out from semi-colon to end and add
'deplores the continuing failure of Her Majesty's Government to end the scandal of Britain's inequitable contributions to the EEC; recalls the unanimous Resolutions of the House of Commons on 16th July and 22nd November 1979 urging a fundamental reform of the Budgetary arrangements so that Britain's contribution to the Budget is at least not greater than its receipts; declines to approve the Preliminary Draft Supplementary Budget under which the Government has agreed that Britain is to make a further £616 million payment to the EEC in 1982–83; and demands that the Government resist any new EEC proposals that would increase the tax burden on the British people.'
The House has listened to a speech that I can best describe as something of a sandwich. There was frivolity at the beginning and at the end. In the middle there was a large slab of platitudes and wishful thinking. Frankly, the Financial Secretary's capacity to mislead the House is far below his ability to deceive himself. That is a judgment that I have formed, having listened to his attempts to explain and to see a way out of the present impasse, in which we have been for so long, in our budgetary arrangements with the EC.
The Financial Secretary opened his remarks with some reference to trade. As it is the totality of our relationships that gives so sharp and cutting an edge to the budget imbalance, it is right for me to inform the House and the Financial Secretary, as he does not seem to know anything about it at all, what has happened to our balance of trade since we joined the EC.
I shall quote the incontestable figures in terms of our manufacturing and semi-manufacturing trades. In 1972, which was the year before we joined, the United Kingdom had a balance of £82 million in its manufacturing trade. In the first half of 1982—this is appalling—our deficit was about £4,800 million. The reason why this has not yet turned into an unmanageable balance of payments crisis is that in 1972 we had a virtually nil balance of trade in oil products with the members of the EC, but in the first half of 1982 we were exporting an annual £4,000 million of North sea oil which helped, but did not overcome, the defict that had accumulated in our manufacturing trade.
It is against that background—and it is only one of the major issues that we seek to raise on the totality of issues involved in our membership of the EC—that we turn to the

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special levy, the special tax and the special exaction that is imposed upon the British people through the budgetary arrangements.
This is the sixth debate in this Parliament on Britain's inequitable contribution to the European Community budget. In the first of these debates, on 16 July 1979, the House unanimously approved the motion, substantially reiterated in the Opposition amendment today, that
"in view of the United Kingdom's massive and ever increasing net contribution to the Community Budget"—
the Goverment should—
"press for a fundamental reform of the Budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts."
That same resolution was reiterated in the second debate on 22 November 1979 when the Chancellor of the Exchequer outlined the Government's two main policy objectives: first, that there should be
"a broad balance in the United Kingdom's accounts with the Community",
and, secondly, that arrangements embodying a broad balance must operate
"in respect of 1980 and subsequent years."
As the Chancellor then put it:
"This time the agreed solution must be one which, so far as can possibly be foreseen, will last as long as the problem … Neither I nor any succeeding Chancellor will wish to make speeches in the House in a year or two about yet another debate within Europe on this same subject."—[Official Report, 22 November 1979; Vol. 974, c. 593–97.]
That was the Government's position, and hon. Members know that at the Dublin summit, which followed in late 1979, in spite of the vehement statements by the Prime Minister that she would no longer play Sister Bountiful to the Community—it was, after all, our own money—the Government were driven to a shoddy, shameful and continuing unsatisfactory compromise.
Since the stamp of the Chancellor of the Exchequer was put upon the two major objectives of the Government's policy in relation to the Economic Community in those debates in 1979, and again in his attempts to explain why he did not get it in 1980, I greatly regret that the right hon. and learned Gentleman is not defending this further failure from the Government Front Bench today. I have been in touch with him, and he knows very well that I expected a senior member of the Government to be speaking from the Dispatch Box today. I hoped that we would at least have had an opportunity of substantial answers not only to the questions that I shall put—I shall put quite a few—but to the pertinent quesion of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) about the Government's attitude towards the latest proposals to remove from the House further powers on financial and taxation arrangements, as is suggested in the documents before us.
As a junior Minister, the Financial Secretary is not entitled, and has no right, to speak for the Government on this matter. That is all the more reason why the Chancellor, who is not exactly on the eve of his own Budget, should have been present today. He is not attending any international conference; he is sitting in Great George street thinking of how he can dress up his package on 15 March in a way that is most acceptable to the electorate.
I have outlined the Government's position in 1979 before the Dublin conference. By the time we reached our third debate on 2 July 1980, the Government had settled for an arrangement under which we had to be content with
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a substantial refund. That arrangement fell far short of broad balance. Moreover, it would last initially for two years and, at most, for three. Meanwhile, the Community agreed to make what the Chancellor described as a fundamental review of the scope, balance and operation of the Community budget, the stated purpose of which would be
"'to prevent the re-occurrence of unacceptable situations' for any of the member states."—[Official Report, 2 July 1980; Vol. 987, c. 1556.]
At the centre of today's debate, amid all the documents before us, is the outcome of the third and final year of the 30 May 1980 agreement. Amid those papers is the crucial one containing the Government's weak-kneed agreement to pay no less than £616 million to the Brussels authorities for the fiscal year 1982–83. However £616 million may be described, it is clearly not a broad balance. It is better described as a good example of the so-called resolute approach.
The fundamental review of the Community budget—the so-called mandate of 30 May 1980—has run predictably into the sands. As I warned at the time, the so-called mandate gave the Commission and the Council anything but a free hand. They were hedged in from the start by their terms of reference. Those included the Council's specific agreement not to call into question the common financial responsibility for Community policies that are financed from the Community's own resources; nor to call into question the basic principles of the CAP.
Mr. Marlow: Will the right hon. Gentleman explain why he is so scathing about the Government when in 1978 the deficit was more than £800 million and in 1979 it was £900 million? That was a time when the Labour Government had responsibility. Instead of raking over the ashes and coals of the past, would it not be a favour to the House if the right hon. Gentleman said how we could get out of the mess that we are in at present?
Mr. Shore: I am sure that I shall assist the hon. Gentleman in his great distress before I finish my speech. I was among those who rejected not only the arrangements in 1975, which led to the payments that we are now financing, but the original agreement that set the whole arrangement in concrete, not in 1975, but in 1971 and 1972 when every member of the then Opposition voted enthusiastically for the arrangements from which we are now seeking to disengage. The hon. Gentleman will forgive me if I do not feel the slightest sense of self-reproach when I discuss this subject.
After 13 months of deliberation, the Commission submitted its report of 22 June 1981. It is a long, turgid essay on relaunching the Community, on strengthening the powers of the Commission, on increasing the Community's resources, and it is a plea for economic and monetary union. The United Kingdom's disproportionate budget contribution—the unacceptable situation, which was the whole purpose of the study—was dealt with in precisely six paragraphs in the 50-paragraph text. For the Commission, the main thing was not to meet the British need but to increase its own revenues to finance new policies. It summed it up as follows:
"the Commission cannot accept that an artificial ceiling be put on own resources and propose that they be increased when this becomes necessary to achieve agreed objectives."
The report on the mandate was not accepted by the Council of Ministers, and last year, in a desperate attempt to force agreement on a permanent solution to the United

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Kingdom's budget problem, the Government sought to withhold their approval from the annual farm price review. In short, they sought to exercise their veto on the financing of the CAP under the Luxembourg compromise. That occurred in May last year, but that effort led to the other members of the Community jettisoning the Luxembourg compromise and reverting to the qualified majority voting provisions as laid down in the Rome treaty. Thus, the central constitutional convention of the EC—the right to veto, which was presented as the principal safeguard to the British people in the 1975 referendum—was at a stroke overturned.
The Minister of Agriculture, Fisheries and Food bitterly complained in the House that the Council had violated an accepted convention under which all previous price fixings had been adopted. The following day the Prime Minister said that the decision was "without precedent". The Foreign Secretary was then dispatched to the subsequent Council of Ministers, but came back to the House with the unsurprising news that he could neither reverse the decision on agriculture prices nor attain any binding promise from his EC colleagues that they would not in future, when they thought fit, override the British veto.
That was in June 1982. Since then we have not had a word from the Prime Minister, the Chancellor of the Exchequer or the Foreign Secretary. I suppose that this is another example of the resolute approach. So, for the third year running, we have no broad balance, which the Chancellor set out to achieve three and a half years ago, nor do we have a permanent solution. Instead, we have the payment by Britain of £616 million, a continuation of our position as the second largest net contributor to EC funds, and no agreement is even in sight on the long-term solution of the budget problem.
Indeed, following their abortive attempt to play the veto card last May, the Government found it extremely difficult to get any agreement at all, and only then after quite exceptional delays and with increasingly humiliating conditions.
One cause of last year's problem was the failure of the revised financial mechanism to operate. That was the subject of an earlier exchange between the Financial Secretary and myself. As document 10960/81 makes plain, one of the main qualifying conditions for the operation of the financial mechanism—that the claimant country has a per capita GNP of less than 85 per cent. of the average per capita GNP of the Community—was not met. It was not met, not because the per capita GNP of the United Kingdom increased in relation to the Community's average—on the contrary, it actually fell—but because the pound sterling, owing to the Government's insane monetarist policies, rose against the ecu. As the document puts it:
"The main factor that underlies the failure of the mechanism to operate as intended is the increase during the period 1979 to 1981 of the United Kingdom's GPD share expressed in ECU. Over this period the rate of real growth in the United Kingdom remained on average significantly below the Community average. At the same the time, the value of the pound increased relative to ECU while the United Kingdom had an above average rate of inflation."
That is what the document says. I do not know how the Financial Secretary reconciles that with what he said about it to the House half an hour ago.
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The overvaluation of sterling that followed the money supply and high interest rate policies of the Government led not only to the decimation of British industry but to the wiping out of our claim for monetary refunds under the financial mechanism. The whole of this year's repayment had to be financed under the guise of supplementary measures. As we all know, that is the device under which refunds of the United Kingdom's money are allocated to regional projects, to infrastructure projects and, increasingly now, to energy projects in the United Kingdom.
Having at last reached agreement on this in October 1982, the European Assembly then decided to intervene. It rejected the proposed supplementary budget and forced the Commission and the Council of Ministers to come up with a new package, designed, as the explanatory memorandum to document 4417/83 puts it,
"to bring out in a more positive manner the Community character of the measures proposed."
Earlier, I used the word "humiliating" advisedly when I described the conditions under which we receive our money back. These refunds of our money that the Commission, the Council of Ministers and now the European Assembly have so kindly permitted us to receive, are subject not only to their allocation to different projects in the United Kingdom but to inspection and invigilation by the Commission staff. I know that the hon. Member for Southend, East (Mr. Taylor) will listen to what I say now with particular interest. As the explanatory memorandum to document 8874/82 describes it, the Commission staff
"carried out a control check on the Yorkshire and Humberside railways sub-programme in March, and in May, further checks were made of the land reclamation and housing sub-programmes in Northern Ireland. The purpose of these checks was to verify the use of the Community funds granted and to check that the sub-programmes were being implemented as planned."
The House will be glad to know that
"apart from a minor problem on housing, these visits were completed to the Commission's satisfaction,"
and the remaining balances were then paid to the United Kingdom.
I have said that we have now reached the end of the third year of the interim arrangements that were agreed on 30 May 1980. What now lies ahead? One thing is clear. The Government have not the slightest idea. In the most recent public expenditure White Paper published in February, the Government make forecasts for the three years 1983–84, 1984–85 and 1985–86. The entries for our net contribution to the EC budget during those three years total £1,400 million. Of course, those figures are covered by a note in the text which reads:
"the level of our net payments will depend on the outcome of further negotiations in the Community on budget refunds."
The House will wish to know that, in the absence of agreement for the years ahead, Britian's net contribution in 1983–84 is estimated at £1,504 million, in 1984–85 at £1,588 million and in 1985–86 at £1,700 million. This is the true measure and extent of the folly that was committed as long ago as 1971 when, in their anxiety to join the EC, the Government of the right hon. Member for Sidcup (Mr. Heath) agreed to accept the financial arrangements of the European Communities. This agreement was embodied in the treaty of accession in 1972 and began to take effect from the moment of our entry in the following year, but built up slowly in the seven-year transitional period that the treaty of accession permitted.

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There is not a member of the present Government who did not enthusiastically agree to the terms of entry to the EC that the then Prime Minister so weakly and foolishly accepted. There was one exception, so far as I can recall. Certainly the present Prime Minister cannot object. The right hon. Lady voted for the terms of entry, and she voted specifically against the amendments which we tabled to the European Communities Bill during its course through the House in 1972. The Chancellor of the Exchequer, so prominently absent today, shared the burdens of driving the Bill through the House of Commons with his right hon. and learned Friend the Member for Hexham (Mr. Rippon).
Mr. David Stoddart: He sold us out.
Mr. Shore: We warned, again and again and at the time, of the appalling burdens and exactions that the Community's financial arrangements—its "own resources" system—would impose on the United Kingdom. But our warnings were ignored and overridden.
Mr. Ridley: Although the right hon. Gentleman is going back over this ground, it carries no shame for me personally. When the Labour Government renegotiated the terms of entry and presented them to the country in the referendum which approved them, was the right hon. Gentleman content to remain a member of that Government? Was he happy, if he now has these views, to remain a member of a Government with which he now says he did not agree?
Mr. Shore: The right hon. Gentleman will recall that we had an exceptional arrangement within the Labour Government—[Interruption.] There is nothing to laugh at. We had the phenomenon—the House has had no other experience in this century of so-called dissenting Ministers—by which we were free to campaign against what we disagreed with. I campaigned as vigorously as I knew how. I was right, and those who support these arrangements were wrong. If, in the immediate aftermath of having lost that referendum, I had said that I was no longer going to abide by the rules of the game, the House would not have thought that particularly honourable behaviour on my part. I shall leave it at that. I have not at any stage concealed my strong objections and dissatisfaction and, what is far deeper, my determination to put it right.
The consequences of these arrangements are clear to anyone who bothers to look. Unless new arrangements are made, we shall revert in the coining year to the original arrangements entered into under the treaty of accession with those appalling sums, which I mentioned earlier, being due under Community law for Britain to pay to the Brussels Commission. So it is with particular interest tht we must now all turn to the document "The Future Financing of the Community" which was released by the Commission on 4 February 1983.
What do we find? Basically, the same tired old remedies. First, expand Community policies other than agricultural support policies, which are, of course, virtually sacrosanct, in the hope that this will somehow rectify the imbalance in the United Kingdom's budget payments—the difference between contributions and receipts. Secondly, as a consequence of new policy developments, the enlargement of the Community's "own resources"—in short, the increased taxation of member states by the EC.
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In raising more money, there is no doubt which is the Commission's favoured remedy. As the Commission puts it:
"of all the possible sources of additional general revenue for the Community budget, value added tax has obvious attractions."
The VAT contribution is limited by the 1 per cent. ceiling, and the Commission seeks the removal of that ceiling.
Secondly, there is the proposal for what the Commission describes as "progressivity". The basic proposal is that VAT contributions should be made at different rates, reflecting the GDP per capita of the member states. The third proposal is for a special agricultural output-related tax—to which the Financial Secretary referred—which the Commission concedes would be only a temporary measure.
Fourthly, the Commission examines the prospects for financial equalisation—the raising of new funds to finance expenditure in the least prosperous member states. It states:
"the resources so transferred need to be subject to the necessary consistency with community policies and subject to proper community control".
Finally, the Commission document argues for an extension of the powers of the European Assembly. It brings forward once again the proposal first made in 1973 to amend article 201 of the EC treaty so that
"the institutions of the community can create additional sources of revenue without having to obtain ratification by national parliaments."
There will not be many supporters for any of those proposals in the House.
The suggestion that the European assembly should be given the power to raise additional taxes, without the consent of the House, can be rejected out of hand Nor do I believe that, apart from a few Euro fanatics—I recognise one or two in the Chamber—there is any opinion in the House in favour of increasing the own resources of the EC. In any event, no variation in the tax-levying aspect of the EC's budget would meet the massive discrepancies between the United Kingdom's payment and its receipts. Indeed, the Chancellor of the Exchequer, in his statement in Brussels, made that point. There is no means of closing the gap without dealing with the specific question of Britain's unequal contribution. That change in receipts can be brought about only by the substantial demolition of the CAP—which the remainder of the Community would not allow—or by a massive increase in other Community programmes, which would involve a substantial increase in the tax revenues of the Community. So there is no way out there.
The Opposition warn the Government not to proceed down those paths. The remedy that we have consistently urged upon the Government, since they first resolved to obtain a broad balance in their budget accounts with the EC, is to amend the European Communities Act 1972 to enable the House to intercept the outflow of British money to Brussels and, thus, to reduce our contribution to the level of our receipts. After three and a half years of first threatening and then dithering, it is time for decisive action. It is time for a resolute approach.
A resolute approach on this will be among the first measures that the next Labour Government will take when they begin the process of withdrawal from the Rome treaty.
4.34 pm
Mr. J. Enoch Powell: It is almost exactly five years since this House decided to create in its own image—or in a caricature of its own image—a body in the European Community that was destined to exercise within the Community, over this country, the powers that the House had gained and exercised throughout the centuries. I need hardly add that the House was operating under a guillotine when it reached that decision. In recent years it has been our custom, when there was to be any great change in our constitutional arrangements—any marked sacrifice of our rights and liberties—that the House should deny itself the opportunity of debating them in full. Perhaps that was in part due to a nice sense of reluctance to hear too much and to perceive too clearly what we were doing.
It was however clearly perceived and stated in the House in 1977–78 what would be the consequences of the establishment of a directly elected European Assembly. I shall trouble the House with only one half paragraph that sets the point out concisely:
"The moment that the right to reject the budget or to dismiss the Commission is in the hands of those who sit in the Assembly by the same right as we sit here, it will be found that those are very far-reaching powers indeed."
The reference is to the treaty powers of the Assembly.
"It will be found that the Assembly has become a body which the Commission will have to obey—whatever the forms"—
we have been discussing some of the forms in the debate today—
"under which it obeys—and it will be a body which the Council of Ministers will be unable to defy."—[Official Report, 24 November 1977; Vol. 939, c. 1790.]
Those who divest themselves of their rights and privileges and hand them over to be used against them by others seldom have to wait very long for the opportunity to perceive what they have done and to regret the consequences. For us it has begun with the transactions that we are investigating this afternoon.
The elected European assembly has made the first move towards exploiting its inherent powers—the power over the budget and the power over the Commission. Its resolution, which opened the door to the refund of 1982—for which the Financial Secretary appears to take so much credit—stated:
"It considers this supplementary budget, to which it raises no objection"—
the reason it raises no objection is that since the first objection was taken a treaty has been made between the Commission and the assembly—
"a first step towards more ambitious objectives for the Community."
The terms of that treaty are discreetly expressed in Europese, a tongue which owes something, no doubt, to the diplomatic language which the Foreign Office has taught the world. However, they can be read and translated. Before Britain was to receive the refund, before there was to be a budget, undertakings had to be given to the assembly by the Commission, in consideration of which it would take no objection to the supplementary budget. The Commission undertook namely:
"to bring forward proposals as soon as possible to expand existing policies and diversify the own resources system."
Again, the assembly noted that the Commission had undertaken
"to present at the earliest opportunity proposals aimed at furthering and developing such policies and introducing a more diversified system of own resources."
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Hon. Members who have looked no further than that sentence might be misled by the word "diversify". It is a delightful euphemism. It does not refer to resources of the same total quantity raised in different ways. It is clear that "diversify" is a euphemism for "increase". The Commission's document, the essay which the Commission showed up to its masters in the assembly during the period between the refusal and the agreement, between the objection and the non-objection, makes that clear enough.
I quote now from paragraph 13 of Commission document No. 11125/82—I am sorry about the barbarous figures—which says:
"the Commission starts from the assumption that the existing range of own resources will remain intact; and that any new forms of revenue would constitute an addition to this range."
That is what is meant by "diversification". It then says, on the subject of those further policies which are mentioned in capitulation by the Commission to the assembly:
"The Commission regrets that, as a result of the current stagnation of Community decisions in many areas, the relationship between the development of national and Community policies is not moving as expected in favour of Community programmes."
Did the House hear that? The Commission regrets that we are doing so much ourselves upon our own decisions with our own revenues, instead of more being done by the Community—and not just more being done by the Community, but less, in consequence, being done by us. It is also stated that the increase is not desirable "simply"—a lovely word—"for its own sake". The increase is desirable for its own sake, but not "simply" so. The Commission continues:
"All expenditure at Community level should be rigorously scrutinised with a view to showing that it represents a cost-effective alternative to national programmes … the corollary of increased Community expenditure should be a reduction in expenditure at the national level."
One could not have a more open or a more insolent assertion by the Commission to the Community's face that it intends to take more from us in order not that we shall pay more in total but that we shall control less.
It would be a mistake to suppose that the capitulation is painful to the Commission. On the contrary, it is wholly delightful to the Commission; for the power which the assembly gains will be power gained at the expense of the Council of Ministers—that is, at the expense of the component nations. Who will be the gainer by that? It will be the would-be bureaucratic dominator of Europe. It will be the would-be bureaucratic empire of western Europe, which will arrogate to itself the powers which the leverage of the assembly has removed from the local democratic—I do not know whether I dare use the word after what the Financial Secretary said—control of national assemblies.
At a critical stage in our own constitutional development, the power of this House, which depended upon its control of the budget, was consciously used by the Crown as a means of exalting the power of the Executive. When the Reformation statutes were being passed, Henry VIII said, "We are nowhere so high in our estate Royal as in this our High Court of Parliament." The Commission will be nowhere so high in its imperial, bureaucratic power than when it is exercising what has been extorted by the assembly's budgetary powers enshrined in the treaty—the budgetary veto of the assembly.
In case that assertion were to be misconstrued as mere deduction, mere statement of arguable consequences, we have it set out—it has been mentioned by the hon. Member

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for Liverpool, Walton (Mr. Heffer) and the right hon. Member for Stepney and Poplar (Mr. Shore)—in the overt assertion by the Commission that in any future rearrangement of the finances of the Community, the assembly's role must be increased. I quote:
"In the Commission's view, it is essential that in any further renewal of the system proper provision should be made for the exercise by the directly elected European Parliament of budgetary powers and responsibilities which adequately reflect its status."
Let there be no misunderstanding, then, about the nature of the initial victory: the first step has been taken at the expense of this House and this country by the elected European assembly which we ourselves brought into existence.
"Give me the budget and I will control the Government."
Archimedes' principle might be restated in that form. We gave the assembly control of the budget by treaty. We gave it the right to direct election. Now we are beginning to reap the consequences, but not only in matters financial. It may have been in financial matters that our predecessors, centuries ago in the embryo of this place, first exercised their power. But that was not for long. They soon turned to the matters upon which the moneys which they granted would be expended. They soon turned to control the domestic policy, they soon turned to control the foreign policy, of the Crown.
We have been injudiciously anxious—the Government, or, for kindness and accuracy, I should say a part of the Government, have been only too anxious—to cast over the European Community the mantle of a sovereign state in respect of the conduct of international affairs. Now the assembly is moving up to exploit that field too. We learn that it intends as an assembly—as the directly elected body, with its thumb on the jugular vein of the Government—to investigate and conduct hearings on the internal affairs of this country and its relations with the Irish Republic, that it will proceed to hold hearings in London, Belfast and Dublin and sit in judgment on the policies of Her Majesty's Government and the internal affairs of the United Kingdom.
That has to stop somewhere. Somewhere, even the Government, who could swallow the treaty of 1972 and who can take pride in the humiliation of the supplementary budget of 1982, must put some limits to their surrender and cession of the rights of us here and of the powers that ought to belong to the House. Before the debate is concluded we ought at any rate to have a plain assurance that Her Majesty's Government will make it perfectly clear—they have the means to do so—to the European Community that it has no business, and that the assembly has no business, to concern itself with internal matters of the United Kingdom, over which the House and Parliament alone are sovereign.
I shall give just one little reminder and just one little warning to the Financial Secretary. He was talking about the refunds that would be obtained in the future. He was saying—I heard him say it, although he is only the Financial Secretary—that we would not be agreeing to an extension of Community revenues from this country. I thought that the right hon. Member for Stepney and Poplar over-indulged his natural generosity in saying that only a tiny minority in the House would ever be found agreeable to an increase of the types of revenue that we pay to the Community. I do not agree with the right hon. Gentleman there: I think that he was too generous. He has taken too
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little account of the power of the lever which we ourselves, only a few years ago, put in the hands of the European Assembly.
It will be no use, when the Commission comes forward with proposals for increasing the sources of the Community's revenue, for Her Majesty's Government or this House to say, "But we shall not agree to an increase in our VAT contribution," or, "We shall not agree to the derogations in the incidence of VAT being removed," or, "We shall not agree to any additional form of taxation going hence to the EC." We cannot say that. Why not? Because the assembly will answer again, as it did in 1982–83, "In that case, you get no refund, no supplementary budget." The Government have lost the power, this nation has lost the power, so long as we are parties to the Treaty of Rome, to say what we will or will not do, what we will or will not pay. Such is the depth to which we have fallen. It is a depth from which we can still recover ourselves; and we shall.
4.50 pm
Sir Russell Fairgrieve: I listened with interest to the right hon. Members for Stepney and Poplar (Mr. Shore) and Down, South (Mr. Powell). It worries me that when we debate European matters, mainly Opposition Members, but also some Conservative Members, come back to the basic idea of withdrawal, no matter what the subject. I say to the right hon. Member for Stepney and Poplar that, as 40 per cent. of our exports go to the European Community, if we withdraw from the Community we shall probably put at risk the jobs of as many people as are currently unemployed in this country. If the right hon. Gentleman wishes his party to go into the election with mandates calling for increased unemployment—and relaxation of immigration rules at the same time—it will not be very popular with the electorate.
Mr. Jack Straw: From where does the hon. Gentleman get his figures for potential job losses? Is he aware that the Minister of State, Foreign and Commonwealth Office—a Euro-fanatic, if ever there was one—put in his own claim in a debate last year of only tens of thousands? Is he further aware that no one in the Government has made any study of the employment consequences of leaving the EC, presumably because it is realised that there would be a benefit for employment?
Sir Russell Fairgrieve: I was very careful about the figures that I gave. The figures have been worked out at 2·5 million jobs being at risk in industries that export to Europe. One reason why we have been in trouble with Europe from the beginning is that we did not join each of the European institutions at the very beginning. One of the things that I learnt in my business career was that, if a new product came into the field, one tried to market it first. One did not wait until everyone else was doing so. That has been our trouble in Europe. It happened in the case of the European defence community from which we pulled out, thus causing France to pull out. It happened in the case of the steel and coal community—Schuman' s brilliant idea to prevent ever again war between France and Germany. We did not enter, but we had to do so in the end. It has been the same sorry picture throughout.
Then there were the Messina talks, at which we were improperly represented, and the final signing of the treaty

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of Rome. When did we enter? We entered just at the moment when oil prices were hijacked in the western world, which then went into slump.
We know the problem of the budget. It is the common agricultural policy. We know that agriculture claims far too high a proportion of the Community budget. I know that this Government will do all they can to redress the balance. That is what would have happened had we been in at the beginning. I remember the words well, when we first considered the CAP—that it would pay to grow wheat on the top of Ben Nevis. It is still not right. Although I accept that French, German and Italian agriculture have reduced considerably the number of people employed, their efficiency is miles away from that of our agriculture. It is still wrong that a man in Europe can come back from his normal job and it pays him to keep a couple of cows in his back shed. Those are anomalies that we must straighten out, and I am sure that the Government will do that.
I believe that this Government have done a fine job in budgetary repayments. They did a fine job recently over the fishing agreement. Again, had we joined at the beginning, we should not have had an agonising 10 years in getting a fishing agreement, because there would have been a different agreement from the start.
I end with a word about the future. Again, we have made a mistake in not joining the EMS at the beginning, because we shall have to join it some day. There is never a right time, if one does not join at the beginning.
I leave the House with this thought, which I know will be anathema to some Opposition Members. Although I may never live to see it, I hope that we are approaching a generation that can travel from London to Rome via Bonn and Paris without having to produce passports or change currency.
4.55 pm
Mr. Tony Benn: I shall not pursue the argument of the hon. Member for Aberdeenshire, West (Sir R. Fairgrieve), because what has emerged from this debate is what has been the key question from the beginning. In having this debate we find that relationships in this House have completely changed. We have not heard a responsible Minister telling us what he has decided. We have had a petitioning Minister reporting on how much he was allowed to have back of the money that our electors have paid in taxation. This is not about money or energy conservation.
We are studying the effect of transferring real power from the people of this country, who only lend it to us Parliament by Parliament, to others who will have a growing role in the control of our society. When we are told that Community inspectors will come to see how far we have obeyed the instructions under which we have to operate in order to receive our own money back, the extent of the power shift becomes apparent. This derives from the treaty of Rome which we did not draft and cannot amend, and to which we were joined by a treaty of accession which was not even published before it was signed by the Prime Minister of the day, using the Royal Prerogative for that purpose.
It is not irrelevant to go back into the history of this matter. We have now had over a decade of membership. There have been many conflicts over the common
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agricultural policy, steel policy, fisheries, trade, taxation, and now over the budget. The issue has always been the same: whether we were right to hand over the powers of self-government to the Community, and what were the consequences of that transfer.
The hon. Member for Aberdeenshire, West said that he would like to see more travel in Europe. So would I. He said that he would like to see people moving more easily from one country to another without a passport. So would I. After all, passports were introduced only quite recently, in 1914 I think, for travel in other parts of the world. What the hon. Gentleman will not see is that the treaty of Rome is a permanent barrier to co-operation between this country and other countries in Europe, because it asks us to sacrifice our rights of democratic self-government in order to co-operate with those who live across the channel. We are a provincial assembly, and we will not have it. However long it takes—and it may take some time—the British people will break with the treaty of Rome.
I want briefly to divide my comments into three parts. First, why will the British people never accept these arrangements? Secondly, how do we get out? Thirdly, what sort of Europe do we want to see? Let me say—for we are moving into a period when we shall have much public debate about our relationship with Europe—why it is that we shall not accept the treaty. It is not a nationalist response. Indeed, the treaty of Rome is as hostile to the interests of working people in Germany, Italy and France as it is to those of our own working people. [Interruption.] Hon. Members should reflect on why, after the horrors of Nazism, the Common Market looks better to those countries than it does to us and it will be realised that after such an experience the Community looks better than what went before. [Interruption.] That is true. Apart from Ireland, we are the only country in the Community that has not lived under Fascism or Nazism or been occupied by Fascists or Nazis. That explains the different attitude which I experienced as president of the Council of Ministers, and when I sat on that council for many years as Secretary of State for Energy. It was the history of those countries that made them see the Community as acceptable, and it is not acceptable to us. It is certainly not insularity, because we have always been a worldwide trading nation.
Sir Anthony Meyer rose—
Mr. Benn: I shall give way in a moment.
We shall not accept the treaty, but not because anyone in Britain thinks that our problems have been caused by Common Market membership. To the best of my knowledge that has never been said. It is not because we think that withdrawal would automatically solve our problems, because nobody has said that either. The reason is that, like every other colony in the British Empire, we want self-government. We need to break with the treaty of Rome to solve our problems because—this is an issue that the House has not yet faced—if a Government were elected on a programme involving, as it must if our economy is to recover, exchange control, trade planning and public investment, those policies would not only be contrary to the views of the European court in interpreting the treaty but to the British judges in whom we have invested the power to apply European legislation against an elected Government. What Lord Denning did to Mr. Livingstone over cheap fares in London it would be the

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duty of British courts to do to an elected Government committed to trying to solve the problems by applying our policies.
Sir Anthony Meyer: Is it not possible that to countries such as Spain, Greece and Portugal, which knew at first hand and have recently emerged from the horrors of totalitarianism, the idea of pooling a measure of their sovereignty in order the better to defend their freedoms is an attractive one?
Mr. Benn: The hon. Gentleman had better be careful. If he says that countries that have apparently willingly accepted a loss of democracy do not find much difference in the Community, let him be careful that he does not say that a country that has struggled over many centuries to achieve democracy should not now mind giving up the rights of its people. Again—I repeat the point—the House has never been sovereign. It is the electorate which is sovereign, whose interests and opinions we seek to represent, and it was not and is not for us to yield its power to others.
How shall we get out of the EC? In his final words, my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) alluded to withdrawal. People in election year want to know how that will be done. They know that there are many criticisms of the Community, many of which have been made in the House. I want to turn my mind for one moment to how that withdrawal will be carried out.
First, we must make it crystal clear that, although we may have to negotiate about the details of our withdrawal, there will be no negotiation about the decision to withdraw. There will not be another renegotiation. Many Labour Members felt cheated when the last Labour Government came to a conclusion that did not meet the objectives that we set. We are saying, for the reasons that I have tried to set out, that Britain will withdraw from the Common Market.
We have also said that, in order to do that, we must repeal the European Communities Act 1972, not just section 2, to restore the power of the House of Commons and thus remove the potential capacity of some new Lord Denning to tell an elected Government that the policies to which they are committed are illegal.
We must then abrogate the treaty of accession. I do not know whether the House noticed, but I alluded earlier to the fact that the treaty of accession was signed under the Crown Prerogative. Therefore, it cannot be wrong for an incoming Government to use the Crown Prerogative to abrogate it. Those who think that this House or the other place would have any control over that act of abrogation have misread our constitution. I happen to think tht it is entirely wrong that Parliament, unlike the American Senate, has no power to ratify treaties. As a general proposition, I am in favour of the House ratifiying treaties, but under our constitution it does not and does not have to ratify the abrogation of treaties. Therefore, the abrogation of the treaty of Rome will be an executive act that can be undertaken on the advice of a Labour Prime Minister using the Crown Prerogative.
Let me deal with the way in which that transfer can be made with the minimum of disturbance. I should be perfectly happy, once the Act was repealed and the treaty abrogated, that we should have a status quo agreement about many of the arrangements that have been reached with the Community. Indeed, we would have no
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alternative because many industries would be dependent on those agreements. But a status quo agreement where we, as a Parliament, have the power to change the status quo is completely different from a status quo enforced upon us by a Commission that we have not elected. I go further. I would be perfectly happy to see British Ministers as observers at the Council of Ministers, trying to participate in the development of sensible acts of harmonisation. But the fact that we must withdraw, abrogate and restore to the House the power to govern itself, cannot be denied.
What sort of Europe do we want? The Financial Secretary to the Treasury made some fun, he thought, of what the Labour party was saying. However, he is wholly wrong to suppose that the argument that we put forward is insular in character. We have repeated time and again that we want a united Europe but not a Europe in which we are tied to a commission with powers under a treaty that we cannot alter.
For the sake of greater clarity, I have marked the passages in "Labour's Programme 1982" which spell out our policy with great simplicity. It says:
"The Labour Party and the labour movement in general, is now firmly committed to Britain's withdrawal from the European Economic Community."
On foreign policy it says:
"we should like ultimately to bring about the simultaneous dissolution of both NATO and the Warsaw Pact."
That relates to a European security arrangement. It goes on to say:
"We welcome the contribution made by the Euro-Communists in this respect"—
that is European unity—
"and consider that this is an important factor which helps the labour movement in Europe as a whole to work for a European socialist alternative … We need to encourage and develop economic links with Eastern Europe, as this constitutes one of the main elements of our policy of detente. We believe that such co-operation is of mutual benefit, and that a rupture of an East-West dialogue would be detrimental to world peace and security."
It goes on to say:
"We live in a divided Europe, yet we must work to open the frontiers of peace, working towards a genuinely socialist Europe. Our objective is to work towards the creation of a wider but much looser grouping of European states—one in which each country is able to realise its own economic and social objectives, under the sovereignty of its own parliament and people."
I shall finish with one further quotation. I shall not inform the House until afterwards whose remarks I am quoting.
"Can anyone doubt that, if we had had, in 1939, the unity between Russia, this country and the United States that we cemented at Yalta, there would not have been the present war? I go further. Can anyone doubt that, so long as we hold that unity, there will not be another war?"—[Official Report, 28 February 1945; Vol. 408, c. 1514.]
That was Anthony Eden speaking in the House of Commons on 28 February 1945. The perspective of a united Europe in which people are able to live and work together without either the curse of the arms race or the divisions imposed by the Common Market on the one hand and Comecon on the other would be greatly in the interests of our people—[interruption.] The hon. Member for Wrexham (Mr. Ellis) does not speak for anyone in this House. He should resign and seek a mandate, like the former hon. Member for Mitcham and Morden, Mr. Bruce Douglas-Mann.
Mr. Tom Ellis: On a point of order, Mr. Deputy Speaker. I wonder what protection I can have. I

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represent the electors of Wrexham who voted me into the House. What protection exists for me when the right hon. Member for Bristol, South-East (Mr. Benn) says that I do not represent anyone in the Chamber?
Mr. Deputy Speaker (Mr. Paul Dean): I cannot help the hon. Gentleman. It is not a point of order for me. It is a point of debate.
Mr. Benn: It is a point for the hon. Gentleman's constituents. He will not give them the chance to decide whether they want him under his new label.
Fifty years ago, Hitler came to power. We live with the legacy that he left. The legacy was, first, a divided Europe that has caused great anxiety and uncertainty to people on that continent, secondly an anti-Russian crusade that the Prime Minister has taken up, and thirdly, ideas that are being reintroduced into society by the Government over whom the right hon. Lady presides. I believe that the electors should reject all of them and that, in moving forward, we should progress towards a vision of a different sort of Europe—a Europe of unity, not of disunity, a Europe of self-government in the East as well as the West and a Europe that allows the people of that continent to have a larger say in their future than is permitted under the treaty of Rome.
5.13 pm
Mr. Teddy Taylor: The right hon. Member for Bristol, South-East (Mr. Benn) has added greatly to our knowledge of the kind of Europe that he wants and of the steps that the Labour party would take to get us out of the Common Market. It is, however, accepted by the Opposition Front Bench that a minimum of 18 months would be required for this to happen and that the achievement of a united Europe would probably take considerably longer. Irrespective of whether a Labour Government are elected or the Conservative Government are returned to power, there will be a period of at least two years during which a serious budget problem will have to be resolved. Although my right hon. Friend the Financial Secretary to the Treasury spoke with great sincerity, it is not clear how that problem will be resolved. It is clearly more serious and urgent than ever.
My right hon. Friend the Financial Secretary has stated that if nothing is done our net contribution this year and next year will probably be more than £1,000 million. Over the past three years, we have had the advantage of substantial rebates negotiated by the Prime Minister through her determination and courage. However, this avenue now appears to be blocked. The signs are that there will be no rebate in 1983 and 1984 unless the British Government are prepared to make substantial concessions either by accepting a new system of budgeting or by giving more powers to the European assembly.
Hon. Members—those for and those against Europe—should be concentrating on how we can get out of the mess. It is not a question of whether the blame lies with the Government who signed the treaty or with the Labour Government who did not renegotiate very well. The fact is that Britain has an urgent and serious problem. Sadly, there has been no proposal from anyone, apart from the right hon. Member for Down, South (Mr. Powell), for dealing with it. It is implied that our weapons are not strong. What weapons do we possess to resist the
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Commission and the Parliament combined if they come to us and say that they will give us another rebate, or a rebate for five years, if we agree to increase the resources of the Community? This is a matter that hon. Members should be examining. The Government should state their views and the Opposition, despite their clear objection to membership, must say precisely what they consider should be done.
There is not a great deal to be gained by arguing the membership case yet again. We have some strong weapons in the back of the armoury. It should not be forgotten that we have contributed an enormous amount to the Common Market. I have received a recent answer from the Treasury showing our net payment to date at £3,911 million—well over £1 million a day since we joined. That is a substantial sum. We also make an important contribution to European employment. My hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve) said that 2·5 million jobs are at risk in our trade with the Common Market. If so—the figure has been given by the CBI—there must be at least three million jobs on the continent equally at risk.
One thing that has emerged since we joined the Community is a horrendous trade deficit with Europe. The deficit now stands at about £5 billion a year. That compares with a situation before membership when we always had a profit. There is no weakness. Certainly, many jobs in Britain depend on Common Market trade. However, far more jobs in the Common Market depend on exports to Britain.
If trade with Europe stopped tomorrow, according to the logic used by the CBI, 700,000 more jobs would be created the same day. That would not, of course, happen. Things do not work like that. Trade does not stop. It was expanding with Europe before we joined the Common Market. If there is a disruption of trade, everyone suffers. If, however, the argument is conducted on the basis of figures and this kind of loose logic, there would be a net gain of jobs. Europe would suffer more severely than Britain in respect of manufacturing jobs. To that extent, we have a lever.
We also have the lever of the common agricultural policy. I can never understand why Labour Members object to the CAP. It seems to be the ideal kind of Socialist arrangement that many of them suggest for British industry. They want to protect jobs in our traditional industries. If there were a planned policy for steel, for cars, for ships and for coal, like the common agricultural policy, this would surely be the answer to all Socialist dreams. One can imagine the Government saying to car workers, coal miners and shipbuilders that they intend to introduce an EC scheme under which they can produce as many ships and cars and as much coal as they want, that there will be a guaranteed price at least twice that of the world price and that there need be no worries about selling whatever they produce because sales can always be made to the Russians for one third of the price. That would guarantee full employment for shipbuilders, for miners and for car workers. We could all live happily ever after. The cost would be extraordinary. The developing countries would be damaged. However, this is what the CAP is all about. I cannot therefore understand the root and branch opposition of the Labour party when it has a golden opportunity during the budget negotiations to achieve exactly what it wants.

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Our only hope of getting more cash is by agreeing to give the Common Market more cash. That money is wanted by the Common Market to develop more nutty, Socialist, nonsensical schemes, such as the common agricultural policy that damages us, benefits the Russians and cripples developing areas such as the West Indies and Pakistan. Many hon. Members feel deep down that the parties, by some gigantic mistake, have ended up on the wrong side. Some of the sentiments expressed by the right hon. Member for Bristol, South-East could be used by Conservative Members on other issues. At the same time, Conservative Members are supporting Socialist nonsense, such as the CAP, either for farming or for other reasons. We hear Conservative Members talking about the undermining of parliamentary sovereignty, which they never used to do, and we hear the opposite from Labour Members.
Whether my arguments are right or wrong, the British Government and Parliament face an appalling problem over budget payments. It is an urgent problem which will not go away.
What worries me most is that, while everyone agrees on sentiments, no one gives us any clear ideas. The Chancellor of the Exchequer, in his excellent speech on Europe, said that, as part of the deal that the Government had negotiated, there would have to be a reduction in the cost of the CAP through the elimination of structural surpluses and that agriculture spending would have to be subjected to the same financial disciplines as other national spending programmes. Those were splendid sentiments with which hon. Members on both sides of the House would agree, but no one will tell me how those aims are to be achieved.
Should we say that we will freeze prices? There is not the slightest evidence that a freeze would reduce structural surpluses. There is ample evidence that farmers would increase their production to maintain their incomes. We will not solve the problem that way. The CAP is not in the business of reducing or freezing prices.
Mr. Geraint Howells: If the hon. Gentleman had his way, which policies would he introduce to safeguard the interests of British agriculture?
Mr. Taylor: The only way that can be done is to give responsibility to the British Parliament and Government to do what they think is right. If we decide that it is in our national interest to pay our farmers twice or three times the world price for their products, that is up to us. Parliament and the Government would also have to decide whether they wanted to do the same for the car industry, coal mining and everyone else.
As we are not net exporters of food, we could afford to do that for our agriculture, but we cannot afford to do it for ourselves and for Europe.
I urge the Government to give us some guidance about what they intend to do. If we have a clear policy on what we should strive for, it might be possible to get all-party unity until the membership issue was decided at the next election or thereafter. It is optimistic to talk in terms of withdrawing from the Community within 18 months. Greenland had a referendum a long time ago and decided that it wanted to leave the Common Market, but it is still a member. Negotiations are continuing, and some of us doubt whether Greenland will ever leave.
Some say that one answer to the problem would be to increase Community spending and to set up CAP
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equivalents for cars, textiles, coal and any area where we could get more out of such an arrangement than could other members of the EC. It is suggested that we ought to look for any industry or area where we waste more public spending than does the rest of the Common Market and get that industry or area included in an EC scheme.
I know that the Prime Minister and the Cabinet are willing to go along with the nonsensical aspects of the Common Market, because they think that it might be possible to improve them, but I do not believe that they would agree to set up CAP equivalents for coal, cars, steel and so on. That is not on. We will not be able to solve the problem by increased Community spending.
Another suggested solution is that we should change the basis of contributions. Our main problem is that contributions are calculated on the basis of VAT and customs duties. Because we import more from the rest of the world, we pay more in customs duties. The French have said that we will not solve the problem by changing the basis of contributions.
Could we change the CAP? Although my right hon. Friend the Minister of Agriculture, Fisheries and Food complained bitterly about the overturning of the veto, there did not appear to be much complaint about the speedy implementation of the price increases. I doubt whether we shall ever see the day when a British Government will ask for the sort of fundamental changes that will reduce the amount, spent on the CAP.
There is increasing urgency. Partly because of the weather, partly because we are stuffing our cows with more imported tapioca from south-east Asia to increase their yields, and partly because our farmers are producing more through efficiency, the CAP problem will be a lot worse this year. Last year we spent £7 million a day on subsidies to export cheap food to the rest of the world, including Russia. Such exports to Russia totalled 3 million tonnes last year, 2 million tonnes in the previous year and 1 million tonnes in the year before that. That problem is getting worse.
I can see no long-term progress being made unless Britain is prepared to be very tough and to use the weapons at its disposal, which are the payment of cash, trade coming into this country and our contribution to the CAP. The only answer that would make sense to a Conservative is the running down and eventual abolition of the CAP. That is the only way to get a permanent and sensible answer to the budget problem—unless we go the other way and create CAP equivalents for other industries.
It may be asked how we could achieve that when we cannot even achieve a reform of the CAP. I believe that it would be easier to abolish the CAP than to change it. Much would be gained and nothing would be lost if we made it clear that it was the responsibility of each member state to look after its own farmers and agriculture and to decide how money was to be allocated for food exports.
Hon. Members on both sides of the House have talked about the importance of getting agreement and co-operation between European countries. The CAP is a divisive factor which does enormous damage to friendship and co-operation within Europe.
Some may say that the abolition of the CAP is not the right answer and that there are better ways, but such people always talk in generalities. They say only that there could be adjustments here and greater emphasis there.
It may have been hoped that we could stagger from year to year by having more rebates. Until recently I thought

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that that was the answer, but the European assembly has made it clear that we will not have any more rebates. Something must give.
The Government's battle will be made more difficult if we continue to swap slogans on whether it is a good thing or a bad thing to be in the Common Market. I accept that many things are wrong. Our trade performance has been horrendous, we have been mugs in many areas, and I find it impossible to justify the fact that we have reduced the number of jobs in our steel industry by more than the rest of the EC members put together, under an agreement that was meant to be "European".
The Government will have to explain how we can sort out the budget problem permanently. They will need the co-operation of both sides of the House and will have to act with great determination. Unless we are willing to accept a solution that would be unacceptable to Conservative principles and to common sense, we must go for the abolition of the CAP and leave each member state to make its own decisions on agriculture. If we did that, there would be less disagreement within Europe and a better deal for Britain. We could then move forward to achieve more co-operation and harmony within Europe.
5.28 pm
Mr. John Roper: The hon. Member for Southend, East (Mr. Taylor) is one of the more seductive critics of the European Community and his arguments have to be listened to and, on occasions, responded to. I agree with much of his basic analysis of the budget problems and he helpfully brought the debate back to the subject under discussion.
No one can doubt that a long-term solution to the imbalances in the Community budget is considerably overdue. There is a tendency in the House to consider that this is purely a problem for this House and this country, whereas the problem of the Community budget, as the recent document from the Community and the recent debates in the European Parliament have shown, is much wider than the particular problem, serious though it is, of the British contribution and the British payments. As the hon. Member for Southend, East said, the problem goes much wider, and if the solution that he suggested—that of abolishing the CAP—were to be accepted, it would have a substantial impact throughout the Community.
It may not be entirely the fault of the present Government that a solution has not been found, but it certainly seems that the annual bickering over our refunds and the way that they have been conducted have not necessarily brought the long-term solution any closer. The Government's give-us-our-money-or-else attitude has distracted attention from attempts at long-term solutions of the budgetary problems and given many among our Community partners who are sceptical about our commitment to Europe more grounds for suspicion.
The emphasis of our effort must shift from trying to get as much back in any one year as possible to trying to find a satisfactory solution on a longer-term basis. This can serve not merely our national interest but the interest of the Community as a whole. Such a solution, as has been made clear in what has been said so far, must consider both sides of the budget, income as well as expenditure.
I do not accept the view of the Financial Secretary that there is no need for further own resources. It is fortuitous
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that the tendencies in world food prices over the past two years have saved the Community within those two years from hitting the limits of own resources. The problem of the admission of Spain and Portugal to the European Community means that it is necessary to look carefully at the phrase about the diversification of own resources, and I note what the right hon. Member for Down, South (Mr. Powell) said about that. He quoted from the Community's document, which says:
"It should be possible to show the people of Europe that any increase in the Community's resources should not automatically involve an additional burden on the European taxpayer; on the contrary, in many cases the corollary of increased Community expenditure should be a reduction in expenditure at the national level."
The solution of the problem of the community budget will lie not in the way suggested by the hon. Member for Southend, East, of reducing the Community's activities, but by diversifying sources of revenue and of expenditure. That solution will take some time to be reached, and there will obviously be a fairly long period for these negotiations. I doubt whether in this year we shall get, for the budget of this year, that solution. It will be necessary also to find a short-term solution for 1983.
Signs of frustration and impatience halfway through the negotiations, or the unilateral measure suggested by the right hon. Member for Stepney and Poplar (Mr. Shore)—the threats of not making payment—are not liable to lead to the right long-term solutions being made in the Council of Ministers.
Mr. Nigel Spearing: Can the hon. Member be a little more explicit about something? He said that he did not favour greater Community taxation, but went on to say that perhaps we should get our revenue from diverse sources, and that that will take a little time. Surely that is taxation, whatever the source. The hon. Gentleman is saying that he favours additional taxation, but he is not saying how he thinks it should be raised.
Mr. Roper: I shall be returning later to the subject of the diversification of resources. I said that I did not accept what the Financial Secretary said about there being no need for any further own resources. I then went on to refer to what the Community document said, which is that it is not necessarily the case that if there is increase of expenditure by the Community on the Community's budget and projects there needs to be an increase in public expenditure in Europe as a whole, and therefore by the European taxpayer as a whole. It may be there that the hon. Gentleman misunderstood me, and I am glad that I have been able to put him right.
Mr. Heffer: I am sure that the hon. Gentleman must have read the speech by Mr. Gaston Thorn in which he said:
"Even if we can achieve savings thanks to tighter management of budgetary funds, and funds allocated to the common agricultural policy in particular, new own resources will be needed to bring Community intervention to the critical level at which it will have a real impact and provide the stimulus and guidance we expect of it."
Mr. Roper: Obviously I did not make myself clear. I was trying to say that there is a need for increases in the Community expenditure and for diversification of own resources. What is not necessarily the case is that that increase in Community spending need lead overall to an increase in public expenditure throughout the Community, if what is happening is a transfer to the Community budget

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of matters that have previously been the responsibility of the national budget. I hope that I have made that point clear.
Mr. Douglas Jay: In that case, the hon. Gentleman is saying that some expenditure that was previously decided by the British Government and the British Parliament will, in future, be decided by the authorities in Brussels.
Mr. Roper: With parts of Community policy, such as energy policy or transport policy, it makes a great deal of sense for us to develop policies together. For example, on research and development on such projects as the joint European Torus, it makes much more sense to carry out these projects on a European basis so that we can match the research and development of Japan and the United States, rather than doing it by penny packets by individual European states. If there is to be a regeneration of industry in Europe, it will be by developing such policies on a Community basis. There is an opportunity for the use and development of European policies to bring people throughout the Community back to work.
It is clear that equitable reform of the budget will not be achieved solely by increasing expenditure on programmes that would benefit Britain. This point was made by the Financial Secretary. The scale of the problem caused by the CAP, which devours between 60 and 70 per cent. of the Community budget, is too great. The Chancellor, in his remarks in Brussels, pointed out, for example, that the regional development fund would, on the present quota basis, need to be increased by 50 billion ecu, twice the totality of the whole Community budget, to give Britain net receipts equivalent to the 1982 refund of 850 million ecu.
To think that one can get the problems of the imbalance and the unfairness of the budget and of getting the United Kingdom net contribution right by increasing programmes such as the regional fund without looking at the contributions is nonsense. The problem will become greater and probably insuperable after Spain and Portugal have joined the Community in the near future.
Expansion of some of the programmes, to some of which I have already referred, and the introduction of new ones will help to ease the budget problem and will have a valuable effect of their own. The Community needs to develop programmes to bring economic activity in Europe back to the level that is required. Here, some expansion of the regional and social funds would be of advantage. Transport and energy policies could be further developed, and we have seen in the refunds for 1982 a great deal of that. As the Financial Secretary said, about a third has been devoted to energy projects in this country, that is, about £230 million out of the £600 million that is coming. Indeed, the solution for 1983 will require far more specific contributions to energy and transport schemes in Britain. But further resources should also be devoted to joint industrial research and development projects.
I have already referred to the example of the joint European Torus, and I believe that there would be opportunities in, for example, the financing of Airbus Industrie, which could be used as a way of developing Community initiatives.
The Financial Secretary referred briefly to the projects that have been agreed for 1982, and it is interesting that those projects outside the CAP that are arranged in order
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to give us our refund are classified as non-obligatory expenditure. It is worth noting that the European Parliament's discretion to increase the budget is related to the share of non-obligatory expenditure within the total budget. Non-obligatory expenditure has gone up last year as a result of the refunds to the United Kingdom, and it will presumably go up this year. If, as has been hinted by the chairman of the budget committee in his speeches, that expenditure increases, so will the Parliament's control over the budget.
Mr. Ridley: I might be able to help the hon. Gentleman with the facts on what is an important point. The supplementary measures before the supplementary budget for 1983 have always been classified as obligatory. In the supplementary for 1982, paid in 1983, about two thirds remain in supplementary measures—the £400 million, which is still obligatory. The other third, about £230 million, relates to energy measures and is classified as non-obligatory, but the Parliament has given its undertaking that it will not take that into account as part of the base, thereby being unable to increase its total expenditure for next year.
Mr. Roper: I am grateful to the Minister, but I understood that, although the Parliament has given that assurance for 1984, it has not given such an assurance for 1985. Indeed, Mr. Lange, the chairman of the budgets committee, has suggested that whatever is agreed in terms of specific projects this year would affect the 1985 budget. Therefore, the growth of the non-obligatory section of the Community's budget has some effect upon the leverage, referred to already, that the Parliament has on the totality of the Community's budget. I am not opposed to it, but it is a matter of which the House should be aware in its discussions.
I believe that the Parliament is aware of the need for long-term reform of the budget. Indeed, its activities in the last few months have helped in the direction of finding sensible long-term solutions for the problems of the Community as a whole, as the Financial Secretary said in his opening remarks.
It will be virtually impossible to expand any of the financial non-agricultural policies unless fundamental changes are made in the ways in which the Community collects it resources. We shall be hitting the 1 per cent. limit VAT ceiling in the very near future—if not in the course of this year, it will almost certainly be in the course of 1984.
Reform is made all the more necessary because of the particular problem that the desirable accession of Spain and Portugal to the Community will bring. The paper outlining the Commission's initial ideas—the so-called green paper—has in a sense provided us with a helpful basis for considering ways of diversifying revenue and, indeed, perhaps increasing it. I accept what was said by the right hon. Member for Down, South, that diversification might be seen by some to be a euphemism. It is, I believe, intended, as he said, to refer to an expansion as well as to a variation in the resources to which we are referring.
While raising or removing the 1 per cent. VAT ceiling would probably be the simplest solution and has always had some advocates, I should not wish to see it introduced if there are other possibilities, as I believe there are. It would have particular disadvantages for the two countries

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which are at the greatest disadvantage in terms of the Community's present budget—the Federal Republic of Germany and the United Kingdom. By itself, it does nothing to reduce the burden of the net contributions on those members of the Community.
The Financial Secretary, in his note on the Community's proposals, is a little sceptical about the proposal that to link the VAT contributions to national GDP would help solve the problem and would also help to remove the present imbalance in the budget by introducing an element of progressivity. If it could be notionally linked with the regional variations in income throughout the Community, it could be seen to be in line with the treaty of Rome, the aim of which includes bringing together the levels of wealth in different regions of the Community. That progressivity—although I believe that it would be most rational to link it to the percentage of VAT that was contributed—could, as was said by the Financial Secretary, be in the form of a tax on national GDP. There are certainly substantial advantages in providing the Community with other resources based on taxes other than value added tax.
The Community has suffered in the past from its narrow and inflexible tax base. The proposal for an agricultural tax that is made in the Commission's document, although I do not think it would be welcomed very quickly by some Community members, would have the greatest effect in redressing the imbalance between net contributors and net recipients, as it would fall most heavily on those countries which at the moment are the largest recipients of funds from the CAP. Certainly that aspect should continue to be explored.
I am sorry that the Commission, in its final document, did not put forward its earlier proposal that there should have been some form of energy import levy. That idea has much to commend it. I believe that it would be fairly acceptable to a number of countries in the Community, if not to all. I think that it would be acceptable, for example, to France, which is concerned about its investment in nuclear and other power stations. It would probably be acceptable also to the Federal Republic of Germany. I hope that the Financial Secretary and the Government will, in the discussions on the document, ensure that the idea of an energy import levy is kept in play as one of the effective ways of increasing the revenues of the Community and, by diversifying them, of helping very considerably the problems of the United Kingdom. As a net exporter of energy, we would not, of course, be a contributor to that particular Community levy.
It is likely that a final solution of the Community's budget problem will require a combination of several of the proposals that the Commission has made for the diversification of own resources. I hope that the Government, in the discussions, will take a rather more positive attitude towards the proposals than seemed likely from some of the things that the Financial Secretary has said today.
Rather than pointing out the disadvantages—obviously almost any tax has certain disadvantages—the Government should try to ensure a development of new sources of revenue for the Community, in the interests of trying to get a solution to the fundamental problem of the budget.
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The demonstration of our commitment to the Community and of our political will to achieve the necessary reforms in regard to expenditure and revenue raising is essential. If we are obstructive this year, we shall find ourselves bickering over refunds next year, the year after and the year after that. The potential benefits to Great Britain of Community membership will once again fail to be realised. They are available now, and I hope that the Government will take advantage of these proposals to ensure that they are realised.
5.49 pm
Sir Michael Shaw: I follow the hon. Member for Farnworth (Mr. Roper) by saying that I believe that it is important that we look at the problems to see how we can develop our future role within the Community. I feel that there has been a danger in some of the earlier speeches—I fully understand it—of rehearsing diametrically opposing views. We have heard from those hon. Members who felt genuinely that it was a mistake ever to have joined the Common Market and who equally genuinely still believe that it is a mistake to remain in it.
I voted in favour of joining, and I have always been in favour of staying in. I believe that we can play a valuable part for the people of this country and for Europe by staying in and seeking to make it the maximum possible success in the future. In furthering those ends I believe that we have an important duty today to look at the way in which the budget debate in Europe has been going because it involves refunds due to the United Kingdom and, this year, to Germany also; to their implementation and to the ways in which the need for such refunds can be avoided in the future.
The first proposals put forward by the Commission in the 1982 supplementary budget for reimbursement last year were discussed in great detail and, finally, for reasons that I shall deal with later, were not adopted. Revised proposals were put forward in the first 1983 supplementary budget and have been happily agreed. After the production of the draft 1982 supplementary budget, the Council took the proposition put forward by the Commission and, after considerable discussion, hammered out an agreement on 25 October last year. However, the European Parliament had not been consulted and there were several matters upon which it felt strongly. As was right, it expressed its views equally strongly.
First, the Parliament felt that there should be greater control over how the rebates were spent. In other words, if money was being paid back it should be paid back for energy projects, and so on, that could be checked and controlled properly by the Community. That is one of the reasons why I believe we should get away from this concept of rebate as soon as possible. We want to contribute the correct amount to start with rather than contribute too much and then have the money handed back later.
The second point about which Parliament felt strongly was that there should be a limit to annual ad hoc arrangements of refunds. The European Parliament claimed that it should be the last occasion upon which these ad hoc arrangements should be made. Frankly, I do not believe that that is a realistic concept. I understand it for the purpose of argument and bringing pressure. If one reads the debates that took place in the European

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Parliament on 10 February this year—although not couched within the official resolutions—one sees that members had doubts about that proposal.
The third point was that the European Parliament felt that in reaching agreements such as the supplementary budget there should be proper consultation between the Council and Parliament. The stumbling block in 1982 was the European Parliament's insistence that this would be the last occasion upon which such ad hoc arrangements would be made. The Council offered to make a general declaration recognising the importance and urgency of finding, in the context of the development of common policies, a lasting solution to the Community's internal imbalances so as to avoid future ad hoc adjustments. In support, the Council noted publicly that the Commission was submitting proposals to it on the Community's future financing. Parliament's view at that stage can be summed up fairly as, "We have heard all this before. We have heard these policies and nothing seems to have happened." As a result, the supplementary budget was not accepted.
I have a good deal of sympathy with the European Parliament's view. For several years I was involved in the conciliation process between the Council of Ministers and the European Parliament. However, the faults were not one-sided. In the early days the Council may have been reluctant to take the European Parliament seriously but, for its part, the parliamentary delegation was far too prone to stand on its dignity and insist on its rights. That is no posture in which to seek genuine negotiations. A genuine role for the conciliation machinery had not been worked out at that time. It was only after the 1975 treaty, which was ratified in 1977, that the need for conciliation became clear.
The Community's budgetary authority became a joint budgetary authority consisting of the Council of Ministers and the European Parliament. From then on, Council and Parliament had to learn to get on with each other. I am glad to see that the 1983 budget was agreed and adopted at the proper time in December. It was to the credit, not just of the Council and Parliament, but particularly of the Parliament's budget rapporteur, the MEP for Upper Thames, Mr. Robert Jackson.
In every debate on this subject in which I have taken part, I have stressed the fundamental need for Council and Parliament to learn to work together as the budgetary authority. I stress that once again. Whatever difficulties may have to be overcome in the successful development of the Community, such agreement is fundamental to future progress.
The first supplementary budget of 1983 was a re-hash by the Commission of the first attempt in 1982. The negotiations that have taken place this year, prior to the final agreement reflect considerable credit on all involved—on the Commission for the way in which it prepared the document, taking account of all the criticisms and comments beforehand, and particularly on the Council and the Parliament for the way in which they genuinely sought an agreed solution, and in doing so showed themselves willing to move significantly towards each other's point of view. The obstacles that made agreement impossible in late 1982 were finally overcome in early 1983. Where there's a will, there's a way.
I believe that there is now a willingness on the part of the Council, even if not on the part of all members of it, to acknowledge the partnership involved in developing the role of the joint budgetary authority. I suspect that in that
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process my right hon. Friend the Financial Secretary to the Treasury has played a constructive and helpful part. I congratulate him.
The Council has agreed to much greater control over the refunds than was originally contemplated. For its part, the Parliament has accepted the fact that genuine efforts are being made to reform and develop the Community's future financial framework. Agreement has been reached by genuine conciliation.
We must consider whether the ad hoc payments to the United Kingdom and West Germany will be necessary in future. The simple answer is yes, probably, until the entry of Spain to the Community. At present there is an imbalance in the budgetary contributions of individual member countries. The reasons are well known.
By definition, it means that if the United Kingdom pays too much, as it does, other countries do not pay enough. To put it bluntly, I do not foresee the latter agreeing to a permanent change from a system that is advantageous to them unless there is also advantage to them in a change. But changes will be necessary when Spain joins. Nowhere will they be more necessary than in the CAP. The countries now advantaged by the CAP will then insist on changes. It is in just such negotiations that our justified demand for a fairer long-term solution to the present imbalance in budgetary contributions can best be made.
Until that time I suspect that short-term arrangements for ad hoc rebates will have to continue. In the meantime, it is vital that we should prepare plans and discuss ways in which those changes can be brought about, so that if and when Spain accedes we are ready to put into the changes that will then become necessary methods whereby the character of the budgetary contributions will be fair to all.
6.4 pm
Mr. Julius Silverman: I follow the hon. Member for Scarborough (Sir M. Shaw) in agreeing that a long-term solution to the budgetry problem will not be found quickly. I wonder whether it will be found at all.
It is now about 18 months since the Commission failed to fulfil its promise to bring proposals before the Community and the Council on structural changes in the finance of the Community. Eighteen months later we get a green paper. Apart from discussing options and possibilities and showing the Commission's desire to increase expenditure and taxation, it takes the matter no further. There are no concrete proposals. I shall be surprised if proposals come forward in the spring, as the Minister said. If they come forward in a form acceptable to members of the Council I shall be absolutely astonished.
The fault of this budget is the fault of all EC budgets that have come before the House. They all suffer from the CAP. That is the problem. It bestrides the whole of the Community's finance. Even today, when the proportion has been somewhat reduced, it is still the dominant feature in Community finance and all revolves around that huge concentration of finance. It is because of the CAP that we have the problem of compensation for the United Kingdom and that the Commission feels that it has no room for manoeuvre.
In its green paper the Commission talks about raising finance here or there, but it does not question the existence of the CAP. There is no suggestion of taking even the most modest steps to reduce the expenditure. That is astonishing. When we talk about finance we are talking

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about expenditure as well as raising revenue. The green paper is one-sided and I do not believe that it will take us very far.
When the May agreement was entered into we were told that there were what the Minister called two triggers. One, the financial mechanism, soon went. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) told us why. We did not possess the qualifications, due to a large extent to the Government's economic policy. That trigger has gone. We are left with the supplementary measures, of which we are getting only £400 million, and we are told that we shall get £230 million on unspecified energy programmes. No one has been told anything about them. We do not know what sort of programmes they will be or where they will be sited. We are merely told that a programme will be coming forward. I look forward to that with interest.
I wish now to deal with the matter from a constituency angle. I represent a west midlands constituency in Birmingham. So far not a single penny has gone to the west midlands from the supplementary measures. The money is devoted entirely to certain designated areas which the British Government and not the Commission are responsible for choosing. The west midlands does not get a single penny.
The west midlands is today one of the most depressed areas in the country. Its decline from past prosperity has been rapid, dramatic and disastrous. It is now almost at the top of the list of regions with high unemployment. Every week there are fresh closures and fresh redundancies. There have been several thousand redundancies in the city of Birmingham during the past few weeks, and 20,000 jobs have disappeared in my constituency during the past three or four years.
There is no daylight to be seen. In the past, Governments might have said that the depression in Birmingham was temporary. They might have said that the west midlands was a resilient area and that it would recover. Today, the position is desperate. Industries are disappearing and there is no sign of recovery. One might have expected that, where there were some programmes to distribute, something would have gone to the west midlands, but not a single penny of this money is going to the west midlands. I do not know whether any of the energy programmes will go there. Perhaps the Minister could tell us in due course. I am interested not only in the supplementary measures but in the regional fund. As for the regional fund, I have here a table entitled: "Fund assistance 1975–1981 and main social and economic indicators". I shall give the figures for assistance in the various areas in those years. For the north of England, the figure is 80·51 million ecu; for the north-west, 27·72 million ecu; for Yorkshire and Humberside, 73·63 million ecu; for the east midlands 13·24 million ecu; for the south-west, 31·85 million ecu; for Scotland, 331·36 million ecu; for Wales 196·70 million ecu and for Northern Ireland 182·75 million ecu. For the west midlands, the figure is 0·10 ecu per capita.
I want the Minister to explain why this state of affairs continues when conditions are so desperate. One or two hon. Members have asked whether the west midlands will now have access to Community funds and the Minister has replied that, for the time being at any rate, there will be no such access. In view of the desperate position of the
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west midlands, what are the Government going to do about this aspect of their policies? What assistance will they give? What proportion of these funds will go to the west midlands, and what change of policy will the Government make with regard to that very distressed area?
6.13 pm
Mr. Alan Haselhurst: My approach to the budget problem depends on three factors: first, the assessment of the benefits of membership to Britain; secondly, the certainty or otherwise of Britain's membership of the Community; and, thirdly, what I wish the Community to be and what I wish it to do.
I apologise to the hon. Member for Birmingham, Erdington (Mr. Silverman), with whom I have the honour to sit on the Select Committee on European Legislation &c, for not taking up what he said, especially from his regional point of view. However, I doubt whether industrialists and business people in the west midlands would necessarily draw, as he does, a gloomy conclusion about membership of the Community.
It is impossible to assess Britain's benefits from membership of the Community simply by considering our performance today and deducing that, because we have been members of the Community, we have done less well than we would, had we been outside the Community. We must try to assess what would have happened to Britain had we not joined the Community and then compare our position today. That exercise was carried out by the group economic adviser to Lloyds Bank and published in its January economic bulletin. The conclusion of Mr. Christopher Johnson was:
"The cumulative effect of our EEC membership on the UK's GNP is estimated at a £19 billion gain on industrial exports, and a £7 billion loss on agricultural Budget transfers, leaving a net gain of £12 billion, or 5 per cent. of this year's GDP."
That shows that there is an economic gain to Britain, although the gain may not be as great as many of us would wish.
Nor has Britain lost from the common agricultural policy. There have been benefits to both British agriculture and the consumer from our membership of the CAP because we have security of food supplies. We may not have been better off by buying on the great world market where prices have fluctuated considerably for some time and that will offer no certainty of cheapness in the long term.
Mr. Arthur Lewis: Will the hon. Gentleman give way?
Mr. Haselhurst: No. The hon. Gentleman has only just arrived in the Chamber and has not been listening to the debate. Other hon. Members wish to speak—
Mr. Lewis: I have heard the hon. Gentleman's comments.
Mr. Haselhurst: —and I shall not give way to the hon. Gentleman.
The reason why Britain has not done better in the EC may lie in the fact that we have not put our industrial house in order in other ways. We have suffered from overmanning, poor management and obstructive trade union practices, all of which have held up Britain's performance compared with our continental partners. Those matters cannot be dismissed and ignored when we

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consider what Britain has done in the Community. We could have done better, and we shall do better only if we sort out our industrial difficulties.
We should not ignore the political importance of our membership. It is impossible to put a price on that, and one of the most fundamental reasons for our membership is the great advantage of our growing closer to our European partners, which is a force for peace and good in the world. That stands above all other benefits of membership.
If we are to take a sensible approach to the budget problem, we must know how we have done realistically within the Community, and how well we might do if we sorted out our industrial difficulties, and we must get rid of the continuing doubt about whether we are serious about our membership. Our industry is damaged by the uncertainty, and especially by the fact that a major party in Britain will campaign in the next election for this country to leave the Community. Very few people in industry and commerce believe that it is a sane and credible policy for Britain to pull out. When they know that the Labour party is advocating that policy, it must act as some form of restraint on their commercial and business decisions. That uncertainty is damaging to the further development of the British economy.
While this uncertainty exists, how do we look to our partners in the Community? How can they be expected to debate and negotiate seriously on what should be a fair deal for Britain and for all the Community members if our partners are not sure that Britain will remain for much longer a Community member? That cause for doubt is understandable. If they appreciate the downright hostility that was shown this afternoon by the right hon. Member for Stepney and Poplar (Mr. Shore) they may imagine that we are at war with them, rather than in partnership as members of a community dedicated to common objectives.
The so-called internationalism of the Labour party, as demonstrated by the right hon. Member for Bristol, South-East (Mr. Benn), is of the vague and waffly variety. The Labour party is very good at talking about the brotherhood of man in broad international terms, but when it is asked to get down to the nitty-gritty details of co-operating with its next-door neighbours in Europe it falls well short. That uncertainty must be removed. The Labour party should realise the damage it is doing to Britain and to the British people by continuing to keep the issue open.
Mr. Heffer: Is the hon. Gentleman aware that at the end of the second world war the Labour party resuscitated the Socialist International, whereas the Conservative party resuscitated nothing about internationalism? Is he also aware that it was the Labour party which, consistently over the years, stood foursquare with those who were seeking their national independence? When the Labour party came to power in 1945, it was responsible for ensuring that India and other nations gained independence. That is true internationalism.
Mr. Haselhurst: The hon. Gentleman demonstrates that he is living in 1945 and not in the present. The British Labour party has the opportunity of standing foursquare with the Labour and Social Democratic parties of the continent of Europe, and to their despair it is failing to do so. That is the test of internationalism and the brotherhood of Socialism. We must get rid of this uncertainty as an important part of ensuring that Britain gets the best budget deal in the future.
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The final consideration is what kind of Community should exist in the future—[Interruption.] I have already given way to the hon. Member for Liverpool, Walton (Mr. Heffer). I am not prepared to give way to him if he continues a sedentary commentary. He might do the House the courtesy of remaining silent or seeking to interrupt if he wishes.
The Community should be an expanding and dynamic body. I do not have any hang-ups on sovereignty. Today, it is absurd to rely upon narrow national sovereignty. I am not happy with the idea of clinging to the nation state. While I am proud of my country's history, I look back on the history of the world to see that the nation state has created a lot of distress in the conduct of its policies. If a way can be found of getting away from the nation state and embracing the idea of a wider community, that is far better for the development of mankind than relying on narrow nationalism or an overt jealous guardianship of sovereignty.
The Community's role must be expanded. In this modern world, many things can be done only on a Community basis. If this country is to retain a worthwhile industrial presence in the world, we must work in alliance with our partners in Europe. That will enable the financing of some of the projects that will form the core of tomorrow's industrial world. Unless countries are prepared to act together, nation states will be unable to find the resources individually to fund the industries that will create work for the future. We should be thinking about new research projects as well as regional development when we look at what the scale of the Community's budget should be. More money will have to be found in the future.
I hope that my right hon. Friends will not take too rigid a view of not expanding the contribution to own resources. If there are worthwhile reasons for putting money into the Community's budget, I hope that those will be paramount.
The solution to Britain's problems can come about only as part of an expansion of the Community budget towards defined purposes. My hon. Friend the Member for Southend, East (Mr. Taylor) suggested that these principles were Socialist. They are the pragmatic approach of a Government and country seeking to find realistic answers to the industrial problems of tomorrow. Those answers cannot be found solely within these shores. That is not a Socialist conclusion. It is in an expansion of the Community budget that one will be able to solve the contribution that Britain should make towards that budget.
I commend Ministers on the imaginative and resourceful speeches that they have recently been making on the continent of Europe. I hope that they will keep those qualities of imagination and resourcefulness to the fore when they are engaged in the detailed negotiations on Britain's future contributions. It is only by the enlargement process that we shall achieve a fair answer for all the individual countries as well as a contribution that is fair and reasonable.
6.28 pm
Mr. Nigel Spearing: I am grateful, to you, Mr. Deputy Speaker, for calling me immediately after the hon. Member for Saffron Walden (Mr. Haselhurst) with whom I frequently agree on matters in the House. We are both members of the Select Committee on European Legislation. First, I pay him a compliment. He has expressed in colourful language a common view held

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by members of his party, and some members of the British public, about the Common Market. That view is erroneous.
I wish to remark on one of the points the hon. Member made earlier about how Britain can benefit from the European Community. I have every reason to suppose that the hon. Member's constituency is benefiting from the Community's agricultural policy. The United Kingdom cereals harvest for 1982 showed a surplus of about 6 million tonnes. Not all of it will be exported. Some of it may be sent to the EC, Russia, East Germany or Poland. If it is exported it will require a subsidy of between £400 million and £500 million. If that surplus was not available to export, Britain would not get the money from the European Community and we would be contributing another £500 million net.
Many of the so-called "benefits" in the budget calculations go to particular sectors of society. The common agricultural policy is distorting the agriculture of the United Kingdom in a way which may be of short-term benefit to some of the hon. Gentleman's constituents. In the long term it will not benefit agriculture in the United Kingdom.
The hon. Gentleman said that the treaty of Rome encouraged co-operation and partnership and that it is an international treaty. That is not true. The treaty of Rome is a commercial, economic and political treaty. I can find nothing in that treaty relating to world co-operation and partnership. Those are qualitative matters in relationships between states. I shall be interested to see whether any hon. Member can point to any provision in the treaty of Rome that encourages those necessary qualities. I suggest that the treaty prevents the development of the qualities that we all wish to see.
The common language is an example. We talk about partners. The essence of partnership is that each person contributes to the common weal without an account book calculation of how much he is putting in. In fact, that is never the case in the EC. The other member states are our competitors rather than our partners. They are competitors forced on us by the articles of the treaty, which require competition as the sine qua non of the economic organisation of the Community.
The hon. Member for Saffron Walden said that he wants to see an expanding and dynamic Community. Perhaps he does not realise that he is encouraging a hierarchical organisation that takes power from the nation state. I agree that in the modern world the nation state cannot solve problems on its own. That is why the United Nations and hundreds of international agencies look at matters issue by issue to see whether some sort of arrangement can be made. Of course, the nation state cannot do it on its own, but, unless there are nation states, they cannot co-operate with one another.
Those who support the EC in terms of the hon. Gentleman's logic want to do away with Britain as a nation state, as with France and Germany—[Interruption.] The hon. Member for Harrow, East (Mr. Dykes) waves his hand. He should wait until the end of my remarks to see whether he feels so confident, because that is the aim of those who wrote the treaty of Rome. They have put inside it an automatic screw which, wherever it moves—and it moves annually—inexorably and automatically moves in that direction. It is built into the mechanism, and was seen
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to be so by hon. Members long before we signed the treaty. Conservative Members, Ministers, and perhaps even the Foreign Office, have just woken up to that fact of life.
I wish to make three relatively brief points on the procedure that we have adopted in these matters, on the mandate of 30 May and on the power of the assembly, which is growing and ought to be diminished. We have before us in this long and complex motion no fewer than 11 documents. Attached to each is a Government explanatory memorandum, some of which are also accompanied by reports from the Scrutiny Committee. In other words, between 20 and 30 documents ought to be perused by hon. Members taking part in the debate.
Notice was given of the debate in principle last Thursday week, but it was not until last Friday that the general public and most hon. Members could possibly know what documents would be contained in the motion. The motion was not tabled until then, and it was not until then that the Hansard containing the list of documents was printed. If we are to do justice to our procedures or, indeed, to the Community, that is not the proper means of proceeding. I hope that the Leader of the House and others concerned with these matters will look at this point.
My second point on procedure is perhaps more important. We have been discussing the powers of the assembly. It has been assumed by some, including the right hon. Member for Down, South (Mr. Powell), that the powers of the assembly, which it is now wielding so effectively, were in the treaty of accession. They were not. The treaty has been printed as Cmnd. 6252, dated 1975. The assembly's enhanced powers over the budget were given by this House on the evening of 8–9 December 1975. However, that effective amendment to the treaty of Rome was not understood by the House, which considered two definition of treaties orders that were passed without any change whatever.
Mr. Roper: The hon. Gentleman will remember the date as well as I do, because he took part in the debate, as I did. If he rereads the speeches, he will find that there were a number of references to the importance of those treaties.
Mr. Spearing: I do not deny that. On that occasion, my speech was nothing like as strong as it should have been.
The question on the Order Paper at that time was that the House should approve two statutory instruments. I shall now proceed to explain how they amended the treaty of Rome. The schedule to each of those domestic statutory instruments referred to a number of treaties—about 12 in all—of which Cmnd. 6252 gave greater power to the assembly in respect of the budget. That was how we amended the treaty of Rome and handed over the power.
Some of us may have had a clue about what was going on, but I doubt whether any hon. Member believes that that was the way to give the assembly greater powers over the budget. Therefore, procedural matters in respect of the Community and this House require considerable scrutiny.
My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) has already referred to the mandate of 30 May 1980, which was hailed by Conservative Members, particularly by the right hon. Member for Chesham and Amersham (Sir I. Gilmour), then the Lord Privy Seal, as a great breakthrough. The Cabinet was sold it the day after it had been agreed, and everyone thought

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that they were on the way. However, that communiqué—because that was all it was—contained the phrase
"without calling into question the principles of the CAP".
The problem is that the principles and practices of the CAP are the keystone to virtually everything that goes on in the Community, pre-eminently the budget.
Mr. David Myles: Which principles in the CAP does the hon. Gentleman wish to do away with?
Mr. Spearing: The problem is that the CAP objectives are laid down in the treaty, but it is the means whereby those objectives are achieved that have become custom and practice. One of the objectives, I think in article 64, is the "stabilisation of markets". It is on those three words that the whole system of intervention depends, as well as the ways in which it has grown and in which the previous agreement affects future expenditure.
One of the features of Common Market operations is that immediate difficulties are usually solved at the cost of putting greater difficulties and expenditure into the future. That has happened time and again. When it was agreed that there should be a modest withdrawal of crops, modest intervention and the setting up of an agricultural fund, I doubt whether anyone realised the extent to which the CAP had grown. Once started, it could not be stopped. It cannot be stopped because of the dependence on electoral votes in each country concerned. Politicians on both sides of the Channel have got on to a rising spiral that they cannot get off. That is one of the principal characteristics of the Community.
Mr. Myles: I wish to pursue this point further. The hon. Gentleman has not said which of the principles of the CAP he would wish to jettison either in or out of Europe. Is it the stabilisation of markets, which was mentioned, or one of the others?
Mr. Spearing: I am grateful to the hon. Gentleman because, perhaps inadvertently, he has hit upon the great problem that faces the CAP.
One can agree with objectives, but one can disagree with the means adopted for achieving them. If I were a Frenchman, I would perhaps uphold the policy of taxing food from outside because I would believe that, internally, French rural society should be sustained by such a policy. I believe that our policy of deficiency payments was much better suited both to British agriculture and to the British people. Therefore, the answer is that one has two means of achieving the same objective. I do not believe that they can be harmonised because of history and the differences between our two peoples. That was one of the good reasons why many people were against going into Europe. They foresaw the problems that we now face.
My third point relates to the role of the assembly in our current problems. The British rebates have come across continual problems. They were negotiated for a two-year period, with a one-year extension. Now, in this final year, after an enormous amount of discussion, the assembly, as described by the hon. Member for Scarborough (Sir M. Shaw) with great accuracy and detail, has said no. It did so for obvious reasons. I shall quote from Europe dated Friday 17 December 1982 under a heading "Strasbourg Thursday 16 December 1982". It states:
"By a very wide majority—258 votes in favour and 79 against—the Parliament has adopted the report and the resolution by the Italian communist Carla Barbarella which amounts to a rejection of the amending budget for 1982".
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It goes on to explain the reasons. Carla Barbarella was not present in a party capacity. She was chairman of the committee which reported. Neither Conservative Members nor the Foreign Secretary, who was Chief Whip of the Government which pushed through the measures, would have believed that in 1982 an Italian Communist deputy, being chairman o f a committee, could move a motion in the assembly which would wipe away £500 million or £600 million of public money from Britain. That is what is happening.
We all know why it has been done. The right hon. Member for Down, South used the word "lever". It is not only that the Parliament was against this payment because it did not have the necessary strings attached to it, but because it wanted to enlarge the powers of the assembly as against those of the Council and the Commission. The Parliament was using this as a convenient lever in its hands to do so.
The hon. Member for Scarborough outlined the need for consultation. He emphasised time and again the need for agreement. Of course 'that is so, but it takes two to make an agreement. The more consultation there is, the more power the assembly will have over and above the Council. It may be that the effective power is even greater than that given by the treaty. We all know that the real power in politics is based not only on the written law or on written rules, but on the leverage which might be brought to bear. It is clear that the European assembly, in going about its work, has enlarged its powers and brought publicity on itself that it would not otherwise have received and is spoiling for the next round.
We have only to read the communiqués which appeared in Europe on 11 February. Referring to the long resolution which came about at the end of the deliberations, it said that the Parliament
"considers this supplementary budget, to which it raises no objection, a 'first step towards more ambitious objectives for the Community."'
What can the "more ambitious objectives" be? The hon. Members for Saffron Walden and Harrow, East might like to fill those in. The hon. Member for Farnworth (Mr. Roper) has already filled in what the SDP thinks. The SDP agrees with the Community on this matter. The SDP wants to enlarge the budget and increase its scope. It wants the EC to spend more and national Governments to spend less. That was the burden of the speech of the hon. Member for Farnworth.
It is no good the Government saying that they do not think there should be an increase in the 1 per cent. limit. The report of the Select Committee on European Legislation summarises it as follows:
"The Commission contends that for these aims to be realised an extension of the Community's own resources is unavoidable, and does not accept that the 1 per cent. ceiling on VAT own resources should be a permanent constraint."
Later, summarising the Commission's views, it states:
"The Commission concludes its paper with a discussion of the role of the European Parliament as one branch of the budgetary authority, noting that while sensitive issues were raised in 1973 by its own proposal that the Community institutions should be empowered to create new budgetary revenue sources without the need for ratification by national legislatures, a greater degree of independence in this respect was nevertheless desirable."
In other words, the Commission is leaning in the direction of the assembly when the assembly wants to increase its powers.
I close my remarks on the connection between money and policy, on a point made by the right hon. Member for

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Down, South. We all know that control over money equals control over policy. In political terms, policy is often money—not always, but often. The assembly clearly wishes to extend its competence, and competence over the budget is but the first step. Other people also wish to extend the competence of the Community.
In a press release, dated 26 November 1982, Herr Kohl, Chancellor of the Bundestag as he then was—this was kindly sent to us by the West German embassy—referring to the period when Germany will have the Presidency of the Council—a period now with us, but of course preceding the German elections—said:
"Above all, this applies to the German-Italian initiative on a European Act, which we hope will provide new impulses for European unification. When my country assumes the presidency of the European Community, we shall therefore make vigorous efforts to promote this initiative."
That document is not before us today, but the power of money which would push that document is not in this House alone—it is with the assembly. When Conservative Members read the document, they may not say "Hear, hear". The mechanisms of the Community, which I mentioned in reply to the hon. Member for Saffron Walden, have within them an automatic screw towards European unification—unification of its political authority; unification of its public expenditure; unification of its laws; and unification of its foreign policy.
I do not believe that that is the right step. I do not believe that the fruits of co-operation, fellowship and friendship can come from the tree of the treaty of Rome. They must be achieved in some other way. The Government must realise that once a year the screw will be turned on an automatic ratchet, and that ratchet is the annual budget. They must make a resolute approach and realise that the friendship and partnership that we want with our friends across the Channel cannot be achieved by the treaty of Rome.
6.50 pm
Mr. Peter Lloyd: I am pleased to follow the hon. Member for Newham, South (Mr. Spearing) because I agree with the main part of his argument. My only disagreement is with his comment that it takes two to make an agreement. That is not true in the Community, where it takes at least 10.
Everyone agrees that Britain pays too much, or that it receives too little, but I suspect that some Community enthusiasts regard our contribution as a not unbearable surcharge for the privilege and benefit of belonging to the EC, and as an inevitable penalty for not joining earlier and being present for the formulation of the original rules. That view was taken by my hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve).
Most people in Britain, and certainly in the House, believe that the Prime Minister was wholly right to insist on the temporary adjustment that she achieved in 1980. Contrary to what the hon. Member for Farnworth (Mr. Roper) said, I believe that in so doing she focused, not distracted, attention on the basic long-term problem. Since then we have been waiting for the promised new permanent arrangement to ensure that the problem does not arise again for Britain, or for any other member state. So far, we have waited in vain.
The obvious injustice to Britain, tardily recognised as such by our friends in the Community, is that we are in
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an unacceptable position which, on entry to the EC, we were promised would be put right. The fact that that remains unresolved strikes most people as, at best, sloth and inertia and, at worst, a deliberate and mean desire to keep arrangements that might profit them at our expense. But neither view really explains why the matter remains unsettled, despite the sustained pressure of Foreign Office and Treasury Ministers during the past three years. Those suspicions do an injustice to, and underestimate, our friends in the Community.
Of course, our fellow members would be unusual if they were enthusiastic to find ways of paying more so that we could pay less. But the underlying reason why nothing is done is surely that the budget question inevitably touches upon the fundamental character of the EC. The way that it is eventually settled will determine the way in which the Community will evolve. Therefore, every solution canvassed has a more significant implication than its effect on the United Kingdom's net contribution and the extra that our fellow members will have to pay. The documents underlying the debate show that.
But if the Community is to continue to be welded into a federal European state or, to use a less provocative description, some sort of supranational unity—which is undoubtedly the ideal of most of those with the responsibility for running it and the path down which, in the fulness of time, they mean to go—witness the statement of Herr Kohl referred to by the hon. Member for Newham, South. There are others we could pray in aid on that point.
If the Community is to advance in that direction, it must ensure that it continues to be financed from its own resources, to do with as it determines. It must also view with great suspicion any idea of a juste retour arrangement, as it would destroy the Community's potential as an organic unity if each country was guaranteed that it would get out whatever it put in, less a percentage for expenses. The Government undoubtedly understand that, because it is implied, if not quite stated, in the green document which has been in the Vote Office for some considerable time, unlike some other documents being debated today. It is dated September of last year and is entitled "The Budget Problem". On page 7, the Government argue strongly that they are not asking for a juste retour but that they want a formula to ensure that the transfer should be from the richer to the poorer. That sounds to me, and no doubt to our colleagues in the Community, to be a refined version of the species—a somewhat juster juste retour than simply getting back what we put in. My hon. Friend the Under-Secretary, who knows that passage, will say that Britain is prepared to be a modest net contributor, but we are being disingenuous to say that the principle is not really being breached by what we ask.
The most communautaire way to deal with the United Kingdom budget problem is to develop other Community policies that would provide the desired offsetting net benefit. But there is surely something grotesque in the idea of developing policies not for their intrinsic merit, but to make the statistics look better. That would be a gigantic misappropriation of public funds. Yet the Government, in the document, insist that they have long wanted a more rapid development of EC policies, especially regional and social. I hope that they will explain why.
Are the Government really saying that Brussels can spend our money more effectively in those and other areas,

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and do so better than we can ourselves? If so, they must tell us how that can be. I suspect that efficiency and value for money have little to do with it, and that the answer is that the Community idealists and managers in Strasbourg and Brussels regard those as the necessary steps in what they call "building Europe". We will be moved to accept that as the most promising way of achieving the appearance of getting our money back. For, in truth, development of those policies will mean that the Community, including the United Kingdom, will have to find additional resources to finance them. That, thanks to the additionality rule, will exert an upward pressure on public spending at home, which the Government have taken nearly four determined years to bring under control. That would not be a satisfactory outcome, although it may have some attraction for Opposition Members.
As my hon. Friend the Member for Southend, East (Mr. Taylor) said, the budget problem would almost entirely evaporate if there was a genuine common market in agriculture, in which prices were determined by supply and demand rather than expensively engineered by politicians. Yet the Government, in the document, protest that they are not trying to undermine the CAP and that over-production and the consequent dumping on the unfortunate Third world can be dealt with without altering the principles of the treaty of Rome, or even the fundamentals of the CAP constructed upon it. It is high time that the Government told us how the trick might be done, because I do not believe that it can. I shall resist the temptation of explaining why, because it is not strictly relevant to the debate. But I recommend any hon. Members who wonder why to read the brilliant book on the subject recently published by my hon. Friend the Member for Holland with Boston (Mr. Body).
Despite my critical stance, I support the Government—at least in their efforts to obtain a permanent rebate. But they are facing a far harder and more dangerous task than they have ever admitted. The way that the issue is resolved will have a major influence on the direction in which the Community will develop. Those who make the decisions on the other side of the Channel will insist that any change conceded must extend the authority and the influence of the Community. Thus I fear that the only solution—
Mr. Myles: Does my hon. Friend want us to come out of the Community?
Mr. Lloyd: No. I would much prefer that the Community should be changed. If it cannot be changed, I am afraid that that will be the only option open to us.
I fear that the only solution—I hope that it will not be—that the Government will eventually find that it can secure will involve a further increase in EC own resources and a larger area of United Kingdom decisions and spending controlled or supervised from Brussels, which will be less cost-effective and responsive in practice than Whitehall would have been and deeply unwelcome in principle to the British people and the House.
7.1 pm
Mr. Ron Leighton: I am pleased to follow the extremely thoughtful speech of the hon. Member for Fareham (Mr. Lloyd).
I fear that the House must approach this debate with a sense of déjà vu. Once again, we are obliged to turn to the
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sad and sorry saga of Britain's still unsolved budget problem. Here we are yet again tiresomely haggling over the grossly inequitable exactions that are demanded from us by the EC budget and the still unreformed lunacies of the common agricultural policy. It is no wonder that there is a sense of exasperation and weary disillusion in the country over the whole wretched business.
Last week I asked the Foreign Secretary whether he was aware that the British people were sick and tired of the annual haggling and wrangling over the British budget contribution. He said that he understood that well and asked me how I thought he felt. Presumably he feels exactly the same.
The EC budget is a Heath Robinson contraption, which it is misleading to dignify with the description of budget. The Common Market has nothing like a Chancellor of the Exchequer who sits down and takes a series of conscious decisions. All the main decisions are taken separately in meetings of the Council of Ministers. The decisions on policies are laid end to end. The expenses are estimated, added together and presented as a bill to be paid. That is what is called a budget.
Conscious decisions can be made only in the small sector known as non-obligatory expenditure. Much the greater part is obligatory or compulsory expenditure, mainly on agriculture, where there is no discretion. The task is merely to estimate the cost of running the CAP, the cost of financing the huge, surpluses exceeding demand and the enormous costs of subsidising their dumping and export on world markets. Then the bill is presented. Therefore, the Council of Agriculture Ministers is in many ways more influential on the outcome than the Council of Finance Ministers. The latter just picks up the tab.
Our Minister of Agriculture, Fisheries and Food could have helped if he had carried out the promise in the Conservative election manifesto to freeze the prices of goods in structural surplus. However, he has not. He has done the opposite. Last year the price increase was over 11 per cent. That served only to worsen, entrench and fortify the CAP, not to reform it. The farm whey is becoming more lunatic than ever. It gives open-handed guarantees for everything produced. That is why it produces the food mountains. It has unduly benefited the larger, richer producers and has widened rather than reduced the gap between the richer and poorer regions.
It puzzles me why, in equity, the United Kingdom should pay anything at all to the EC budget. Even the Chancellor once said that in the EC resources should flow from richer to poorer countries and regions, as they do within national economies, and that the balance of contributions should flow from conscious overall decisions, not simply from putting individual policies end to end.
I do not know what the budget will be like this year, but in our domestic budget normally some heed is paid to the ability to pay and to the need for expenditure. The more deprived regions in the United Kingdom receive more than they pay. There is a redistributive effect. The preamble to the treaty of Rome talks of
"reducing the differences existing between various regions."
If the policy is really one of encouraging convergence of economic performance and wealth, why should there not be large subventions to the United Kingdom? Why are we not a net beneficiary? After all, most of the other member states are. They receive subsidies and net payments, yet they are some of the richest countries in the

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world, certainly in Europe and in the Common Market. Surely that is entirely perverse. There is no relationship between contributions and receipts on the one hand and each country's wealth on the other. The budget, and the mix of policies that it finances, does not promote a fair distribution of resources within the EEC or the convergence of economic growth. It does the complete opposite.
Document 6329 is an explanatory memorandum from the Treasury. It is stated in paragraph 8:
"in real terms, economic growth in the UK has remained on average significantly below the Community average."
That takes me back to the discussions, which my right hon. Friend the Member for Bristol, South-East (Mr. Benn) will remember, when we had the referendum. When our growth rate was contrasted with that of the Community, we were told that if only we would join, by some unexplained process or infection, the United Kingdom would have the same growth rate as in the Common Market. However, in the decade before we joined the Common Market our growth rate was higher than it has been since we joined. I must not be diverted down that path.
I return to the budget. It was eminently predictable and was predicted—our words are on record—that the financial regulations devised by the original Six to suit themselves would not suit our different circumstances, economy and trading patterns and would lead to a haemorrhage of British resources to the continent, and that effectively we would be grossly exploited by our richer neighbours. In the 10 years that we have been members of the Community we have handed over about £4 billion. At 1983 prices, it would be much more than that. That growing disaster was concealed by the transitional arrangements. Their ending coincided with the election of the Conservative Government. The Prime Minister was confronted with the full horror of a bill for £1 billion for policies that damaged us. The right hon. Lady averred that she would have none of it. She went to Dublin to demand our money back. She wanted the whole loaf, and she had the full support of the House. I shall quote what was reported in Hansard on 16 July 1979—just a couple of months after she was elected. The House passed a motion urging Her Majesty's Government
"to press for a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts".—[Official Report, 16 July 1979; Vol. 970, c. 1096.].
That was the policy of this House in July 1979.
At that time I was a member of the Select Committee on European Legislation, &c., the Scrutiny Committee, and I well remember on 16 April 1980 the Financial Secretary coming along to tell us what that meant. I quote:
"As you know, the Prime Minister has said on a number of occasions that we have very little room for manoeuvre and that she would consider it appropriate, if we were to make a net contribution, for that contribution to be less than that of France, I do not think it would be sensible to go further than that".
The Select Committee Chairman said:
"Just for the record, what is the contribution of France?",
to which the Financial Secretary replied:
"It is slightly complicated, because if you look at the table you will find that it is roughly a break even".—[Official Report, 3 July 1980; Vol. 987, c. 1667–8].
That was the position of France, and the Financial Secretary said that he wanted our contribution to be less
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than that of France. Presumably he wanted either a break even or for this country to become a slight net beneficiary. I should have thought from that statement that nothing could be clearer about the Government's policy.
The Prime Minister insisted on what she called a permanent solution based on a broad balance. We all know that we do not have that. Can anyone say that we have anything like that? Of course not. It is as far away as ever. All we have is a temporary ad hoc arrangement, giving us half a loaf, with promises. The promise was the famous mandate to the Commission in May 1980—I remind the House that that was three years ago—for an examination of Community policies following the temporary settlement with Britain to prevent a recurrence of unacceptable budget situations for any member state. That mandate was fatally flawed. It was confined and circumscribed because, in May 1980, the Council re-affirmed that the commission must not call into question common financial responsibility for EEC policies or the basic principles of the CAP. How does one reform anything without changing it? Is that possible? Of course not.
However, there was a pathetic and naive optimism. The right hon. Member for Chesham and Amersham (Sir I. Gilmour), then the Lord Privy Seal, said in June 1980:
"With the review commissioned for 1981 and the proximity of the 1 per cent. VAT ceiling, we have an unrivalled opportunity to bring about sensible adjustments to the operation of the CAP and to put the Community's finances on a sounder basis than ever before".—[Official Report, 2 June 1980; Vol. 985, c.1046.]
That was three years ago. We have had it again today. We have heard it for years. We have always been going to do these things.
Sadly the right hon. Gentleman is no longer with us in that capacity to muse upon what went wrong. His successor, the right hon. Member for Spelthorne (Mr. Atkins), coming perhaps with some relief from Northern Ireland, was even more sanguine. By then, the Commission, under the mandate, had reported, and he told us on 29 October 1981—it is embarrassing to hear his naive optimism:
"The European Council at the end of June this year agreed on the procedure for handling the report. It called for work to be done so that conclusions could be reached by the Heads of Government at the next meeting of the European Council in London on 26 and 27 November. It is a major priority of our Presidency to ensure that we make decisive progress on the subject".
Does the House remember the great hopes that were held out by the British Presidency? The former British President, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), is not present. My hon. Friend the Member for Birmingham, Erdington (Mr. Silverman), the Chairman of the Scrutiny Committee, was taken aback by that, and intervened to ask whether that was realistic. The then Lord Privy Seal went on, very optimistically:
"In June, when the Heads of Government met in the European Council, again, they called on member countries to sit down, discuss, negotiate and work out how best to solve the problem, whether by adopting the proposals or in some other way, and present Heads of Government with decisions for them to endorse, or, if decisions were not possible, at least alternatives to discuss and decide on. That is what is happening. Discussions have gone on steadily and intensively over the past weeks and months.
I am glad to say that at the Foreign Affairs Council that I attended earlier in the week all member States represented recognised the need to accelerate the work, because 26 November is not far away. To facilitate decisions at the November meeting we are under instructions from our Heads of Government to do just that. It is accepted by all the countries that

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it is necessary to arrive in November at a position where the Council can take decisions."—Official Report, 29 October 1981: Vol. 10, c. 1047.]
That was in 1981.
Mr. J. Enoch Powell: Just think what he was like in Northern Ireland.
Mr. Leighton: That was pie in the sky. I do not know what the right hon. Gentleman was like in Northern Ireland, but here, I believe that he had been a Whip before that. What he said was a fantasy, a dream world, complete nonsense. He, too, is no longer with us in that capacity—nor are his illusions. We have no permanent solution. We have still only a patched-up, botched-up, unsatisfactory temporary arrangement. All these years later we are still engaged in ad hoc-ery, in bitter demeaning annual wrangling and haggling, and it will get worse. Quite soon, we shall start on another round. I pity the Minister on the Treasury Bench if he has anything to do with it. There will be more bitterness and more bad blood.
The financial arrangements do not suit the United Kingdom, but to change them we should have to undo and unravel the whole package that the original Six contrived for themselves. Why should they undo it? They are enshrined in the treaty of accession that we so foolishly signed—but, presumably, with our eyes open. The measures for Britain are seen by the theologians and purists of the EC as exceptional and purely temporary concessions.
It is we and we alone who want to reform the CAP, but if that is to be done it is the other countries which will have to change their agriculture systems. Why should they change their agriculture systems to suit us? Are they likely to do so? I do not think so. It has been said that Germany is now the largest net contributor and therefore might be an ally. But Germany's agriculture voters get great benefits from the CAP. I notice that Herr Helmut Schmidt from time to time gave lip service to criticisms of the CAP, but Herr Ertl went merrily ahead looking after his Bavarian farming vote. I see no help there.
What leverage do we have? We cannot veto the farm price review, can we? Our veto was steamrollered out of existence. We have a Minister who is in favour of higher prices for the farmer and who is not worried about consumers. He just wants to please the farming community, so there is no hope there.
There are all sorts of other difficulties in the Minister's way. He will have observed the recent shenanigans in the EC assembly. I do not know whether that is a futile body. It seems to be, but it does have powers under the treaty. Something which has not yet been mentioned is the prospect of new elections. The people who sit in that rather curious body will want to flex their muscles to justify their existence to their sceptical voters. Is there not a great temptation for them in the run-up to the Euro-elections next year, when we return as a supplicant, to make all sorts of conditions? There are rumours that they may sack or put pressure on the Commission; they will certainly seek to strengthen their position before the next elections.
The right hon. Member for Down, South alluded to the fact that the House obtained its powers historically by its control of Supply and the assembly will do the same. That is the only way that it can obtain extra powers and establish its position.
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Some people think that the solution is to throw money at the problem—as the Prime Minister would say —to have a larger budget and to set up new funds. I am afraid that that is no solution. Even if we did that, all that we should be doing is throwing more money after bad because, although we now have a small net gain from the minuscule regional and social funds, even that will disappear from enlargement, and after enlargement the United Kingdom will be in deficit, even on the regional and social funds. Therefore, to increase the size of the budget and to breach the 1 per cent. ceiling on VAT will not help us.
The only moral to draw, the only sensible conclusion, is to recognise the stark and simple truth that these arrangements do not suit the United Kingdom. They were not negotiated by us, and they were not meant to suit us and they do not. If they continue, they will be a constant source of acrimony, discord and conflict between us and our neighbours. It is ludicrous and demeaning to go on year after year with these wearisome disputes. Let the continentals run their agriculture as they wish, but let us take back the powers that we ceded to run our agriculture as we wish. Instead of these destructive disputes, let us arrange our relations with our neighbours on a basis other than membership of the Common Market.
7.25 pm
Mr. Hugh Dykes: Instead of continuing with wearisome disputes as described by the hon. Member for Newham, North-East (Mr. Leighton), we should divest ourselves of his wearisome speeches which, if he does not mind me saying so, are always similar. It is a rather shaming reality that instead of dealing in detail with the specifics of the subject in hand, such as the budget, EC debates, particularly the speeches of Labour Members, hysterical and monotonously repetitive tirades against working with wicked foreigners who have horns and a tail, who are not to be trusted at all, and who are seeking to do us down at every opportunity, seem to set out to show how ghastly the whole thing is.
The British public do not fall for that nonsense. That is part of the internal cathedral of the Labour party's domestic agonies and problems. Whenever it is in opposition, it must be fiercely anti-EC. If by some mischance it were to win a general election in future, which seems increasingly unlikely, it would presumably find convenient reasons for being able to declare that withdrawal from the EC is no longer a good idea for Britain, or, indeed, an essential prerequisite—to use some of the phrases that we have heard today.
Without wishing to sound pompous in any way, as an hon. Member who is part of the post-war generation, how saddening and shaming—for that is the right word—it is that this is the only Parliament in the EC where such absurd quasi-fundamentalist debates take place with monotonous repetition, with the hysterical outbursts and silly speeches such as that made by the right hon. Member for Bristol, South-East (Mr. Benn) and the equally absurd tirades and hysteria of the right hon. Member for Down, South (Mr. Powell), who is not here at the moment. Presumably we shall have an even more hysterical outburst later from the hon. Member for Liverpool, Walton (Mr. Heffer).
That does not serve the nation or the British public well. They want to hear serious and detailed arguments about the inevitable problems that arise in the normative and conventional context of our EC membership, not the

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hysterical, chauvinistic, xenophobic rubbish that we hear repeatedly from the Labour party for its own internal reasons. It is a little presumptuous of it to inflict the domestic intra-party wranglings and struggles that it has, one comrade against another, on the long-suffering British public when its stance is not genuine but is born out of the traditional agonies and pains of its disunity in opposition. Although I want the disunity to remain so that it remains perpetually in opposition, it should bring forward much more constructive views about the budget and what should be done in future.
We all know the problems of the EC budget without the hon. Member for Newham, North-East telling us. They are perfectly understandable and natural problems which need not cause the hysteria within the Labour party to which I have referred. They are that Britain's traditional trading patterns still reflect the past, although we are gradually achieving better harmony with our colleagues and friends within the Community. We still import far more from non-EC countries and because our agriculture is based on a higher level of activity pro rata, with a much smaller base of operatives and output, we contribute more to the CAP than we get out. Those are the main reasons. There are some detailed exceptions such as the differential size of our GDP which is also added to the budget problem.
The awful Catch 22 illogicality of the Labour party is that it grumbles about such things but does not wish to see the permanent solutions to the problems that are even now being proposed in this series of documents. The Commission is constantly beset, as are the hapless members of the European Parliament—I pay tribute to them, particularly the British Members, and even the Labour ones who realise that they have a worthwhile job to perform—by the dilemma of being deprived by the Council of Ministers of the essential power and authority to propose solutions on issues such as the budget that would overcome the objections mentioned by the hon. Member for Newham, North-East. There are some hon. Members mainly on the Opposition Benches but even one or two sadly on the Conservative Benches—
Mr. Teddy Taylor: A growing number.
Mr. Dykes: —who are not prepared—my hon. Friend the Member for Southend, East (Mr. Taylor) made a much more thoughtful speech today—to wish the powers on the Commission to propose solutions.
The documents before the House contain sensible proposals, some aired for the sake of debate while others are more concrete. The Government are responding in a series of complicated but nevertheless essential meetings to those suggestions. I share the view expressed by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), in an excellent speech, and by my hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve), that the 1 per cent. ceiling is out of date and that it should be breached as a matter of deliberate policy to provide more resources for the Community budget. At a stroke, that would allow the hon. Member for Newham, North-East to be satisfied that, at long last, the agricultural ratio was coming down and that more funds would be available for spending on desirable areas in this country and others.
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The Commission is proposing all the things that Labour Members want—more money on industrial and commercial activities, more money for the less developed regions of Britain and less on agriculture. Yet, when these proposals are put forward, there is the traditionally hysterical reaction from the Labour party. We need to support the ideas that the Commission produces. We need to reinforce the authority of the Commission. We should welcome the increased budgetary powers of the European Parliament with the additional insurance policy and protection provided by the fact that it is a joint budgetary authority with the Council of Ministers.
I wish that the Council of Ministers, not only in financial and budgetary matters, but in other matters, had had the courage and wisdom to cease adopting a nationalistic position. It is worse here than in any other state, including France. However, it exists everywhere, as a result partly of the economic recession. If the Council of Ministers had had the courage to withstand those pressures and had acted together positively to build up the Community and the budget in recent years, we would have fewer problems. The United Kingdom's less developed areas are crying out for more Community money.
This would not be a total substitute for national money. The purposes can be different. No one can provide the planning—a word congenial to Labour Members—on a scale and with the cohesion and harmonisation in deciding priorities better than the people in Brussels who can assess the needs of the entire Community. Of course, nation states remain strong entities that are more powerful than the Community. I accept that with enthusiasm. I am a patriot and a nationalist in that moderate sense. Why should that contradict the development of the Community taking common actions that benefit member states—tasks that cannot be done so efficiently by the nation states?
Mr. Leighton: Will the hon. Gentleman explain why he wants to send even larger sums of money to Brussels to finance an even more swollen and bloated budget in the hope of getting back a little more for our deprived regions when we could keep the money here and allow the House to decide what should be done with it?
Mr. Dykes: The hon. Gentleman misunderstands. The answer is lengthy. I shall deliberately avoid giving it, because you, Mr. Deputy Speaker, would rightly become impatient. I should like, however, to give two examples to show how the hon. Gentleman continually takes the wrong path. When a nation state alone decides which regions should receive additional aid, the west midlands, which needs it, does not get it. If the Community had the power, over and above national money, to decide upon areas of the Community that needed additional assistance, that problem would be overcome.
The hon. Gentleman continually undermines the confidence of his constituents about Britain's membership of the European Community and its long-term future in respect of expenditure that amounts to 2·5 per cent. of the total public spending of all member states. It amounts to less than 1 per cent., even following the latest increase, of the total amount of GDP of the entire Community. It is illogical and irrational that the hon. Gentleman should fuss and fret ten times as much over these issues when billions of pounds can be voted late at night without hon. Members paying proper attention. This shows the obsession of the Labour party.
Mr. Richard Body rose—
Mr. Dykes: I hope that my hon. Friend will forgive me if I do not give way. He has not been present for much of the debate. It will take time if I give way.
I implore Opposition Members and some of my hon. Friends, although there are not, thank goodness, many of them—this is the wise party in all respects—to drop these incredibly biased obsessions and irrational judgments about the European Community. They have ceased to be amusing. They have become positively alarming and worrying. This is the only Parliament within the Community where one hears such self-doubting, hysterical and paranoid debates about membership of the Community. Even in France, which cannot be accused of being other than an extermely robust and proud nation state, such debates do not take place in the National Assembly. That is not because the National Assembly is weak. It has powerful debates on many subjects. There is no debate even among Socialists in France about the essentials of Community membership even though there are problems within the Community which has not arranged everything marvellously for France.
Mr. Teddy Taylor: If there are any hysterical and alarming arguments, they surely come from my hon. Friend. It was true Conservatives like myself who fought the last election saying that we wanted to control unnecessary public spending. Now that this has been achieved, my hon. Friend wishes to increase public spending by the back door through the Common Market.
Mr. Dykes: That is one way of describing the situation. It is, however, my hon. Friend who gets carried away and becomes over-excited. The Community budget is not only small; it is also virtuous. In this country we have become accustomed to continued chronic deficits. Now, following four years of painful policy making by my right hon. and learned Friend the Chancellor of the Exchequer, they are much smaller. The Community budget is self-contained. There is no deficit. No debt is created. The receipts and the payments are supposed to balance. This will presumably continue to be its structure.
There are enthusiastic Europeans like myself who say that the budget, logically, like national budgets, should develop some kind of debt ratio. However, that does not happen at the moment. My hon. Friend does not need to get too worried. It is essential to determine the areas of genuine spending need in the Community budget and to fit tight financial control and surveillance of those figures into the budgetary procedure by increasing the powers at the margin of the European Parliament and by encouraging the Council of Ministers to operate more in the spirit of a community. They should operate on the basis that member states and those running the Governments in them actually like each other—not on the basis of hostility and dislike portrayed by the Opposition.
My hon. Friend the Member for Southend, East argued again about the wickedness of sending butter to the Soviet Union. On a visit I made to Moscow last April, I found that most of the butter in the shops came from New Zealand. My hon. Friend the Member for Southend, East will presumably argue that it is heroic and brave of New Zealand to send butter to the Soviet Union as a means of getting rid of a surplus. Yet he describes it as wicked and monstrous if the Common Market does the same thing. That is nonsense. I hope that the European Parliament will
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develop greater self-confidence. In its December debate and vote it held out the hand of assistance to this country over the dilemma of the budgetary problem. The European Parliament was saying, with total justification and accuracy, that the system of rough and ready rebates, which are not fair either to the majority of member states or to Britain, was silly and illogical and that a permanent solution had to be found.
I do not believe that we can achieve a permanent solution without being much more open-minded and flexible, not only on going through the 1 per cent. ceiling on VAT-equivalent payments, but on considering other sources of revenue for the budget.
Why is the 1 per cent. ceiling regarded as so sacrosanct? I agree with my hon. Friend the Member for Southend, East about the need to exercise ruthless control over public spending, but there is no magic about the 1 per cent. figure. It is only because there has been an anomalous effect on the differentials in world food prices and export subsidies and because VAT receipts, before the rate of inflation slowed down in Europe a year or two ago, were higher than expected, that the 1 per cent. ceiling had not been breached. It might have been breached if circumstances had been different and then a solution would have had to be found, because the pressure on spending in farming and other areas would have demanded it.
There is nothing fixed about the 1 per cent. limit. Of course it is a psychological jump to move to 1½ per cent., but it should be easier for people at least to think constructively about alternative sources of revenue.
One hon. Member suggested that an energy levy should be considered. I regret that such a levy is not an intrinsic part of the Commission's proposals. It makes much sense in many ways to develop a number of alternative, individualised sources of specific revenue for the EC budget. Overnight, this country would be an automatic beneficiary. The amount that we would receive would be very large and we would pay little into an energy levy budget because we are an oil-producing country.
I hope that the House still prides itself on its flexibility, though I sometimes doubt it when listening to debates such as this. The House should consider alternative possibilities, and I am sure that my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs, who is to reply to the debate, will refer to a number of options that could be developed in future.
There is no substitute for developing the Community budget constructively and in a non-inflationary way to spend money in the right areas in all the member states. There is also no substitute for much more co-operation, which is the essence of a convergence of action and decision making by Finance Ministers to help to get a Community-based, Community-wide recovery.
The slump in Europe is getting worse and the EC is the only body which can take a lead in bringing the whole of Europe out of the economic and industrial degradation and developing squalor into which it has sunk.
Mr. Leighton: Why has the Community not done so?
Mr. Dykes: Because the Council of Ministers never has the political will to get everyone round the table to decide to do things, which means spending Community money.
Surely the Mother of Parliaments should have more self-confidence in its constitutional abilities and capacities

719
to stand up to the relatively weak European Parliament and other European institutions, which are still a modest collection of bodies. If that is not possible, there must be something wrong with this House and, to a lesser extent, with another place, which is also proud of its constitutionality and is not panic-stricken about the Community. Debates in another place reveal a continuing enthusiasm for our membership of the EC, even among Labour peers, who reflect a more sensible period of the Labour party's history of about 10 years ago.
It is not right for the right hon. Member for Down, South to compare exactly the constitutional procedures and long-term historical reality of our control over taxation proposed by the Executive and approved by the Parliament with the developing and modern procedures of the European Community. The essential difference is that there is a separation of powers in the Community which does not exist in this Parliament. The absence of a Government in the European Parliament changes the situation completely. Even though the Council of Ministers and the Parliament revolve round each other more constructively, the Council still calls the tune. None of the budget proposals can be approved unless the British representative on the Council of Ministers agrees that they meet the wishes of the British Government.
In the light of that incontrovertible fact, I suggest that everyone can be much calmer and less hysterical and silly about the future of our membership of the Community.
The comforting irony for Conservative Members is that, although detailed aspects of the Community are, inevitably, unpopular—it is a pity that we do not do more to present the facts to the public—there seems to be no inclination among the British people to leave the Community. That is yet another fatal flaw in the Labour party's negative and miserable manifesto.
7.47 pm
Mr. Bob Cryer: We have come to expect those measured tones of smooth support from the hon. Member for Harrow, East (Mr. Dykes). He is a Eurofanatic who sees nothing wrong with the EC and continues to trot out a sort of PR panegyric on the virtues of the Community.
The hon. Gentleman acknowledged that the EC, too, is in recession. I remind him that at the time of the referendum on our membership, the employers' organisations ran a campaign entitled "Jobs for the Boys" in which they claimed that the budgetary and economic arrangements of the Community would provide a solution to all our economic ills.
It is apparent that those claims were palpably false. The EC does not provide any solution to our economic ills, but the employers' organisations now claim that pulling out of the Community would be even more devastating than the devastation that membership has wreaked on our economy, particularly over the past three years.
The Community is in crisis. The argument about the budget is an annual event and no long-term arrangements can be made, because of the make-up and constitution of the EC. Therefore, as long as we remain members we shall have this annual wrangle.
This year we have managed to get a refund of our own money, but it is likely that next year we shall make a net contribution of about £700 million. When the Labour
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Government were in office, the then Leader of the Opposition, the present Prime Minister, used to claim that we were too abrasive with the Common Market and that a more co-operative and helpful approach was necessary. The right hon. Lady adopted the supine attitude towards the Community that the hon. Member for Harrow, East always displays.
However, since taking office, the Prime Minister has had to argue fiercely with the Common Market to obtain relatively minor results. There have certainly been no major results in the form of a reorganised Common Market.
Reorganisation of the Common Market is impossible because it depends on unity, and there are vested interests in the Common Market that benefit directly to a far greater extent than we do from the CAP. Those countries are not likely to give their consent to any changes that will deprive them of their farming benefits.
We are in an unfavourable position. Britain is the fourth poorest nation in the Common Market. Yet only Britain and West Germany are net contributors. Even in those circumstances, there is pressure from the EC to increase the own resources contribution by upping the 1 per cent. levy from VAT.
The translation of the letter from the Commission of the European Community signed by Mr. R. Burke, member, in paragraph 4, says:
"The Commission has on a number of occasions explained why it believes an extension of the Community's own resources to be necessary and why it cannot accept that the present ceiling should constitute a permanent constraint upon the growth of the Community's budget. In his programme speech of February 1981 to the European Parliament the President of the Community emphasised that the Community could not remain simply a Community of one per cent. In the first place, this is because of the need to safeguard the maintenance of the full range of the Community's existing policies. The Community is already living in the shadow of the exhaustion of its current financial resources".
There is pressure for an increase in the levy that finances the Common Market. We need an assurance that the Government will resist any pressure to increase the levy on VAT that goes to the Common Market. Conservative Members, such as the hon. Member for Harrow, East, specifically say that the Common Market has to extend beyond the 1 per cent. limit. That is a significant part of our money over which this Parliament does not have control.
The hon. Member for Harrow, East said that we should be able to stand up to the Common Market and not worry about things too much. However, Parliament has been nurtured and developed as a democratic institution over many years. The vote has been fought for by people over many years. People see Parliament as an institution of democratic endeavour. When we see that institution eroded and the power of controlling financial expenditure shifted away to a Council of Ministers with non-accountable Commissioners in the EC, we worry.
The touching faith of the hon. Member for Harrow, East in the Council of Ministers is remarkable. The Council is undemocratic, it meets in secret, it has considerable powers and it can effectively legislate without any opportunity for lobbying, except indirectly to a Government before a Minister sets off for the Council of Ministers. There is no spotlight of publicity through open doors covering the proceedings of the Council of Ministers. It is a secretive body. If such a body had those powers in this country, I hope that Conservative Members

721
would ask for it to be subject to more democratic proceedings. We do not want any more resources from the United Kingdom going to an essentially undemocratic body that is unaccountable for its decision-making. The pressure for the increase in own resources must be fiercely resisted.
Another aspect of the danger of the increase in own resources and of the Community's budget is the decision over the farm price review. The Government have said that they regret and are opposed to the decision but it took place, and the Luxembourg compromise was effectively seen to suffer a major alteration. There is no guarantee that in future there will be pressure for majority decision-making to be acceptable as the norm in the EC — I suspect that a few Euro-fanatics on the Conservative Benches are prepared to accept that—rather than some aberration that they are powerless to stop.
Mr. Allan Roberts: And the SDP.
Mr. Cryer: As my hon. Friend has reminded me, the SDP has specifically said that it is hook, line and sinker for—if it is for anything at all—majority voting in the EC. I imagine that its watchword at the next election will be, "Vote for us. We want majority voting in the EC." This would be a major breach of faith with the British people, because the Government's pamphlet "Britain's New Deal in Europe", which was distributed to every household in the United Kingdom, unequivocally stated:
"No important new policy can be decided in Brussels or anywhere else without the consent of a British Minister, answerable to a British Government and British Parliament … The Minister representing Britain can veto any proposals for a new law or a new tax if he considers it to be against British interests."
That patently was not the case over the farm price review, which set an important precedent. I know that the Government expressed some opposition at the time, but they cannot give an unqualified guarantee that the same pressures will not arise again for majority decisions to be taken over important issues.
When we discuss the budget we recognise that, because of the nature and organisation of the Common Market, the vast proportion of the budget goes to support the CAP. There have not been any changes in the CAP over the past three years, or even since the formation of the EC. It is an intrinsic pillar of the Common Market. Countries with vested interests, particularly France, which benefit from the CAP, will see no virtue in agreeing to any changes. As long as there is a right of veto in the Common Market there will be no change in that system.
The CAP is an obscene system, and everybody pays lip service to its obscenity. Even the Euro-fanatics say that the CAP gives rise to obscenities in a world in which many people are deprived of food. For example, in 1981 over one million tonnes of fruit and vegetables were taken off the market by the EC, and 300,000 tonnes were destroyed.
Mr. Dykes: The hon. Gentleman has just been saying how wrong it is to have a majority voting system. Now he says that the trouble with the CAP is that there is a veto. Why does he not solve the muddle in his own mind?
Mr. Cryer: That is one of the difficulties of the Common Market. The veto was guaranteed by the United Kingdom Government, but they cannot guarantee that the right of veto will be maintained in future. On the farm price review, the veto was useless.
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France will attempt to maintain the veto, as will West Germany, because it is in their interests, as it is in the interests of other beneficiaries of the CAP. The hon. Member for Harrow, East is making the point that if the veto system disappeared, the CAP might be changed because a majority system would be brought into operation. That lies in the distant future. In the meantime, our experience is that the majority system has been used only rarely, and against the interests of the United Kingdom.
In 1980–81, 78,000 tonnes of tomatoes were taken into intervention, of which 67,000 tonnes were destroyed; 517,000 tonnes of apples were taken into intervention, of which 114,000 tonnes were destroyed, and 8,000 tonnes of cauliflowers were destroyed, but I do not have the figures for the number of tonnes taken into intervention. To allow that quantity of food to be destroyed, without any likelihood of a fundamental change in the system, is appalling when we bear in mind that two thirds of the world's nations are short of food.
Mr. Myles: Does the hon. Gentleman agree that fresh food deteriorates rapidly? If it were not taken off the market, it would be destroyed, in effect, on the trees.
Mr. Cryer: It would not be destroyed if it were eaten. The hon. Gentleman is an enthusiast for sophisi.cated weapons systems. I suggest that it is not beyond the wit of mankind to take that surplus food and distribute it to hungry people. That could easily be done before the food became rotten. It is done every day throughout the world. But, because the CAP operates an obscene system, it does not allow that sort of thing to happen. As we know, it is a system for propping up the inefficient, uneconomic farmers of the Common Market.
The Government have recently demonstrated yet again their devotion to the farmers' cause. The hon. Member for Holland with Boston (Mr. Body) has written a very useful book showing the amount of support that has gone into farming in the European Community compared with manufacturing industry.
The Government, who are supporters of free enterprise—the Prime Minister says that British goods must compete on fair terms with the rest of the world—have done a complete U-turn over UHT milk imported from France. They say that the milk is horrible, tastes nasty and should not be imported. Yet they are denying the very principle that they purport to support—that the consumer should be allowed to make the judgment. The Government, in their effort to plan trade—that is what they are doing—say that the importing of that milk would disrupt British farming. For whatever reason they can find, they are determined to control the importing of French milk into Britain. All I ask is that they take the same robust attitude to manufacturing imports.
One of the objections to UHT milk relates to hygiene. Have the Government considered the safety aspect of manufactured goods? The Government do not employ safety officers at ports in Britain to examine imported manufactured goods arriving here. If any manufacturer in any other Common Market country wishes to exhibit machinery in Britain, he is free to do so, and it can then be sold. At that stage, it may be discovered to be faulty.
When a British manufacturer takes his machinery to West Germany, for example, and puts it on a stand at an exhibition, it is inspected to determine whether it is safe.

723
If it does not conform with safety standards, it has to be withdrawn from the exhibition, and it is not allowed to be sold. The Government should institute reasonable safety standards for goods coming into Britain, rather than reacting, as always, after an accident has occurred or after some product has been found to be defective. The Common Market budget is geared very much towards the common agricultural policy and very little towards manufacturing industry.
The European Community is very good at public relations. It widely advertises the fact that it contributes to factory nursery units, to new factories and to regional development programmes. It claims to represent a great stride forward in international relations. Yet even the hon. Member for Harrow, East accepted that expenditure on the regional fund needs to be increased. He wants to reduce the disparity between the money spent on manufacturing industry and the money spent on the common agricultural policy. He wants to do that not by a switch of existing resources, but by increasing the expenditure on manufacturing industry through increasing the contributions from the various member states, particularly the United Kingdom. It simply will not work.
We have to emphasise continually that every penny that is spent by the Common Market inside the United Kingdom is our own money, but with the important difference that it is not under the control, generally speaking, of the United Kingdom Government and is not subject to scrutiny by our elected Parliament. By increasing the EC's own resources, we shall be pushing more and more power across to the Common Market.
The hon. Member for Harrow, East said that some people take a nationalistic view of the Common Market. That criticism does not apply to Labour Members. We do not take a narrow nationalistic view of the Common Market. We do not accept that a minority of western European nations represents the world. The EC is a tariff club. It is a Common Market with a tariff, a barrier. Those who look inwards are the EC supporters.
We want to have trading, cultural and international relations with the whole of the nations of the world. [Interruption.] With the Communist bloc as well, of course. As my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) has said, if we do not live with the Russians, we shall die with the Russians, so of course we want international relations with the Communist bloc, and also with the capitalist countries, but not just those within the EC.
Our withdrawal from the EC would not be accompanied by the dire results predicted by those who in the past have said that our membership would bring us great benefits and been proved to be so wrong. The United Kingdom is a massive, rich market for the EC countries. Since our entry in 1973, in motor vehicle production alone we have lost about 1 million cars and 150,000 commercial vehicles. That is one of the reasons why our manufacturing industry is in such dire straits. When the manufacture of vehicles is reduced to that extent, the ripples spread throughout the whole of the United Kingdom. For example, there is no longer any demand for the textiles used in tyres. The effects are also felt by the manufacturers of components and of car batteries. Head-lining and upholstery from the textile industry are also affected. All those items have a cumulative effect.
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We have seen what has happened as a result of our membership of what was to be a buoyant Community. Our industry was supposed to grow. Much of the loss of British manufacturing has been taken up not by Japanese imports, but by imports from the Common Market, as the new car registrations will show.
We are in a very powerful position to organise quota arrangements to ensure that British manufacturing industry survives and is not swamped by Common Market products. The western European countries want to enter our market and we want to plan trade, so on that basis we can arrive at a suitable quota arrangement. After all, the Government have done it in arriving at the multi-fibre arrangement. There is not a Conservative Member of Parliament representing a textile constituency who objects to the multi-fibre arrangement. Some of them may object to some of the details, but they do not object to the MFA in principle. The only Conservative Members who object to the MFA are those who are comfortably away from the textile belt, but they should remember that the textile and clothing industries employ over 600,000 people directly and represent a very important section of our manufacturing industry.
The multi-fibre arrangement is a precise quota arrangement operated and negotiated by the EC with Third-world countries. The problem is that we cannot negotiate quota arrangements with other EC members because the majority of textiles that affect the United Kingdom come not from Third-world countries but from within the EC. There is a massive case for having trading and international relations with a much broader spectrum of countries than those within the narrow confines of the EC.
As the EC's budget resources increase and pressure grows, the power of an institution such as Parliament, which has been built by blood, sweat and tears over many years, is being gradually eroded. We can see that in the regulations and directives that are spewed out from the EC one after the other week by week.
We know that there has been erosion. Yet too many people shrug their shoulders and accept it as part of the status quo. The EC is not simply a trading arrangement; it is a political arrangement, a federal system, to convert a number of nations working together into a gigantic amorphous mass in which the major political and economic decisions are taken behind closed doors by the Council of Ministers.
There is no reason why nation states cannot come together and work in amity, extend relationships, and enter into quota arrangements. Indeed, people get on far better if they do, because the span of human understanding is limited. People have an appreciation, an understanding and acceptance of their position within a nation. If nations are combined into a great sprawling mass, such as the EC, people's sense of belonging disappears. They become more, not less, alienated.
The notion that people coming together in the EC has been some kind of bridge in international relations is not true. People feel isolated. The arguments over the budget demonstrate people not coming together but engaging in an unseemly scramble over the allocation of resources. It is far better to engage in international trade as a group of equal nations on a basis of trust and equality. It means that we must leave the Common Market and all this budgetary nonsense can be left behind.
8.12 pm
Mr. David Myles: I am glad, Mr. Deputy Speaker, to have the opportunity of catching your eye. I had thought that I might do so earlier but the hon. Member for Keighley (Mr. Cryer) was drafted in rather hurriedly by the Opposition to prop up some of their weak arguments and perhaps carry the batting on a little longer. That was demonstrated by the way he put his case. His arguments were unusually ill-rehearsed. He had to scribble down one or two things during the speech of my hon. Friend the Member for Harrow, East (Mr. Dykes). It is rather unfortunate that the Opposition are so short of speakers who want to oppose this motion that they had to resort to that subterfuge.
I have been in the Chamber for almost the whole of the debate. The only time that I had to leave was when my hon. Friend the Member for Southend, East (Mr. Taylor) was speaking. I should have liked to hear what he said, but I have heard him speak on this subject on many occasions so I may, perhaps, be allowed to guess at a little of what he said today.
I have been trying to find my place in this argument, because we have heard both extremes. Unfortunately, we have mainly heard from the Opposition that the only answer to our relationship with Europe is to leave. It is remarkable that the right hon. Member for Bristol, South-East (Mr. Benn) did not seem to go to that extreme. He seemed to be saying that although we should leave the present European Community, we should form another. I was listening with a certain fascination. That is not the right word, because a rabbit is fascinated by a ferret, and I did not feel fascinated like that, although there must be many people who are influenced in that way by the right hon. Member. I was interested in his argument because he seemed to say that he wanted a union of European Socialist republics. He said clearly that Europe would not be united unless it was Socialist. He did not mind giving up our sovereignty for a union of European Socialist republics but he did not want to give it up for a confederation of European democratic republics. It is amazing that the right hon. Member for Bristol, South-East should go on so much about democracy.
Opposition Members who go on about sovereignty—with the exception of the right hon. Member for Down, South (Mr. Powell) whose long-held views on this matter I respect—and who are terrified of giving it up still say, "Let us lay down our arms. Let us throw away sophisticated weapons." That is what the hon. Member for Keighley said. Surely that is a bigger surrender of sovereignty than any co-operation or confederation in Europe.
I ask the House to consider carefully the far greater dangers that there could be in giving away sovereignty in that way than there is in the European Community. We have not given away sovereignty. I do not want to give it away. I believe that the House and the country should have control of our legislation. We must recognise that if we live in a world where travel difficulties are always decreasing, we must expect certain disciplines. That is the right word to describe the things that we must pay attention to within the Community. They are a great discipline.
The other factor that has been ignored by the Labour party in the debate is that the disciplines apply not only to us but to the other side. In the common fisheries agreement, for instance, we were able to get a discipline
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imposed on the Danes so that they would not continue to rape the seas and destroy fish stocks. We could have had the control in no other way than by agreement. We achieved it within the EC. I congratulate my right hon. Friends on their tremendous hard work in achieving the agreement, which is one of the true common policies that we have had in Europe.
International agreements such as on the financing of the EC budget are not easily achieved and are even more difficult to alter if only one state in 10 wants such a change. The situation is not helped if, in the interim, there has been renegotiation and an agreement again reached, backed up by a referendum of the whole country. It is therefore pleasantly surprising that so much recognition of our budget contribution problem has been given by our Community partners.
Mr. Marlow: In Paris?
Mr. Myles: Most certainly. Otherwise, we would not have obtained the refund. Our Community partners would not have been willing to give the refund. Under the strict terms of the agreement, we were not entitled to the refund, but, because of an understanding of our problem, we obtained a substantial refund.
There is, however, a great need to find a longer-term acceptable solution, as my right hon. Friend the Minister suggested. I am sure that our Community partners are amenable and are anxious to find such a solution, unlike the Labour party. The only solution that it and, I am sorry to say, my hon. Friend the Member for Southend, East have is to abolish the EC—get rid of it, come out, give up, contract into our shell and not compete. That is what is argued so often from the Opposition Benches.
Mr. Arthur Lewis: I have not heard one hon. Member on the Labour Benches say what the hon. Gentleman alleges. I would like to have one person named.
Mr. Myles: I am interested to hear the hon. Gentleman complaining. I have heard people say continually in the debate that they wanted to come out of Europe or abolish the CAP.
Mr. Lewis: But who said that we should wrap ourselves up in a cocoon?
Mr. Myles: Ah, no. No one said that. As usual., the hon. Gentleman has scored a hit. I beg his pardon. But it is the logical implication that I draw from what is said.
Mr. Lewis: Sweden is not in the Common Market and it is not in a cocoon.
Mr. Myles: I am sure that the House would be surprised if I did not come quickly to speak of the CAP. It has been a remarkable Community achievement. Along with the CFP—we hope to see the benefits of that, too—it is one of the agreements that has worked. Not only has agricultural production increased—the hon. Member for Keighley was complaining about manufacturing production not increasing—but the percentage of the budget that the CAP has required has been steadily reduced, especially since this Government came to power.
The surpluses are constantly complained about. It is strange to complain about plenty. We are the only area that complains because we have enough food. The complaint would be far more valid if it were about shortages or the failure of the Community to provide food for the poor people of our countries as well as for the rich.
Mr. Marlow: My hon. Friend is a farmer and knows a great deal about agriculture. Could he tell the House about the long periods during which the British people suffered from deprivation of food, outside periods of war, when this country was not a member of the European Community or involved in the CAP?
Mr. Myles: Outside periods of war? I do not dwell on history. I want to move forward. I want to consider future supplies for the increasing population in this country and in the world. If my hon. Friend wants to study history, he should consider what Thomas Malthus said. I do not doubt that the surplus in western Europe would have existed even if we had never fashioned the CAP. The carrot of stable, guaranteed Community prices for some agricultural products—only a few—has done far less to increase production than the new agricultural technologies. There have been genetic improvements in seeds and livestock, an increased understanding of the benefits of fertiliser usage and increased use of herbicides. Many of those new techniques have been stimulated because the guaranteed prices have been set at levels lower than those to which input costs have escalated.
The hon. Member for Keighley spoke about motor cars and how we have lost ground in our markets for motor cars. I can demonstrate graphically how this may have happened under the 1974–79 Labour Government, when the economic management of his country was so disastrous that inflation, wages and everything else was allowed to roar on. In 1973 it took 22 5 cwt. hill calves to buy a British-made Ford 4000 tractor. In 1979 the same Ford 4000 tractor would have cost 39 of the same 5 cwt. hill calves. In 1973 it took one calf to buy 1,000 gallons of diesel; in 1979, three calves. That is how farmers in the Community and everywhere else have to pay their bills.
That is the reason for the surpluses. As input costs rose, the farmer had to increase his production to meet them, or go out of business. It may be that many Labour Members want farmers to go out of business. If that is what they want, let them say so clearly and not say, like the hon. Member for Newham, South (Mr. Spearing) who has now left the Chamber, that we could rely on the old-established deficiency payment system. A deficiency payment system that would maintain agricultural prices in this country at present levels would cost far more than our net contribution to the European budget.
Mr. Marlow: Not true.
Mr. Myles: That is a recognised fact. There are two deficiency payment systems within the CAP—one is the beef premium scheme and the other is the sheepmeat regime that we enjoy. I say "enjoy" because farmers get a reasonable return for their labours and the housewife can buy lamb at market price with no added value. It is commonly said that the sheepmeat regime has dragged down the price of other products such as pigmeat. There is no guaranteed price for pigmeat or many other agricultural products in the Community.
The problems in the CAP are with grain, milk and milk products. Many other areas should follow the example of the Aberdeen milk marketing board, which has increased its sales of liquid milk during the past year. Then we could get out of our surplus milk difficulties. When did a milkman ever come to the door and ask, "Can I give you better service? You are not taking so much milk this week." We need a little more marketing, which will be
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stimulated by the "Food from Britain" campaign that was launched successfully last week and that will help our surplus problems much more than rhetoric from Opposition Members.
It would be foolish to suggest that an easy solution could be found to the volume of expenditure on the CAP while at the same time adhering to the aims of the treaty of Rome. The hon. Member for Newham, South said that it would be difficult, and it is. Nor is it sensible to increase spending in other areas to try to balance our contribution. In that, I agree with some of my hon. Friends. Care should always be taken in spending public money. However, there is a danger that we shall procrastinate on this matter until a crisis occurs, believing that a solution can be found because of the motivation caused by that crisis. I urge my right hon. and hon. Friends to find a solution before the crisis develops, so that we are not forced into a funding position that we do not relish.
8.32 pm
Mr. Doug Hoyle: The speech of the hon. Member for Banff (Mr. Myles) was one of the most unusual that I have heard in the House. I did not believe that I would ever hear, from either side of the House, such a defence of the common agricultural policy, because it is almost indefensible. The hon. Gentleman's acceptance of a common fisheries policy that has given away Britain's rights was almost unbelievable. His speech moved well away from other speeches and from the subject of tonight's debate, which is the budget and how much longer we shall put up with paying an unfair amount.
As always, we have heard the same excuses about why we cannot get our just deserts from the Common Market. We are always promised another reform, but from what the Minister said it appears that budget reform will be even more difficult in future. Now the Minister says that we shall not be given a rebate as such but that the money returned will have to be earmarked for specific purposes. It will be impossible for us to cope with that because the majority of hon. Members wish to change the nature of the budget. Despite what the hon. Member for Banff said, we all wish to change the 65 per cent. spent on agriculture.
Following the advent of Spain and Portugal, we shall get a demand from those countries for more support for Mediterranean products. More money will be spent on agriculture rather than less. As long as we are faced with this dilemma, Ministers will always say, "We are fighting for British interests. We have not got them yet. Just leave it with us. Sooner or later we shall persuade these benevolent people in the other countries in the European Community, although they have a vested interest in retaining the CAP."
One can understand why France has a vested interest in agriculture, and why there is a demand to prop up the inefficient farmers in France and Germany. One can understand why they will in no way agree to any changes.
My hon. Friend the Member for Keighley (Mr. Cryer) said that this has been a bad deal for Britain. The whole of the EC has been a bad deal for Britain. Many hon. Members remember that we went in with a blowing of trumpets. It was said that membership could lead to a bonanza for this country and solve all our problems. Membership was not relevant to the problems we were facing at that time. When we examine the position we can see that we were bound to be put in a more unfavourable position than we were before.

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Before we joined the Common Market, Britain had the problem of trying to carry one of the major currencies of the world. That was not relevant to the problems faced by the other countries that had joined the Common Market. Our problems were not those faced by France, which was an agricultural country with some industry, nor were they the problems faced by that most efficient industrial machine, Germany, which was looking for new markets. Of course those countries welcomed us into the Community. They have exploited the situation.
Many people are not surprised at what has occurred. Many hon. Members argued against going into the European Community. In 1975, hon. Members on both sides of the House argued that Britain should come out when we were given the opportunity to do so in the referendum. We have been proved right in what we said on both occasions. The tragedy was that the British people did not listen to us when they had the choice.
There is no doubt at all about the unpopularity of the Common Market now. It would be wrong to lay all of our problems at the door of the Common Market. However, the Common Market has made our position far worse, especially as a manufacturing nation. It is in our interests to buy our food and raw materials in the cheapest world market. It is in our interests as a manufacturing nation to look to the world as a whole to get a market for our manufactures.
What has happened now that we are in the Common Market? Our trade deficit in manufacturing goods has been £15 billion in the past 10 years. That must be compared with our surplus with the rest of the world of £40 billion. How can joining the Common Market have been a good thing for us? The Minister tried to grapple with the cost of our being in the EC. It has been costing Britain £1 million a day.
My hon. Friend the hon. Member for Keighley was right to talk about the cost in relation to motor vehicles. I agree with him. There is no point coming to the House and talking about a plan for the import of motor vehicles and telling the Japanese to cut back on their imports when the real problem is imports from the EC, which far outnumber imports from anywhere else in the world. About 40 per cent. of our imports come from the EC. If we wish to protect our automobile industry so that it can have a chance to recover and make itself competitive with the rest of the world, we should be talking about global quotas and of restricting imports from all parts of the world, and that includes the EC. That will be impossible so long as we remain in the EC. The cost to us has been tremendous.
Mr Cryer: The proponents of free trade have long held that trade should not be planned or interfered with. That applies to the Common Market. In 1982, we achieved the lowest output of British motor vehicles since 1957. If we do not plan our trade we shall be virtually wiped out within the next 10 years.
Mr. Hoyle: I agree with my hon. Friend. The motor vehicle industry is reaching crisis point, just as the textile industry did, yet we are unable to deal with the crisis because we are members of the Common Market and, therefore, cannot deal with the biggest threat to our motor industry.
When we talk of the automobile industry, we are not merely talking of the automobile factories, but of the
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components industry that supplies them. In other words, we are speaking of some of our most basic industries. For example, many jobs in steel have been lost because of the import of motor vehicles. The textile industry has suffered just as much, as has the rubber industry, which is part of the components industry. We are, in effect, talking about a large part of our manufacturing industry.
Since 1979, our steel industry has lost 100,000 tonnes, because of steel imports or the import of products made of steel, such as motor cars. That is something that we cannot continue to accept, not if we are to remain a manufacturing nation.
The deficit between the export of goods to the EC and the import of goods from the EC is now about 30 per cent., or £900 million. In other words, about 750,000 jobs have been lost solely through our membership of the EC. Some people argue that jobs would be at risk if we pulled out of the EC, but they do not give the other side of the equation and say how many jobs have been lost because of our membership. We certainly know that our manufacturing industry has been unable to stand up to the competition that has resulted from the Common Market.
The hon. Member for Banff waxed eloquent about the CAP. He did not seem to think that there was anything immoral about the surpluses that have occurred, but rather that there was something good in creating them. It would be good if those surpluses benefited the world as a whole, but instead they often distort world trade. What has happened with sugar is nothing short of criminal. Such surpluses often help the Soviet Union. We certainly do not get the benefit. Last year, the EC spent £2·8 billion disposing of agricultural surpluses.
The hon. Member for Banff said that he spoke for the farming community, but he did not represent the farmers who took part in the Farmers Weekly poll, which showed that 78 per cent. of our farmers were worried by these wasteful surpluses. Such surpluses are a vast handicap to our people, who must put up with the high prices that result from both the CAP and the surpluses.
There has been a net export of investment away from Britain. We were promised that, if we joined the Common Market, investment would flow into Britain, but investment has left this country and has gone to the Common Market. We are far from being a beneficiary. That investment should have been taking place in Britain, because it was badly needed in manufacturing industry.
We are led to only one conclusion—that Labour has the right policy in relation to the EC. We have to decide that enough is enough and that we must come out of the Common Market. We have put it plainly at the forefront and I am hopeful that it will be stated in our campaign document and in Labour's manifesto that we shall withdraw. We shall try to do so in an orderly fashion. We shall try to do it with the least disruption to trade within the EC. Of course, it would be quite wrong if we did not say here and now that we shall be discussing withdrawal with our EC partners. We could talk for ever but talking cannot be allowed to go on for ever.
The first thing that we would try to do on coming to office would be to amend the European Communities Act 1972. We would ensure that the Act did not apply in this country. We would return to Britain the sovereignty that was taken away by our entry into the EC. The next step after the negotiations had taken place would be a complete repeal of the European Communities Act. Conservative Members have fairly asked what would be the result of

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withdrawal. I believe that we should not rejoin EFTA—although some Opposition Members would accept that policy—but should have the same type of relationship with the EC as America and Canada, which would mean applying a common tariff policy to the EC which, equally, would apply a common tariff policy to us. We would be the beneficiaries of such a policy.
If we withdrew and applied such a policy, it would not mean, as some critics of our policy have said, that we would stop trading with Common Market countries. Of course we would not. There is a self-interest involved. Can one imagine the French giving up a market for their agricultural produce? Can one believe that Germany would want to give up the market that it has developed for its manufactures? The difference would be, of course, that outside the EC we would be trading on more favourable terms with those countries. It would also give us the opportunity to develop our markets in the rest of the world.
I for one, wish to retain our close associations with the French Socialists and with the West German, Dutch and Danish Socialists. We wish to have a close liaison with them. We could gain many advantages from close association. We could discuss with the French some of the Socialist policies that they are trying to incorporate, albeit with difficulty in some cases, because of the membership of the EC. The French are having problems with their balance of payments because they are trying to apply Socialist policies while remaining in the EC. That is a lesson from which we should be able to benefit.
The Labour party policy would be popular with the British people. The British people as a whole believe that they were sold a false prospectus over the Common Market. They have seen jobs disappear and our steel industry decimated. They have seen our automobile industry going the same way as a result of imports. They have seen us pay far more for our food than we need to—all by reason of our membership of the Common Market. They will welcome a party that will give a lead not from a narrow, nationalistic angle, but from an internationalist angle. Britain can then trade freely with all the nations of the world. It could help the developing countries, which would benefit if we imported more food and raw materials from them. I want Britain to enter into a long-term arrangement with them that will benefit their economies.
While Britain remains a member of the EC, there will be no recovery of manufacturing industry. Instead, we shall see the death of one industry after another. It is not the time to argue about the budget—we must argue about the whole philosophy of remaining in the EC. Conservative Members who are highly critical of the Common Market are not prepared to support that argument. They believe that the EC can be reformed while Britain remains a member. I do not believe that.
It would be far more sensible and honest to tell our partners that we must leave the EC. It does not mean that we shall leave them altogether. We shall still co-operate with them, but on equal terms. The only way to do that is to withdraw from the EC after negotiation with our partners. We must do so in an orderly manner that does not destabilise our economy or have a bad effect on the economies of our partners. If we follow that course, not only shall we remain on friendly terms with them, but we
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shall continue our trade with them while we re-open our discussions and trade with the remaining nations of the world.
8.52 pm
Sir Brandon Rhys Williams: The Financial Secretary said that the vital issue was to find a lasting solution to the budgetary problems. I am sure that all hon. Members in this House agree with him, as do the elected representatives in Strasbourg.
The difficulty of Britain's budgetary position has been exaggerated by our uneasy relationship with the EC, which has been caused by reasons other than the imbalance of the budget. In recent years, the rates of exchange between Britain and the main manufacturing member states have been favourable to imports and unfavurable to our exports, with the result that we have not enjoyed the extension of our trade for which we hoped when we joined a large, expanding, free trade area.
Another reason for our uneasy relationship is the demands of the CAP. A number of hon. Members also find the constitutional issues extremely difficult, even after 10 years of membership. However, we signed a treaty that set up a common fund and also an elected body to supervise the way in which the bureaucracy which determines the spending of the common fund manages its affairs. Those who opposed the signing of the treaty are entitled to their view, which is that the solution to the budgetary problem is to withdraw from the Community. The Government take a different view, and I am glad that they do.
The Community is still holding to a target of 1 per cent. a year for its current account, which puts into perspective the real size of the budgetary problem. We are debating a sum of money in dispute in our current account which is only a fraction of 1 per cent. of the British tax base. Although that is a substantial sum, we must realise that the current account is not the only consideration.
The Government are right to look at ways of changing the nature of the sources of revenue from which the 1 per cent. is raised. However, I make no secret of the fact that I am convinced that it would be better for this country if we joined the member states that are seeking to enlarge the fund. The case rests on the basis of "the bigger the fund, the bigger the refund". Although it will be difficult to reform the common agricultural policy, if the fund were somewhat larger, there would be a more than proportionate expansion in the amount of money for the social and regional funds, from which this country stands to benefit so much.
I therefore welcome the Commission's initiative in its so-called green paper on exploring ways in which the budget might be expanded in the course of time. We shall not see a runaway expansion that will jeopardise the financial independence of Britain, France, Germany or other member states, but within the current account there is room for certain expansion. This country would stand to gain very much if that expansion were allowed. Therefore, I hope that the Government will keep in mind the possibility that that is the solution to our budgetary problem, which we shall find in the end.
I should like to say something about the reform of the CAP. The difficulty arises from historical conditions that go back to our decision to repeal the Corn Laws in 1846. The member states on the continent took a different view on the protection of their agriculture. There are, however, some suggestions one could make. We should press for

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forestry to be included in the scope of the CAP to a far greater extent than now. Of course I realise that forestry is not a current account but a capital account matter. We could place also more emphasis on the avoidance of waste, recognising that the CAP is primarily intended to provide a social fund to assist an industry which is grossly overmanned. We, too, have such industries and we need help with them. It is not a food policy or an economic policy, but a social policy. If the money that is spent in support of agriculture went directly to the people instead of towards sustaining a uniform price as the main aim of policy, it would achieve its objective in a better way. With the accession of new member states, that is the way in which the CAP will have to be reformed.
I would like to draw the attention of the House to the Commission's intentions in regard to the capital account, which stands in the long run to be far more significant for this country than anything in 1 per cent. or 1½ per cent. Europe, or whatever ends up on the current account. The Ortoli facility will be expanded by the Commission's current proposals. Is the Commission simply duplicating the work of the European Investment Bank? I do not think that it is, because the EIB is not short of funds for the sort of lending that it does, which is a scrupulous operation. The EIB has never had a bad debt. That implies that it takes on only a certain limited category of capital investment. The Commission is now proposing something different, but has not fully worked out its intentions.
In article 2 proposed in document 4348 on 13 January this year, it is stated that the council is to lay down the guidelines for eligibility for these loans. I have pressed Mr. Ortoli and have not had a satisfactory answer as to precisely what the Commission has in mind. The House should give its mind to it.
The real difficulty of industrial lending in Britain and other member states is not the shortage of funds but the anorexia which is afflicting our industries. They will not take advantage of the funds which are available for all sorts of reasons. How will the new fund overcome those problems? It has scope first where Government support is necessary or consequential expenditure is needed, for projects such as the Severn barrage. Presumably there will be planning and other considerations besides the generation of power on which the British Government should collaborate with the Commission. Secondly, it has scope where the project requires the co-operation of more than one Government. The channel link is an obvious example. There is also scope for the Ortoli facility where the timespan of risk is beyond the cover obtainable through normal market mechanisms. I am sorry to say that that applies now to most industrial restructuring plans, in both the private and the public sectors. Finally, there is scope for the Ortoli facility where there needs to be a stimulus or a subsidy element which has deliberately to be included in the loan as a matter of policy.
If we, as a Community, plan to spend more money, the Commission has to show that exenditure jointly incurred is likely to bear more fruit than expenditure of the same order undertaken by member states without the co-operation that is envisaged under the treaty. If nothing is to be gained by co-operation between the European democracies, the treaty has only a limited value. But I believe that the people who hold that Britain can solve all its economic problems entirely on its own are in a minority in this country, and will be shown to be in a minority when the election comes.
9 pm
Mr. Eric S. Heffer: Despite the fact that we are supposed to be discussing only the supplementary and amending budget No. 1 and the green paper, we have strayed well beyond those subjects, which is perfectly understandable when we realise that the budget is at the heart of the whole issue of the Common Market.
Before I come to the issues that are connected with the budget, I want to make one or two comments on what the Financial Secretary said. I thank him for giving publicity to the document that I and my hon. Friend the Member for Aberdare (Mr. Evans) issued last week. I hope that those right hon. and hon. Members who have not seen the full document will get hold of Labour Weekly of last week, which gives at least part of the document. Of course, the document is much more lengthy and contains many interesting details. The hon. Member for Harrow, East (Mr. Dykes) said that we should have serious and detailed arguments, and I quite agree. Any serious and honest person, after reading the paper, will agree that the case against being in the Common Market is proved, I would say almost beyond doubt.
I want to say a word about democratic Socialism. It is often implied by Conservative Members that we want to bring in some form of east European state, and I want to answer that charge briefly. Such charges, bandied about in the Mother of Parliaments, undermine democracy and democratic argument, democratic discussion and democratic institutions.
For the benefit of those Conservative Members who do not know what democratic Socialism is, I shall explain it briefly. It is the opposite of democratic centralism; that is the point. It is Socialism by the consent of the people through an elected Government, who can of course be thrown out at the next election if the people so desire. We are passionately concerned to uphold the basic democratic parliamentary system that we have in this country, and in which democratic Socialists believe in every other country. For the benefit of those who do not understand it, the first people who were imprisoned in the Soviet Union during the Bolshevik revolution were democratic Socialists. The first people who were put in prison in Hitler's Germany were democratic Socialists. We believe in a pluralistic democratic system. I want to put that on the record, because hon. Members and others often make slanderous statements which, in my view, do great harm to democracy in this country.
In passing, I suggest that the Financial Secretary to the Treasury and the hon. Member for Southend, East (Mr. Taylor) seem to get their ideas of Socialism more from the "The Servile State" by Hilaire Belloc and the books of Edward Bellamy than from genuine Socialists such as William Morris and Keir Hardie. I suggest that they read the last two authors and, if they do so, it will be with great effect.
There are two aspects of the supplementary budget. First, that Britain is to receive compensation is hailed by the Government as a great victory, as we have heard so often this afternoon. It is a tune which we have heard before. We heard it about the fisheries agreement. What has happened is that Britain has lost far more overall than it has gained because, first, there is no guarantee whatever for the future. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) spelt out in detail exactly what can happen if there is no agreement in future. It is

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interesting to consider that we start from a completely false premise on the fisheries agreement. We make a little gain by a concession but have done so after having given everything away, and that is hailed as a great Government victory.
Secondly, the Government have said nothing about the cocky attitude of the European assembly which has flexed its muscles and used what powers it has to strengthen its position and is now demanding greater powers. The Commission is proposing that the assembly should have a bigger role in future. What is slowly but surely happening is that, by stealth, the assembly is being transformed into a real Parliament with real powers at the expense of the House and, therefore, of the British people.
In a statement made on 7 February at Brussels, the Chancellor of the Exchequer said:
"To begin with the 1982 supplementary budget, I naturally regretted the Parliament's decision last December. That an agreement reached after so many months of painful negotiation in the Council should be thrown out at the final stage came as a considerable shock."
It certainly did not come as a considerable shock to many hon. Members, but it shows that the Government were shocked. He went on to say:
"The Council has responded positively and constructively on all these points in the recent dialogue and the new draft budget. It has travelled a remarkable distance in a short time. I hope very much that Parliament will now respond in a similar spirit of flexibility and co-operation".
We heard from the hon. Member for Scarborough (Sir M. Shaw), who knows a great deal about this matter, that there was conciliation by consent. I would say that the Parliament, or so-called Parliament—the assembly—used what powers it had, flexed its muscles, in order to ensure that it developed further powers in future. It will use those powers each time as effectively as it can at the British people's expense. If that process is not reversed, sooner or later we shall find that increasingly important decisions affecting our people will be taken at Brussels or Strasbourg and, as we were warned by some when we entered the EC, we shall become a sort of regional authority which inevitably must look to Brussels for guidance. Some may argue that that is an exaggeration. I shall be examining it when I come to discuss the green paper. It proves beyond doubt the sort of future that some within the Community envisage for us. They want to see a federal Common Market—an EC with an enhanced Parliament that has the powers, and what they will be spent on.
I come back to the supplementary budget. Following the hours devoted to it and the compromise reached on 25 and 26 October by the Foreign Ministers, the Commission proposed in a document that the United Kingdom should receive the whole of the 1982 budget refund entitlement. Despite all the work of the Foreign Ministers, this was rejected by the European Parliament which later agreed new proposals by 183 votes to 33 with five abstentions. Those proposals gave Britain the compensation we had originally proposed but with strings attached, which mean that the Parliament decides how the rebate or part of it will be spent. I believe that I heard an hon. Member say "democracy".
Mr. Cryer: It was the SDP—the hon. Member for Farnworth (Mr. Roper).
Mr. Heffer: It seems funny that, when the Council of Ministers has agreed on an amount, it is overthown by the
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Parliament which is to decide how the British Government will use the money. It is not simply a matter of telling the Government how the money will be spent. It is telling the British people. Barbara Castle, the leader of Labour's delegation in the European assembly, was right when she said:
"The compensation to the United Kingdom is inadequate and the insertion of a part of the common energy scheduled measures is not necessarily in line with United Kingdom priorities." Barbara Castle, speaking on behalf of the Labour party, put the case absolutely correctly.
We are now paying into the EC budget the second highest amount of any EC country. The Government's White Paper on public expenditure still envisages a net payment of £680 million. It could be more. On 2 February, The Times stated:
"That rough assumption of a two thirds refund may prove over-optimistic in the face of the hard negotiating to come with Britain's EEC partners, and on the big agriculture element in the EEC budget the White Paper concedes that Community spending on agriculture, and Britain's corresponding contributions, will continue to rise."
Sir Michael Shaw: The hon. Gentleman argues that it is presumptuous of the European Parliament to seek to deny the passage of the 1982 supplementary budget because it has been fully thrashed out by the Commission and the Council. I fail, therefore, to understand why the Labour Government in 1975 agreed a new amendment to the treaty whereby the budgetary authority of Europe was to consist in the future of both the Council and the Parliament acting together. In 1977, all members of the Community agreed to that change in the treaty. What is the purpose of having a joint budgetary authority if the two members of it are not both consulted and do not get together in a genuine discussion about what should be done?
Mr. Heffer: When we discussed direct elections and the establishment of a European assembly, many Labour Members and, I am sure, some Conservative Members believed that sooner or later that assembly would be given increased powers and we would become a sort of local Parliament without power to control our future. We made our position clear at the time. The Labour party opposed the whole basis of the assembly, and we wanted Britain to come out of the Community.
My right hon. Friend the Member for Stepney and Poplar made his position clear earlier, and I make my position clear now.
Mr. Ridley: That is not quite good enough. The hon. Gentleman was a member of the Administration who allowed this to go through and he remained a member of that Administration—not for ever, I know, but he did not resign on this issue. Why is he raking over this ground as though he had not approved of it when he was in office?
Mr. Heffer: The Financial Secretary to the Treasury ought to know what goes on in the House. I left the Labour Government on the question of the Common Market. If the right hon. Gentleman has not caught up with that yet, he is a few years out of date. He clearly does not know what went on at that time.
Our contribution to the budget is second only to that of West Germany. We have heard much about the money that we get back through grants. One of my hon. Friends listed a number of regions that have received grants. Merseyside receives grants and loans from time to time, but we are

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merely getting back the money that we have paid in. The figures show that we get back far less than we put in and in some places we may be getting money that we do not want and which could be better used in other places if we had control over that money.
Mr. Teddy Taylor: Did the hon. Gentleman see the recent helpful reply from the Treasury that explained that every pound of aid that the EC gives to Merseyside and other areas costs the British taxpayer £1·71?
Mr. Heffer: I am grateful for that helpful intervention. If any other hon. Member wishes to intervene with similar statistics I shall be happy to allow him to do so.
The decision of the European Parliament can be summed up as meaning that there will be a rebate for Britain this time, but never again. That needs to be examined with some care. We know that the Government want to find a solution to the budget problem. They want to find it within the EC and we want to find it outside the EC.
The European assembly's resolution on the supplementary budget was described as a
"first step towards more ambitious objectives for the Community".
On 8 February this year, Mr. Gaston Thorn, the President of the Commission, spoke to the European Parliament. Every hon. Member ought to study that revealing speech carefully. Mr. Thorn spoke about the need to fight unemployment and admitted that the Community had totally failed in that respect. At the end of his speech he turned to the future of the EC's finances, argued that the Community required more finances and said:
"The limit on our own resources has almost been reached … Why does the Community need new own resources? The answer is simple. Even if we can achieve savings thanks to tighter management of Budgetary Funds, and funds allocated to the Common Agricultural Policy in particular, new own resources will be needed to bring Community intervention to the critical level at which it will have a real impact and provide the stimulus and guidance we expect of it."
I am sorry to quote at such length, but this is an interesting and important speech. He continued:
"In addition to this institutional constraint, there is the Council's insistence on unamity on every question, even where the basic legislation does not require it. It is high time we turned our backs on quarrels about the Luxembourg compromise which has been increasingly detrimental to the Community of Nine and the Community of Ten and which, if the practice it instituted were to persist, would completely paralyse a Community of Twelve. It is no longer acceptable that Community decisions, when they finally emerge, can only be described as 'too little too late'."
That is clearly a call to get rid of unanimity and have majority decisions. He continued:
"I do not propose to go through the details here. Suffice it to say that the Council, which is to begin considering our proposals, shortly, is asked to delegate more executive tasks to the Commission and to accept that there should be more majority decisions. These decisions would require the formal assent of this House, which would thus be more closely involved in the Community legislative process."
That is what Mr. Thorn said, and there is the great Social Democrat, the hon. Member for Farnworth (Mr. Roper), who is so democratic that he changed his party without a vote, nodding his head in agreement. He does so because he, like all the other Euro-fanatics, in the House and outside, wants a federal Europe and wants to get rid of the conception—
Mr. Ridley: It is a free country.
Mr. Heffer: Of course it is a free country, but in the process of the so-called freedom the powers and rights of the House of Commons will be destroyed. That is what the hon. Member for Farnworth wants.
There are four financial proposals in the green paper. There is a suggestion of an increase of the 1 per cent. in the VAT payment. The hon. Member for Harrow, East asked what was wrong with that, and other hon. Members have said much the same. What is wrong with it is that VAT is a regressive kind of tax that hits ordinary working people harder than anyone else. We opposed it for those reasons and we would oppose it again.
Let us take the so-called progressivity. This would relate each state's contribution to the EC budget more directly to its prosperity as measured by GDP, and could be done by VAT adjustments or taxation. There are three other proposals, all of which were outlined earlier. All these proposals in the green paper in the long run could and, I agree with the right hon. Member for Down, South (Mr. Powell), would, mean an increase in the taxation of our people.
The Commission is suggesting a long-term solution but at further cost to the British people. The fishing agreement is part of that. We have been discussing the CAP and much has been said about it. However, as far as Gaston Thorn and the majority of the countries in the EC are concerned, the CAP is sacrosanct. As Gaston Thorn said in his speech:
"There can of course be no compromise on the fundamental principles of the Common Agricultural Policy."
If that is so, I would assume that the CAP financing would, despite the proposals, continue largely as before. That would mean high prices for the housewife for her foodstuffs.
The proposals for the rote of the European Parliament are included in the green paper:
"Any new development of the Community's financing system should, in the Commission's view, reflect and enhance the role of the directly elected European Parliament as one branch of the budgetary authority."
I could go on giving quote after quote. They all add up to enhanced powers for the European Parliament, and I regard them as being very serious.
The debate has been wide ranging and I want to end by looking very briefly at what 10 years' membership of the Common Market has meant for us. I want to consider the so-called gains that we have achieved as a result of our membership.
Unemployment in Britain has increased by 2·5 million since we entered the Common Market. In manufacturing industry alone, unemployment has more than trebled. In the steel industry it has increased fivefold. Industrial output has fallen by 16 per cent. The annual output of motor vehicles has fallen by almost 1 million. Our accumulated trade deficit in manufactured goods with the EEC over the 10 years amounts to over £15 billion, whereas our trade surplus with the rest of the world exceeds £40 billion.
Since we joined the Common Market, we have paid not £1 million a day but—according to figures that the hon. Member for Southend, East received yesterday—more than £1 million a day into the EC budget. Our consumers have suffered a decade of high food prices under the CAP policy.
In view of the statement made by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), it is necessary, in order to clarify the position, to see where the Labour party stands on the question of withdrawal from the

739
EC. The Labour party conference on three occasions has made it absolutely clear that it will take this country out of the Common Market. In addition, the TUC Economic Review 1983, published a week ago, says:
"A further set of constraints is imposed by our membership of the EEC … It is for that reason that the TUC is campaigning for the UK to withdraw from the EEC."
So it is not only the Labour party that wishes Britain to come out of the European Community. The TUC is also against our continued membership and is arguing that we should withdraw.
How should we seek to achieve our objective? As my hon. Friend the Member for Warrington (Mr. Hoyle) said, we shall do it in an orderly way, by proper negotiations, and not by threats or high-handed action. When we have a Labour Government, we shall immediately begin negotiations—[Interruption.] The British people, at the next election, will give Conservative Members a real political bloody nose, and there is no doubt about that. We shall have a Labour Government after the next general election. When we get it, we shall begin negotiations with the EC countries. We shall agree on a timetable and we shall issue a White Paper.
We shall immediately repeal vital parts of the European Communities Act 1972, which would mean that EC law would no longer be applicable to this country. We should then carry out the main negotiations which would culminate in the repeal of the 1972 Act and the formal abrogation of the treaty of accession. That is the way in which we intend to leave the European Community. That is the Labour party's clear position. There is no dubiety about it. I want to make that absolutely clear to the House and the country. The Labour party believes that in the long run we cannot solve the problems relating to the CAP, the budget or other matters without making a clear statement of that kind and without leaving the European Community.
9.30 pm
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind): This debate has, perhaps not surprisingly, ranged over a number of issues not directly related to the budget. It might, therefore, be appropriate to respond to certain of those points first.
The right hon. Member for Down, South (Mr. Powell) raised the fact that some members of the European Parliament are seeking to have discussed within it matters involving Northern Ireland. He asked the Government to respond by making it clear that we could not support any such proposal and that we should not consider it to be within the European Parliament's competence. I am happy to give him that assurance, which, I believe, will be welcome also to hon. Members on both sides of the House. I understand that no firm decision has yet been made on that request, but that a committee of the European Parliament will discuss it later this week. We have no doubt that a domestic matter such as that does not fall within the European Parliament's competence, and that it would be inappropriate for it to be discussed. Of course, we have no formal means of preventing the Parliament discussing whatever it wishes. However, the practical consequences of any such discussion will be completely negative, and it is desirable that the matter be considered in that light.
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The hon. Member for Liverpool, Walton (Mr. Heffer) and other hon. Members asked whether the proposal in the green paper that has been issued by the Commission which calls for an increase in the European Parliament's powers commands the Government's support. My hon. Friends the Members for Saffron Walden (Mr. Haselhurst), Aberdeenshire, West (Sir R. Fairgrieve) and Harrow, East (Mr. Dykes) said that they would have some sympathy with the proposal. As has been said on a previous occasion, the Government do not see any reason to increase the European Parliament's powers. That proposal does not find favour with the Government.
Perhaps one of the most curious contributions to the debate was the speech by the right hon. Member for Bristol, South-East (Mr. Benn). He was asked why Socialist and working-class people in this country had to treat the Community as an enemy whereas Socialists in West Germany, France and other countries of the Community could treat it as a friend and something with which they could work and accept as being within their interest. His response was that, because they had lived under Nazism and Fascism, their attitude towards the Community was different from ours. The right hon. Gentleman nods his head. That is an extraordinary condemnation of the contemporary Labour party. It believes that only Socialists who have experienced Nazism and Fascism can work together within the European Community rather than try to disrupt it.
Another even more remarkable observation by the right hon. Member for Bristol, South-East was that if a Labour Government were returned to office after the next election, they would have the power—presumably he would wish it to be used—to use the Royal Prerogative to abrogate the treaty of Rome. He put that as one of the first actions of such a Labour Government. We are aware that the Labour party and the right hon. Gentleman, having once burnt their fingers with a referendum, no longer wish to consult the British people. We now find that they do not even wish to consult Parliament. This great tribune of the people wishes to use the Royal Prerogative for that purpose.
Mr. Benn: The hon. Gentleman should consult the record of his own party. The Prime Minister who took us into the Common Market stood on a manifesto that he was committed to negotiate—nothing less, nothing more. He then signed the treaty of accession, without publishing it, using prerogative powers. It was my hon. Friends and I, and the Labour party of which I am a member, who provided the referendum, having said throughout that this matter must be decided by an election or a referendum. The Labour party will be committed by its manifesto to withdraw and the British people will vote on withdrawal in the election which brings back a Labour Government later this year.
Mr. Rifkind: The right hon. Gentleman doth protest too much. Great democratic Socialist that he is, he has shown himself today to be a great admirer of the Royal Prerogative. That is contrary to the Socialist pretensions he has applied on other occasions.
I have studied the motion and the Opposition amendment. I have also listened with care to the speeches of the right hon. Member for Stepney and Poplar (Mr. Shore) and of the hon. Member for Walton. I did not expect to hear congratulations to the Government on what they have so far achieved in reducing the burden of the

741
European budget. I am well aware that comparisons between what we have achieved and what the Labour Government managed to produce will not find favour with Labour Members, but they cannot avoid the fact that during the five years of the Labour Government not one single penny was refunded to the British taxpayer—not one solitary ecu was repaid to the British Treasury. That was the achievement of the Labour Government of which those right hon. and hon. Gentlemen were members.
In 1975, the attempt to renegotiate the terms of our membership of the Community did not in any way remedy the problem. When this Government came to office in 1979 there was not even an attempt being made at that time formally to renegotiate the burden of the European budget. Yet right hon. and hon. Gentlemen have the sheer effrontery to attack this Government. During the last two years of the Labour Government, Britain's contribution to the European budget was no less than £1,580 million, and not a single penny had been refunded. That can be compared with the first three years of this Conservative Administration, when we have had no less than £2,000 million refunded. One can sum it up by saying that the Labour party talks about budget reform, but the Conservative Government practise it and will continue to do so.
I said that the right hon. Member for Stepney and Poplar was vague in his comments about the budget and how he would wish to see it altered. He has been vague about a number of other matters, too—in particular, the relationship that he would like to see between Britain and the Community in the event of Britain's withdrawal. He does not want to see a free trade relationship continuing between Britain and other members of the Community, but he has equally professed himself to be no full-blooded protectionist. We are entitled to wonder where he exists in the spectrum.
I am reminded of a doggerel written 70 years ago about a politician in a similar situation:
"I'm not for free trade and I'm not for protection,
I approve of them both and to both have objection.
In going through life I continually find
It's a terrible business to make up one's mind,
So in spite of all comments, reproach and predictions
I firmly adhere to unsettled convictions."
That would be a suitable epitaph for the right hon. Member for Stepney and Poplar, after the view that he has taken.
Several hon. Members referred to the recent decision by the European Parliament not to approve the original draft supplementary and amending budget. Like other hon. Members, the Government regretted that decision by the European Parliament. Indeed, it was an ironic decision for it to take. We understand that its main motivation was to draw to the attention, in particular, of the Council of Ministers, its disapproval of one interim solution after another and the imperative need for a long-term resolution of the problem.
When we consider that the Government hold this objective more than any other, it would have been somewhat ironic if the United Kingdom had suffered most as a consequence of that decision by the European Parliament. In the event, both the Council of Ministers and the Commission insisted that the United Kingdom would not suffer as a consequence of that decision, and the European Parliament approved the subsequent budget that was put before it.
In one important way, that incident may have been beneficial. It focused the attention of the Council of
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Ministers on the importance attached to a long-term reform of the budget. It emphasised the fact not only that the United Kingdom believes that existing arrangements are unsatisfactory, but that there is broad support within the European Parliament from parliamentarians of other countries who realise that some resolution of this difficulty by long-term restructuring is essential. That can only be beneficial to this country.
A number of hon. Members referred to the so-called green paper tabled by the Commission, perhaps partly in response to the growing feeling on this subject. That document is very important. For the first time we have a review of the revenue as well as the expenditure aspect of the European budget. As the Government have emphasised for some time, we must balance those considerations if we hope to resolve this difficulty.
It is too early to form any definite views on the details of the green paper, which has not long been published and which is composed largely of ideas rather than firm proposals. The Commission has said that it wants to await the response of the Council of Ministers, the European Parliament and other interested bodies before making any firm proposals either to the Council of Ministers or to the European Parliament.
Mr. Heffer: Will the hon. Gentleman give us a firm assurance that if the European Parliament makes it clear that it will not agree in future to Britain having some temporary ad hoc arrangement, unless it gets the powers suggested in the green paper and also outlined by Gaston Thorn in the same process, the Government will not agree to those powers? If it insists and we are faced with a huge bill, will the Government then refuse to pay it and perhaps do the sort of thing that was suggested by the hon. Member for Southend, East (Mr. Taylor)?
Mr. Rifkind: The hon. Gentleman does the Commission a disservice. Nowhere in the document to which he referred does the Commission suggest that an increase in the powers of the European Parliament should be a necessary and inescapable part of any package that might be agreed.
Mr. Heffer: Yes, it does.
Mr. Rifkind: If the hon. Gentleman reads the document, he will see that the Commission indicates its preference that consideration should be given to increasing the powers of the Parliament. I have said that the Government do not share that preference, and the Commission does not suggest that that should be a necessary precondition of any resolution of the budgetary problem.
The European Parliament has not ruled out the idea of giving support to further interim solutions if there is a clear sign that the Council of Ministers and the Community are moving in a realistic way towards a resolution of the long term budgetary problem.
It is clear that any satisfactory attempt to deal with this problem must approach the expenditure as well as the revenue side of the European budget.
Some points have been made about expenditure. My hon. Friend the Member for Fareham (Mr. Lloyd) asked about the expansion of the regional and social funds and other non-agricultural parts of the Community budget. He asked whether it was sensible or wise, or the Government's policy, significantly to seek to increase the

743
Community's overall expenditure as a means of helping to rectify the budget problem. While we certainly see a role for expanding the non-agricultural element of the Community's expenditure to get a more sensible balance within the budget, we would not suggest that that should be brought about by a significant or dramatic increase in the total expenditure of the Community. We are talking about a balance within the Budget and not the total resources available to the Community.
The development of non-agricultural expenditure can play an important part in achieving a balance, although I put it no higher than that. At present, Britain receives about 29 per cent. of expenditure on the social fund, which is desirable. We have said that we shall support proposals for selective assistance to high technology industries, information technology and the development of energy policies. The United Kindgom has also taken a lead in the promotion of a Community strategy on the coal industry. Progress can be achieved in several important areas. I assure my hon. Friend the Member for Southend, East, (Mr. Taylor) and other hon. Members who have commented on this matter, that it is neither realistic nor desirable to propose that the non-agricultural expenditure of the Community can be so expanded as to resolve the major imbalance that now exists. We must consider these measures as only a contribution towards that problem.
Mr. Marlow: Will my hon. Friend agree with me that there is no justification whatever for any increase in Community expenditure at a time when the Government are trying to reduce their own expenditure?
Mr. Rifkind: I shall deal with own resources later, but my hon. Friend will appreciate the fact that, even without any change in the formal structure of the Budget arrangements and finances, the 1 per cent. ceiling on VAT has not yet been reached, and there is still buoyancy in the existing arrangements without formal new decisions being taken.
There is broad agreement in the House that reform of the CAP is necessary, but not because we do not recognise that the policy has provided some advantages. It is worth noting that the increase in agricultural prices during the past 10 years has been lower than the rate of inflation, and the proportion of agriculture as compared with the overall size of the Community budget has reduced during that period from about 80 per cent. to about 65 or 66 per cent. Clearly, the uneconomic and expensive surpluses that have been generated are not in the interests either of this country or of the Community. They must be a major objective of reform.
The green paper produced by the Commission refers, significantly for the first time, to the need for changes in the revenue structure of the Budget. The document puts forward some ideas about which the Commission is thinking. My right hon. Friend the Minister of State is attending a meeting of the Council of Ministers in Brussels today, where preliminary discussion is taking place on such matters. He intended to try to establish with greater clarity the ideas that the Commission is considering. However, I emphasise the fact that the Government's approach is very much that outlined by my right hon. and learned Friend the Chancellor of the Exchequer in his speech at The Hague in June 1981. He said that if we are to move on this matter, we must find a proper balance
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between the net receipts and the net contributions in the Budget to ensure that, if progress is to be made, we must acknowledge the relative prosperity of member states and their populations.
We do not suggest that there must be a mechanical formula to guarantee that each member state receives back exactly the sum that it contributes. I doubt whether that is possible, even if it were desirable. However, as my right hon. and learned Friend said, if there is to be an element of redistribution in Community expenditure, any net transfers should be on the basis of movement from the more prosperous to the less prosperous members of the Community. It is essential that the criteria applied should be defensible and logical. I hope that that will command support on both sides of the House.
Mr. Shore: The hon. Gentleman is speaking with great authority on behalf of the Chancellor of the Exchequer, whom we are now pleased to see in his place. Is it still the policy of his right hon. and learned Friend and that of the Government to achieve a broad balance in Britain's budget contribution with the EC? If so, over what time scale does he intend to achieve it?
Mr. Rifkind: It is desirable to achieve a broad balance. The right hon. Gentleman will be well aware that the Chancellor of the Exchequer and the Prime Minister have stated that the Government would not object if the result of these procedures and negotiations was a modest net contribution by the United Kingdom. We maintain that the existing arrangements are unacceptable. Any long-term solution should be based, if there is to be a net transfer, on account being taken of the relative prosperity of the individual member states of the Community.
My hon. Friend the Member for Northampton, North (Mr. Marlow) asked about own resources and whether the Government could support any increase in the own resources available to the Community. Within the existing 1 per cent. ceiling on VAT there is an element of buoyancy which enables some growth in expenditure to take place and some flexibility to be applied without any formal change in the revenue-raising powers that the Community has at its disposal.
The Government have not changed their view. No argument can be put forward with any conviction that it is necessary or desirable to increase the own resources of the Community.
I say to my hon. Friend the Member for Scarborough (Sir M. Shaw) that the Government do not believe that the likely accession of Spain and Portugal to the Community, which we hope will happen in the relatively near future, will materially change own resources. The Government do not approach this question in a dogmatic or ideological way. We maintain that at present, for pragmatic reasons and for reasons relating to the natural buoyancy of existing arrangements, it is not necessary to contemplate a change of that kind.
The hon. Member for Walton mentioned his great pride in the new document on the Labour party's policy on the Common Market. This is a document to which I and my hon. Friends have been giving some attention. The front page is quite interesting. It is called "Labour's Socialist Approach". It says that it is issued on behalf of the hon. Member for Walton and the hon. Member for Aberdare (Mr. Evans). I was puzzled and curious about the reference to the document being issued on their behalf. I presume

745
this was as a result of the determination of their research officer to show that he had written it and not the hon. Gentlemen. The document is not on behalf of the Labour party, the Opposition Front Bench nor the Shadow Cabinet, but only on behalf of those two hon. Members. Perhaps this is another example of the precedent that the right hon. Member for Stepney and Poplar referred to, of a potential agreement to differ in that the remainder of the Opposition Front Bench wish to reserve the right to agree or disagree with such aspects of this document as take their fancy.
Mr. Heffer: The hon. Gentleman is making a lot out of nothing. My hon. Friend the Member for Aberdare (Mr. Evans) and myself are Front Bench spokesmen. The statement is similar to the one issued by my hon. Friend and his team. It is the views of the Front Bench spokesmen of the Labour party, and is totally in line with Labour party policy.
Mr. Rifkind: The hon. Gentleman is correct in saying that the hon. Members are Front Bench spokesmen. This document is not issued on behalf of the Shadow Foreign Secretary. He is a Front Bench spokesman with some interest in the European policy of the Labour party. He has not even graced us with his presence this evening. Perhaps he is in Bermondsey. I would not advise my hon. Friends to read this document. I would not advise Opposition Members to read it. It is one of the most turbid documents one could hope to find. It is one of those documents that, once it is put down, is difficult to pick up again.
In its conclusion is a reference to the Labour party being an internationalist party. You could have fooled me, Mr. Speaker. Its belief in internationalism leads it to wish to break up the best example of international co-operation in western Europe. They go on to say:
"We hope that eventually the whole of Europe will be under a democratic socialist system."
It seems that President Mitterrand of France, Mr. Papandreou of Greece and Senor Felipe Gonzales of Spain have not been persuaded that the break-up of Western Europe is necessary to achieve that objective.
The most interesting statement of all is contained in the conclusions, which state:
"We believe in a wider European unity."
I am happy to accept that the hon. Member for Walton is a model European—after all, what is a model but a small imitation of the real thing!
This extraordinary document also states that, after the next Labour Government have withdrawn Britain from the Community, they do not wish to indulge in a siege economy. We are told that the policy of the next Labour Government would be to impose a common external tariff on imports from the Community. It is suggested that this should be a tariff of about 9 per cent., but the hon. Gentleman and his hon. Friend have the nerve to go on to say that they do not expect retaliation, despite the fact that 43 per cent. of our exports go to the Community, whereas only 7 per cent. of Community exports come to the United Kingdom. In those circumstances, retaliation is not only likely but almost inevitable and would be greatly to the disservice of this country.
The hon. Gentleman also said that after withdrawal from the Community the options available to the United Kingdom would be severely limited. He does not anticipate that we should contemplate any agreements with the Community that would inhibit the freedom of a
746
Socialist Government to impose Socialist policies on the United Kingdom. He goes on to state that the power to impose Socialist solutions
"amost certainly excludes rejoining EFTA"
and excludes negotiating
"a bilateral preferential trading agreement with the EEC".
Even Communist Romania and Yugoslavia have bilateral preferential trading agreements with the Community. It seems that the hon. Gentleman's objective is a relationship between Britain and the Community, of which it is now a member, of even less significance than that shared by the Communist states of eastern Europe.
The truth is that the Labour party's whole policy on the Community has become a complete shambles. Its one fixation is Britain's withdrawal from the Community. It has not the faintest idea of what that will lead to or what relationship Britain would then have with the rest of the Community. Indeed, I am reminded of the scathing remarks that Voltaire made about the Opposition of his day 200 years ago, when he said that the Opposition was like a eunuch—it knows what it wants, but it does not know how to get it.
That summarises a Labour party that has rejected the results of the referendum and the trading benefits for our exports to the Community that have developed over the past 10 years. It represents a Labour party that has produced proposals that bear little relationship to the true needs of the United Kingdom and that ignores the fact that the investment that we have achieved over the past 10 years, particularly investment from the United States and Japan, would in all certainty not have come here—
Mr. Heffer rose—
Mr. Rifkind: I shall not give way. It ignores the fact that much of the investment that has come to the United Kindgom over the past few years would not have come but for our membership of the Community.
I understand that a survey this month has shown that the United Kingdom was the first choice for investment by United States electronics companies, half of which said that they would reconsider if Britain were outside the European Community. One quarter of those companies flatly said that they would not have set up in the United Kingdom but for our membership of the Community.
I have no hesitation in rejecting this foolish and absurd amendment, and I invite the House to vote for the Government's motion.
Question put, That the amendment be made:—
The House divided: Ayes 220, Noes 314.

Division No. 73]

[10 pm

AYES

Adams, Allen

Buchan, Norman

Allaun, Frank

Callaghan, Rt Hon J.

Anderson, Donald

Callaghan, Jim (Midd't'n & P)

Archer, Rt Hon Peter

Campbell, Ian

Ashley, Rt Hon Jack

Campbell-Savours, Dale

Ashton, Joe

Cant, R. B.

Atkinson, N. (H'gey.)

Carmichael, Neil

Barnett, Guy (Greenwich)

Carter-Jones, Lewis

Barnett, Rt Hon Joel (H'wd)

Clark, Dr David (S Shields)

Benn, Rt Hon Tony

Clarke, Thomas (C'b'dge, A'rie)

Bennett, Andrew (St'Kp't N)

Cocks, Rt Hon M. (B'stol S)

Bidwell, Sydney

Cohen, Stanley

Booth, Rt Hon Albert

Coleman, Donald

Boothroyd, Miss Betty

Concannon, Rt Hon J. D.

Bottomley, Rt Hon A. (M'b'ro)

Cook, Robin F.

Bray, Dr Jeremy

Cox, T. (W'dsw'th, Toot'g)

Brown, Hugh D. (Provan)

Craigen, J. M. (G'gow, M'hill)

Brown, R. C. (N'castle W)

Crowther, Stan

747

Cryer, Bob

McCartney, Hugh

Cunliffe, Lawrence

McCusker, H.

Cunningham, Dr J. (W'h'n)

McDonald, Dr Oonagh

Dalyell, Tam

McElhone, Mrs Helen

Davidson, Arthur

McGuire, Michael (Ince)

Davies, Rt Hon Denzil (L'lli)

McKay, Allen (Penistone)

Davis, Clinton (Hackney C)

McKelvey, William

Davis, Terry (B'ham, Stechf'd)

McMahon, Andrew

Deakins, Eric

McNamara, Kevin

Dean, Joseph (Leeds West)

McTaggart, Robert

Dewar, Donald

McWilliam, John

Dixon, Donald

Marks, Kenneth

Dormand, Jack

Marshall, D (G'gow S'ton)

Douglas, Dick

Marshall, Dr Edmund (Goole)

Dubs, Alfred

Marshall, Jim (Leicester S)

Duffy, A. E. P.

Martin, M (G'gow S'burn)

Dunnett, Jack

Mason, Rt Hon Roy

Dunwoody, Hon Mrs G.

Maxton, John

Eadie, Alex

Maynard, Miss Joan

Eastham, Ken

Meacher, Michael

Edwards, R. (W'hampt'n S E)

Mikardo, Ian

Ellis, R. (NE D'bysh're)

Millan, Rt Hon Bruce

English, Michael

Miller, Dr M. S. (E Kilbride)

Ennals, Rt Hon David

Mitchell, Austin (Grimsby)

Evans, Ioan (Aberdare)

Molyneaux, James

Evans, John (Newton)

Morris, Rt Hon A. (W'shawe)

Ewing, Harry

Morris, Rt Hon C. (O'shaw)

Faulds, Andrew

Morris, Rt Hon J. (Aberavon)

Field, Frank

Moyle, Rt Hon Roland

Foot, Rt Hon Michael

Mulley, Rt Hon Frederick

Ford, Ben

Newens, Stanley

Forrester, John

O'Halloran, Michael

Foster, Derek

O'Neill, Martin

Foulkes, George

Orme, Rt Hon Stanley

Fraser, J. (Lamb'th, N'w'd)

Palmer, Arthur

Freeson, Rt Hon Reginald

Park, George

Garrett, John (Norwich S)

Parker, John

Garrett, W. E. (Wallsend)

Parry, Robert

George, Bruce

Pavitt, Laurie

Gilbert, Rt Hon Dr John

Pendry, Tom

Golding, John

Powell, Rt Hon J.E. (S Down)

Gourlay, Harry

Powell, Raymond (Ogmore)

Graham, Ted

Prescott, John

Hamilton, James (Bothwell)

Price, C. (Lewisham W)

Hamilton, W. W. (C'tral Fife)

Race, Reg

Hardy, Peter

Radice, Giles

Harrison, Rt Hon Walter

Rees, Rt Hon M (Leeds S)

Hart, Rt Hon Dame Judith

Richardson, Jo

Hattersley, Rt Hon Roy

Roberts, Albert (Normanton)

Haynes, Frank

Roberts, Allan (Bootle)

Healey, Rt Hon Denis

Roberts, Ernest (Hackney N)

Heffer, Eric S.

Roberts, Gwilym (Cannock)

Hogg, N. (E Dunb't'nshire)

Robertson, George

Holland, S. (L'b'th, Vauxh'Il)

Robinson, G. (Coventry NW)

Home Robertson, John

Rooker, J. W.

Homewood, William

Ross, Ernest (Dundee West)

Hooley, Frank

Ross, Wm. (Londonderry)

Howell, Rt Hon D.

Rowlands, Ted

Hoyle, Douglas

Sever, John

Hughes, Mark (Durham)

Sheerman, Barry

Hughes, Robert (Aberdeen N)

Sheldon, Rt Hon R.

Hughes, Roy (Newport)

Shore, Rt Hon Peter

Janner, Hon Greville

Short, Mrs Reneée

Jay, Rt Hon Douglas

Silkin, Rt Hon J. (Deptford)

John, Brynmor

Silkin, Rt Hon S. C. (Dulwich)

Johnson, James (Hull West)

Silverman, Julius

Jones, Rt Hon Alec (Rh'dda)

Skinner, Dennis

Jones, Barry (East Flint)

Smith, Rt Hon J. (N Lanark)

Kaufman, Rt Hon Gerald

Smyth, Rev. W. M. (Belfast S)

Kerr, Russell

Snape, Peter

Kilroy-Silk, Robert

Soley, Clive

Lambie, David

Spearing, Nigel

Leadbitter, Ted

Spellar, John Francis (B'ham)

Leighton, Ronald

Spriggs, Leslie

Lestor, Miss Joan

Stallard, A. W.

Lewis, Arthur (N'ham NW)

Stoddart, David

Lewis, Ron (Carlisle)

Stott, Roger

Litherland, Robert

Straw, Jack

Lofthouse, Geoffrey

Summerskill, Hon Dr Shirley

Lyon, Alexander (York)

Taylor, Mrs Ann (Bolton W)

748

Thomas, Dr R. (Carmarthen)

Whitlock, William

Thorne, Stan (Preston South)

Wigley, Dafydd

Tinn, James

Willey, Rt Hon Frederick

Torney, Tom

Williams, Rt Hon A. (S'sea W)

Varley, Rt Hon Eric G.

Wilson, Rt Hon Sir H. (H'ton)

Wainwright, E. (Dearne V)

Wilson, William (C'try SE)

Walker, Rt Hon H. (D'caster)

Winnick, David

Warden, Gareth

Woodall, Alec

Watkins, David

Woolmer, Kenneth

Weetch, Ken

Wright, Sheila

Welsh, Michael

White, Frank R.

Tellers for the Ayes:

White, J. (G'gow Pollok)

Mr. George Morton and

Whitehead, Phillip

Mr. Harry Cowans.

NOES

Adley, Robert

Costain, Sir Albert

Aitken, Jonathan

Cranborne, Viscount

Alexander, Richard

Critchley, Julian

Alison, Rt Hon Michael

Crouch, David

Alton, David

Dorrell, Stephen

Ancram, Michael

Douglas-Hamilton, Lord J.

Arnold, Tom

Dover, Denshore

Aspinwall, Jack

du Cann, Rt Hon Edward

Atkins, Rt Hon H. (S'thorne)

Dunn, Robert (Dartford)

Atkins, Robert (Preston N)

Dykes, Hugh

Atkinson, David (B'm'th,E)

Eden, Rt Hon Sir John

Baker, Kenneth (St.M'bone)

Edwards, Rt Hon N. (P'broke)

Baker, Nicholas (N Dorset)

Eggar, Tim

Banks, Robert

Elliott, Sir William

Beaumont-Dark, Anthony

Ellis, Tom (Wrexham)

Beith, A. J.

Emery, Sir Peter

Bendall, Vivian

Eyre, Reginald

Bennett, Sir Frederic (T'bay)

Fairbairn, Nicholas

Benyon, Thomas (A'don)

Fairgrieve, Sir Russell

Benyon, W. (Buckingham)

Faith, Mrs Sheila

Berry, Hon Anthony

Farr, John

Best, Keith

Fell, Sir Anthony

Bevan, David Gilroy

Fenner, Mrs Peggy

Biffen, Rt Hon John

Finsberg, Geoffrey

Biggs-Davison, Sir John

Fisher, Sir Nigel

Blackburn, John

Fletcher, A. (Ed'nb'gh N)

Blaker, Peter

Fletcher-Cooke, Sir Charles

Bonsor, Sir Nicholas

Fookes, Miss Janet

Bottomley, Peter (W'wich W)

Forman, Nigel

Bowden, Andrew

Fowler, Rt Hon Norman

Boyson, Dr Rhodes

Fox, Marcus

Bradley, Tom

Fraser, Rt Hon Sir Hugh

Braine, Sir Bernard

Fraser, Peter (South Angus)

Bright, Graham

Fry, Peter

Brinton, Tim

Gardiner, George (Reigate)

Brittan, Rt. Hon. Leon

Gardner, Sir Edward

Brooke, Hon Peter

Garel-Jones, Tristan

Brotherton, Michael

Gilmour, Rt Hon Sir Ian

Brown, Michael (Brigg & Sc'n)

Ginsburg, David

Brown, Ronald W. (H'ckn'y S)

Goodhart, Sir Philip

Browne, John (Winchester)

Goodhew, Sir Victor

Bruce-Gardyne, John

Good lad, Alastair

Bryan, Sir Paul

Gorst, John

Buchanan-Smith, Rt. Hon. A.

Gow, Ian

Buck, Antony

Gower, Sir Raymond

Budgen, Nick

Grant, Sir Anthony

Burden, Sir Frederick

Gray, Rt Hon Hamish

Butcher, John

Greenway, Harry

Butler, Hon Adam

Grieve, Percy

Carlisle, John (Luton West)

Griffiths, E. (B'y St. Edm'ds)

Carlisle, Kenneth (Lincoln)

Griffiths, Peter (Portsm'th N)

Carlisle, Rt Hon M. (R'c'n)

Grist, Ian

Cartwright, John

Grylls, Michael

Chalker, Mrs. Lynda

Gummer, John Selwyn

Channon, Rt. Hon. Paul

Hamilton, Hon A.

Chapman, Sydney

Hamilton, Michael (Salisbury)

Churchill, W. S.

Hampson, Dr Keith

Clark, Hon A. (Plym'th, S'n)

Hannam, John

Clark, Sir W. (Croydon S)

Haselhurst, Alan

Clarke, Kenneth (Rushcliffe)

Hastings, Stephen

Cockeram, Eric

Hawkins, Sir Paul

Colvin, Michael

Hayhoe, Barney

Cope, John

Heath, Rt Hon Edward

Corrie, John

Heddle, John

749

Henderson, Barry

Mayhew, Patrick

Heseltine, Rt Hon Michael

Mellor, David

Hicks, Robert

Meyer, Sir Anthony

Higgins, Rt Hon Terence L.

Miller, Hal (B'grove)

Hill, James

Mills, Sir Peter (West Devon)

Hogg, Hon Douglas (Gr'th'm)

Moate, Roger

Holland, Philip (Carlton)

Monro, Sir Hector

Hooson, Tom

Montgomery, Fergus

Horam, John

Moore, John

Hordern, Peter

Morgan, Geraint

Howe, Rt Hon Sir Geoffrey

Morris, M. (N'hampton S)

Howell, Rt Hon D. (G'Idf'd)

Morrison, Hon C. (Devizes)

Howell, Ralph (N Norfolk)

Mudd, David

Howells, Geraint

Murphy, Christopher

Hunt, David (Wirral)

Myles, David

Hunt, John (Ravensbourne)

Neale, Gerrard

Irvine, Rt Hon Bryant Godman

Needham, Richard

Irving, Charles (Cheltenham)

Nelson, Anthony

Jenkin, Rt Hon Patrick

Neubert, Michael

Jessel, Toby

Newton, Tony

Jopling, Rt Hon Michael

Nott, Rt Hon Sir John

Joseph, Rt Hon Sir Keith

Onslow, Cranley

Kaberry, Sir Donald

Oppenheim, Rt Hon Mrs S.

Kershaw, Sir Anthony

Osborn, John

Kimball, Sir Marcus

Page, John (Harrow, West)

King, Rt Hon Tom

Page, Richard (SW Herts)

Kitson, Sir Timothy

Parkinson, Rt Hon Cecil

Knight, Mrs Jill

Parris, Matthew

Knox, David

Patten, Christopher (Bath)

Lamont, Norman

Patten, John (Oxford)

Lang, Ian

Pattie, Geoffrey

Langford-Holt, Sir John

Pawsey, James

Latham, Michael

Penhaligon, David

Lawrence, Ivan

Percival, Sir Ian

Lawson, Rt Hon Nigel

Pink, R. Bonner

Lee, John

Pollock, Alexander

Le Merchant, Spencer

Porter, Barry

Lennox-Boyd, Hon Mark

Prentice, Rt Hon Reg

Lester, Jim (Beeston)

Price, Sir David (Eastleigh)

Lewis, Sir Kenneth (Rutland)

Proctor, K. Harvey

Lloyd, Ian (Havant & W'Ioo)

Rathbone, Tim

Lloyd, Peter (Fareham)

Rees, Peter (Dover and Deal)

Loveridge, John

Renton, Tim

Lyell, Nicholas

Rhodes James, Robert

Lyons, Edward (Bradf'd W)

Rhys Williams, Sir Brandon

McCrindle, Robert

Ridley, Hon Nicholas

Macfarlane, Neil

Ridsdale, Sir Julian

MacGregor, John

Rifkind, Malcolm

Maclennan, Robert

Rippon, Rt Hon Geoffrey

Macmillan, Rt Hon M.

Roberts, Wyn (Conway)

McNair-Wilson, M. (N'bury)

Rodgers, Rt Hon William

McNair-Wilson, P. (New F'st)

Roper, John

McNally, Thomas

Rossi, Hugh

Madel, David

Rost, Peter

Major, John

Royle, Sir Anthony

Marland, Paul

Rumbold, Mrs A. C. R.

Marlow, Antony

Sainsbury, Hon Timothy

Marshall, Michael (Arundel)

St. John-Stevas, Rt Hon N.

Marten, Rt Hon Neil

Sandelson, Neville

Mates, Michael

Scott, Nicholas

Maude, Rt Hon Sir Angus

Shaw, Sir Michael (Scarb')

Mawby, Ray

Shelton, William (Streatham)

Mawhinney, Dr Brian

Shepherd, Colin (Hereford)

Maxwell-Hyslop, Robin

Silvester, Fred

750

Sims, Roger

Vaughan, Dr Gerard

Skeet, T. H. H.

Viggers, Peter

Smith, Sir Dudley

Waddington, David

Smith, Tim (Beaconsfield)

Wakeham, John

Speed, Keith

Waldegrave, Hon William

Spence, John

Walker, Rt Hon P. (W'cester)

Spicer, Jim (West Dorset)

Walker, B. (Perth)

Spicer, Michael (S Worcs)

Walker-Smith, Rt Hon Sir D.

Sproat, Iain

Wall, Sir Patrick

Squire, Robin

Waller, Gary

Stainton, Keith

Walters, Dennis

Stanbrook, Ivor

Ward, John

Stanley, John

Warren, Kenneth

Steel, Rt Hon David

Watson, John

Steen, Anthony

Wells, Bowen

Stevens, Martin

Wells, John (Maidstone)

Stewart, A. (E Renfrewshire)

Wheeler, John

Stewart, Ian (Hitchin)

Whitelaw, Rt Hon William

Stokes, John

Whitney, Raymond

Stradling Thomas, J.

Wickenden, Keith

Tapsell, Peter

Wiggin, Jerry

Taylor, Teddy (S'end E)

Wilkinson, John

Temple-Morris, Peter

Williams, D. (Montgomery)

Thomas, Rt Hon Peter

Williams, Rt Hon Mrs (Crosby)

Thompson, Donald

Winterton, Nicholas

Thorne, Neil (Ilford South)

Young, Sir George (Acton)

Thornton, Malcolm

Younger, Rt Hon George

Townend, John (Bridlington)

Townsend, Cyril D, (B'heath)

Tellers for the Noes:

Trippier, David

Mr. Carol Mather and

van Straubenzee, Sir W.

Mr. Robert Boscawen.

Question accordingly negatived
Main Question put and agreed to
Resolved,
That this House takes note of European Community Documents Nos. 4348/83 (Amended proposal for contracting loans under the New Community Instrument for the purpose of promoting investment within the Council), 10960/81 (Mandate of 30th May 1980—Report on the application of the Financial Mechanism), 5980/82 and 8874/82 (Commission's second and third reports on the implementation of supplementary measures in favour of the UK), COM(83)23 (Preliminary draft supplementary and amending budget No. 1 for 1983), the subsequent draft supplementary and amending budget No. 1 for 1983, 4417/83 (Proposal for a Council regulation amending Regulation No. 2744/80 establishing supplementary measures in favour of the UK), 4418/83 (Proposal for a Council regulation establishing specific measures of Community interest relating to energy strategy), 11125/82 (Communication from the Commission on the compensation for the UK: the subsequent solution), 4826/83 (Commission communication on the future financing of the Community); and supports Her Majesty's Government's efforts to negotiate arrangements for the Community budget which will ensure that the sharing of burdens between member states is equitable.

European Community Budget

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Motion relating to Ways and Means may be proceeded with, though opposed, until any hour.—[Mr. Lane.]

Orders of the Day

  Parliamentary Constituencies (Wales)
  Order read for resuming adjourned debate on Question—[16 February]—
  That the draft Parliamentary Constituencies (Wales) Order 1983, which was laid before this House on 7th February, be approved.—[Mr. Mayhew.]
  Question again proposed.
  10.14 pm
  Mr. Tom Ellis: When the debate was adjourned last week, I was commenting on one or two points that had been made by hon. Members. The right hon. Member for Rhondda (Mr. Jones) said that the Boundary Commission for Wales was incompetent, at least to the extent that it failed to appreciate the need for what he called natural communities. In some wards or villages there might have been aberrations in that aspect of the Boundary Commission's work. I cannot discuss individual issues in parts of the country that I do not know, but if the right hon. Gentleman is serious about having natural communities represented by an electoral system, he will have to depart from the present system. It cannot be done under that system. For example, Cardiff, North-East, or Cardiff, West, or Cardiff, Central, or Cardiff, South-East can hardly be regarded as natural constituencies. Clearly, the natural constituency is Cardiff. One could say "I am the Member for Cardiff', and that would sound natural. Cardiff, North-East or Central or West is quite the opposite of a natural constituency.
  Let us consider the present position of the hon. Member for Flint, East (Mr. Jones). The error there will be rectified as a consequence of boundary changes in the county arrangements, but his constituency is at present three distinct parts of the county, separated by chunks of the old county of Denbighshire. It has the industrial complex along Deeside, with its steel making, textiles and aircraft manufacture. It has a small patch of the old Flintshire, with a population of about 1,000. That is essentially a dormitory suburb for Chester, Merseyside and the Wirral. Then there is a rural part of Flintshire, called Flintshire detached, with a population of about 5,000 to 6,000 people. That community is entirely different from the hon. Gentleman's present main base in industrial Deeside. It is an example of what was forced on the then Boundaries Commission, which had to accept unnatural communities because of the rules imposed on it by this House. Therefore, I cannot see the strength of the right hon. Gentleman's argument.
  Mr. Alec Jones: Despite the hon. Gentleman's lack of knowledge of south Wales—I have the same lack of knowledge of north Wales—he will accept that for a commission to produce a proposal suggesting that Aberfan village is not a part of the community of Merthyr seems to imply that the report was not based on much real knowledge of community life, certainly in the valleys of south Wales.
  Mr. Ellis: The feature of the Boundary Commission's work over the past three to four years that has struck me more than anything else has been its readiness to respond to evidence put before it. I should have thought that the right hon. Gentleman would be pleased that the
  752
  commission, to the limit of its ability, and given the terms of reference forced on it by our present electoral system, accepted the evidence presented to it about Aberfan.
  The hon. Member for Flint, West (Sir A. Meyer) said that he thought that the Boundary Commission had been far too radical and enthusiastic. He said that there were really no problems in Wales, at least compared with some of the problems that existed in England. He pointed out, for example, that we have no rotten boroughs, no deserted city centres, and so on, and that all that was needed was to tidy up a little and take account of shifts in population. I can only say that the hon. Gentleman must be living in a dream world. In north Wales, which is his part of the world and mine, we have the two counties of Gwynedd and Clwyd, which under the old dispensation would each have had four constituencies. The voting population on the 1981 count in Clwyd was 296,000, and the voting population in Gwynedd on the 1981 count was 176,000—a discrepancy of nearly 2 to 1. If Gwynedd and Clwyd were each to remain with four constituencies, the whole point of trying to get an electoral quota, or something approaching an electoral quota, would have been a nonesense. A further point arises. When the commission decided to give five constituencies to Clwyd and three to Gwynedd to meet the requirements laid on it to try to approach as near as possible the electoral quota, it meant that a particular constituency—what one might call the Welsh language constituency—was disfranchised. The rural Welsh-speaking, hill-farming Merioneth was being attached to the hotel, boarding house, coastal strip of Llandudno and was virtually subsumed within that strip, which is an entirely different society and constituency.
  In order to obtain an electoral quota of somewhere within 10 per cent., and at the same time to arrange for representation of those constituencies, the only real answer is that which would have met the case of the right hon. Member for Rhondda—multi-member constituencies. That could easily be done but it means an entirely different electoral system.
  If the objectors to the various proposals are serious in their claim that they are anxious to obtain genuine democratic and fair representation, they must face up to the fact that they cannot do that and at the same time insist on retaining the present system.
  Several Hon. Members rose—
  Mr. Speaker: Order. I want to call as many hon. Members who represent Welsh constituencies as I can, but I understand that the hon. Member for Goole (Dr. Marshall) has a special point to make.
  10.20 pm
  Dr. Edmund Marshall: I rise as a mere Englishman to seek clarification on two points that were raised before the start of the debate on 16 February.
  First, my hon. Friend the Member for Ogmore (Mr. Powell) asked who was entitled on such occasions to sit in the place which is normally recognised to be that reserved for special Government advisers. If, on an occasion such as this, we have in that place within the precincts of the House an official of the Boundary Commission, the Government would have somebody to advise them whom they claim is an official of a completely independent body.
  At Question Time on Thursday 17 February, the Prime Minister said:

  753
  "I agree that the Boundary Commission's decisions are independent".—[Official Report, 17 February 1983; Vol. 37, c. 466.]
  The Government cannot have it both ways. Either they regard the Boundary Commission as independent of and separate from the Government or they do not. If it is not independent of the Government, we shall know the Boundary Commission's recommendations for what they may be worth. If the Boundary Commission is independent of the Government, there is no place for a Boundary Commission official in the place reserved for Government advisers. The Government must consider their position on that matter closely so that future such orders will be debated in a proper manner.
  Secondly, prior to the previous debate I raised a matter related to the spelling of one ward in the definition of the Vale of Glamorgan constituency—"Peterson-super-Ely". If that were a spelling or typographical error, I can understand that all hon. Members might regard it as a trivial point to make. However, it now appears that the spelling of "Peterson-super-Ely" in the draft order was a deliberate modification by the Government of the spelling of that ward's name as it appears in the Boundary Commission's report. If there has been a deliberate modification of the spelling of Peterston-super-Ely—it is a place which you, Mr. Speaker, know well and of which you know the correct spelling—under the terms of the statutes governing the procedure for bringing such orders before the House, the Home Secretary is required to give his formal reason for such a modification. It was shown last Wednesday evening that such a reason has to be part of the order laid before the House. Hon. Members need full clarification from the Minister on both these points.
  10.25 pm
  Mr. Geraint Morgan: My observations will be confined to the county of Clwyd to which reference has already been made by the hon. Member for Wrexham (Mr. Ellis). I wish particularly to draw the Home Secretary's attention to the Boundary Commission's proposals for that county, now enshrined in the draft order, and to ask him to recast its provisions, as he and the House have the power to do. I appreciate that this is asking a lot of any Home Secretary at this stage. The Boundary Commission is an entirely independent body. Any tinkering with its findings by the Government is apt to create the suspicion, however unworthy, that it savours of gerrymandering and seeking to obtain some party political advantage by so doing.
  I submit that the recommendations relating to Clwyd are so unreasonable and involve so much unnecessary and purposeless ripping up of historic boundaries and community ties that have stood the test of time that my right hon. Friend would be fully entitled to and should review the recommendations in the interests of sensible redistribution, which all hon. Members would accept. My point is that the commission could have effected its purpose, adhering in so doing to the principle both of creating electorates of almost equal numbers and of not crossing county boundaries, just as well, if not better, by having regard to old-established and historic community links, as, indeed, the redistribution rules enjoin it to do. However, these links are so completely ignored that one is left with the impression that it was felt that there was some signal virtue in so doing. Such an attitude, in my view, cannot be right.
  754
  The effect of the recommendations for the county of Clwyd is that five constituencies will be created in place of the virtual four that exist now. I say "virtual" because, ever since the local government reorganisation came into force in 1974, there has been a parliamentary overlapping of the boundary between Clwyd and Gwynedd.
  A sizeable proportion of the present Merioneth constituency has been in Clwyd and a smaller but more populous area of my constituency of Denbigh has been in Gwynedd. I mention this particularly, because no reasonable person could have any quarrel with the commission's proposals to straighten out constituency boundaries and make them coterminous with the new county boundaries. Most people accepted that this would be inevitable when the next parliamentary redistribution took place after local government reorganisation.
  One could not fairly find fault with the commission's recommendations that the county of Clwyd should contain five constituencies. Clwyd has the fastest growing population of any county in Wales. The increase in the number of its electorate clearly justified the creation of five seats. If one divides the 1981 electorate of Clwyd by five, one arrrives at a figure of 59,191, which is almost the identical figure fixec by the commission as the optimum quota of 58,753 for the average Welsh constituency.
  The commission was therefore plainly right in deciding that four constituencies would be too few and equally justified in rejecting the rather bizarre suggestion put forward by the Clwyd county council and by at least one district council that there should be six. This fanciful and unrealistic notion seemed to be based on the idea that there should be a Member of Parliament for every borough or district council, of which there are 37 in Wales. I doubt whether this would be a good basis or a parliamentary constituency in any event, much as it might please some chief executives. It was a non-starter both in Clwyd and in Wales generally, because it ignored the vast disparity in the numbers of electors in various borough and council areas. The result of adopting this system would have been to defeat the basic purpose of redistribution—achieving a comparative equality of numbers in electorates.
  So far, so good, but at this point I entirely part company with the commissioners, who, in their proposed redrawing of Clwyd constituency boundaries, appear to have been obsessed with the numbers game to the exclusion of almost every other consideration. To achieve this, they ignored not only historic community links, but even the local government boundaries created as recently as 1974, to which the local inhabitants are only just beginning to become accustomed.
  For example, a proposed new constituency boundary would run, without any rhyme or reason whatever, right through the areas of the Colwyn and Rhuddlan borough councils. Indeed, one might be forgiven for thinking that the commission was all set to disturb the new local government entities painstakingly brought into being in 1974. A particular absurdity in Clwyd is the separation into different constituencies of the towns of Rhyl and Prestatyn, united for local government purposes in 1974, which have so much affinity with each other that there is virtually no visible demarcation line between them.
  In passing, I mention—mainly, though not wholly, as a matter of historic interest—that the redistribution will mean that, for the first time since 1552, the names of Flint and Denbigh will disappear from the list of constituencies

  755
  represented in the House. It is interesting that the first representatives of Flint and Denbigh sat in the House alongside the last representative for Calais.
  The commission's proposals can be fairly criticised on another ground, too. In its zeal to achieve equal numbers of electors, it recommends constituencies that are grotesquely out of balance in geographical area. That is particularly reprehensible, because there is at present a great imbalance in the sizes of the Clwyd constituencies—Denbigh, with an area of well over 500 sq miles, being bigger than Flint, East, Wrexham and Flint, West put together. Instead of seeking to redress that imbalance, the commission has made it much worse by recommending the creation of a vast new constituency of South-West Clwyd, which would stand out on an electoral map of north Wales rather like the state of Texas on a map of the United States.
  Perhaps I might digress at this point to say a word or two about the proposed South-West Clwyd constituency, which is a smudgy amalgam, if I may use that honoured expression, if ever there was one. It lumps together areas that have virtually no affinity with each other. Districts like the industrial fringe of Wrexham, largely Anglicised in speech, are thrown in with distant agricultural areas like Edeyrnion where the Welsh language is as strong as anywhere in Wales.
  Small wonder, therefore, that this strange creation was condemned from the outset, not only by my party, but by Liberals and Socialists. The critics included, for example, the Maelor-Wrexham borough council and the Rhosllanerchrugog community council—neither of which is, I imagine, exactly a power house of Toryism in Wales—and, even more significantly, the group of Welsh Labour MPs and the Welsh Labour party.
  All the criticism was rightly based on the undoubted fact that there was no affinity between the vastly different areas and the interests that it was proposed to fling together in the new constituency. I remember that the Liberal candidate for Denbigh was moved to write to the Denbighshire Free Press and he permitted himself a mild witticism when he said that the Liberals would never agree to a shotgun marriage between Llanfar Talhaiarn and Esclusham Below or Esclusham Above—Llanfar Talhaiarn being in the Welsh-speaking area of the old county of Denbigh and the other quaintly named places being in the Anglicised area around Wrexham.
  My party in Clwyd, having given due weight to the need to adhere to county boundaries, on the one hand, and to increase the number of constituencies to five, on the other, produced, after the most careful consideration, some counter proposals that would have retained, to some extent—for they could do no more—the old Denbigh and Flint, West constituencies, even though the former would have had to cede a good deal of territory in the south to the new fifth seat. These proposals had the merit of preserving many community links, making the geographical size of the new constituencies more balanced and equitable, and, last but not least, achieving an even better equality in electoral numbers than those of the commission.
  I am afraid that these excellent proposals were wrecked by the attitude adopted by those who turned up at the inquiries, particularly Socialist representatives who did a complete volte-face from their attitude of condemnation.
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  I do not quite know what to say about the Liberals, because they quarrelled among themselves and with their partners in the alliance.
  The assistant commissioner—this is not without significance—in his report to the commission said that, had it been left to him, he would have preferred the Clwyd Conservatives' proposals to those of the commissioners. He went on to say, as he was bound to, that he was unable to recommend any acceptance because all the other political parties had either opposed or not supported them. One can readily understand the quandary in which he found himself.
  As I said, it would be most unusual for the Home Secretary to interfere at this stage. However, I am asking him to do that on three grounds. First, the assistant commissioner expressed the unequivocal opinion that the counter proposals were preferable to those of the commission. Secondly, having come to that conclusion, he was wrong—loyalists would say that he misdirected himself—in not recommending that the counter proposals be accepted because there was no consensus among the political parties about them. Thirdly, in any event, so far as this is or should be material in this context, there had been such full consensus among the political parties at the outset.
  Procedurally, this would mean the withdrawal and redrafting of the order. There can be no doubt in my view, in the interests of reasonable and equitable redistribution of constituencies in Clwyd, that that is the only proper course for the Home Secretary to take.
  Several hon. Members rose—
  Mr. Speaker: Order. I remind the House that the debate will last for an hour and a half. I hope that hon. Members will bear that in mind, so that all who wish to speak can be called.
  10.37 pm
  Mr. Dafydd Wigley: I welcome the new Minister of State, Welsh Office to the Front Bench. I am glad that his long Trappist period is coming to an end.
  There has been condemnation of the report of the commissioners from both sides of the House, both in the first part of the debate and tonight. However, we should differentiate between the first report and proposals that the commissioners made and the eventual outcome. The first proposals were a load of nonsense. They were lines on maps that took no notice of natural communities. They must have been put together rapidly and with little thought. However, the second and final proposals, following the hearings, were very different. I have the impression, as have other hon. Members, that there had been a positive response to the commissioners' representations from all parts of Wales. There was a great difference between the final report and the first tentative proposals.
  That is something that I welcome and that all hon. Members should welcome. The procedure of holding local hearings has borne fruit. That is all to the good. However, those local hearings could have been all the more valuable had the first set of suggestions been more sensible. That would have enabled us to look constructively at the detail rather than have to oppose, lock, stock and barrel. We could have looked in detail at some of the proposals, particularly the more nonsensical ones such as the one

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  suggesting that Aberavon should go into the Aberdare constituency, and in the north, that the Merioneth constituency should run through into Llandudno. It will be useful to put on record some of the points that future commissions should be considering in greater detail at an earlier stage, to avoid that sort of difficulty.
  The commission was given very strict guidelines—or at least it interpreted them very strictly—to adhere to county boundaries and to adhere to a norm, or a quota, for a seat. In the event, in order to get constituencies that had any meaning in community terms, the commission had to depart from that strict quota or average figure.
  I think that commissions would in future be well advised, rather than going rigidly for an average of 58,000 or however many votes, to start with a plus or minus 10 or 15 per cent. and to have a greater consideration of the community of interest.
  In looking back to the discussion in 1948, when perhaps the greatest debates took place in this Chamber—the background to the present legislation—we can see that it was then clear that Wales, Scotland, and perhaps parts of England, had greater representation for specific reasons. Those specific reasons included the sparsity of population, the difficulties of travel and the geographical nature of those areas.
  Future commissions in Wales should bear in mind that if Wales is, purely statistically, over-represented—with 36 seats compared with 31 or 32 on a straight British average—that over-representation is because of specific characteristics of Welsh geography, Welsh topology and sparsity of population. If it is right to have more seats on account of those geographic characteristics, those extra seats should be in the areas where the geographic characteristics themselves exist. In other words, an over-representation in Wales in average terms should not be used as an excuse for over-representation in those areas where there are no justifiable characteristics leading to such a representation.
  The second question is whether being coterminous with country boundaries is such an overwhelmingly important basis for a commission's consideration. We have heard only a moment ago of the uniting of Colwyn Bay and Llandudno as one seat. Many people could argue that the uniting of Colwyn Bay and Llandudno would make a much more natural and homogeneous area, but that, of course, would go across the county boundaries.
  I suggested in my evidence to the commission—I think that many other hon. Members have the same feeling—that on a day-to-day basis we have much more affinity and much more to do with district councils than with county councils. Indeed, an analysis of my correspondence over a period of 12 months showed that there was three times as much correspondence with the district council as there was with the county council. That should be borne in mind.
  There are other equally important boundaries, such as the boundaries of the local DHSS or of the Department of Employment office. There are many parameters that come into the judgment and not just one overriding parameter, the county boundary, as has been put forward.
  The final report seems to a large extent to be much more sensible than the first one. In giving 38 seats to Wales rather than 36, it overcomes some of the problems. It gives Wales a little more voice in this House. We in Plaid Cymru do not accept that that is anything like what we need to overcome our problems in Wales. But, having said all
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  that, we appreciate the way in which the commission listened at the inquiries, and we are grateful that the final report is that much better than the original proposals.
  10.43 pm
  Dr. Roger Thomas: May I move the debate to the south-west part of Wales, to the county of Dyfed, and state that there is a unanimity of opinion within the present county of Pembroke—or rather within the Pembroke constituency that since 1974 has been within the enlarged county of Dyfed—that the constituency boundaries should remain the same. That opinion cuts right across all party political divisions, and it is with some regret that one is forced to be critical of the Boundary Commission in choosing to ignore such a great weight of public opinion. It is, of course, at present the constituency of the Secretary of State for Wales.
  When there was a comparatively minor health reorganisation in Wales, the Dyfed health authority was divided into a Pembroke health authority and the remainder of Dyfed into the much larger East Dyfed health authority.
  It appears that the proposed boundary change runs wholly counter to that employed in making the present constituency coterminous with the new health authority. If the changes go through part of the Pembroke health authority will be in the new constituency of Ceredigion and the much larger southern part, including the district general hospital at Haverfordwest will be in the Pembrokeshire constituency.
  Alternative proposals have been put forward to the effect that there should be a tolerance of some 20,000 in the electoral quota on the ground that to use the electorate as the sole criterion was to ignore the great variations in the geographical and sociological features in Wales. Although the present Pembroke constituency has the third largest electorate in Wales, to my knowledge no complaints have been received to the effect that the area is under-represented. The absence of support for the provisional recommendations shows that the electorate is satisfied with the constituency and the status quo, if not with the status quo of the Member.
  Due account should be taken of the special geographical considerations—the size, shape and accessibility of the area. The peninsular nature of the former Pembrokeshire makes it a distinct geographical entity and any attempt to hive off part to another parliamentary constituency would be a patently artificial device aimed at complying with the rules of the numbers game.
  Whereas all Pembroke polling stations are now within a 30-mile radius of Haverfordwest, the commission's proposals would result in some polling stations being as far as 50 or 60 miles from Aberystwyth on which the Cardigan constituency is based. Besides being out of line with district council boundaries, the proposed new constituencies would divide other units of local government and associated bodies—the Pembrokeshire health authority, the petty sessional divisions of Dewsland, Fishguard, Haverfordwest and Narberth, the South Wales tourism council and the Development. Board for Rural Wales.
  It is probably true to say that no area of the United Kingdom resisted the 1974 local government reorganisation as vocally or vehemently as did Pembrokeshire. More

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  than eight years on, the "Bring back Pembrokeshire" campaign is no less active than it was in 1974, as witness the number of car stickers to that effect still in the county.
  Pembrokeshire generally regards itself still as a sociological entity. As a political entity, it now exists only as a parliamentary constituency, but any attempt to complete the task of political dismemberment would be seen as flying in the face of other developments which have tended to restore the Pembrokeshire identity.
  May I say on behalf of a large section of the Pembrokeshire constituency, in particular the Presili district council, for the wards which are being transferred from the Pembrokeshire constituency into the new Ceredigion constituency, that they have taken soundings of local opinion in their wards and have encountered complete opposition to the idea of change in the parliamentary constituency boundaries, thus taking them into the Ceredigion constituency.
  It is the common view that special geographical considerations and local ties should be given precedence over any attempt to approximate to an arbitrary electoral quota in determining the pattern of parliamentary representation in south-west Wales. I therefore ask the Home Secretary to reject the revised recommendations of the Boundary Commission for Wales and to retain the Pembroke county constituency in its present form.
  10.49 pm
  Mr. Gareth Wardell: I confine my attention to three points regarding the commission's proposals for Gower.
  First, paragraph 157 reads:
  "The Gower constituency (59,792) was of a suitable size to remain unaltered, but the electorate of the adjoining Swansea West constituency (66,826) was too large to remain unchanged."
  The county of Pembroke is recommended by the commission to have an electorate of 66,998. Yet that figure is too large for Swansea, West. No doubt there are excellent reasons to be found somewhere for such apparent jiggery-pokery.
  Secondly, the three north-eastern wards of the Gower constituency are to be included in the constituency of Neath. The rationale for this change comes in this deeply convincing sentence in paragraph 161:
  "These three eastern wards were linked by main road to Neath."
  There is not a word about the fact that the main pattern of communication lies along the Amman, Swansea and Neath valleys, which run in a north-easterly to south-westerly direction. There is not a hint that the largely Welsh-speaking community, with its rich culture, is to be linked to a mainly English-speaking community. There is no mention of the fact that the proposed parliamentary boundary will split in two the large village of Pontardawe. There is not even a murmur that the transference of these wards will end the inclusion of the entire Lliw valley borough council in the constituency of Gower.
  Thirdly, the Commission proposes the transfer of Mumbles to the Gower constituency. The evidence and rationale for that are given in paragraph 162:
  "This was the southernmost ward of the present Swansea West constituency and seemed to have some affinity with the Gower peninsula."
  What an intriguing sentence! The latter part is worthy of repetition:
  "and seemed to have some affinity with the Gower peninsula."
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  If such a description of Mumbles had been offered by a secondary school pupil in a geography O-level examination, "Waffle" would have been confidently written on the script. No assistant examiner worth his salt, certainly in the Welsh joint education committee, could ignore such imprecision.
  What could the commissioners have had in mind? If we assume that they were not using the word "affinity" in its chemical sense, perhaps they meant a structural resemblance between Mumbles and the Gower peninsula. Where does that lead us? The truth is that on virtually all criteria, Mumbles is inextricably linked with the city of Swansea. Indeed, it is a suburb of that city. Of course, affinity may be found between two areas almost anywhere on terra firma. It is clear that an adept geographer has managed to convince a spatially inept commission that insignificant similarities are elevated to the rank of affinity, while no mention is made of the obvious and significant similarities.
  Those three points convince me that the Boundary Commission for Wales has produced a most unsatisfactory report. How much better it would have been had the commission turned its attention to the words of Robert Frost in "Mending Wall":
  "Before I built a wall I'd ask to know
  What I was walling in or walling out,
  And to whom I was like to give offense."
  The commission has redrawn lines on a map, but I give the warning that bad boundaries make bad neighbours.
  10.55 pm
  Mr. Roy Hughes: I was interested in the remarks of my hon. Friend the Member for Goole (Dr. Marshall) about the commissioners. The words "independent" and "impartial" have been bandied about, but in Welsh terms such terminology is untruthful. The figures are not representative of life in Wales—they are establishment figures. As late as the election of 1966, the Tory representation of Wales could have been brought to the House in a Mini with space to spare. Those people have no identity with the majority of opinion about the life of Wales. My hon. Friend asked about the secretary to the commission advising the Government from the box. Any last vestige of impartiality tends to go by the board.
  Some have been surprised by the interest shown in the proposed Welsh boundary changes. People have now realised the diabolical changes that are being foisted on the people of Wales. The hon. Member for Flint, West (Sir A. Meyer) spoke about some of my colleagues and myself trying
  "to cheat the hangman's noose."—[Official Report, 16 February; Vol. 37, c. 421.]
  All that we are trying to do is to resist the iniquitous proposals that are so detrimental to the life of Wales.
  One can ask oneself "What has Wales ever had from the Tories?" Gerrymandering in Wales has been one of the least of their crimes. As a result of this terrible Conservative Government, Wales is now experiencing mass unemployment on a scale that it has not known for the past 50 years.
  The commissioners simply drew lines on a map, based on numbers. They showed complete ignorance of life of Wales and ignored our mountains, valleys and, above all, our communities. Under the revised proposals, only one constituency is the same as in the original proposals. That, to say the least, is significant. but the exercise has taken

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  more than three years, and the cheek of it was that we were given only one and a half hours last Wednesday night to discuss these important changes. It is disgraceful. No wonder there has been concern.
  In fairness to the hon. Member for Flint, West he described the commission as:
  "inept and insensitive … which has done its work badly".—[Official Report, 16 February 1983; Vol. 37, c. 423.]
  Many hon. Members would endorse those sentiments, especially in respect of their own areas.
  I have had the privilege and honour to represent Newport for the past 17 years in the House. It has had a very bad deal from a community point of view. It is argued that boundary changes are to do with movement of population. All Newport has had is butchery. Even the names of the new constituencies are a misnomer. Southeast and south-west Gwent will be more relevant to what is happening. Half of Newport is to be handed over to the one constituency of Newport, East, and the other half is to be handed over to the constituency of Newport, West. There is linkage with much of the surrounding area in respect of the two proposed new constituencies. What contribution these proposals can possibly make to the community life of Newport I am at a loss to understand.
  The town of Newport has a slightly declining population. It could have been left alone, as it is a compact and centralised community. These proposals will cause a lot of problems and confusion for the people of Newport. The town is being mucked about to suit neighbouring areas. The people of Newport never got over those disastrous local government changes made a decade ago. It was a complete upheaval, which cost the earth. Now, despite all of the money that has been paid out, we have less efficient services. All that the people of Newport have had to do is pay.
  Over the years Newport has seen its very good education and police service go. The control of the roads in Newport has gone as has its water undertaking. In the process, community spirit has been undermined and the identity of the town taken away. The cost in financial and community terms has been high.
  When one turns to the position of local government, one realises the confusion and chaos that the Government are causing. I was speaking to the leader of the Newport council today. He said that he was completely exasperated with the attitude of the Welsh Office about boundaries and local government. There is a definite linkage between local government and parliamentary boundaries. A chaotic situation exists in Newport. The boundaries for the districts have not been finalised. The leader of the council said to me that this weekend is probably the deadline for the forthcoming May election. All manner of representations have been made to the Welsh Office. So far they have been of no avail. Newport, in view of its population, is under-represented on Gwent county council. That is not fair or just. Such anomalies need to be ironed out. Then there is Torfaen, Blaenau Gwent and Islwyn. I understand that their boundaries are not likely to be settled until after the county council elections of next year. There seems to be a link between these local government boundaries and the parliamentary boundary.
  The Government lecture people about so-called business efficiency. They make me weep. These proposals are highly detrimental to the people of Newport. They are part of a scheme of things—a gerrymandering exercise—to obtain a better representation for the
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  Conservative party in Wales. Particularly in this climate, with mass unemployment and industrial stagnation, these efforts will be repudiated, and I hope before not too long.
  11.6 pm
  Mr. Ray Powell: I hope that the House will forgive my husky voice. It is the result of a cold that I picked up after being thrown on to the icy streets of London at midnight last Wednesday.
  I am glad to catch the eye of the Chair tonight to expose the blatant butchery of my constituency by the Boundary Commission, for Wales. I should like to express and explain the tremendous anxiety of the county councils, the borough councils, the district councils, the town and community councils, political parties of various persuasions and numerous other organisations whose strength of objection should have received far more sympathetic consideration from the commissioners than that contained in this third periodical report.
  I should like to cover other areas within the Principality, having received letters from various parts of Wales strongly objecting to the report, but for the moment, I confine my remarks to the Ogmore constituency, the Ogwr and Taff-Ely borough areas, where the commissioners propose a new parliamentary seat of Bridgend.
  Details are contained on pages 31, 91 117 and 119 of the report, and I shall deal with paragraphs 121, 122, 125, 126 and 127, together with the revised recommendations after explaining the representations that were made before the commissioners produced this report.
  The areas involved are the Ogmore constituency with an electorate of 73,993, parts of the constituency of my right hon. and learned Friend the Member for Aberavon (Mr. Morris), with an electorate of 23,722, and part of the constituency of my hon. Friend the Member for Pontypridd (Mr. John), with an electorate of 8,756.
  The Ogmore constituency is shaped like one's right hand—the four fingers representing the valleys of Llynfi, Garw, Ogmore and Abercardin and Gilfach; the thumb the Pencoed and Heol-y-cyw area; the palm the town centre of Bridgend; and the base of the palm the coastal belt of Southerndown, Ogmore-by-Sea and Merthyr Mawr. It is without question one of the best constituencies in the country, with its mix of four beautiful valleys, a rural spread, a coastal belt overlooking the Bristol channel, a market town and a large trading estate.
  Since local government reorganisation in 1973, the area went through amalgamation of five local authorities without any great upheaval, and the town of Bridgend became the centre of all activities, with the borough council officers based there and most of the departments under the one roof. It soon meant that all areas spreading throughout the length and breadth of the borough of Ogmore gravitated towards Bridgend. The main police station, the shopping area, the DHSS offices, the jobcentre, the bus station, the railway station, the industrial estate, the magistrates court, education offices, social services offices and many other activities are centred in the Bridgend area. Without elaborating further, this was the main centre servicing an electorate of 97,715 and a population of 125,000. The part of the Aberavon constituency of 23,722 electors is already within the borough of Ogwr and is included in the figures that I have just mentioned. The main centres of population are Bridgend, Maesteg and Porthcawl, but a number of other towns are situated to the north of Bridgend.

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  The valleys that I have mentioned, probably more than any other single influence, have shaped the pattern of life in the constituency. Socially, economically, culturally and politically, the influence of these famous valleys upon their communities in particular and on the constituencies in general has been immeasurable.
  I do not apologise for taking time to emphasise what must already be perfectly plain to the House, because in my view the commissioners' proposals do not pay sufficient regard to the significance of the valleys. For example, a home interview conducted by the borough council in 1975–76 in connection with the preparation of the Ogmore and Garw district plan provided relevant information on certain links between the Ogmore and Garw valleys and Bridgend. The survey showed that 50 per cent. of the working population of the two valleys worked outside the area, and of these 32 per cent. worked in Bridgend. It showed that 24 per cent. of weekly convenience goods shopping trips were to Bridgend while for durable goods shopping trips the figure increased to 53 per cent. These figures show clearly the important part which Bridgend plays as an employment and shopping centre for the residents of the Ogmore and Garw valleys.
  The commissioners' proposals to cut off the valley communities on an east-west line would create a serious and unfortunate imbalance between the two comstituencies. One is a relatively prosperous constituency with tremendous potential for economic growth, while the other is less prosperous and lacks such potential. I believe that the proposed Bridgend constituency would benefit at the expense of the Ogmore constituency and that the people of the Bridgend constituency would benefit at the expense of the people of the Ogmore constituency.
  In my submission, therefore, the proposals fail miserably in numerous regards, especially for parliamentary representation. To place all the greater economic and social problems and disadvantages in one area and all the advantages in the other area is both undesirable and overwhelmingly unwelcome, to say the least. The economic and social imbalances which would result by dividing the existing constituency along the lines proposed by the commissioners would manifest themselves in, for example, housing, industry, rate income, age of educational facilities and ancillary health services, and would be made even more acute by the four wards of Taff-Ely being added to the proposed Ogmore parliamentary constituency.
  These four valleys are separated by mountains rising in places to almost 570 metres above mean sea level. As a consequence of topography and road conditions, the time taken to drive by car from the top of the Llynfi valley around the main settlements of the proposed constituency and returning to Maesteg, the constituency's largest settlement, would be at least two and a half hours and cover about 70 miles.
  For those reasons, I spoke at length to the inquiry held at Pontypridd on 9 and 12 February 1982 and requested a north to south division based on the rivers Llynfi and Ogmore, which would have divided the area proposed into two constituencies from the heads of the valleys to the estuary—a natural division that existed before the Tory party was even dreamt of. How much more impartiality can one display than that? In addition, the division from north to south would have given an electoral quota of
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  57,189 in one constituency and 55,553 in another, which is much nearer to the 58,000 sought by the commissioners in their original proposals.
  I have already explained the essential difference between the commissioners' proposals and the counter proposals. Because there was special emphasis on the electoral quota, alternatives were offered to meet the figure of 58,000. There is no doubt that the proposals to the inquiry of the north-south division could have been achieved without offending against any of the recognised criteria. It could have been achieved without creating social imbalance and problems. It would be fairer to both Members of Parliament and would leave undisturbed the established communities of the valleys. The proposals offered would have achieved all that, and would have received the support of the people—something that the commissioners' proposals do not attract.
  When we received the statement from the Boundary Commission for Wales, and the provisional recommendations for Mid-Glamorgan, it outlined in detail the rules applicable. It referred to the electorate of Ogmore county constituency as being well in excess of the electoral quota. That is quite true. I have already said that Ogmore has an electorate of 75,000. However, under the final proposals presented to the House tonight, the figures for the Ogmore constituency are reduced to 51,000. The commissioners' proposals divide the Ogwr borough from east to west and adds wards from the adjoining constituency of Pontypridd.
  Following the publication of the commissioners' recommendations for the parliamentary constituency of the county of Mid-Glamorgan on 25 June 1981, discussion by numerous groups took place and 60 organisations presented their views. They had memberships of 100 or more in accordance with the rules and guidelines laid down by the commissioners. In addition, numerous individuals and small groups expressed separate opinions. Of the 60 organisations, 57 objected to the proposals and only three supported the commissioners' recommendations. Those three are listed as the Aberavon Conservative Association (Porthcawl Branch), the Ogmore Conservative Association and some dubious body called the Rhondda Conservative Association.
  At the Pontypridd inquiry in February 1982, 21 organisations, directly or indirectly, verbally or in writing, submitted proposals supporting the alternative division of the borough of Ogwr to that of the commissioners—their proposals being a division from east to west, and the alternative proposals being from north to south, using the rivers Llynfi and Ogmore as the natural division. The organisations objecting included the Mid Glamorgan county council, the Ogwr borough council, the Taff-Ely borough council, the Llanharry community council, the Llantrisant and Llantwit Fardre Trades Council, the Mid Glamorgan county Labour party, the Aberavon constituency Labour party, the Ogmore constituency Labour party, the Ogwr borough Labour party, the Pontypridd constituency Labour party, the Welsh parliamentary Labour party, the Members of Parliament for Aberavon, Pontypridd and myself, and many other groups and individuals far too numerous to mention, but contained in the report of the local inquiry for Mid Glamorgan. All those mentioned requested a division from north to south. Pages 26 to 43 of the 53-page report of the inquiry deal with the division of Ogwr borough and the extra seat.
  I could go into graphic detail on the number of representations, but I know that other hon. Members wish

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  to speak. I could list numerous alternative proposals that we, the Ogwr borough and the Mid Glamorgan county Labour party have presented, but I shall hurry along and refer to rule 7 on the electoral quota. That is disregarded for Ogmore, as it has been throughout the Principality. Furthermore, section 2(2) of the House of Commons (Redistribution of Seats) Act 1958 refers to the fact that the commissioners
  "in discharging their functions … shall take account … of any local ties which would be broken by such alterations".
  The local ties in the present proposals have been not merely broken but savagely butchered and severed—it is worse than the recent murders in Cricklewood that we have been reading about.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I am sorry to interrupt the hon. Gentleman. In the spirit of good will which prevails tonight, he might bear in mind that the Opposition Front Bench would like some time to wind up, and I am sure that the House will wish to hear from the Minister.
  Mr. Powell: That is why I made my point of order last week and why I requested you, Mr. Deputy Speaker, to consider extending the debate. For two and a half hours I spoke at the inquiry at Pontypridd. Even then I had to trim what I had been requested to say by many people and organisations in the Ogmore constituency and the Ogwr borough area.
  If the order is passed, its effects will last for at least 10 to 15 years, and could last until the early part of the year 2000 and beyond. The House allowed the commissioners to spend more than three years compiling their report, and inquiries to take place, but we are allowed only one and a half hours to debate what will happen to 36 constituencies and the creation of two extra seats. That is a total disregard of the rights of Members of Parliament, who should be here to expound on their constituents' behalf the reasons why the order should not be accepted.
  It is essential, important and imperative that we get the boundaries right. The proposals will probably last for 15 years. I cannot understand the Government's undue haste. Are they going for an Easter election or an earlier election than June? Why should we not have a full-scale debate on the issues affecting Wales? Hon. Members would like to raise issues on their constituents' behalf. I tabled an amendment. It has not been called as the order is not amendable. If we cannot amend the order to make a difference for the one seat of Ogmore, we have to call on every hon. Member to vote against the order, whereas we could well be satisfied with most of the Boundary Commission's suggestions.
  Despite the shortage of time, Mr. Deputy Speaker, I must say that, although there is tremendous support for a north to south diversion with proposals for sharing the electorate to ensure the electoral quota, within a few hundred, we must ask why the commissioners did not think that the alternatives commanded greater acceptance locally and complied with the statutory provisions and the commission's principles. Why did it not agree to the great public support for a change in its proposals? Why did it not hold a further inquiry after receiving those representations?
  It is suggested that the proposals are formulated by the commission from its position of independence and impartiality. If that is so, is it not passing strange, to say the least, that it completely ignored the views of all the
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  numerous objectors and accepted the support of three Conservative organisations. That smacks of hyprocisy as much as if not more than the Franks report, if that is possible.
  I am firmly convinced that the parliamentary constituency of Bridgend 'was designed with the politically motivated bias of attempting to create a Tory seat. The electors of Ogmore will not allow such gerrymandering and if the proposals go through tonight they will turn out in force to return a Labour candidate to show their utter disgust at the Boundary Commission's proposals and total disregard of the legitimate objections raised inside and outside the House.
  I regret that I must conclude because I have enough to say to last another hour and a half. As the proposals will last for 10 to 15 years, if there are objections—even if only to one or two seats in the Principality—Parliament should be able to amend and alter the proposals. I have listed my action on behalf of my constituents. I have complied with all the rules. I believe that I have made my case. Therefore, if the Home Secretary is not prepared to listen to the arguments and table an order to amend, I shall ask the House to reject the proposals and vote against them tonight.
  11.27 pm
  Mr. Donald Coleman: The tenor of the debate this evening has been, I think we can all agree, far less acrimonious than was the case last Wednesday evening when the House previously debated the order. Perhaps that is because the Government have learnt not to be dismissive of representations that are serious and of great importance to many people.
  My right hon. and hon. Friends sought last week by means of points of order to carry out a duty that was laid upon them as hon. Members. It was the Government's responsibility to seek to deal sympathetically with the issues that they raised rather than to be seen to he driving the order through the House at all costs. We have had to come back to it and in doing so we have had a much more even-tempered debate in which all hon. Members have been able to express their justified concerns and worries about the effects of the order and the Boundary Commission's proposals on their constituencies, and, more importantly, on their constituents.
  There is a matter outstanding from last week's proceedings that concerns me. I rose on a point of order which, upon a reading of Hansard, I find received no reply. I return to it again tonight, not as a point of order but as a question to the Minister. On the assumption that the point of order of my right hon. and learned Friend the Member for Aberavon (Mr. Morris) was correct and that the Secretary of State had failed to fulfil his statutory duties, since we have had an order made and shall presumably proceed to pass it, what certainty is there that the order will be valid? What recourse have my constituents, who would be affected by the order, if it is found to be invalid? This is an important matter. I would be grateful if the Minister of State can assist the House, my constituents and myself in the matter.
  I wish, on behalf of the Labour party, to place on record our appreciation of the action of Mr. Justice Talbot and his fellow commissioners in arranging for the informal exchange of views in Cardiff when we took advantage of the opportunity to express our opinions, although others did not.

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  This debate has demonstrated that Wales is not fully satisfied at the outcome of the Boundary Commission report. A number of expressions of dissatisfaction have been heard tonight. My hon. Friend the Member for Carmarthen (Dr. Thomas) has referred to the position in Pembroke. There is no part of Wales that has shown more feeling about what is proposed than Pembroke. It still smarts from what was done by the Tory party in the 1974 reorganisation of local government. This has never been accepted by the people of that part of Wales. Now, along comes the Boundary Commission, under another Tory Government, further to hurt the pride of the people of Pembroke.
  Time does not permit me to go further into these matters as I would have wished. My right hon. and hon. Friends and some Conservative Members have voiced their fears about the position that will be created in Wales. We shall not oppose the order tonight. I hope, however, that what has been stated on both sides of the House will cause the Government to consider, even now, whether the Boundary Commission has got it right.
  11.32 pm
  The Minister of State, Home Office (Mr. Patrick Mayhew): I have listened carefully to everything that has been said tonight and in the debate last week. One factor that has emerged prominently is the sincerity and fervour with which right hon. and hon. Members have spoken from both sides of the House in defence of local loyalties and links, often of long standing, which regrettably are to be disrupted if the proposals of the Boundary Commission are given effect.
  I agree with the hon. Member for Neath (Mr. Coleman) that all the worries that have been expressed are valid. The hon. Gentleman asked me what would be the position if the point made by the right hon. and learned Member for Aberavon (Mr. Morris) were correct and the Home Secretary had failed to fulfil his statutory obligation to lay a statement of his reasons for making any modification if, indeed, he had made a modification. It is not for me to pronounce on what the position on law might be in hypothetical circumstances. However, section 3(7) of the House of Commons (Redistribution of Seats) Act 1949 states:
  "The validity of any Order in Council purporting to be made under this Act and reciting that a draft thereof has been approved by resolution of each House of Parliament shall not be called in question in any legal proceedings whatsoever."
  I consulted my right hon. and learned Friend the Solicitor-General, in the absence abroad of my right hon. and learned Friend the Attorney-General, and he authorised me to say that, having considered the arguments, he has expressed the view that the draft constituencies order does not effect a modification of the recommendations of the Boundary Commission for Wales contained in its report.
  It is important to emphasise that we are dealing with the recommendations and report of a commission that is not the creature of any Government of the day but is a wholly impartial commission created according to a formula approved by Parliament to secure its very impartiality. It is important that that should be borne in mind.
  The commission has been unable to base its final recommendations on new local government boundaries
  768
  and district wards in every instance. That is naturally disappointing, but the commission was required by statute to submit its proposals to reduce the present disparities in electorates between 1979 and May 1984. As there was little prospect of the Local Government Boundary Commission for Wales completing its special community and district reviews by May 1984, it would have been dangerous for the Parliamentary Commission to have deferred the start of its review, or the submission of its report, any longer. Had it done so, the next general election would have been fought on boundaries based on 1965 electorates, during which time an entire generation of new electors has emerged.
  This does not mean that the changes that have still to be made to local government areas and district wards, which will result in the new constituencies being divided by new county boundaries or new district or ward boundaries, cannot be rectified before the commission completes its next review in 10 to 15 years' time. As I said last week, it is open to the commission to make interim recommendations to take account of such changes where it thinks it right to do so. It does not have to be at the motion of the Government of the day; it can do so of its own motion. That is important. Such reviews are intended to take account of changes in local government boundaries. I think that the commission will give sympathetic consideration to requests for such reviews.
  Necessarily I have a short time in which to reply to the issues that have been raised, but I feel that I should deal with the points made last week by the right hon. Member for Rhondda (Mr. Jones). He expressed his disagreement with the commission's recommendations for Pembroke and Ceredigion. I understand his view. The right hon. Gentleman's criticisms of that part of the report were supported today by his hon. Friends the Members for Carmarthen (Dr. Thomas) and for Neath and by others. I am aware of the degree of concern that has been expressed. The commission took the view that the electorate of the Pembroke constituency would be nearly 80,000 if it acceded to the objections that were made. My right hon. Friend is confident that it would be unacceptably high. However, I fear that what was said last week and today is not sufficient, in the Government's view, to justify a modification of the commission's recommendation.
  The right hon. Member for Rhondda also referred to the recommendations on Ebbw Vale, Abertillery, Rhynmey, Porterdown and the upper Swansea valley, particularly as regards the transfers from Gower to Neath, which were also raised by the hon. Member for Gower (Mr. Wardell). The commission faced a difficult problem because, although the Gower constituency was an acceptable size, the remaining constituencies were not. Alterations to them inevitably involved alteration to the Gower constituency. Representations made to the commission after the local inquiry clearly commanded much sympathy among its members, but, as they explain in paragraph 174 of the report, they found that they could not accede to the objections without creating unacceptable disparities.
  When considering whether the Home Secretary ought to modify some recommendations, to meet a local anxiety, such as that voiced by the hon. Member for Gower, we have to bear in mind that there is always a knock-on effect which can cause further disagreements.
  My hon. Friend the Member for Flint, West (Sir A. Meyer) spoke eloquently of the anxieties in his constituency, and he was joined tonight by my hon. and

  769
  learned Friend the Member for Denbigh (Mr. Morgan). I have time to deal only cursorily with their case. The assistant commissioner concluded that the commission's proposals for Clwyd were not seriously at fault or unworkable, whereas the counter proposals were opposed by the majority at the local inquiry.
  The main reason why the existing constituencies had to be radically altered was that Clwyd is entitled to five seats. The existing Denbigh constituency has parts in the county of Gwynedd; Merioneth, most of which is in Gwynedd, has parts in Clwyd; and Flint, East is divided into three parts. One can sympathise with the commission's feeling that it had to make fairly radical changes there.
  The hon. Member for Goole (Dr. Marshall) spoke about Peterston and Peterson. The ward in question was created by the Borough of Vale of Glamorgan (Electoral Arrangements) Order 1982 and the spelling of the name in the draft Order in Council reflects that in the electoral arrangements order. The commission's recommendations contains a typographical error, the correction of which is not a modification. A modification within the terms of the Act has to modify the effect of the commission's recommendations and not be a mere typographical inaccuracy.
  I understand the anxieties that have been expressed, but my right hon. Friend the Home Secretary is convinced that they are not sufficient to enable him to meet the anxieties by modifying the recommendations of the Boundary Commission. I believe that the House can confidently give effect to those recommendations in toto.
  Question put:—
  The House divided: Ayes 238, Noes 9.

  Division No. 74]

  [11.43 pm

  AYES

  Alexander, Richard

  Carlisle, Kenneth (Lincoln)

  Alison, Rt Hon Michael

  Carlisle, Rt Hon M. (R'c'n)

  Ancram, Michael

  Chalker, Mrs. Lynda

  Aspinwall, Jack

  Channon, Rt. Hon. Paul

  Atkins, Rt Hon H.(S'thorne)

  Chapman, Sydney

  Atkinson, David (B'm'th,E)

  Clarke, Kenneth (Rushcliffe)

  Baker, Kenneth(St.M'bone)

  Cockeram, Eric

  Baker, Nicholas (N Dorset)

  Colvin, Michael

  Banks, Robert

  Cope, John

  Beaumont-Dark, Anthony

  Corrie, John

  Beith, A. J.

  Costain, Sir Albert

  Bendall, Vivian

  Cranborne, Viscount

  Bennett, Sir Frederic (T'bay)

  Critchley, Julian

  Benyon, Thomas (A'don)

  Crouch, David

  Benyon, W. (Buckingham)

  Dorrell, Stephen

  Berry, Hon Anthony

  Douglas-Hamilton, Lord J.

  Best, Keith

  Dover, Denshore

  Bevan, David Gilroy

  Dunn, Robert (Dartford)

  Biffen, Rt Hon John

  Dykes, Hugh

  Blackburn, John

  Edwards, Rt Hon N. (P'broke)

  Blaker, Peter

  Eggar, Tim

  Bottomley, Peter (W'wich W)

  Elliott, Sir William

  Bowden, Andrew

  Ellis, Tom (Wrexham)

  Boyson, Dr Rhodes

  Emery, Sir Peter

  Braine, Sir Bernard

  Fairbairn, Nicholas

  Bright, Graham

  Fairgrieve, Sir Russell

  Brinton, Tim

  Faith, Mrs Sheila

  Brittan, Rt. Hon. Leon

  Fenner, Mrs Peggy

  Brooke, Hon Peter

  Finsberg, Geoffrey

  Brotherton, Michael

  Fisher, Sir Nigel

  Brown, Michael(Brigg & Sc'n)

  Fletcher, A. (Ed'nb'gh N)

  Browne, John (Winchester)

  Fookes, Miss Janet

  Bruce-Gardyne, John

  Forman, Nigel

  Bryan, Sir Paul

  Fowler, Rt Hon Norman

  Buchanan-Smith, Rt. Hon. A.

  Fox, Marcus

  Butcher, John

  Fraser, Rt Hon Sir Hugh

  Butler, Hon Adam

  Fraser, Peter (South Angus)

  Carlisle, John (Luton West)

  Gardiner, George (Reigate)

  770

  Garel-Jones, Tristan

  Murphy, Christopher

  Goodhart, Sir Philip

  Myles, David

  Goodhew, Sir Victor

  Neale, Gerrard

  Goodlad, Alastair

  Needham, Richard

  Gorst, John

  Neubert, Michael

  Gow, Ian

  Newton, Tony

  Gray, Rt Hon Hamish

  Onslow, Cranley

  Greenway, Harry

  Oppenheim, Rt Hon Mrs S.

  Grieve, Percy

  Osborn, John

  Griffiths, Peter (Portsm'th N)

  Page, John (Harrow, West)

  Grist, Ian

  Page, Richard (SW Herts)

  Grylls, Michael

  Parkinson, Rt Hon Cecil

  Gummer, John Selwyn

  Parris, Matthew

  Hamilton, Hon A.

  Patten, Christopher (Bath)

  Hamilton, Michael (Salisbury)

  Patten, John (Oxford)

  Hampson, Dr Keith

  Pattie, Geoffrey

  Hannam, John

  Pawsey, James

  Haselhurst, Alan

  Penhaligon, David

  Hastings, Stephen

  Percival, Sir Ian

  Hawkins, Sir Paul

  Pollock, Alexander

  Hayhoe, Barney

  Price, Sir David (Eastleigh)

  Heddle, John

  Prior, Rt Hon James

  Henderson, Barry

  Proctor, K. Harvey

  Higgins, Rt Hon Terence L.

  Rees, Peter (Dover and Deal)

  Hill, James

  Renton, Tim

  Hogg, Hon Douglas (Gr'th'm)

  Rhodes James, Robert

  Hooson, Tom

  Rhys Williams, Sir Brandon

  Hordern, Peter

  Ridley, Hon Nicholas

  Howe, Rt Hon Sir Geoffrey

  Ridsdale, Sir Julian

  Howell, Rt Hon D. (G'ldf'd)

  Rifkind, Malcolm

  Howell, Ralph (N Norfolk)

  Rippon, Rt Hon Geoffrey

  Howells, Geraint

  Roberts, Wyn (Conway)

  Hunt, David (Wirral)

  Rossi, Hugh

  Hunt, John (Ravensbourne)

  Rumbold, Mrs A. C. R.

  Irvine, RtHon Bryant Godman

  Sainsbury, Hon Timothy

  Jenkin, Rt Hon Patrick

  St. John-Stevas, Rt Hon N.

  Jessel, Toby

  Scott, Nicholas

  Jopling, Rt Hon Michael

  Shaw, Sir Michael (Scarb')

  Joseph, Rt Hon Sir Keith

  Shelton, William (Streatham)

  Kaberry, Sir Donald

  Shepherd, Colin (Hereford)

  Kershaw, Sir Anthony

  Silvester, Fred

  Kitson, Sir Timothy

  Sims, Roger

  Knox, David

  Skeet, T. H. H.

  Lamont, Norman

  Smith, Sir Dudley

  Lang, Ian

  Smith, Tim (Beaconsfield)

  Langford-Holt, Sir John

  Speed, Keith

  Latham, Michael

  Spence, John

  Lawrence, Ivan

  Spicer, Jim (West Dorset)

  Lawson, Rt Hon Nigel

  Sproat, Iain

  Lee, John

  Squire, Robin

  Lennox-Boyd, Hon Mark

  Stainton, Keith

  Lester, Jim (Beeston)

  Stanbrook, Ivor

  Lewis, Sir Kenneth (Rutland)

  Stevens, Martin

  Lloyd, Ian (Havant & W'loo)

  Stewart, A.(E Renfrewshire)

  Lloyd, Peter (Fareham)

  Stewart, Ian (Hitchin)

  Loveridge, John

  Stokes, John

  Lyell, Nicholas

  Stradling Thomas, J.

  Macfarlane, Neil

  Taylor, Teddy (S'end E)

  MacGregor, John

  Thompson, Donald

  McNair-Wilson, M. (N'bury)

  Thorne, Neil (IIord South)

  Madel, David

  Townend, John (Bridlington)

  Major, John

  Trippier, David

  Marland, Paul

  van Straubenzee, Sir W.

  Marlow, Antony

  Vaughan, Dr Gerard

  Marshall, Michael (Arundel)

  Viggers, Peter

  Marten, Rt Hon Neil

  Waddington, David

  Mates, Michael

  Wakeham, John

  Maude, Rt Hon Sir Angus

  Waldegrave, Hon William

  Mawhinney, Dr Brian

  Walker, B. (Perth)

  Maxwell-Hyslop, Robin

  Waller, Gary

  Mayhew, Patrick

  Ward, John

  Mellor, David

  Watson, John

  Miller, Hal (B'grove)

  Wells, Bowen

  Mills, Sir Peter (West Devon)

  Wheeler, John

  Moate, Roger

  Whitelaw, Rt Hon William

  Monro, Sir Hector

  Whitney, Raymond

  Moore, John

  Wickenden, Keith

  Morris, M. (N'hampton S)

  Wiggin, Jerry

  Morrison, Hon C. (Devizes)

  Wigley, Dafydd

  Mudd, David

  Wilkinson, John

  771

  Young, Sir George (Acton)

  Tellers for the Ayes:

  Younger, Rt Hon George

  Mr. Carol Mather and

  Mr. Robert Boscawen.

  NOES

  Cowans, Harry

  Skinner, Dennis

  Cryer, Bob

  Welsh, Michael

  Dixon, Donald

  Martin, M(G'gow S'burn)

  Tellers for the Noes:

  O'Neill, Martin

  Dr. Roger Thomas and

  Parry, Robert

  Mr. Gareth Wardell.

  Powell, Raymond (Ogmore)

  Question accordingly agreed to.
  Resolved,
  That the draft Parliamentary Constituencies (Wales) Order 1983, which was laid before this House on 7th February, be approved.

  Parliamentary Constituencies (Wales)

    INTERNATIONAL TRANSPORT CONVENTIONS BILL [LORDS]
    Order for Second Reading read.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 66 (Second Reading Committees), That the Bill be now read a Second time.
    Question agreed to.
    Bill accordingly read a Second time.
    Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

    WAYS AND MEANS

      INTERNATIONAL TRANSPORT CONVENTIONS [MONEY]
      Resolved,
      That, for the purposes of any Act of the present Session to give effect to the Convention concerning International Carriage by Rail signed on behalf of the United Kingdom on 9th May 1980, it is expedient to authorise the payment into the Consolidated Fund of fees received by the Treasury for certificates issued in pursuance of that Act.—[Mr. Major.]

    PLANT VARIETIES BILL [LORDS]
    Order for Second Reading read.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 66 (Second Reading Committees), That the Bill be now read a Second time.
    Question agreed to.
    Bill accordingly read a Second time.
    Motion made—[Mr. Spearing]—and Question, That the Bill be committed to a Select Committee, put and negatived.
    Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  Plant Varieties [Money]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to amend the Plant Varieties and Seeds Act 1964, it is expedient to authorise any increase attributable to the said Act of the present Session in the sums payable out of money provided by Parliament or into the Consolidated Fund under the said Act of 1964—[Mr. Major.]
  11.54 pm
  Mr. Nigel Spearing: The Bill contains a provision for about £1,000 charge on public funds for the administration of the Bill. As the purpose of the Bill is perhaps to put money into other people's pockets, it might be interesting to know what the provision is for. The Bill, which has been read a Second time, raises a number of national and international issues hitherto unsuspected. I believe that for that reason it would have been better for the Bill, having left the House after Second Reading, to go to the new experimental public Bill Committee where its purport and methods of operation could have been studied by a Select Committee before it was further debated.
  Unfortunately, that experimental provision is not in force during this Session, although it was in the previous Session, and that is why I moved the motion a minute or two ago, calling for a Select Committee, because without the Select Committee scrutiny I do not believe that the House will have dealt with the Bill in a proper and public fashion.
  11.55 pm
  Mr. Frank Hooley: I should like to support my hon. Friend the Member for Newham, South (Mr. Spearing). I believe that the House would have benefited considerably from the advice of a Select Committee on this Bill. It has technical and international ramifications which may not be immediately plain from a Bill that looks so innocuous. I am sure that those hon. Members who have read the proceedings in Committee will be aware of some of those ramifications.
  I should like to know the purpose of the money resolution. I am slightly puzzled, because page 3, clause 6(4), states:
  "Nothing in this Act shall impose any charge on the people or on public funds, or vary the amount or incidence of or otherwise alter any such charge in any manner, or affect the assessment, levying administration or application of any money raised by any such a charge."
  Discounting all the gobbledegook, it seems to suggest that if the Bill is enacted we are not entitled to charge any more money. It may, of course, be a technicality arising from the fact that the Bill started in another place, but if it is the Minister should explain the subsection. The Minister should also explain what she can usefully buy with £1,000 of public funds. We are nowadays accustomed to talk in terms of £1 million or £1 billion. What one can buy for public expenditure of £1,000 is a little obscure.
  Before we pass the money resolution we should have an explanation from the Government about why they objected so strongly to the proposal of my hon. Friend the Member for Newham, South that the Bill's ramifications should be examined by a Select Committee. It is unfortunate that the Lord President has declined to reactivate the system the Government introduced last
  774
  Session or the previous one of special Select Committees. I accept that we cannot examine the Bill under that procedure because the resolution has not been put down. As my hon. Friend the Member for Newham, South said, it would still have been possible to have committed it to a Select Committee under the existing Standing Orders of the House. It is a great pity that that opportunity was missed. It may, of course, lengthen our proceedings in Committee more than would otherwise have been necessary.
  I am interested to know what this £1,000 or £2,000 will be spent on, with the rate of inflation that we have had under the Government, and what exactly is the purport of clause 6(4) which seems to say that the Bill is not entitled to make any charge. No doubt the Minister will enlighten the House on those points before we agree to the money resolution.
  11.59 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I shall not get drawn into the arguments for sending the Bill to a Select Committee, because a vote on it has been taken.
  It has been pointed out that the money part of the Bill is likely to be minimal. The Bill introduces amendments to part I of the Plant Varieties and Seeds Act 1964, which established the system of plant breeders' rights in the United Kingdom. The Bill has three primary purposes—to provide for an increase in the maximum period for which plant breeders' rights are exercisable from 25 to 30 years and the minimum period from 15 to 20 years; to enable the United Kingdom to ratify the 1978 revised text of the international convention for the protection of new varieties of plants; and to make certain other amendments that have become necessary since the enactment of the original legislation to take into account changes in the plant breeding and marketing industries, and other factors.
  The financial effects of the Bill are minimal. However, the following clauses may be perceived to have minor financial implications. Clause 1 provides for the increase in the periods of protection referred to. As fees for the combined exercise of the grant of rights are payable on an annual basis, it may be expected that the provision will increase the income from that source, but as normally only a small proportion of varieties are retained for the full period of grant—a point I made in Committee—the additional income is not expected to exceed £1,000 to £2,000 per year for the foreseeable future.
  Clause 1 at the same time repeals the provisions whereby the Controller of Plant Variety Rights may extend the periods of protection in cases where he is satisfied that the holder of rights has not been adequately remunerated by his grant. That should produce a saving of administrative costs involved in considering applications for extension.
  Clause 2 enables Ministers to extend plant breeders' rights in certain species to the marketing of imported parts of products of varieties protected in Great Britain. That would call for the amendment of statutory instruments, requiring small additional expenditure of administrative staff time and resources.
  Clause 3 has two main provisions. Subsection (1) widens the scope of the factors to be taken into account by the controller in considering compulsory licence applications by requiring him to endeavour to secure that,

  775
  where an export market exists for a variety, it is supplied from United Kingdom resources. Subsection (2) provides that representations in compulsory licensing applications involving a company in which the Government have an interest, such as NSDO Ltd, may be made by interested persons or organisations who will be afforded a hearing conducted by the controller or, indeed, any person appointed by him.
  The effect of clause 3 could be to increase marginally the number of compulsory licence applications and the costs involved in processing them. It is not possible to quantify such extra costs, but they would be minimal and containable within existing resources.
  Any additional costs resulting from the Bill will be contained within public expenditure limits. The money resolution is widely drawn and is intended to cover increased payments into the Consolidated Fund as a result of the extended periods of protection and any increased costs that result from the extension of powers in clause 2 and the widening of the scope of the controller's duties in clause 3.
  Question put and agreed to.
  Resolved,
  That, for the purposes of any Act of the present Session to amend the Plant Varieties and Seeds Act 1964, it is expedient to authorise any increase attributable to the said Act of the present Session in the sums payable out of money provided by Parliament or into the Consolidated Fund under the said Act of 1964.

  Statutory Instruments, &c.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): By leave of the House, I will put motions 7 to 10 together.
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committees on Statutory Instruments, &c.)

  Statutory Instruments, &c.

    EXPORT GUARANTEES
    That the draft Export Guarantees (Limit on Sterling Commitments) Order 1983, which was laid before this House on 27th January, be approved.
    That the draft Export Guarantees (Limit on Foreign Currency Commitments) Order 1983, which was laid before this House on 27th January, be approved.
    That the draft Export Guarantees (Extension of Period) (No. 5) Order 1983, which was laid before this House on 27th January, be approved.
    That the draft Export Guarantees (Limit on Overseas Investment Commitments) Order 1983, which was laid before this House on 27th January, be approved.—[Mr. Major.]
    Question agreed to.

  Bedford-St. Pancras Railway Line (Electrification)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]
  12.3 am
  Mr. T. H. H. Skeet: In this debate I am joined by my hon. Friends the Members for Luton, East (Mr. Bright), Luton, West (Mr. Carlisle), Bedfordshire, South (Mr. Madel), and St. Albans (Sir. V. Goodhew) and my hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell), who will soon become the Member for Mid-Bedfordshire.
  The prolonged delay in the operation of the Bedford-St. Pancras electrification is a public scandal. Construction began in 1976 and the project was completed to Moorgate in May 1982. It remains unused, with 48 sets of rolling stock remaining at sidings at Bedford, Nottingham, Derby and Cricklewood. The unions have complained about the lack of investment in British Rail, but when a project is carried through to completion they inhibit its use, regardless of the pleas and discomfort of commuters who travel daily between Bedford, the intermediate stations, and the metropolis. It could happen only in "Alice in Wonderland" that, from a total investment of £154 million, electrical equipment, overhead wiring and rolling stock worth £85·6 million lie idle to weather and rust, while a further £68·1 million is in partial use.
  After the Taj Mahal, the pyramids and the groundnut scheme, Bedford electrification remains a monument to union ineptness and irresponsibility and managerial inability to control events.
  According to my hon. Friend the Minister, in a written reply
  "The investment which has been lying idle represents about £150,000 a week in interest costs".—[Official Report, 18 November 1982; Vol. 32; c. 272.]
  There could be a saving for British Rail. On 8 April 1982, my hon. Friend said:
  "current costs of train crews, fuel, cleaning, shunting, maintenance and depreciation on rolling stock are estimated at approximately £4·10 per mile for each four-car diesel-multiple-unit set and at £3·20 per mile for each four-car-electric-multiple-unit set."—[Official Report. 8 April 1982; Vol. 21; c. 474–75.]
  On a rough estimate, the capital loss to October 1983 is about £5 million, and the revenue loss is about £1·5 million.
  The current timetable is something of an enigma. Work was completed to Moorgate in May 1982 and was estimated to be completed to St. Pancras in October 1983. If we assume a McCarthy settlement of £6 per shift of duty within 14 days, which is optimistic, 50 per cent. of the service could be operational on a slower timetable by July 1983, with full operational service by October 1983, or one and a half years after completion of the works. I hope that my hon. Friend will give his verdict on the timetable.
  However, the House is more concerned with drivers' wages today and what they are likely to be on average. The basic wage is £105 a week. If we add 10 per cent. for unsocial hours, which is £10·50, overtime and Sunday working another £30, and London weighting allowance £15·80, that makes a total of £161·30. If we add an estimated extra £6 a shift claimed by ASLEF—it is claiming £7 but will probably get £6—that brings the total to £194·30. We must then add a further 6 per cent. on the
  778
  McCarthy proposals, which will eventually be backdated to September 1982, which brings the total pay of drivers to £200·60 or £10,430 per annum.
  Those figures are extraordinary when compared with the Tyneside metro, which is a drivers-only operation. The wage for those drivers is £165, including overtime and continental rostering. Yet we are told by ASLEF that the extra responsibility assumed would account for the difference between those figures. I cannot believe that.
  Mr. David Madel: Does my hon. Friend agree that with such wages it is time for the drivers to think about the suffering commuters who must continue to travel in dirty diesel trains from Bedfordshire to St. Pancras?
  Mr. Skeet: I am grateful to my hon. Friend for mentioning that. I am one of those unfortunate commuters who come from Bedford, and my hon. Friend comes from a station on the line. We have been suffering those appalling conditions for too long. The unions entirely ignore the comfort of the travelling public.
  Mr. Graham Bright: Is my hon. Friend aware that many commuters from Luton are now travelling by the excellent coach services that are running from that town to Victoria? The commuters are finding that more pleasant, because the coaches are comfortable and cheaper. That must be damaging the long-term prospects of this line, and the unions are responsible.
  Mr. Skeet: The unions, especially ASLEF, must recognise that the more they continue with restrictive practices, the more they are destroying their own system which gives them a good living.
  I wish to refer to the preliminary electrification scheme. The two main projects are Paisley to Ayr at a cost of £25 million and Colchester to Harwich and Ipswich to Norwich at a cost of £29 million. A formal proposal relates to the main east coast line of Leeds to Newcastle at a cost of £118 million.
  I hope that I have the Minister's assurance that no new electrification project will be undertaken or permitted until ASLEF agrees to work the Bedford-St. Pancras facility. I am certain that my hon. Friends will agree with that.
  Last year there was a dispute between ASLEF and British Rail over flexible rostering. It lasted for 17 days but was spread over several months with the eventual acceptance of the McCarthy proposals, but unhappily it was not decided what extra payment was due to the drivers on a single-man operation. It is extraordinary how oblivious the members of ASLEF have been to the difficulties of the travelling public and to the fate of their own enterprise on which they depend for their living and which was subsidised by the taxpayer to the tune of about £1,000 million per annum in 1982–83. The commuter remains disadvantaged, yet cannot lay a claim against the unions for any loss sustained.
  On Thursday 10 February I was travelling to Bedford on the 16·35 and sat in a compartment which had no heating. The guard was helpful and told me that the carriage—FO 3198—had been referred three times to the authorities but nobody had bothered to correct the defect. This is certainly not an isolated example. I have come to the conclusion that the trouble with British Rail is that it is overstaffed, that management at certain levels is either afraid or reluctant to manage and that the unions in their

  779
  rivalry make the administration of the system virtually impossible, especially when they choose to cause disruption regardless of the loss, damage and discomfort of third parties who may choose to travel by rail.
  Why was the cost of running the operation of the Bedford-St. Pancras line not settled with ASLEF and the NUR before British Rail embarked on building the project? Secondly, as British Rail is a state corporation, for which the Minister has responsibility, how long is he prepared to tolerate the painfully slow negotiating procedure that has contributed to endless meetings and the wasting of national assets?
  Thirdly, will the Minister confirm the assurance given by a former Secretary of State for Transport that, unless there is to be proven productivity and a reasonable rate of return on public investment, new electrification projects, wherever they be, will not be contemplated?
  Fourthly, will the payment of the 6 per cent. awarded to railway workers by Lord McCarthy pursuant to a settlement of the recent dispute be made contingent upon union readiness to operate the Bedford-St. Pancras line?
  Fifthly, does the Minister realise that if a private company was conducting these operations, and if it could not use profitably the £150 million worth of assets for a year following completion, it would have little hope of keeping its enterprise from voluntary liquidation, and that ASLEF should be made to realise that there must be some limit to its inordinate demands and restrictive practices?
  Will the combined efforts of this wretched union through the accumulated loss of British Rail, to which it has contributed, place at risk the Bedford-Bletchley rail link? Will he confirm that the loss to that line, after crediting the value of the tickets, amounts to £14 per person who travels on that line?
  This is an extraordinary example of modern technology. The money has been provided by the taxpayer, yet unions that are outdated in their own experience are holding back what should have been a profitable exercise.
  12.15 am
  Mr. John Carlisle: This is a significant debate for those of us with constituencies on the Bedford-St. Pancras line. We are all grateful to my hon. Friend the Member for Bedford (Mr. Skeet) for raising the matter.
  It is significant that the Opposition Benches are empty. I refer especially to the absence of the hon. Member for Nuneaton (Mr. Huckfield), who was so vociferous during the recent British Rail dispute in support of ASLEF, which is entirely to blame for this dispute.
  I represent constituents who are running out of patience. As my hon. Friend said, this is a scandal. We can only wonder at the resilience shown by our constituents over the last few months while this dispute has dragged on. It is a disgrace that thousands of them have travelled to London each day and seen at Cricklewood the new rolling stock waiting to be manned with weeds growing through the wheels, all the more so as they have been forced to travel in the most out-of-date and filthy carriages now available on British Rail. All our constituents must be grateful to my hon. Friend for raising this matter.
  Most galling of all is that the cost is increasing, despite the return that could be achieved not only to the drivers
  780
  but to the well-being of our constituents. There is no doubt in my mind that jobs are being lost in the Bedford, Luton, St. Albans, and Hemel Hempstead areas because this line has not yet reached fruition. The opportunity for new housing is being lost because the line is not operational. I know of many employers who would willingly come to the towns in that area if and when the service is available.
  The Minister must understand the deep resentment that is now felt against British Rail and the union concerned. I do not completely share my hon. Friend's dissatisfaction with the management. I compliment Mr. Harry Reed, the divisional manager, who tried to apologise to commuters for the trouble that has been caused. The blame lies fairly and squarely with the bloody-minded attitude of Mr. Ray Buckton and the ASLEF union. They, and they only, are responsible for this delay and for the fact that this investment has not yet come to fruition.
  Only one result should come from this sad affair. Not only should British Rail refuse to go ahead with any further electrification until the line is opened, but those drivers who continue to refuse to man the line should be dismissed and replaced by those—and there are many—who are willing to be trained to man the line. If that does not happen, as my hon. Friend the Member for Luton, East (Mr. Bright) said, people will find alternative means of transport.
  The ball is fairly and squarely in the court of the union. I hope that the debate and the Minister's remarks will emphasise that fact so that we can start the trains running as quickly as possible.
  12.20 am
  The Under-Secretary of State for Transport (Mr. Reginald Eyre): I know that my hon. Friend the Member for Bedford (Mr. Skeet) has been seriously concerned for a long time about the issue that he has raised tonight. I note that my hon. Friends the Members for Bedford and Luton, West (Mr. Carlisle) are supported by the presence of my hon. Friends the Members for Bedfordshire, South (Mr. Madel), St. Albans (Sir V. Goodhew) and Luton, East (Mr. Bright) and my hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell).
  Many of the constituents of my hon. Friend the Member for Bedford will have suffered as a result of the rail unions' refusal to operate the new electric trains on the Bedford to St. Pancras line. I also understand the concern of my hon. Friend the Member for Luton, West. Luton is the main intermediate stop on this line. My hon. Friend's constituents would have benefited, as he described, from the introduction of the new service. I share their indignation and appreciate fully the strength of feeling expressed by my hon. Friends on behalf of their constituents.
  For nine months, trains which would have provided a faster and more frequent service, generating more revenue, have been standing idle at Cricklewood gathering rust and surrounded by weeds, within view of the long-suffering passengers in the shabby old diesels, which still provide the service. We know the reason only too well. It is because the rail unions—first the NUR and now ASLEF—have refused to agree on terms for driver-only operation, for which the trains were designed. They have become a symbol of union intransigence and resistance to change. It is impossible to take seriously the unions'

  781
  commitment to a modern railway and their requests for new investment when they are blocking the full use of investment worth more than £150 million.
  Suburban services to Bedford are still operated by diesel multiple units introduced in the late 1950s. In the mid-1970s, a decision had to be taken on their replacement. The Railways Board proposed that the service should be electrified and extended along the Midland City line to Moorgate. A new station, known as King's Cross Midland, would be built to improve connections with the underground at King's Cross and St. Pancras, an important interchange served by five tube lines.
  An extensive programme of engineering work has been carried out. Several stations, including Luton, were substantially reconstructed and a completely new station was built at Bedford. The maintenance depot at Cricklewood was rebuilt to cope with the new rolling stock. Colour light signalling was installed from St. Pancras to north of Bedford. Extensive track improvements were made. In order to make room for the overhead power lines, many bridges were reconstructed and the track on the Midland City line lowered. King's Cross Midland station was built, with links to the underground. And, of course, the overhead wires were installed.
  All this work was completed within the time scale set at the start of the project and within the cost target. The Bedford-Luton section of the line was switched on in January 1981 and used for driver training. The line to Moorgate was ready in May 1982. Electrification of St. Pancras station was completed during last summer, as planned. But the new trains still did not run.
  At present, the service is being provided by trains that should have been withdrawn. British Rail has had to face extra maintenance costs to keep them in service. The railways, their customers, and the taxpayer have lost the benefit of nine months of using the new trains on the Bedford-St. Pancras line. Luton and St. Albans should be served by four trains an hour in each direction throughout the day, and Bedford by two. The average journey time from London to Bedford should have been reduced by 20 minutes and to Luton by 11 minutes. As it is, passengers on this line have had to suffer a reduced service and overcrowding at peak periods. I regret this. Luton and St. Albans have only two trains an hour in each direction during the day, and Bedford only one.
  The pity is that this is totally unnecessary. The travelling public have suffered. The image of the railways has been harmed and the climate for further investment has been made less favourable as a result of the unions' action. Yet the issue is basically a simple one. The new trains for the Bedford-St. Pancras line have been designed and built so that they can be operated by the driver alone. The Railways Board has, therefore, decided, quite rightly, that it makes no sense for trains to have both a driver and a guard. It sees this as one of the central areas where there is scope for productivity improvements to help to reduce its costs.
  The board, and many railwaymen, realise that they must achieve productivity improvements to secure the modern and efficient railway we all want to see. We must compliment BR on what it has done so far in that direction. Of course, more needs to be done, and the board can count on the Government's full support in its continuing efforts to achieve further improvements.
  782
  The search for improved productivity on the railways has not been exclusively the province of the Railways Board. The rail unions have advanced their own ideas for achieving better productivity, and several Opposition Members have given the House the benefit of their ideas. These have always had the same theme—"Increased investment leads to improved productivity; give us the investment and we will deliver the productivity " The appalling example of the Bedford-St. Pancras saga shows a completely different picture. Here we have some £150 million invested in new rolling stock and special infrastructure designed to provide a modern, fast, efficient and comfortable service by May 1982. But what has happened? The benefits to the customers have been lost. The only real journey that those new trains have made is into the sidings; they are still there.
  Mr. Skeet: When will we have the electrification?
  Mr. Eyre: I am seeking to answer that question to my hon. Friend's satisfaction.
  Let us examine the reasons why the new trains are still standing idle in Cricklewood sidings. Diver-only operation of trains on the Bedford-St. Pancras line was one of the six productivity points in the twin agreements on pay and productivity which formed part of the 1981 railway pay settlement. There then followed a full year of negotiations about what the unions were supposed to deliver under the terms of the productivity understanding, when they were supposed to deliver it, and what should be the role of guards on trains that have no need for them. It was only after Lord McCarthy, in an arbitration award on pay and productivity in September last year, had suggested a formula that would allow single manning to take place with guards retained for a period of six months on non-guard duties, that the NUR agreed to the principle of driver-only operation.
  The Railways Board therefore opened negotiations with the NUR and ASLEF on supplementary payments for staff whose responsibilities would change under the new arrangements. It made an offer which the NUR accepted, ASLEF chose, to take the issue through all the stages of the negotiating machinery. It now rests with Lord McCarthy, the chairman of the Railway Staff National Tribunal, to arbitrate on this question. I am sure that the whole House will join me in hoping that Lord McCarthy makes his award clear and realistic, and that he makes it quickly.
  Hon. Members will, I am sure, have seen the press reports of remarks made by the chairman of the Railways Board about railway negotiating procedures. He cited the Bedford-St. Pancras negotiations as an example of how the industry's existing machinery of negotiation was inadequate to cope with the need for rapid change. I emphasise that it is, of course, entirely a matter for the Railways Board to negotiate any changes to the existing machinery with the unions which it may conclude are necessary. The Government have no locus in this, although, of course, we shall look forward with interest to seeing how its ideas on this important subject develop.
  The House will wish to know how that sad story affects the case for further electrification. The Government have already approved electrification to Harwich, Ipswich and Norwich, and preliminary work has started on this scheme and on the line between Paisley and Ayr. We have the board's proposals for the electrification of the east coast

  783
  main line to Leeds and Newcastle, the schemes with top priority in its 10-year programme of main line electrification. We hope to announce a decision shortly on the board's proposal to electrify the Tonbridge-Hastings service, and we are awaiting further information to establish whether it would be worth while to electrify both lines to Cambridge, from Royston and Bishop's Stortford.
  We have told the board that we cannot reach a decision on the east coast main line proposals without regard to prospects for the inter-city business, which would be the major beneficiary. Inter-city has a remit to run at a profit; and when we see a satisfactory plan for the business, the way will be open for a decision on the electrification of the east coast main line. We hope to receive the board's
  784
  business plan shortly. Decisions on the balance of the 10-year programme will have to be reached in the context of the debate on the future of the railway as a whole.
  However, the case for electrification, as for any other major investment, is bound to be affected by the unions' readiness to co-operate in improving productivity. The more the railways can save through higher productivity, the more will be available to invest in worthwhile schemes. The problems on the Bedford-St. Pancras line show how slowly this lesson is being learnt. But I hope, for the sake of my hon. Friend's constituents, whose interests they have represented so strongly, that the unions will yet show, by quickly agreeing to operate the service, that they realise how far the future of the railways is in their hands.
  Question put and agreed to.
  Adjourned accordingly at half-past Twelve o'clock.

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

Water Meters
Lord Orr-Ewing:My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many water meters have now been installed in (a) domestic and (b) commercial premises.
Lord Skelmersdale: My Lords, in England and Wales there are some 71,000 water meters in domestic premises and about 768,000 water meters in non-household premises. Separate figures for commercial premises are not available.
Lord Orr-Ewing: My Lords, I thank my noble friend for that reply. Is it not clear, then, that it would be in the interests of people who use a minimum amount of water if they had water meters and were not allotted a bill clearly related only to the rateable value of their apartments? Therefore, is it not something which the Government ought to encourage? Just as we have had metered gas and electricity for many decades, and this has led to economies, would it not lead to economies of water if meters were strongly encouraged by the Government?
Lord Skelmersdale: My Lords, it is not yet clear how many people nationwide would benefit from a metering scheme such as my noble friend suggests. A survey conducted by Severn Trent Water Authority suggests that only about 1 per cent. of households in their area would be likely to benefit from the metering option. However, the Government have made a policy that all domestic consumers, wherever they live in either England or Wales, shall have the option of securing water meters if they so want.
Baroness Fisher of Rednal: My Lords, would the Minister agree that that is a very small percentage of the total number of water consumers, 71 per cent.? Is the noble Lord aware that 1 per cent. of the Severn Trent Water Authority is a very small proportion of people? Would he not agree that £100, which is the approximate cost for having a water meter installed, is a very heavy cost, especially for those for whom it is supposed to be more beneficial to have one installed?
Lord Skelmersdale: My, Lords, the £100 that the noble Baroness refers to is the approximate maximum cost and refers to outside water meters. Of course, many of these meters could well be inside the house and could be fixed, for example, by do-it-yourself
500
enthusiasts. Therefore, there is no reason why in a lot of these properties the price should be anything like as much as the noble Baroness suggests. In fact, the minimum figure I have had suggested to me recently is £20.
In my original Answer I said some 71,000 water meters in domestic premises, which of course is rather different from the figures the noble Baroness has just suggested. As to the total proportion of metered water supply, it is difficult to do this in gallonage but I am informed that, on the costs of water, one-third of all water that is costed is supplied through meters at the moment.
Lord Lloyd of Kilgerran: My Lords, is it possible for the noble Lord the Minister either now, or in writing, to divide the figures up further and give the figures for Wales alone?
Lord Skelmersdale: Yes, my Lords, I shall certainly do that. I am afraid not now, but in writing.
Baroness Fisher of Rednal: My Lords, would the noble Minister clarify? Did he, in answer to me, say that water consumers can fix a do-it-yourself meter themselves? Is he suggesting that water consumers go and buy the meters and install them themselves? Is that what he said? A do-it-yourself kit?
Lord Skelmersdale: My Lords, I said that it could be done by do-it-yourself enthusiasts, but also it could be done under contract with a local plumber, which of course would involve a slightly higher charge because you would have to pay the plumber.
Lord Leatherland: My Lords, may I ask the noble Minister what is the use of having water meters if we have not got any water?
Lord Skelmersdale: My Lords, we are talking on this Question about a general subject, not a specific one of this particular time.

Crown Agents Tribunal
2.41 p.m.
Lord Campbell of Alloway: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether appropriate steps have been taken to implement the recommendations of the tribunal in their report dated 31st March 1982 into the operations by the Crown Agents as financiers on their own account 1967–74 (H.L. 149).
The Lord Privy Seal (Baroness Young): My Lords, all the organisations concerned have reviewed the comments in the report relating to them. The constitution and role of the Crown Agents and their relationship with Government have been defined and regulated by the Crown Agents Act 1979.
In 1975 the Crown Agents started to disengage from their own-account activities in property and secondary

501
banking, and since then they have confined themselves to performing successfully their traditional role of providing services to and in respect of overseas Governments and administrations, particularly in the developing world. The 1979 Act endowed the Crown Agents with the recognised legal status of a statutory corporation. The Act also set up a separate Crown Agents Holding and Realisation Board which has successfully disposed of the previous Crown Agents property holdings in Australia and some further holdings elsewhere. As a result it has been able to repay £17 million to the Consolidated Fund to date after discharging the liabilities arising from the original investment.
As to accountability and control, my right honourable friend the Secretary of State, with the approval of the Treasury, has set a financial target for the Crown Agents which they are expected to achieve by 1985. Internal control procedures within the Crown Agents have been overhauled and improved. The departments concerned have taken steps to clarify responsibilities and tighten up procedures.
As my noble friend Lord Elton said in this House last week, the Government accept the Crown Agents Tribunal's conclusions on procedure, and accordingly consider that the proper safeguards for persons involved in inquiries (the need for which the Government recognise) can be adequately applied by tribunals under the provisions of existing legislation, to which no amendment is therefore needed.
Lord Campbell of Alloway: My Lords, in thanking my noble friend for that detailed and satisfactory reply, may I ask her whether she is aware of any steps taken in implementation of paragraph 31.11 of the report to ensure that the Bank of England passes on to the Treasury any information it has which is relevant to the duties of the Treasury?
Baroness Young: Yes, my Lords. The Treasury and Bank of England have agreed to ensure that communication between them must never again break down in the way described in the report, and in particular it has been agreed that communication on questions where public funds are potentially or actually at risk should be in writing or, if initially made in discussion, subsequently confirmed in writing.
Lord Molloy: My Lords, is the Leader of the House aware that the reasons why this tribunal was established were most depressing for those of us who read the initial reasons for it being set up? Would she please tell the House whether the Government are satisfied with the recommendations of the tribunal and that what happened to cause the tribunal to be set up will not happen again?
Baroness Young: My Lords, I wish to take this opportunity to thank the members of the tribunal for their very comprehensive and thorough report, and to confirm what I said in my original Answer: that the Government have accepted the conclusions of the committee's report.
Lord Cledwyn of Penrhos: My Lords, may I, on behalf of this side of the Chamber, thank the Leader of the House for the full reply she gave to her noble friend's Question and say that it is encouraging that the supervision recommended by the report has now been put into effect by the Government? May I press her a little further, and ask whether she and her right honourable and noble friends are absolutely satisfied that the supervision is now tight enough to ensure that there is no repetition of the kind of thing which brought the tribunal of inquiry into existence? Could she also confirm that the Government are satisfied that there is no other organisation on the same footing as the Crown Agents where lack of supervision of this kind exists?
Baroness Young: My Lords, I hope that what I said in my very full original Answer, which I gave in considerable detail in view of the interest which has been expressed in your Lordships' House, will have been enough to satisfy the noble Lord, Lord Cledwyn, that the Government have taken all effective steps to try to prevent such an occurrence as the tribunal of inquiry has elicited. Naturally, we all hope that there will not be such an occurrence at a future date. It would be quite wrong of anybody to say that it could never occur, but certainly we believe that, in the particular circumstances surrounding the Crown Agents, we have taken all the reasonable steps that we can.
Lord Cledwyn of Penrhos: So far as the noble Baroness is aware, my Lords, there are no other organisations subject to Government accountability where such a thing could happen?
Baroness Young: Not so far as I am aware, my Lords.
Lord Bancroft: My Lords, I, too, thank the noble Baroness for the very full reply she gave. Did she, or did any other Member of your Lordships' House, attend any of the meetings of the tribunal, which, it will be recalled, were public in response to Parliamentary pressure? I ask that question because, on the one occasion when I went there, there was no one from the public or the press. Is she aware (as I am sure she is) that four years were taken out of the lives of the three eminent members of the tribunal and that a number of barristers' careers were severely damaged by the amount of time they had to give up to it?
Baroness Young: My Lords, I did not myself listen to any part of the tribunal's proceedings, and, while I cannot speak for any other Member of your Lordships' House, I am sure that, nonetheless, it is valuable that they should have been held in public and that it should have been possible for people to attend had they wished to do so. To answer the second part of the noble Lord's supplementary, I recognise, as do my colleagues, that the tribunal took a very long time, and I wish to repeat the Government's gratitude to the members of the tribunal for their very thorough report and the time they gave up to it.

CT High Resolution Scanners
2.48 p.m.
Lord Plant: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why high definition CT scan of the brain is available only in the private sector.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, I am afraid the noble Lord is mistaken such facilities are increasingly available within the National Health Service.
Lord Plant: I am surprised at that reply, my Lords, because I have with me a letter from St. Bartholomew's Hospital which says:
"Deep scanning is available only in the private sector".
Is the Minister aware that when I showed him this letter his reply at that stage was quite different from the one he has just given?
Several noble Lords: Oh!
Lord Trefgarne: My Lords, I do not recall writing to the noble Lord in the terms he suggests. It certainly was not recently. Of course, I answered the Question on the Order Paper, and not any correspondence that he may have sent to me. As for the Question on the Order Paper, there are 50 general purpose scanners available in the National Health Service. About 10 of those are advanced machines capable of the high resolution technique to which he refers. In addition, some of the earlier generation have attachments which enable them to perform high resolution scans.
Lord Hale: My Lords, is the noble Lord aware that I think I have said in the House that I have had a five-scan brain X-ray under the National Health Service? The noble Lord, Lord Plant, was kind enough to show me all his information and the letter that he had. I think that the matter would be as well cleared up from the point of view of general information. I had my scan at the Maudsley Hospital. It took about 15 minutes on the steps of the "guillotine". The doctors were delighted with the result, and said that the clarity of the photographs was remarkable but that did not mean that they were photogenic. But the results in these matters are important.
Lord Trefgarne: My Lords, if I may say so, the noble Lord is living proof of the merits of this equipment, but perhaps I should say that it is nonetheless rather expensive—as much as £650,000, which in the case of the noble Lord is clearly money well spent.
Viscount St. Davids: My Lords, will the noble Lord confirm that his Answer means that he is well aware of the fact that it is not only members of BUPA who need their heads examined?
Lord Plant: My Lords, I want to press the noble Lord just a little further. I have a letter from a consultant
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neurologist at St. Bartholomew's. Is the noble Lord aware that the consultant neurologist says that further study involving a high definition CT scan of the brain is indicated, but this investigation is available only in the private sector?
Lord Trefgarne: My Lords, if the noble Lord is referring to the St. Bartholomew's case—and there was a recent press report about it—then I must say that that consultant is mistaken also.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that I was very pleasurably surprised to hear the Answer that he gave? It would be a great help to the House, and indeed to the country, if the location of the various brain scanning facilities within the National Health Service was known, since there may be areas where there is a serious shortage of such facilities. So far as the cost is concerned, £650,000 compared with the usefulness of the machine is a flea bite. If one compares the cost of a single fighter aircraft, for instance, with the cost of the machine, one will realise that the cost of one aircraft would probably be enough to buy two brain scanners. In view of the considerable use made by the private sector of National Health Service facilities, where in the health service there are areas of shortage of this type of equipment is it possible that the private sector may become involved on a basis of reasonable cost in relation to what it enjoys from the National Health Service?
Lord Trefgarne: Yes, of course, my Lords, the Government wholly agree with the suggestion that there should be a free exchange of services of this kind, in particular, if I may say so, in connection with very expensive facilities such as this, where sometimes it is not justified for both the private sector and the National Health Service to have facilities side by side in similar areas. That is in fact what happened in the St. Bartholomew's case, to which the noble Lord, Lord Plant, referred, though I can also say that St. Bartholomew's is planning to install one of these machines later this year.
Lord Walston: My Lords, can the noble Lord give us figures showing the numbers of patients in the private sector and the numbers of patients in the public sector who have been able to make use of this form of treatment?
Lord Trefgarne: My Lords, I do not have those figures in front of me, but I shall see whether I can find them and advise the noble Lord.
Baroness Macleod of Borve: My Lords, can my noble friend the Minister answer the question asked from the Benches opposite as to where the facilities are located? I think it is very important for some of us to know this. I am involved with voluntary giving of money to hospitals, and I wonder whether my noble friend is aware that I should like to know about the possibility of people providing scanners in certain areas of the country.
Lord Trefgarne: My Lords, as I said just now, there are already more than 50 of these machines in this

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country. I understand that the number is constantly increasing. For example, as I said just now, one is shortly to be installed at St. Bartholomew's. I am not sure that a list such as has been suggested would be particularly helpful, because it would not necessarily be accurate for more than a short time, but I shall look into the matter further.

Ghanaian Refugees from Nigeria: UK Aid
2.55 p.m.
The Earl of Listowel: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what assistance they have given, or will give, for the relief and resettlement of Ghanaian refugees from Nigeria.
The Minister of State, Foreign and Commonwealth Office (Lord Belstead): My Lords, a total of £150,000 has so far been set aside for immediate relief aid. The United Kingdom is also contributing approximately £700,000 to aid which the European Community has allocated. The British High Commissions in Accra and Lagos were authorised to spend at once on emergency relief locally and in Togo and Benin. Medical supplies worth at least £70,000 have so far been sent to Ghana.
The Earl of Listowel: My Lords, I thank the noble Lord for his reply and the Government for what they have already done. May I ask the noble Lord, since this disaster involves a fellow Commonwealth country, whether the Government will seek the support of other Commonwealth countries, preferably at the highest level—Prime Minister to Prime Minister—for a long-term resettlement programme to provide all the requirements needed to enable the refugees to become farmers and to live and work on the land near their homes, or in other parts of Ghana?
Lord Belstead: My Lords, certainly I should like to draw the attention of my right honourable friend the Foreign and Commonwealth Secretary to the suggestion that the noble Lord has made about long-term resettlement. With regard to the question of the need for yet further assistance from this country, we should consider any applications sympathetically if need can be shown by the Ghanaian authorities.
Lord Oram: My Lords, can the Minister say anything about assistance that may have been given by British voluntary aid organisations—since in these matters they are often able to act more quickly than the official administrative machine? Is it the Ministry's policy to work closely on such occasions with the voluntary agencies?
Lord Belstead: My Lords, the original Answer mentioned £700,000 which is being given by the United Kingdom as part of the European Community's effort in this matter, and certainly a very great deal of that contribution from this country went to the work of voluntary organisations in the field.
Lord Wigoder: My Lords, did the Government of this country make any representations to the Government of Nigeria about the way in which the expulsion was carried out?
Lord Belstead: My Lords, we do not contest the legality of the Nigerian decision to expel illegal immigrants, but what we have done—and we have made the Nigerian authorities aware of this concern through diplomatic channels, as between friendly Commonwealth countries—is to show regret at the way in which the decision was carried out, since it led to much unnecessary hardship.
Lord Brockway: My Lords, may I ask the Minister whether the Government have information about the Ghanaian Government's projects to re-establish the deportees in farming communities, and can the Government themselves provide technological assistance for the projects as well as encourage the Commonwealth Secretariat to do so?
Lord Belstead: My Lords, I of course take seriously that suggestion from the noble Lord, since it is the second time that it has been made from the Opposition Benches during these exchanges, and I assure the noble Lord, as I have assured the noble Earl, Lord Listowel, that the point will be looked at carefully. But I think I should add that, as of course both noble Lords are obviously very well aware, the influx of Ghanaians from Nigeria will add to Ghana's severe economic problems, and that underlines the need for Ghana to come to some arrangement with the International Monetary Fund.

Agricultural Marketing Bill
3 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrer): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time—(Earl Ferrers.)
Lord John-Mackie: My Lords, before this Bill proceeds, I should like to congratulate the noble Earl's Ministry on the excellent send-off that it gave to the Food from Britain campaign last week. Everybody there thoroughly enjoyed the hospitality and everything else, but the main thing was that anybody who left that meeting without knowing exactly what Food from Britain was going to do had not been paying very much attention. I have never heard a fuller explanation of how the thing was to proceed than was given at that meeting last Tuesday morning.
I should like to reiterate a warning that was given by the managing director of one of our main food stores, that we have got to watch very carefully the whole question of the quantity that is put on the market. Quality and presentation are important; but he emphasised that we could have great difficulties—and there is the example of Lymeswold cheese—if we do not see that there is a steady supply. I should like to mention particularly bacon supplies. As the noble Earl knows, the pig industry at present is not in a good state. I should like to think that the Government are giving

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close thought to some asistance to the pig industry because, as we know from reading the agricultural papers and listening to people, the number of pig producers that are going out of business is alarming. There is no sense in having bacon as one of the products of which we in this country can sell a lot more when there may be difficulties over supplies if something is not done about that aspect. With that warning I would give this Bill a blessing and also the Food from Britain scheme.
Earl Ferrers: My Lords, may I thank the noble Lord, Lord John-Mackie, for what he has said. I am glad that he approved of the launch of Food from Britain the other day. I agree that it was a remarkable event. It was the first time, historically, that we have ever managed to get the producers, the manufacturers, the processers and the retailers all together in order to try to promote British food. That is something which other countries have done but something on which we in this country have been lagging behind. It is good to think that this has now been achieved.
The noble Lord is quite right when he says that it is important to have adequate supplies. That is a prime requirement of proper marketing. It is not just a question of finding a brand name and then televising it; it is one of making certain that the product is good, of making sure that it is what is required by the market and then of making sure that there are adequate supplies. When the noble Lord refers to the problems of the pig industry, I would agree with him that it is going through a difficult time. The noble Lord, however, will be the first to acknowledge that Governments cannot just bail out people when prices go down. In the same way, they cannot remove the advantages of higher prices when they go up.
The point which is important—and I am sure the noble Lord will agree—is that for British bacon to get on to the tables of the housewives it is important that British bacon is constant in supply and that the quality is good. It is only then that it will be able to compete with overseas and other forms of supplies. Really, this is a vital area in which we in Britain have quite a long way to go to ensure, particularly in terms of the bacon industry, that our supplies are as good and that the quality is as good and as constant as those of our competitors.
On Question, Bill read a third time.
Earl Ferrers: My Lords, I beg to move that the Bill be now passed.
Moved acordingly, and, on Question, Bill passed.

Pig Industry Levy Bill
Read a third time, and passed.

ECC 2nd Report: Socio-Structural Policy
3.5 p.m.
Lord Cledwyn of Penrhos Lord Cledwyn of Penrhos rose to move, That this House takes note of the Report of the European
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Communities Committee on Socio-Structural Policy (Guidance Fund) (2nd Report, H.L. 30).
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I speak from this place as the former chairman of Sub-Committee D and not in any other capacity. I am proud to do so. I regarded it as a privilege to be the chairman of Sub-Committee D and I should like to pay the warmest possible tribute to the members of the committee, its clerk and the specialist advisers. They make a formidable combination, as those who come into contact with the committee know, and they perform a most valuable service to the House and to the country. I also wish my successor, Lord Plowden, all happiness and success in the chair.
The committee's reports, as the House will be aware, are regarded as necessary' reading not only in Whitehall and not only in the other place but also in Brussels and in Strasbourg. This study of socio-structural policy is the last over which I had the honour to preside. The title sounds forbidding and it might deter people from regarding the report as bedside reading. But those engaged in, or generally interested in, farming should not be put off by the title because the report deals in detail with a sector which is of the highest importance to them. Of course, we and they tend naturally to be most concerned with farm price support proposals. This is because they are the subject of annual negotiation and because they have an immediate effect on agricultural activity in the Community. As the House knows, Sub-Committee D scrutinises these proposals in detail every year. It could, I suppose, be said to be the focus of the subcommittee's sessional programme. I note that a debate on the proposals will take place a fortnight hence, on 7th March.
We must remember that nearly one-half of Britain's agricultural land is in the hills and upland areas, where special support for farming is absolutely essential if this vast part of our country is to be kept in production. Investment aids to keep agriculture efficient have been an essential part of the policies of successive Governments for a long time. This spending on socio-structural measures therefore could be described as the other side of the CAP coin. It is administered under four EEC directives, to which I shall refer very briefly because they are in fact the foundation of this debate, as the report itself makes clear. These are the matters upon which we are making a judgment in our discussion today.
The first directive (72/159) deals with the modernisation of farms and, in this country, it is implemented through the Agriculture and Horticulture Development Scheme. For example, grants are available for buildings and machinery, land improvement measures and for buying additional cattle and sheep; and help can also be given for keeping farm accounts. In this country we have preferred to provide this aid by way of capital grants while most other countries in the Community give it in the form of interest-rate subsidies. The evidence submitted to the committee by the Ministry of Agriculture, Fisheries and Food showed that poverty in some parts of the Community has prevented them from formulating development plans and that lack of irrigation, lack of drainage, and lack of adequate

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infrastructure—all these things and many other obstacles have held up or stultified structural improvements.
Some members of the committee were able to visit some of these areas last autumn, and it was, by all accounts, a most successful visit. I hope that we may hear something about that from the noble Baroness and noble Lords who went on this tour. For several reasons I understand that applications under this directive have fallen in the past 18 months. When the noble Earl replies perhaps he will comment on this and give us the reasons for the decline.
The second directive, 75/268, deals with less favoured areas and defines the three types of areas which are eligible: first, the mountain areas; then those affected by depopulation; and, thirdly, those with special handicaps. The aids to less favoured areas are described in paragraph 5 on page 4 of the report. This is the point at which I should refer to the integrated development programme for Scotland, the 5-year project which covers the Western Isles about which there has been a good deal of discussion, and concerning which there was a debate in this House a few weeks ago. Appendix C, on page 10 of the report, gives an interesting summary of action taken in other states in the Community.
Now I come to the third directive, which is 72/160. This deals with uneconomic units. It is dealt with here through the Farm Structure (Payments to Outgoers) Scheme, under which a lump sum or annuity may be paid to farmers between the ages of 55 and 65 who are prepared to relinquish so-called uncommercial units. It is clear from the evidence that there is no great interest in this directive in this country. I think the reply to Question No. 63 in the report will indicate the lack of interest to which I have referred.
The last directive, 72/161, deals with agricultural training, retraining and socio-economic guidance. The Agricultural Training Board and the Agricultural Development and Advisory Service (ADAS) are involved in this. The answer to Question No. 30 in the report summarises the position in the United Kingdom, and also shows that France has been taking full advantage of this directive. They have received far more money than we have in this country.
The committee then went on to look very carefully at Regulation 355/77. This regulation deals with the processing and marketing of farm products. This regulation was to run initially for five years to the end of 1982. The House will have noted that we were concerned in the committee about the United Kingdom's share under this regulation. A large number of statistics were supplied to us by the Ministry and these were extremely helpful. The evidence showed that there is some doubt about the continuing justification for this particular method of handing out money; but, also, that because some sections of the Community like it, it is unlikely to be discontinued in the foreseeable future.
But we were, as I say, extremely concerned by the comparatively small share which the United Kingdom receives, and this is shown in Table 5(a), on page 41 of the report. Perhaps we can be told whether there has been any improvement since then. The report deals in some detail with this whole question of marketing and
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processing and makes an important recommendation in paragraph 97:
"benefit to consumers should be a condition of eligibility having no less weight than benefit to producers".
It will be interesting to know whether the Minister agrees with that proposition.
We also favoured the replacement of the Commission by national authorities to administer this regulation and the elimination of the apparent discrimination against some secondary processing activities. In his evidence on the 21st July, which may be seen on page 116 of the report, the House will note that Mr. Simon Gourlay, the vice-president of the National Farmers' Union, said that his union are in favour of
"the extension of marketing activities and assistance for that".
He went on to welcome the Food from Britain campaign, which was then in the planning stage in the Ministry, to which my noble friend Lord John-Mackie and the noble Earl have referred in the previous short interchange.
Last Wednesday, as my noble friend said, a number of us attended the launching of this campaign in a conference in the Barbican, where we heard the Minister of Agriculture and others speaking. It was a very interesting occasion and I wish the campaign all success. It is of course very relevant to Regulation 355/77. May I refer the Minister to paragraph 7 of the NFU's submission? This is on page 100 of the report. They say:
"Given that only one applicant in seven is successful there is too much uncertainty for the regulation properly to stimulate planned investment".
I want to stress the figures, and we should bear in mind that we are talking about the United Kingdom. The submission goes on in paragraph 8:
"The union is unhappy at the lack of a unified approach by the various United Kingdom agricultural departments".
Paragraph 9 says that the union,
"is also concerned at the length of time taken to pay out grant aid on approved projects".
There are other criticisms as well. Mr. Peter Walker is clearly and rightly enthusiastic about the Food from Britain initiative and we hope it succeeds. But the manner in which this regulation is administered is very relevant to the success of the Food from Britain campaign. The committee makes this plain in the report and I commend in particular paragraphs 97 to 101. As paragraph 100 says,
"Promotion of better marketing and processing is of great Importance for the future".
In my view, and from my experience, there is no better farmer in the world than the British farmer. In the past 30 or 40 years there has been no better record of productivity in the world than British agricultural productivity. What has been lacking is the development of processing and marketing. Now we have the opportunity to make progress on this aspect, and I hope that we shall succeed. I trust that the noble Earl can bring the recommendations of the committee and the aims of Food from Britain together in a meaningful way when he winds up the debate.
As the House may know, I have always been sympathetic to the broad objectives of the European Community—very largely on political grounds. The

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Commission in Brussels and the European Parliament in Strasbourg are preferable to Waterloo, the Somme and Dunkirk. The Community has resolved an enormous historical problem, and we should be grateful for that; but we must also criticise the system where necessary. One of my complaints concerns the reluctance of the Commission to effect significant change. One has the impression that the Commission moves far too slowly where change is necessary. We have yet another example in this report. While there is general agreement that the guidance section instruments have on the whole been beneficial in raising farm incomes and in improving farm structures, they have now become out of date. Yet there is no move to appreciate this and to amend them. They were drafted over 10 years ago and economic circumstances have changed substantially since then. Some of the instruments have not been used to any great extent, and others have not been particularly cost-effective.
Sub-Committee D has in fact faced up to the challenge of the changes that I have mentioned and has done so courageously, although no doubt many will disagree with its findings. What does the committee say on this point? It points to the current slow economic growth and the high unemployment throughout the Community at the present time. It points to mounting food surpluses; the committee reminds us that the probable accession of Spain and Portugal will increase the problems of disposing of Mediterranean products; and it also notes that agriculture's share of the Community budget is politically unacceptable.
The whole problem is well summarised in paragraphs 105 and 106, and in the conclusions in paragraph 107. The committee rightly recommends that certain capital aids, for example, for horticulture and land drainage, should continue and it makes some important proposals for less favoured areas in paragraph 91.
Although I took the chair during all the sessions of oral evidence, I think that my noble friend Lord Walston presided over most of the meetings concerning the report itself, and I would like to thank him personally and all those who helped in the production of what I think is an excellent report. It is, I believe, an impressive and also a radical report. I am sure it will be read in Brussels and I hope it will be acted upon promptly, because there is nothing more discouraging than to put in hard work on a report and the production of reasonable recommendations, only to find that it gathers dust for years on a shelf somewhere in Brussels. We shall await the noble Earl's comments with great interest, and especially his reactions to the main recommendations in paragraph 107. Progress in this area, both here and in Brussels, will encourage us to believe that the Community is a dynamic and forward-looking institution worthy of loyalty and support. I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Socio-Structural Policy (Guidance Fund) (2nd Report, H.L. 30).—(Lord Cledwyn of Penrhos.)
3.21 p.m.
Baroness Seear: My Lords, we on these Benches would take the view that the common agricultural policy has been at one and the same time one of the greatest successes of the EEC and one of its greatest liabilities and problems. It has been one of its greatest successes undoubtedly because it has increased the output of food to near, if not total, self-sufficiency: some might say perhaps it has gone too far in that direction in the light of the full possibilities of world trade. It has been one of its greatest successes because it has enabled a reorganisation of farming to take place and, in the poorer farming areas of the Community, a consolidation of holdings and a building up of a far more economically viable agriculture than could possibly have existed without the intervention and the methods of the CAP. It has done this without basically harming the nature of the countryside and of rural life in those areas of the Community. A more drastic and less generous reorganisation system could have led to extremely harmful social results which would have been underlined today, with the unemployment that has developed in the industrial sector and which would have been made far worse had the reorganisation of agriculture been handled in a less constructive and less socially acceptable way.
However, there is no doubt that the CAP has also been a very considerable liability and a considerable brake on development of the Community as many of us would wish to see it develop. Food prices are far too high from the point of view of the consumer, and indeed the excess production has allowed those who oppose the existence of the Community, and Britain's membership of it, to be able to point to the outcome of the CAP as disadvantageous for consumers throughout the Community but particularly for consumers in this country.
So we are faced with a policy absorbing far too high a proportion of the Community budget, as has been pointed out again and again. It is a proportion which is unfavourable for the interests of this country and it has led, or at any rate contributed to, the hostility towards the Community which is so damaging from a political point of view and also from an economic point of view in the longer term. So we look for ways in which the CAP can be adapted to be more beneficial to the interests of this country and indeed to the long-term interests of the Community. However, we recognise that it is not likely that there will be the kind of drastic change in the common agricultural policy which perhaps it would have been desirable to achieve but which, given the history of the policy, given the political realities of the Community and the way in which it works, is just not going to happen.
Therefore, it must be very welcome that in the recommendations of this report is contained the germ of a move to a way in which that policy can be adapted to make it far more acceptable to the interests and needs of this country. The change will not be radical: it will be gradual, but it will be highly beneficial—in particular, the recommendation that the emphasis should no longer be on increasing production for the sheer sake of increasing production, with the apparently absurd result of production that we cannot then sell except at an uneconomic rate, and an increase

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in production which has been accompanied by a continuing increase in price.
The shift in policy should be towards increasing the quality of agricultural life, towards the maintenance of rural life and of the small farm, the family farm and the part-time farmer. We should try to reach the position in which a number of small farms will be maintained, with perhaps one member of the family earning a substantial part of the family income off the farm even though the farm itself continues to be run as a family unit and as a very important ingredient of the life of the rural community. As I say, it has been a great tribute to the CAP that is has so far been able to maintain that kind of rural community, although up till now at far too great a cost in other areas.
We also very much welcome the emphasis which is put on improving the quality of production and improving the service to the consumer which can come from a reorganisation of the CAP. Undoubtedly, consumers and particularly those in this country believe they have had a pretty raw deal from the application of the CAP up to the present time. But if the proposals put forward here are followed and if the stress on quality, on better marketing and on meeting consumer requirements—all incorporated in this report—is followed through, then indeed consumers will begin to see that the operation of the agricultural policy of the Community can work to their benefit. Then slowly perhaps, but not I hope too slowly, the opposition towards this policy will diminish and the work which the Community is doing and to which the common agricultural policy has contributed will be recognised, with very considerable political benefit.
3.28 p.m.
Lord Middleton: My Lords, I welcome this debate as an opportunity to look at the long-term needs of the agricultural industry. As the Minister of Agriculture recently said, not enough attention is given to the long-term, as opposed to short-term, problems by the EEC Council of Ministers. I want to congratulate the committee on their report, but I shall also have to be critical about some of their conclusions.
I compliment the committee on their perception of the need to improve marketing. As the noble Lord, Lord Cledwyn, has just reminded us, last week the Minister of Agriculture launched Food from Britain, the new marketing enterprise. If it is successful, as it must be, it will enhance the demand for food produced in Britain. It will ensure greater opportunities and a highly competitive market for our food manufacturing and processing industries, and generate employment far beyond the farm gate. I am in total agreement with the points made by the noble Lord, Lord Cledwyn, in this connection.
I am glad, too, that the Select Committee recommends that capital aid for land drainage should continue. Well-drained land is indeed a national asset which in the long term will provide a good return for the nation from grants paid. In regard to the less favoured areas, the committee are right to recognise that the development of a wider base for the economy in these difficult areas should be given a higher priority. In addition to the points that the committee make in the report, the ceiling of £8,000 on the expenditure eligible for grants towards tourism and
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craft enterprises should be raised to a more realistic level. There are many examples in other parts of the EEC where the system of administration is better adapted to broadening the economic base in remote rural areas. It is time that the Ministry of Agriculture took a greater part, first, through the socio-economic advisers, and, secondly, through providing grant aid.
I now turn to that part of the report which I find less welcome. The Select Committee reminds us in the introduction to the report that the common agricultural policy provides support by means of expenditure under the guarantee section of the EAGGF—that is, the European Agriculture Guidance and Guarantee Fund, or FEOGA—and under the guidance section. At present the guarantee section receives rather more than 96 per cent. of the total expenditure. In reading the report I was struck by the fact that whereas the original intention was that the guidance section would absorb about 25 per cent. of the total cost of the Community's agricultural budget, in practice expenditure on the guidance section is less than 4 per cent. Moreover, the amount spent on farm modernisation is only a small fraction of that amount.
The committee is critical about the way the CAP is now working, and the noble Baroness, Lady Seear, voiced her misgivings just now. One can only assent to the comments in the report on the imbalance between the guarantee and guidance components of that policy. I do, however, part company with the Select Committee on the conclusion that it draws. It is surely defeatist to make recommendations on the basis that the guarantee and guidance sections can never be brought more into harmony than they have been hitherto. To go on from there and recommend the abolition of capital aid is, I submit, a totally unacceptable proposal and one that would cause great harm to British agriculture, which we surely should be trying to strengthen and not weaken.
If the bulk of the money is spent on the guarantee section, then one would suppose that that is where reform of the CAP should be directed. But the committee's terms of reference were to study the socio-structural directives in the guidance section. So it takes a swipe at the way the CAP is working by saying that the modernisation of farms directive, No. 72/159, is out of date, and the best way to bring it up to date, the committee says, is to end aids to capital expenditure, with some exceptions, whether supported by Community funds or financed solely by national funds.
The merits of this way of reforming the CAP are set out at some length in paragraphs 78 to 83. The arguments could perhaps be summarised like this: first, capital grants have now served their purpose in that farms are now adequately equipped; secondly, capital investment to increase investment has not been related to CAP price policy; and, thirdly, increased productivity implies expansion of production and puts people in rural areas out of jobs.
In paragraph 49 it is acknowledged that the aim of the guidance directive is to improve farm efficiency. The committee itself admits in paragraph 70 that capital grant aids have been cost-effective and have raised technological and structural efficiency. But the committee then proceeds to conclude that these aids should be abolished. I find it very difficult to accept

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this line of reasoning; for the less efficient European farmers are, the more they will press their national Governments for a high level of price support. Surely, only if farmers are efficient can the CAP ever be reformed by spending less money on agricultural support.
I regret that the CAP has evolved so that there is far too much attention paid to the level of intervention prices and hardly any to the long-term need of ensuring that food is produced efficiently and at as low a cost as possible. Perhaps I may quote from the 1956 White Paper which introduced grants for farm buildings:
"The industry must seek progressively to reduce its working costs and so require less support against the effects of low market prices if it is to make its full contribution to the national economy.
"But efficient working on many farms today is still handicapped by inadequate or out-of-date farm buildings or other permanent equipment. Modernisation of these items offers the best way of making an effective contribution towards lowering production costs."
Despite the statement in paragraph 79 that most "farms are now adequately equipped". I firmly believe that that analysis is still valid today and applies as much to Europe as it does to the United Kingdom.
Most of us believe that the success of British agriculture has been as a result of farmers' and owners' willingness to take advantage of new techniques. Research has made these techniques possible, but their application has depended on new investment. New buildings, water supplies, land drainage, roads, fences, machines—all these have been a necessary part of the change in British agriculture in the last 30 years or so. That investment has been accompanied by better working conditions, removing much of the hard manual labour. Without this investment, the current level of efficiency would never have been achieved. Indisputably capital grants have aided, and in some cases enabled, this progress to be made. If in the past 30 years capital grants have contributed to a commendable level of investment, the pattern in the last few years is less satisfactory. We have been running down our national stock of buildings and works. For the last three years, 1979 to 1981, investment has been well below the level of depreciation.
On a number of occasions reference has been made to the rapid escalation of borrowing by the farming industry. In 1972 bank advances to agriculture amounted to about £700 million, but by the end of 1982 had risen to over £4,400 million and were up 21 per cent. on the same level of a year ago—and this despite the improved level of income. My point is that without capital grants, much of which has been recouped from FEOGA, the industry's borrowings would, by now, be far higher—at a level on which the interest charges would be quite unsupportable.
As I said, we have to look to the long-term future of agriculture and there is no doubt that if agriculture is to continue to prosper it will have to adapt and change. New investment is inevitable if we are to keep down unit costs of production, and therefore we must be prepared to encourage investment.
It appears that one of the reasons advanced by the committee for the abolition of capital aids is that it
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would help to maintain employment. That argument ignores the jobs created in the construction industry when farmers and owners put up new buildings. The construction industry is in a depressed enough state already, without cutting off the demand from agriculture, which, I believe, is one of its main markets. This industry, already badly shaken by the recession, would be severely hurt by the Select Committee's recommendations.
If we in the United Kingdom forgo capital grants while our European competitors continue to provide aid, either through grants or through the medium of subsidised interest rates, we shall be at a competitive disadvantage. It is less than a year since the House of Lords Select Committee undertook a study of the state aids by the various member states and their effect on competition. The committee commented on the distortive effect of an accumulation of aids. So long as other countries use such a wide range of mechanisms to promote their enterprises, the removal of aids under Directive 72/159 would have a bigger impact in the United Kingdom than elsewhere.
Let us remember, too, that, whereas capital grant schemes operated in this country could be stopped from one moment to the next, many of our competitors will retain the advantage of continuing subsidised loan schemes which it would be very difficult to bring to a halt. I conclude that it would be a mistake to remove capital aids.
3.40 p.m.
Lord Raglan: My Lords, with the aid of the tables in the report, I have been trying to deduce about how much the countries of the EEC spend upon agricultural guidance, and I am afraid that I cannot find an accurate answer, because a lot of expenditure is national, and if, in any case, as my noble friend Lord Cledwyn mentioned, it is in the form of cheaper loans, it will be impossible to find out the real figure. But it is probably right to say that the total would come to well over double the 607 million units of account which the CAP itself spends. This seems a large sum, but, to get it in proportion, guidance expenditure in this country—CAP and national together—appears to be running at something over £200 million a year. I do not think it really helps to do as the noble Lord, Lord Middleton, did, compare it as a tiny percentage of the very swollen guarantee fund. We are not talking about a huge sum, though it is a significant one, and it is important to examine whether it is well spent.
I will say straight away that, for a very long time, I have had an uneasy feeling that it is not all very well spent and I have reached a different conclusion from that of the noble Lord, Lord Middleton. Perhaps my doubts stem from a time about 25 years ago when I was told that, in order to be eligible for grant, a stock shed which I was erecting must have a regulation number of transparent sheets in the roof. In vain, I pointed out that the cattle would like it dark in summer to be out of the flies, and the only light that would be required in the winter was of the electric kind for foddering before daylight and after dark. In the end, I did without the grant, but the building was, nevertheless, good value and it has proved wholly satisfactory in use.

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So I have always thought that there were several points to be drawn from this experience: first, that the Ministry would not necessarily be correct in their requirements; secondly, that if the investment seemed a good one it would go ahead without grant, unless that grant was a very large proportion of the sum and the worth of the improvement was rather marginal; and, thirdly, that ingenuity would provide economy in design, if necessary. It is fair to say that the MAFF are more flexible about that sort of thing nowadays. But over the years I can think of many other instances, from my own farm and from other farms, which have made me doubt whether many grant-supported schemes are a good investment for the taxpayer.
These doubts are reinforced by what I recollect as the very origins of such schemes in this country. Your Lordships will remember that capital grants began to be institutionalised when the post-war Government offered them to farmers as a kind of quid pro quo for controlling the price of food downwards, and also with the idea of helping to raise output, which was then badly needed. But they have stayed on as part of the scene long past their bedtime, so to speak, although it has been price stability and not such frills as capital grants which has made farming confident, expanding and productive.
Another aspect of capital grants that has often concerned me is whether their existence encourages suppliers to raise their prices. If it does, it may then be argued—and the noble Lord, Lord Middleton, argued this—that that has helped the industry as a whole. Even so—and a case can often be made out in all sorts of areas for pump-priming with Government funds—there ought to come a time when that priming has achieved its purpose. Therefore, I welcome the committee's conclusions on their examination of Directive 72/159 and, on the whole, I agree with their exceptions, though, again, I have to say that I am not enthusiastic about retaining grants for land drainage.
I know that some people are still haunted by the sight of thousands of miles of filled ditches and burst drains from before the war. I know, too, that undrained land is unproductive. But it is also unprofitable. It is in the farmer's interest to drain his land and to keep it drained and that, I know, can sometimes be expensive. But technology has vastly changed and, with the powerful machines now available, ditching is cheap. If the grant were withdrawn, I am sure that the lively and ingenious minds with which the industry itself is overflowing would find ways to cut the cost of under-drainage. So I would leave it to them.
Yet another aspect of the capital grants schemes is that, as things are, it is generally the already better-off farmers who can take best advantage of them. I wish that some way could be found not of helping established and better-off farmers, but rather of aiding people who would like to enter the industry from outside and of aiding those on marginally profitable holdings. The report recommends only that grants of this type should be made in LFAs, and I wonder whether we should consider the whole of the country for this kind of treatment.
But the oddest criterion of eligibility under Directive 72/159 is that the person should practise
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farming as his main occupation. This criterion does not, in fact, operate against the person who buys a large farm and, for example, continues working in the city. It operates against the person who starts a small farm as a sideline to his main job, or who chooses to stay on his otherwise too-marginal holding by, for example, working in a factory during the day. There are many reasons for believing that these are the very kind of people who ought to be encouraged. They tend to be resilient in hard times, because they have an additional source of income; in my experience, in their own line of business they can be as effective low-cost producers as anyone else and they are on the lowest rung of the farming ladder, which otherwise has been getting higher and higher to reach.
I think that we have driven too many people off the land, through the notion that bigger must be more efficient—that word "efficient" has several different meanings—and we have also made it difficult for them to come back if they wanted to. If someone can produce the right goods at the right price, it surely does not matter what the size of his holding is, or what its apparent viability may be, according to the book. I believe that the sign of a healthy farming sector, as with industry, is a concern for the smallest enterprises. Furthermore, I have a feeling that the present policy tends to increase or emphasise a dichotomy between town and country, which has not been good for either. It is a great pity to look upon one way of life as exclusive of the other, and I must say that the impression left with me, from the rapid tour of four Continental regions by a deputation from the subcommittee, was how one seemed to find there an awareness of an inter-relationship between town and country, reflected by accident as well as design in the way that smallholdings and part-time farming were encouraged.
To take two extremes, in Basilicata, in the very south of Italy, they would rather encourage people to stay on their farms than see them jobless in the cities. In Bavaria, there is what I might describe as an "Elysian fields" policy, sponsored by a rich regional government, which, however, is only an exaggeration of what occurs in the rest of West Germany where food production is high, is of excellent quality and is not too expensive, and where it is not considered unnatural for a townsman to be engaged in the countryside, and vice versa, which is to the benefit of both.
I do not for one moment believe that we in this country should try to emulate Bavarian farming. The conditions are not similar and the traditions are different. There are, however, many useful lessons to be learned from Bavaria and I very much support the committee in their recommendations regarding Directive 72/160 and their other comments in respect of small and part-time farming.
The information gathered by the sub-committee (of which I was grateful to be a member) from this tour of four very different regions was enormously helpful in compiling this report. I admit that we were all farmers, and in addition we very much welcomed the presence of the noble Viscount, Lord Sidmouth, with his wide knowledge of the horticultural industry. We were very conscious that we were probably being shown the best of what our hosts no doubt would like to think was typical, but they appreciated that we had come to look

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for ourselves, and I personally found their hospitality overwhelming. We were immensely grateful for all the trouble which the FCO representatives took to organise our trip, and we were greatly impressed by the knowledge, grasp and helpfulness of the agricultural attachés. Organising a trip such as this, with its very tight schedule, is a hard and exacting job and I have enormous admiration for the way that our clerk, Mr. Peter Rees, accomplished it without giving us any problems.
Lastly, I want to thank Mr. John Moss, himself a distinguished former civil servant of MAFF, for his stimulating company on the trip and for the clarity of his drafting of the report, which is largely his work. The sub-committee did not address itself to all the questions which it could have, because that would have made an already necessarily long report far too long. But one conclusion I would draw from the evidence which came before us is that when a decision is made to make a grant for a purpose, it should only be for a strict term of years—no more than, say, three, four, or five years at the most—before the end of which term an examination should be made of whether the policy is working and, if so, whether it is desirable to continue it. I fully agree with the remarks of my noble friend Lord Cledwyn in this regard. Ten years is far too long a period for this one series of directives to have stayed in operation. Government departments easily become geared to perpetual grant-making, in furtherance of all sorts of pet theories of all kinds of people, and recipients adjust their ways of life to the receipt of these grants after the real need for them has ceased and their purpose has been achieved. As a revisionary exercise of that kind the report should serve a very useful purpose.
3.55 p.m.
Lord Sandford: My Lords, I am very glad to welcome the report. I am grateful to the members of the committee for allowing me on one or two occasions to help them to produce it. It alludes to and builds upon a similar study undertaken by Sub-Committee G, the environmental sub-committee of the European Select Committee, which I had the honour to chair some three years ago. As the noble Lord, Lord Raglan, has said, this committee is well furnished with farmers and farming interests, if not dominated by them. Therefore, I find it particularly significant that this report, dealing with the same range of topics and the same impending problems, such as the accession of Spain, Portugal and Greece to the Community, the recession and so on, is far sharper in its criticisms of agricultural policy, as developed by the Commission in Brussels and by the Ministry in Whitehall, far more urgent in its pleas and bolder and more radical in the remedies that it proposes. That is just as well because, as the noble Lord, Lord Cledwyn of Penrhos, indicated in opening the debate, no nettles have been grasped since we pointed them out three years ago. The one development of policy on which we hung our report three years ago, namely, an integrated development programme for the Western Isles, has proved to be a misnomer and a disappointment. As the Minister of State for Scotland said to one of our Select Committees only a few weeks ago, it is little more than an agricultural extension scheme—and a
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good one at that—but it is not a serious attempt to grapple with the problems before us.
By way of example of the stark conclusions to which this committee comes, in paragraphs 81 and 82 it is really saying that no more support, or only limited and reducing support, for production of anything which adds to the existing surpluses in the Community should be given. In paragraph 81 the committee says that there should be no support, or at least only limited and reducing support, for modernisation or changes which have the effect of reducing employment. Thirdly, the committee says in paragraph 92 that there should be no support for practices or innovations which conflict with established conservation policies or which cause damage to wildlife. Though the committee does not quite reach this point in paragraph 105, I would add that in that paragraph the committee is getting near to saying that the support afforded to farmers through the less favoured areas directive needs to be examined more closely because it is so efficient and so wasteful. It is efficient as a way of getting funds out of the Community because, operating over an area which is smaller in many cases than that of France, Germany or Italy, with a number of farms in those areas of about one-quarter or one-sixth the size of the French, German and Italian farms, we succeed in extracting more money under this directive than any of them. To that extent, therefore, it is efficient, but as a way of contributing to the solution of rural problems in the uplands it is most inefficient. Although this committee did not go into it, sufficient research has now been done on behalf of the Community to demonstrate that fact. The inefficiency mainly lies in adding to the incomes of farmers whose income is already well above the comparable figure.
Putting things like that—the committee have not put them quite so starkly as that; I have done so deliberately—is not the way to proceed. The reaction of my noble friend Lord Middleton typifies the response that such a stark conclusion is bound to evoke in the farming community. Therefore, we must not proceed on that basis. We have rather—I am sure my noble friend Lord Middleton agrees with this—to present the future in terms of hopeful opportunities and possibilities and not as perilous threats in the middle of a recession. Therefore, we have to look—and the committee does so—at the positive measures that can be taken and the way in which the existing support can be not so much reduced as redirected and reharnessed. It has to be directed to the support of all the enterprises which can be undertaken on a farm which add to farm income but which do not add to farm surpluses.
The first of these, on which the committee spends a lot of time from paragraph 95 onwards, are the calls for more support under a better marketing directive which will positively provide for more scope for adding value and quality to the product—doing so especially locally and even inside the farm gate. I am not quite sure why my noble friend Lord Middleton speaks about food processing only being practicable beyond the farm gate. Surely, if food processing can be done inside the farm gate that is much to be desired. I recall having attended a CLA conference last summer at which there was a dairy farmer in Cumbria who was

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employing no fewer than 70 people processing his milk production. It is these positive measures which we need to support and encourage by the use of our advisory services. There should be support for all enterprises which add to farm income but which do not add to farm surpluses. That is largely a matter of raising the quality and adding to the value, and of doing that locally.
Then there are those additional enterprises which can be integrated with the purely farm production enterprise by other activities such as farm gate sales, "pick-your own" enterprises, and so on. Perhaps my noble friend on the Front Bench can indicate the extent to which his advisory services are helping in that direction and the scope that he sees for modifying the directives to give support in that area. Secondly, there are those many enterprises which can be integrated with farming through co-ordinated land use management. I refer to forestry, fish farming, field sports, shooting, fishing, pony trekking, field studies, recreation and so on. All of these involve a wider outlook than is at the moment provided by MAFF's advisory services. They now have a statutory duty to advise in this general area of diversification, and I should like to hear from my noble friend what steps they are taking to assume those statutory duties.
Thirdly, there are other activities which can be integrated with the farm through the use of redundant farm buildings. This was an aspect in which the noble Lord, Lord Northfield, was interested when he was chairman of the development commission, and I hope that he will have a little more to say today about such matters as farm tourism, farm contracting, rural workshops, upland management contracting, development of rural crafts and so on.
It seems to me that the problem we have before us is how to manage these changes. The primary change is a change of attitude, because the advisory services and use of the HDS schemes have concentrated for so long and so much on purely food production. Suddenly to ask farmers to think in terms of field studies, fish farming, and so on and so forth is a very sudden change, and it can only be done gradually, but it must be done urgently. There is an enormous field here for ADAS. The work primarily rests on the socioeconomic advisers. My understanding is that we have only just reached the point of successfully filling the seven vacancies for socio-economic advisers. The last one is now in post; this time last year there were two gaps. But what on earth are seven socio-economic advisers among 1,000 agricultural officers? This must be dealt with somehow, and I am grateful to the committee for having urged more concentration on the directive under which the advisory service can be supported from the Community.
Long ago—I believe it was five years ago—the Strutt Report on the Minister's own Agricultural and Horticultural Advisory Service made the point that ADAS are in a position to give a lead in all this, and that is perfectly true. But they cannot give the lead that is required and the amount of advice that is required in order to make the changes which are needed. There is a need to modify initial training, to be hard at work among young farmers, to provide in-service courses in the colleges, and to provide discussion groups and all sorts of similar devices. If the advisory service can be
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managed in Scotland through the colleges, then I have yet to be convinced that the colleges in England connot co-operate more effectively than they do with ADAS here, through which the main advisory service is provided.
I referred a moment ago to the need to diversify and the need to give advice on diversification. Those farmers who have decided to diversify in one direction or another—and it might be into field studies, forestry, fish-farming or farm tourism—and who have decided to invest capital in that area, really do need as much support if not more than they could have received from the advisory service had they stayed in farming. This is really not forthcoming. To take the example of farm tourism, your Lordships can imagine just how many farmers there must be providing bed and breakfast, self-catering units, et cetera, in their buildings. I am told that there are now 20 consortia of farmers in farm tourism, comprising from 15 to 30 farmers in each—all benefiting enormously from the opportunity to pool their experience and improve their services. Ten of those are now in touch with the British Tourist Authority and are promoting their services to countries overseas.
All that is now being co-ordinated and developed by the Arthur Rank Centre at the Royal Agricultural Society's establishment at Stoneleigh. But surely that ought either to be done by the advisory service of the Ministry or, if they are not doing it themselves, they ought to be funding the work at Stoneleigh or the work of any other organisation which comes in to do that work for them. The statutory duty is theirs and they really must get on and discharge it. When my noble friend replies, I wonder whether he will say what is being done by way of modifying the agricultural census forms to give himself and his officials—particularly ADAS—a background against which to see and monitor the development of farm diversification?
Finally, I wish to allude briefly to conservation, which is another policy which farm policy must support and reinforce more than it is doing at the moment. My noble friend on the Front Bench introduced the farm capital grants scheme some two years ago, with provision for consultation between farmers and national parks officers when HDS schemes were being put forward for the national parks. That has provided an invaluable way of co-ordinating conservation policy and farm development policy in those areas. A huge number of schemes have been through this process and have been successfully handled by the officers concerned. It is now time that we considered designating other areas in which this kind of co-operation can take place and that we brought in other organisations such as the farming and wildlife advisory groups to do the work that is done in the national parks by the national parks officers. I shall be grateful if my noble friend will comment on the scope he sees for co-operation there.
In this context, I am glad to be able to report that the Ministry of Agriculture and the Association of District Councils are now co-operating more extensively than they were with a view to seeing the way in which planning policy, for instance, in the rural areas and agricultural policy can be better co-ordinated. We hope to have three regional seminars—in the West

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Country, the Midlands and the North—in the course of the next two or three months. But there is a great deal more to be done. Sub-Committee D has done a very useful job in drawing the issues to our attention, and doing so in such a bold, urgent and sharp way.
4.10 p.m.
Lord Walston: My Lords, the noble Lord, Lord Cledwyn, introduced this report with his usual complete mastery of the subject. I know I can speak for all his colleagues and my colleagues on Sub-Committee D when we say how sad we are that he has left us, but also how fortunate we are to have as his successor such a distinguished and experienced chairman as the noble Lord, Lord Plowden. I am quite sure that under his chairmanship the very high standards of reports your Lordships have experienced under Lord Cledwyn will continue.
It is important in looking at this subject to see it in its historical content, if I may call it that. Ten years ago, when most of these regulations were introduced, Europe, the Community, was still suffering from the experience of, and was influenced by the memories of, the old days of food shortage. The Community was still a net importer of a very large proportion of its normal consumption. The economy was booming, we had overfill employment, and it was therefore very reasonable and very right that the common agricultural policy should, among other things, direct itself towards encouraging increased production of food, increased efficiency in food production, so that higher prices would not be passed on in their entirety to the consumer, and, wherever possible, releasing people from the land so that they could work in the factories which were crying out for them.
In order to do this it brought in these policies, which, as your Lordships will read in Paragraph 49, were expected to take up approximately 25 per cent. of the total expenditure under FEOGA, under the grants, and 75 per cent. under the guarantees for guaranteed prices. That, of course, has not worked at all. The figures we received show that, instead of 25 per cent. going on grants, only 4 per cent. has gone on grants; instead of 75 per cent. going on guarantees, 96 per cent. went on guarantees. That in itself is sufficient to warrant a very close look at these policies to see how they have worked or have failed to work, and why.
Further, as we all now well know, the whole food and economic situation has changed. The success of the common agricultural policy has been such that not only do we now need to import virtually none of our temperate foods but we are now a net exporter of a very substantial quantity of food, which is leading to all the problems which we now see, the threatened trade war with the United States and so on. At the same time, the Community as a whole, not only this country, is suffering from widespread unemployment. There is, therefore, no need at all for us to encourage increased production or to encourage people to leave agriculture and to go into the factories.
At the same time, it must be remembered—and this was one of the things that came from the evidence that we took—that although the objective of the grants which are under discussion was primarily or largely to increase efficiency so that the rise in the price to the
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consumer was contained, that, we were informed (and I think our own common sense had already informed us), has not been the case. The very substantial sums of money which had been expended in the guarantees had not led to lower prices for consumers.
On that subject, perhaps I may refer to one comment by the noble Lord, Lord Middleton, which has already been touched on by the noble Lord, Lord Raglan. Lord Middleton criticises the committee for recommending the cessation of grants to farm buildings. He cited the example of 1956 and the reason given then for introducing these grants, in order to improve efficiency. Surely, if after the period of 25 years during which these grants, some of them pretty substantial grants, have been in existence, while at the same time by and large farming has been profitable and rents have increased to a very marked extent, our farms—with all those factors in their favour—remain ill-equipped and still needing further Government funds in order to bring them up to scratch, that can only be a serious reflection on those who own the land, whether they be owner-occupiers or the landowners themselves. I am sure the noble Lord, Lord Middleton, would resist any charge of inefficiency on the part of the landowners of this country, or of failing to do their duty; I think he would even be hard put to it to suggest that they have been held up by shortage of income from the high rents they have been receiving.
Let me move on by referring your Lordships to what I think is perhaps in many ways the most important paragraph in this report, Paragraph 81, where we wrote:
"Increased productivity in farming, by and large, is achieved by producing more with the same inputs, including labour, or by producing the same amount with lower inputs. The first implies yet further expansion of production; the second yet more people without jobs".
That is the dilemma in which we find ourselves. We do not want more food at this stage. We certainly do not want a declining agriculture, and there are no industries crying out for labour. So this problem really transforms itself from being a purely technical agricultural problem into being a social problem and an overall economic problem.
The solution I believe, in spite of the criticisms of the noble Lord, Lord Sandford, lies in an extension of what is now called the integrated programme, which is being carried out experimentally in this country in the Outer Isles. The noble Lord is a great expert on these matters and he has great knowledge of it. I must say I was surprised to hear from him that the integrated programme looked as if it was going to be—I do not think he would go further than this—a failure. When I looked at it very briefly some months ago, it seemed to me—and I told your Lordships this—that it was in itself an admirable programme and was being administered by extremely good and sensitive people. One has to wait a long time to see what the results are, but certainly it seems to me that they are starting on the right foot.
I would like to see far more of that done throughout the whole Community, encouraging not simply agriculture, one particular form of production, not simply the introduction of industry of some kind or another; but an integrated programme bringing in improvements in the infrastructure, bringing in new

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industries, some of them agricultural, some entirely removed from agriculture, and bringing in other things as well. I suggest bringing in a whole series of planning activities; matters like improved local transport services such as bus services. These are a vital part of the means of improving life in remote areas where there are people who are too poor to be able to afford their own transport. There must be improved rural housing. There must be such simple little things as help to the village post office, which is the focus of so many rural communities where people gather not only to post their letters and to do their shopping but to draw their old-age pensions, to talk to their neighbours and exchange gossip. When a village post office dies the village is in the first stage of disintegration.
This, of course, also applies to the village school, which is a vital part of any community. If one applies the strict criteria of education authorities when the number of school children drops below a certain level, of course village schools have to be closed; but that again is yet another push towards the further and more rapid decline of that particular community. The integrated programme must embrace all these very wide matters.
Then there is the need for planning permission by the local authorities—and I shall not touch on this in detail because I am sure the noble Lord, Lord Northfield, will do so with far greater expertise than I—to enable disused farm buildings and redundant farm buildings to be transformed into small factories for light industries, and the use of sometimes rather unattractive little pieces of land in the middle or on the outskirts of villages to have planning permission for suitable—they must be suitable—industrial purposes. There must be a change of attitude, which is coming but not fast enough and which in very many of our less favoured areas is hardly visible at all. That is the first thing that I suggest to your Lordships must be done.
The second is that about which, again, the noble Lord, Lord Sandford, spoke. I refer to the protection of the environment. Increasingly we are finding—and this is a very good thing to have in this country and a very healthy thing—that the urban dwellers look to the countryside for their recreation. In the old days it was the village dwellers who looked to the towns for their recreation. They would go to the cinemas and the bingo halls, and so on. Now it is the urban dwellers who look to the countryside. They want to visit the countryside to enjoy it and to visit picnic sites, to see the trees and, some of them, to see the butterflies, watch the birds, and so on. Increasingly the farmers, and particularly the farmers in the less favoured areas, must be made to realise that they have a duty to conserve and enhance these natural beauties which are more and more in demand, and, what is more, they should be paid for doing so. Here we have, in the integrated programmes, an opportunity of doing this. Even where there is not such rural deprivation as in the less favoured areas, in the other more prosperous parts of the countryside one has an opportunity of doing so.
ADAS has a significant part to play. It is supposed to be playing it, I know, and the noble Earl will tell us that and I will not disagree with him. But I should like to ask: what steps are being taken to train the, on the whole, admirable local officers of ADAS in order to
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make sure that they are aware of these problems of industrial development, social development, environmental conservation and enhancement? And how are they being taught to put across to farmers how they can best fulfil their responsibilities in this respect? The normal ADAS officer has a degree in agriculture and has been well trained, but it is wrong to expect him to have expertise in all these other matters. Increasingly he must have that expertise. I hope that the noble Earl will be able to tell us that his department is ensuring, or has already ensured, not only that the new people who are recruited to ADAS are aware of this and have the expertise, but that the members who have been there for many years, and who have done a good job, are having refresher courses and new teaching to enable them to do this extra job which, when they first joined the service, had not been thought of. I believe that this is a good report. I support it wholeheartedly and I commend it to your Lordships.
4.27 p.m.
Viscount Brookeborough: My Lords, I should like to begin by declaring an interest. My interest is on two grounds. First, I am a farmer and, secondly, I am a consumer, so I think I can see things absolutely fairly. There may be some who say that I see things from the farmer's eyes more fairly than I do from the consumer's eyes but, like most people, I am vitally interested in both aspects.
I should like to begin by congratulating the noble Lord, Lord Cledwyn of Penrhos, on his presentation of this report. I echo the noble Lord, Lord Walston, in saying how sad we are that the noble Lord, Lord Cledwyn of Penrhos, has been translated. Serving on Sub-Committee D and working in such an intimate atmosphere with men of such ability and such charm as the noble Lord, Lord Cledwyn of Penrhos, has indeed been one of the privileges which I have had since I have been in this House. That applies to others as well, but especially to him.
Reference has been made concerning this report to the success of the visit by certain members of Sub-Committee D to Europe. I mention that because I think that, although I am not suggesting that noble Lords should be gallivanating all over the world on delicious trips, on the whole, especially with regard to EEC affairs, we have probably not been making quite as much use of this as we should. We have been a little apologetic that we are a non-paid House of people who are non-representative. I think that other members of the committee will agree with me that when they talked to the French, and especially the French, the French reacted with tremendous surprise because they felt that these English Lords would arrive offensively aggressive against them. We are there to inquire and to find out the facts; and I think in the interest of the Community—and we are committed to the Community—our visits have done much good.
Further to that, our new chairman, Lady Llewelyn-Davies, visited the Commission in Brussels. I went a few years ago and there really was not much enthusiasm on the part of the Commission members to see us. Of course, I know that the noble Baroness suffers a tremendous advantage in being a beautiful and gracious lady and the Commission would be quite wrong not to see her anyway; but I think that she was

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over-whelmed with her programme because everyone was anxious to see her. I believe that that has a lot to do with the standard of the reports which your Lordships' House has been presenting to the Commission. I believe that they are of such outstanding importance that now the Commission is extremely willing to co-operate with us.
I have wasted three minutes, but I believe it is a valuable three minutes in regard to the importance of our sub-committee. I also pay tribute to the staff and to the experts. Their versatility in dealing with all sorts of subjects and putting things into such good English is quite outstanding.
On the whole, I welcome the report, but equally I welcome the fact that we are not subject to Cabinet responsibility, because there are parts of this report with which I disagree. Many members of our subcommittee would have been sacked from the Cabinet from time to time if we had had Cabinet responsibility. The report recognises that changes in the Community—and very fundamental changes—have occurred as a result of the recession. Indeed, they have been mentioned by other noble Lords this afternoon. As the noble Lord, Lord Sandford, said, it has put a very much sharper focus on those problems than has been done hitherto. The problems have been growing, and it is now much clearer that no longer is there a need or a will to remove people from the countryside and to put them into industry, because there is no industry for them to go to. It is now wrong to depopulate the countryside. It is now right to maintain a farmer working. It is also cheaper for the community to keep a farmer working. There is more dignity and greater contentment for a man in sharing—and I mean that—on the land than in doing nothing on the dole.
I speak from the point of view of an Ulsterman, and I should like to support my noble friend Lord Middleton as regards his criticism of the abolition of capital grants. In our Conclusion (c) we say that, subject to certain exceptions, capital grants should be abolished whether they be national or whether they be from the EEC. The first matter as regards which I support my noble friend absolutely is that I do not see how the rest of Europe can cut off those grants in the same way as we can because so many of the capital grants in Europe are based on cheaper loans and not on capital grants. The effect may be the same but the method of cutting them off will not be the same. Further to that, from our examination of the situation in Europe we find that some other countries are extremely good at finding a method of appearing to cut these things off but in fact in the end they remain there.
The noble Lord, Lord Walston, who served with such distinction as our chairman previously, was speaking slightly as a barley baron when he said that if for 25 years the farms of the United Kingdom were not properly equipped, then there was something very wrong with the farmers. I disagree with him because the evidence has shown that the aim of Directive 159 was to produce "a viable farm" and the evidence which we had showed that that had been produced in some areas. However, my own experience in Northern Ireland with a certain type of climate—and I believe that this applies to large areas of the United
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Kingdom—has shown that the job is still not finished. To suggest that we cut off capital grants for the whole of the United Kingdom is to my mind not a sensible thing to do for so many reasons.
In our part of the world the problem is that there is no alternative crop except grass, which automatically means that we have to have products which live on grass or which come from grass. That being so, the farms have no alternative—they must have capital aid or else we will only add to the unemployed. The application of Directive 159 has already been restricted in regard to dairy farming—that is the one area of grassland production which does produce a surplus. The aim of Directive 159 is not so much to produce more as to make a viable farm. Incidentally, it has in cases produced more, but not to the large extent that it does as regards non-grass farms.
We have been talking in very welcoming terms—and I have not heard a single word against it—about the extension or the increasing improvement of aid to the less favoured areas. Capital grants are almost the linchpin of the LFA directive because Directive 159 applies first, and on top of that we have the LFA directive. If we were to abolish Directive 159 then a substitute would have to be found.
I believe that the report is absolutely right in attaching the importance that it does to the less favoured area problem. I believe that the future of the EEC depends on having a living countryside with a population attached to the land. One piece of information in the evidence which I think should be emphasised is that the less favoured area of Europe consists of 30 per cent.—one-third—of the total land area of Europe; yet in terms of output it produces only 20 per cent. of the total output. That means quite clearly that we can spend a great deal of money in maintaining people on the land and still do not add to the problem of surpluses. When we come to deal with the Farm Price Review, I hope to be able to have something to say about what I believe to be the exaggerated importance of surpluses, but I shall not take up your Lordships' time tonight on that matter.
In our report we state at paragraph 58 that without the compensatory payments on cattle and sheep, living conditions in certain areas would be insupportable. I would only like to say how much I endorse that from my own experience. Without those payments life in the LFAs would be insupportable and that would mean more unemployment.
I always enjoy debates which are answered by my noble friend. I would like to feel, because he is so much bigger than I am and so much better supported, that I have some punch from behind which I could deliver to him. I have a slight punch but it is not as effective as I would like it to be. In December, after we had produced our report, the Government submitted to the EEC a proposal to extend the area of the LFAs. We have so far received no commitment from the Government that the level of aid per acre would remain the same—that is, the Government have given no indication that, although the area will be increased, they will provide greater aid. I believe that that slight delay is unreasonable considering that a commitment on the part of the Government would show the EEC

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Commission that we were serious about our request for an extension of the area. How can they really believe that we are serious if we do not make it quite clear in advance that the Government will in fact financially support the extension of the LFA area in the same way as they do now? From the point of view of Northern Ireland, this would introduce into the Province some £12 million.
I have the greatest admiration for my noble friend and also for his colleagues in their dogged determination in negotiations annually with the EEC. How on earth they remain awake and absolutely clear-minded during those long wrangles I do not know, especially when so much of their time is involved in arguing annually for special aids for Northern Ireland. I agree that, if this extra LFA aid were given, it would not completely solve the problems of Northern Ireland, but I believe that it would reduce the tedium and the bargaining for special treatment for Northern Ireland, because once extra aid as regards the LFAs were granted there would cease to be an annual wrangle.
I could go on talking about this report because I think that it is such a good report, with the exceptions that I have mentioned. However, the time is now right for me to sit down and I would just say to your Lordships that I welcome the report.
4.40 p.m.
Lord Northfield: My Lords, I must resist the temptation offered to me by the noble Lords, Lord Sandford and Lord Walston, to talk at any length about the suggestion of integrated development programmes for the rural areas, much though I should like to be able to do so. Instead, as in previous debates, I begin by declaring an interest, in that I am a very part-time adviser on environment policy to the EEC Commission in Brussels. Speaking entirely personally today, I want to look at the recommendations of the report, particularly concerning Directives 159 and 268, in the light of the need to get right the balance between conservation and agriculture. If I may suggest it to my noble friend Lady Llewelyn-Davies and the sub-commitee, I think they have forgotten one of the Committee's earlier reports which is relevant, and as a result they have not got their recommendations quite right.
We all know the reasons for concern on this problem of getting the balance right between agriculture and conservation. There were exchanges in the Chamber here on 2nd February. When I chaired the committee into the ownership of agricultural land, I found in many witnesses a changing view of land ownership—indeed, a recognition that land is held in trust for the nation; an increasing understanding about leisure needs and the free use of the countryside. We all know—and I think that the conservation lobby is right in saying this—that there is now a danger (I do not put it too high, but let us acknowledge that there is a danger) that farming is not, as in the past, so obviously a natural protector of the environment. With its highly intensive use of capital, machines, science and energy; with the damage from farm pesticides; with some of the ecological damage done by reclaiming marginal land as well as land even more ecologically important
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than that, there is at least some danger which has to be admitted of getting the balance slightly wrong.
On top of that, as many noble Lords have said in the debate, we have over-production now, less need to provoke further production from marginal land, and the public outcry at surpluses funded by FEOGA. In terms of what is happening in our own Chamber there have been some heartening developments in this debate, of which we should take note. The noble Earl himself in the debate in 2nd February at Col. 818 said:
"The integration of agricultural development with conservation is not, and need not be, an insoluble problem. Profitable farming and the needs of conservation are not mutually exclusive goals."
I shall finish there, as it would otherwise be a long quotation. The noble Earl was saying clearly that this argument is getting too strident. I think that we have to bring it back to some practical proposals. The noble Earl's own remarks are one heartening development.
Secondly, we have had, as he said, the Wildlife and Countryside Act, with the hope for conservation of the countryside—I think only 5 per cent. of it is likely to be in the areas of special scientific interest—by the voluntary system in that Act, which we have to give a chance to work. We have all read with pleasure the three articles in The Times last week by the very intelligent Times correspondent, Mr. Hugh Clayton, on this point. Then I come thirdly in heartening developments to just part of the committee's report.
In paragraph 91(d), talking of the less-favoured areas, they end the paragraph by saying:
"Amenity, environmental and conservation aspects should also be adequately funded."
Then in subsequent paragraphs they go on, much on the same lines, to suggest that an integrated development programme concept,
"with scope for amenity and environment consideration",
should be taken into account. There is recognition of this problem in the committee's report.
Before I come to the criticisms, may I just interpolate a summary of what is happening in the Commission, because noble Lords may not be aware of all that is happening on this idea of integrating more successfully the needs of conservation with the needs of agriculture. First of all, there is a draft directive, which has been before the Community for more than two years, on the problem of evaluating the effects on the environment before particular projects are given planning permission. I deliberately do not use the words "environment impact assessment" because the directive itself goes out of its way not to use those words.
In that draft directive, there is a non-obligatory annex about projects whose effects on the environment it is hoped member states will submit to careful examination before giving planning permission, whenever the member states think that their characteristics so require. In other words, it is a non-obligatory discretionary annex. In that are listed certain projects concerning the rural environment: projects for restructuring of rural land holdings; projects for use of uncultivated and semi-natural areas for intensive agricultural purposes; new afforestation with adverse ecological changes; and certain kinds of land reclamation.

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First of all, the Commission is saying that there are some big changes in the rural countryside which ought to be submitted to some form of evaluation and public test of opinion about them, in a systematic process, when the member state thinks that their characteristics so require in the interest of protecting the natural environment. The second development happening in the Commission, as has been mentioned by many noble Lords today, are these integrated action programmes for the Western Isles and other experimental areas throughout the Community.
The third, which has not been mentioned today, is the Commission's proposal for an environment fund. That happens to be important, because one half of the suggestion—whether it would be half in terms of money I do not know—is that that fund should be used throughout Europe to help protect for the natural habitat areas that we would call areas of special scientific interest. It would be helpful if the noble Earl would indicate whether Her Majesty's Government are going to support the idea of that fund. It is very similar to what is in our own Wildlife and Countryside Act, and I hope that when we are doing it we shall not go out and stop a European Community idea for doing the same sort of thing throughout the rest of the Community.
The fourth point that is in the Commision's programme is something of which the committee failed to take note. In the third action programme for the environment, the Commission recommended, and the Council of Ministers has agreed, that we should now bend our efforts in the next few years to much more successful integration from the beginning of environmental considerations in all sectors of policy making. Indeed, the committee published a report lauding that objective and saying that it is important, in areas of all policy making, that environmental considerations should come in right at the beginning and should condition and help to shape part of that policy.
In the case of agriculture I do not think that the committee quite did that when they drafted this report. I want to suggest why I think that. It is important to realise how earth-shaking this might be if we could get across how important it is to bring this in on the ground floor when policy making gets under way. I draw the attention of the House to page 16, the minutes of evidence, and the responses of witnesses from the Ministry of Agriculture, Fisheries and Food. I was surprised and slightly disheartened by what they said. For example, one witness is quoted as saying:
"it seems to me, as things stand at the moment, that we have a Department of the Environment, which holds primary responsibility for environmental matters, and a Ministry of Agriculture, which is responsible for the administration of agricultural matters; amd I see no reason why that should not work in the context of Community policies related to the environment. But certainly, if I could make one small, final comment: there is no question of the Ministry of Agriculture seeing the Environmental Directorate in Brussels at that level, and the Department of the Environment—responsible for the London, Westminster, Whitehall, level—letting agricultural considerations go astray".
That is the kind of attitude which we really must change. There cannot be two views fighting it out in the countryside, hoping they will end up complementary. We must try to integrate more
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successfully than that the environmental considerations at first point in policy-making on agricultural matters.
Let us, then, consider what we might achieve in this area. The committee could have said at the very beginning, "Yes, we understand that at the end of this year these agricultural directives have to be reconsidered, and we shall now submit recommendations on them. But, at the same time, we pay strong regard to our own report on the issue, which says, 'When we are reconsidering these directives, we must bring environmental considerations in right from the very beginning. We shall think about our recommendations precisely on those lines' ".
What might have happened if they had done that? For a start, if we take the recommendations concerning Directive 169 on grants under the agriculture and horticulture development schemes, the committee, instead of saying, "Purely on agricultural grounds we think they should be phased out", they could have said, "On environmental grounds, to which we now must pay regard, perhaps it would be better to reshape them and use them for other purposes".
Lord Raglan: I suggest that my noble friend should read on and give the rest of the sentence from which he quoted, or perhaps he will permit me to do it for him. The witness for the Ministry of Agriculture ends by saying:
"because we would obviously have regard for environmental policies in pursuing our own agricultural policies".
He has obviously taken the point, I should have thought.
Lord Northfield: I started with the main quotation and said the witness asked to make a small final comment, which he did, and it was that. It did not give me the impression of being a new dimension to policymaking—that we integrate it from the very start—but I am anxious to conclude my remarks and will not develop that point further.
Let me suggest what might have been suggested about the grants under Directive 159—and here I am indebted to suggestions by the Royal Society for the Protection of Birds and a remarkable paper written by Mr. Clive Potter of the East Anglian University, who has been studying the whole problem of recasting the grants in the interests of the environment. We could have kept those grants, but perhaps they could have been spent mostly, and perhaps entirely, on the smaller farms. Ten per cent. of the grants might have been earmarked for conservation and improvements that assist conservation. It could have been suggested that we might have included in development plans a statement about wildlife protection as a cornerstone for each farm when submitting plans under that directive. None of that was done by the committee, and I suggest it should have been done.
Coming to the less favoured areas directive—I think the noble Lord, Lord Sandford, was hinting at what I am saying—the danger with that directive is that it is paying many big farmers to produce much more and to bring much too much high land and marginal land into production. Again, it would have been wise to examine first of all how the grants could have been recast to some extent to help preserve the natural environment. A cut-off point for headage payments of

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livestock units, for example, could have been considered so that nobody received a payment for over, say, 100 or 150 livestock units. That would have helped small farms and helped to stop the bringing into use for intensive production of more of the hill marginal land. Or there could have been included under that directive—it is possible under Clause 3(5)—conservation grants for shelter belts, for restoring stone walls and for all sorts of other things which help the natural environment.
I do not want to make too much of this, but I suggest that, valuable though the report has been, it has missed the real point of one of the major departures that the Commission is trying to encourage in the coming years. That is, that we stop regarding the land simply as a place of food production and bring more into consideration the need to use some of our grants and policies and give encouragement through the common agricultural policy for a better effort than is happening now to achieve a balance between the agricultural and conservation interests. I hope I have not been too harsh in my criticism. Perhaps on another occasion that will form a study which the committee will undertake.
Viscount Brookeborough: My Lords, before the noble Lord sits down, may I ask him whether he would not agree that what he is proposing is not the use of the common agricultural policy but the use of social funds? Would he not agree that the use of CAP funds is causing considerable discontent with the CAP, and that it would be better to make more use of social funds in this respect?
Lord Northfield: No, my Lords. I recommend that the noble Viscount reads again the committee's report on the third environment action programme, where it strongly applauds the idea of bringing environmental considerations into each aspect of sectoral policy-making.
Baroness White: If I may intervene, my Lords, the noble Viscount, Lord Brookeborough, will surely recognise that the social fund is primarily for training purposes. It is a misnomer to call it a social fund. Most of us are very much in accord with what my noble friend Lord Northfield said. We are concerned that there should be an environment fund in some shape or form. The European Parliament recently voted that in relation to the current budget, and I hope that when he replies the Minister will deal with this matter.
4.58 p.m.
Lord Monk Bretton: My Lords, I, too, welcome the report. Much of it, I am sure, is good. When it refers to marketing and, in particular, to the uplands, I very much agree with it. I also agree about the slowness of revision of certain areas of the common agricultural policy, though possibly I might want some of those areas revised more quickly and others might want them revised more slowly. Nevertheless, overall, I believe the comment is true.
My main purpose in speaking is to support somewhat my noble friend Lord Middleton. I welcome the recommendation about the continuation
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of drainage funds because it is one of the longest-term forms of agricultural improvement there is, and therefore one should think long and hard before abandoning it; otherwise, one can get desperately behind with something that is extremely important for the fertility of our soil. Be it noted that it is about the oldest service that the Ministry of Agriculture, formerly the Board of Agriculture, operates.
Regarding the other farm fixed equipment grants in general, I am afraid that I am not so happy, either, because much of what is involved is long-term investment, too, and I see it as a continuing process, not something that one can cut off after a period. I believe that further buildings will tend to become redundant, and I know only too well that the process is slower in more difficult areas. So far as I can recall, getting investment in agricultural fixed equipment has always been rather similar to getting a fairly fragile plant to grow; it has taken much inducement to get it to grow, and one should not forget that. It is also a difficult subject technically, and I am sure that it is most important that we keep together the very necessary expertise of surveyors and contractors in erecting new farm buildings of the right kind. I should be hesitant about removing such grants willy-nilly because I believe that the question needs careful and objective consideration.
Personally I am not happy about what paragraph 81 of the report refers to as the disadvantages of,
"producing the same amount with lower inputs".
If one accepts that in totality, which the report appears to do, is one not in effect turning away totally from modern technology? After all, we have reasoned that it is wiser and more sensible to embrace the microchip. I am not sure that in resisting change one is going the right way to ensure employment in the future; indeed I believe that one is not. Yes, we have to go gently with this matter, but I find the report too extreme in its view; and that point I should like to stress.
There is another problem which I think no one has yet mentioned to which I should like to refer. It is the problem of taxation, and I should like to talk a little about capital gains tax, in particular as it affects owners of let land, who, I hasten to say, are not all large owners. This is a matter that we must approach objectively, and not with any form of political passion that is unjustified. Of course some owner occupiers enjoy a limited degree of "roll-over" relief for capital gains tax, but the owners of let land do not when money is required to finance improvements, and I think there is no doubt that the capital gains tax that they pay absorbs much of the grants that they have received for improvements. What has been taken away with one hand has been given with the other, and this has kept the possibility of investment just about moving forward. But I am concerned about the effects of abolishing the grants in this connection.
The incidence of capital gains tax is largely affected by the degree of inflation that there has been, and the degree that we have experienced, since 1965, for example, has been considerable. We have become locked in by this situation quite considerably, and I wonder whether foreign competitors in the EEC are locked in in the same way. I somehow think that they are not. I raise this point because I do not want to see the owner of let land put in a position that would

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discourage him even further from possibly letting land. We know only too well—I thought that the noble Lord, Lord Northfield, might have spoken about this today, but he did not—the findings of the report of the noble Lord and the conclusion that it is very important that we should hang on to the let sector.
My noble friend Lord Middleton has covered the matter of the relative position of ourselves and other EEC countries. Myself, I am fearful that state aids in other countries might not be matched here, and I very much hope that British agriculture will not be left at a disadvantage.
In conclusion, I would say that I believe that the matter of the capital grants for buildings is a delicate one. I know that for owners there is not much room down the mortgage road, if I may put it that way, with 38 per cent. of farmers' income already absorbed by loan interest. I am concerned about further unemployment in the building industry and about the fact that that might make it even more difficult for the let sector to continue to survive.
5.7 p.m.
Lord John-Mackie: My Lords, we are all grateful to my noble friend Lord Cledwyn of Penrhos for the way that he has introduced the report, which is a very important one, and the speeches that we have heard today have definitely emphasised that fact. The noble Viscount, Lord Brookeborough, said that it was fortunate that we were not under the cloud of Cabinet responsibility—if that is a cloud; it has been a cloud to some people. I think that he was probably referring to my noble kinsman, who is not in his place today—the noble Viscount is nodding his head, and I see that he was referring to my noble kinsman—and who has generally disagreed with most of the reports that have come before your Lordships. Unfortunately I myself am rather in that position today, because, despite having been a Member of your Lordships' House for almost two years, I am not quite accustomed to the ways of your Lordships and I put my name down merely to be a speaker in the debate. When I arrived here I found on the list of speakers a nasty gap between the name of the noble Lord, Lord Monk Bretton, and my own name, which I gather indicates that I am supposed to be speaking for the Opposition. I shall be doing so to a certain extent, but I wish to put some of my own points of view as well.
I was rather anxious to deal with the question of the less favoured areas, as referred to in paragraph 107(g) to (i) of the report. But before doing so—and I intended to do this in any case, even before the noble Lord, Lord Middleton, spoke—I wish to refer to the question of capital grants. I liked the nice way in which the noble Lord said that he did not agree with the report, when he stated that other parts of it were less welcome; that is a very nice way to put it. But he went on to show that they were not welcome at all so far as he was concerned. I think that there has been a problem. In discussing the question of grant aid for fixed equipment on farms, the committee in many ways were in a bit of a dilemma. Of course we all know that the scheme has done a tremendous amount of good. In thinking of what was said by the noble Lord, Lord Walston, who was backed up by, I think, the noble Viscount, Lord Brookeborough—or was it the
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noble Lord, Lord Northfield? I cannot remember—it occurs to me that, if we have not taken full advantage of the scheme over 25 years, we have not been doing our job. If the cap fits, you will just have to wear it; I do not know. But there is a point here.
There are two questions about what good the grants do: Whether they promote purely greater production, or whether they promote greater efficiency; or do they promote both? Of course the one thing that we do not want, in particular in milk and cereals, is more production. There is no doubt that there are a lot of farmers who have used the grants for creating better efficiency and who have not increased production. I have a friend who runs a small business in Lincolnshire, and over the years he has repeatedly not gone for huge crops of wheat and cereals but has simply carried on being content with just 2-plus tonnes of wheat and a little less than that of barley. Over the last 10 to 15 years he has increased his efficiency by new equipment, new buildings, drainage and so forth—taking the bonus every now and again of a slightly better harvest—and has increased his profits all the time by doing that. If the noble Lord, Lord Middleton, could give us some way of showing that we could stop the increased production but simply give the grants for increased efficiency, then he would have reason to criticise us. But we could not see any way of doing this and we had to come down in favour—although I am not altogether in favour of it because it is a difficulty—of saying that we should now cut out 159.
We made the exception of drainage. I agree with noble Lords that, if there is one thing that has improved the land in this country, it has been the drainage grants over the years. I have taken full advantage of them myself and there is no question but that that they should continue. I am sorry to have to say this while my noble friend Lord Northfield is sitting behind me, but I am afraid that a lot of them will have to continue in areas that probably he would disapprove of. I remember when the lime subsidy came in in the middle 1930s. When I think of how much good the lime subsidy has done—almost as much good as drainage—I would not mind including that as well. If I may finish on that point, it was difficult for the Committee to reconcile these two problems of efficiency and over-production.
The noble Lord, Lord Raglan, mentioned our trip abroad. He himself is very much against drainage grants or any help to farmers at all. He is welcome to his own opinion. I would say that the trip abroad and looking at these areas was very informative in every way. When one thinks of trying to rationalise, to harmonise, or whatever expression one may use, all the farming and the land all the way from the Shetlands to Sicily, it is just not possible and, frankly, I do not think it should be tried. You have the climate, the quality of land, the difference in the people and their culture and history, and I do not think that we can possibly try to rationalise the help given in these areas.
I would say that we have got to try to have a better understanding—and the noble Viscount, Lord Brookeborough, mentioned this—of the problems in all the various areas, both those that we visited and the others as well. I do not think that there is any doubt

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(and the noble Lord, Lord Raglan, will agree with me) that we were greeted with a deal of suspicion when we went on this trip. They were obviously thinking, "These fellows aren't here for nothing: they want to find out something about what we are doing". With the great charm of the noble Lord, Lord Raglan, who led the delegation and the charm of the other two members, particularly the noble Baroness, Lady Elliot, we got over their suspicion to a great extent, but it was there.
I would suggest that something should be done to have reciprocal visits of the kind that we made. I am sure that it would do a power of good to get some of the people—influential people; and I do not know how one would get hold of them—from the areas that we visited and from other areas, and show them our problems, just as we went to study theirs. I should like to think that that could be done and that we would give a lead. I put it to the noble Earl, Lord Ferrers, that it would be a good thing to do some inviting like that.
If I may mention the differences that we saw, as the noble Lord, Lord Raglan, said, we went to Southern Italy and saw small farms, not viable by any means, of 10 to 15 hectares (30 to 35 acres). They have been getting money so cheaply that it was quite ridiculous the way they equipped their farms. The first farm that we saw had about a 100 horsepower crawler tractor with all the equipment that goes with it, balers, hay machinery, and the rest, sufficient for a 300-acre farm—and simply because they were getting money at 1 per cent. with repayment over goodness knows how many years at 2 per cent. Who is going to pay back money if he is borrowing at 2 per cent? That was our impression. We thought that there was a tremendous need for some co-operation in use of machinery there; because there was a huge waste of money—and a lot of it was EEC money; but that applies wherever it came from.
In Northern Italy, there was a lot of co-operation. The farms were bigger and a lot of money was spent on fixed equipment, but we did not think that the farming was quite as good as it should be. They would have been better off if they had had more advice on how to farm rather than on the amount of money they were spending on buildings and on fixed equipment. The description my noble friend gave of Bavaria was just right. It is a delightful area and they have every chance of developing so many projects different from those that we have in this country. They have tourism all the year round, beautiful weather in the summer, ski-ing in the winter and a beautiful country. There, they were producing a lot of milk and shoving it down into Italy and, according to the Italians, undercutting them.
Then we went to the south of France, north of Marseilles, and there the thing that we learned most about was how much good co-operation can do. It was a lesson to us. There we saw mostly wine growing and oil growing and they put it to us very firmly—and we got this from northern Italy as well; and we went to a big winery there—that there is really no need for there to be a wine lake if they keep up the quality. There is any amount of demand for quality wine. It is the poor stuff which creates the wine lake. I should like at this point to endorse what my noble friend, Lord Raglan, said and to thank all the people who made the arrangements
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and those who gave us hospitality, our own staff and everyone else. It was first class.
If I may try to reply to one or two of the points made, the noble Lord, Lord Sandford, said that the report appeared to make most of the farmers surprisingly radical. I was rather disappointed at that remark. And, of course, he was disappointed with the integrated development policies. I would agree with him on that. There is the money coming to bring about full integration. It is a pity that they started with agriculture, for that is not a fully-integrated policy. I agree with the noble Lord, Lord Walston, about all the things that have to be done, right down to the post office and so on—and he went into great detail—before you really get an integrated rural society and an integrated development policy. I could not agree more with that. The noble Lord, Lord Walston, also posed the question: "should we not have equipped now, after all these years?"
I do not think that I would say much more. I was very pleased to be a member of this committee and to produce what we think is a very important report indeed, which should be taken note of by your Lordships. I do not want to enter into discussion on Lord Northfield's remarks about the environment, except to say that, whatever way one looks at it, with the population of the world increasing to something like 8,000 million in the next half century, the land is basically for food production and always will be. I agree with him that we have to look at the conservation and environmental side. He said that, although it was a very small danger, farmers were not as good custodians of land as they used to be. I do not think that that danger is as great as some people make out. I still say that environment and conservation are important, though I emphasise again that, whatever happens, land is basically for food production.
The noble Lord, Lord Monk Bretton, supported his noble friend Lord Middleton, and I think that I have answered that point. I do not want to go into the question of taxation. I am not an expert on it. Anyway, I dislike any kind of taxation but I find it very necessary. With that, I commend the report to the House.
5.21 p.m.
Earl Ferrers: My lords, as usual, we have had a fascinating debate on this subject. It has covered a very wide area. I should like to thank the Select Committee for having produced such a deep-thinking report, and to thank the noble Lord, Lord Cledwyn of Penrhos, for his chairmanship of it. It was a sorrow to all of us to think that it was his swan-song as chairman of that committee, but it comes to all people from time to time to make a change. We certainly look forward to the noble Lord, Lord Plowden, taking his place.
It was only on the 2nd of this month that we debated at some length the impact which modern farming has on the land and on rural communities. This debate gives us the opportunity to consider other aspects of that relationship. The report on Socio-Structural Policy makes a number of recommendations on matters which were touched on in our debate earlier this month; but, of course, it goes a great deal further than that. I was glad that the compilation of the report at least gave four members of the committee an

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opportunity to have a successful tour abroad, even if it was to the gastronomic inconvenience of the noble Lord, Lord Raglan.
The noble Baroness, Lady Seear, said at the beginning of the debate that she felt that food was too expensive, and that the common agricultural policy contributed to this. I remind her of the fact that everyone is apprehensive of food being too expensive. If she looks at the figures and takes 1979 as a starting point—which, for some curious reason, happens to be quite convenient—she will find that prices have gone up, certainly in this country, by 50 per cent.: food prices by 34 per cent. and farm gate prices by only 23 per cent. Although everyone complains about inflation—and quite rightly so—agriculture and the food industry have both had records considerably below the rate of inflation which other parts of the economy have suffered.
It always is reassuring to find oneself in agreement with a committee which is made up of people of wide knowledge and experience who have spent a great deal of time examining the issue. I am in that happy position; I can agree with many of the committee's conclusions and recommendations. Like the committee, I welcome the view of the structures directives. In particular, I share the committee's view that compensatory allowances should continue to be paid in the less favoured areas, and that grants for drainage should continue. It would be pleasant to go further and say, quite simply: I agree with all the committee's recommendations. But I regret that I cannot do that. In a few important aspects, I think that the committee are, with respect, mistaken.
There has lately been an increasing tendency to criticise the level of support which is given to agriculture through the structures directives—the directives which have been examined so carefully by the committee. I do not complain of the criticism; it is part of everyday political life. But I think it is often based on a misconception; a misconception of just how much money is put into agriculture under the provisions which were examined by the committee, and what is the purpose behind them.
The noble Lord, Lord John-Mackie, asserted—as others frequently do—that we should not be giving assistance to agriculture in the form of capital grants which are aimed at improving efficiency and productivity when so many commodities are in surplus. My noble friend Lord Sandford hinted at that, too. I think this misses a point. The guidance section of FEOGA—the section under which the structures directives are financed and which provides all the European Community finance for the capital grants—accounts for only 5 per cent. of the FEOGA budget. The remaining 95 per cent. is spent under the guarantee section. This is the one which finances support prices and intervention buying.
My right honourable friend the Minister has always stated that the way to tackle the problem of surpluses is to make it less attractive to produce them: to have lower intervention and support prices; not just to stop encouraging the pursuit of efficiency and productivity, which is the purpose of capital grants. To argue that capital grants should be ended as a disincentive to the production of surpluses is rather like saying that, instead of designing new and more efficient motor-cars
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in order to save fuel, we should simply put smaller engines in all existing cars so that they go slower.
That is a dangerously seductive course, but it really is not a realistic one. It is not realistic because, in the modern world, we either adapt and innovate or we fail. We cannot simply stand still. Even less can agriculture revert to a pastoral scene of tranquility and beauty which has not existed for many years, if it ever existed at all. If we try to make it do so, we do not make it back to an agriculture with small fields, pitchforks and horses instead of tractors; what we do is to denude it of funds, and we will have an impoverished countryside and bankrupt farmers unable to employ workers or, if they do so, to pay them a proper wage. In short, we then have a destitute industry in a destitute countryside, and I cannot believe that that is what is wanted by anyone.
Lord Walston: My Lords, may I interrupt? Is the noble Earl telling us that the present level of agricultural prices is so low that it is impossible for farmers to farm properly without other aid, and that without that other aid we would be slipping back into the form of agriculture that he has just described?
Earl Ferrers: My Lords, I was telling the noble Lord exactly what I did tell him, not how he has chosen to interpret what I told him. I think he knows perfectly well what I mean.
We have to get a balance between the need to have a healthy, modern, innovative agricultural industry which can supply a large part of our food requirements and help our balance of payments, and the well-being of the rural community as a whole and the need to conserve that which is best in the countryside. If agriculture does not prosper, people will leave the countryside and it will decline. And just as we cannot preserve nature complete, so we cannot preserve agriculture as it was or as we like to think that it might have been, which is not necessarily the same thing. I cannot agree, therefore—and I go along with my noble friend Lord Middleton on this matter—that capital grants should be ended. Statistics show that they have provided the conditions which have enabled the stock of buildings and works on farms in this country to increase five-fold since 1947, even if those figures happen to exclude Lord Raglan's cowshed. I respected his determination (I was going to say "obstinacy") in forgoing a grant because he did not wish to put a few perspex sheets in his roof.
The noble Lord, Lord Raglan, castigated capital grants as being unnecessary, and possibly even for being responsible for keeping the prices of buildings up. I think the noble Lord said that. He then said, I think, that it was a pity they were not available to part-time farmers as well as to whole-time farmers. It seemed to me there was a certain inconsistency in that; if the noble Lord felt that grants were bad because they kept prices up, it seemed rather extraordinary that he should then have said it was a pity they were not available to part-time farmers. In fact, in 1981 about a third of the capital grant that was paid went to small farmers. Any farmer may qualify for a development grant provided he can submit an acceptable development plan which will raise his income to the level of the comparable income, which is about £6,800

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in Great Britain. Of course, the chances of smaller farmers being able to do this are not good, but the reason for the restriction is, frankly, to avoid fossilising the present structures by providing buildings for nonviable farms.
The noble Lord, Lord Northfield, referred to the development plan provisions to aid conservation. Directive 72/159 requires a development plan to be a budgeted programme of investment capable of raising the income to the figure of £6,800. We require farmers to have regard to conservation and amenity, but the directive itself does not empower us to pay for conservation.
By introducing major restrictions on eligibility for grant, which is what the Select Committee have suggested, our farmers would be exposed to a much higher degree of risk and uncertainty in their investment. We would risk undermining the innovative zeal which has been the basis of the success story of British agriculture since the war. The industry's existing stock of buildings and works is not permanent. Regular and substantial reinvestment is necessary simply to maintain the capital base. Replacement and renewal works accounted for half the total agricultural investment in the early 1970s and they now account for over three-quarters. I agree with my noble friend Lord Middleton that any major reduction in capital support would strike more directly at reinvestment. So even if the Select Committee were correct in claiming that farms in the better farming areas are adequately equipped and the land is in good condition, I fear that such a state of affairs would not be very long sustained.
The noble Lord, Lord Cledwyn, said he thought that applications under the development scheme had fallen during the last few years. There are at present over 22,000 development plans outstanding in the United Kingdom. Of course, it is perfectly true that applications for new plans have declined in the last two or three years. There are probably two main reasons for that. First, investment in industry and in agriculture generally fell during that time. Secondly, each development plan can take up to six years to complete, and there may be some reluctance to embark on a long programme of investment at a time of uncertainty and difficulty such as the period we have been going through, at times of relatively high interest rates. But it is interesting that grants paid under the scheme more than doubled between 1978 and 1980.
We welcome the committee's recommendation that drainage grants should continue. It is fashionable to decry all drainage almost as if it were exploitation. I do not share that view. Of course there are areas of wetland which are of such importance to wildlife that they must be protected. It is the responsibility of the Nature Conservancy Council to indentify and designate those areas; and my department will cooperate with the council in carrying out that task, even though we are bound to differ from time to time about the details.
I was interested to hear the views of the noble Lord, Lord Northfield, on agriculture and conservation. I was tempted to follow him a little but, for purposes of prudence, I will avoid that particular temptation. The one thing in which I would agree with him totally is
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that there is a difference of opinion here. What there must not be is confrontation. It is up to all sides, whether they be farmers or conservationists, to ensure that they see the other person's point of view and avoid confrontation. Because a subject like this has recently come to the forefront, everyone tends to go out on limbs, and it is a most regrettable state of affairs when that happens. Agriculture and conservation have gone on through the ages and can still continue, provided that people are sufficiently broadminded to see the other person's point of view.
The noble Baroness, Lady White, asked in an interjection whether there should be an environmental fund as well as social and agricultural funds. That is a matter which is at present under consideration in the Community.
Going back to the particular area of drainage, there are many other areas of wetland or heavy land which are of no specific significance to wildlife and whose productive capacity is greatly improved by under-drainage. I would go so far as to say that it is the responsibility of any good farmer to drain that land and to put it in good heart. In just the same way as he applies fertiliser and lime and keeps down weeds and pests, so it is part of the age-old process of caring for the land and making the best use of it. We cannot afford to do otherwise when we are losing some 48,000 acres every year and we are still only 75 per cent. self-sufficient in the foodstuffs we can produce ourselves. I was glad, therefore, to see that the committee said that land kept in good heart is a national asset. So it is, my Lords.
My noble friend Lord Sandford referred to extending the co-operation between the national parks authorities and conservation. The Ministry and the national parks authorities already consult more widely than the formal procedures require. This is very welcome and it will be developed.
The noble Lord, Lord Walston, also asked how information on conservation was getting over. ADAS are playing a prominent part in helping the farming and wildlife advisory groups to operate. They provide members of those groups and they involve farming and wildlife advisory groups in their work. ADAS were instrumental in the creation of the original farming and wildlife advisory groups and they are encouraging new ones.
My noble friend Lord Sandford referred to the seven socio-economic advisers and asked: what are these among a thousand agricultural officers? I could not help feeling, in another context and in view of my noble friend's collar, that five barley loaves and two small fishes went a fairly long way. All I would say is that I understand his enthusiasm, but I believe he must try to be a little patient because one cannot just pick socio-economic advisers off the shelf, as it were. There is a limit to Government funds, and we have made a very substantial impact in this direction.
The noble Lord, Lord Walston, also suggested that ADAS should develop greater expertise in nonagricultural socio-economic conservation matters; but in addition to the full-time socio-economic advisers, ADAS have appointed other people such as landscape architects, specialists in pollution control and ecologists. They are also running courses in conservation, in landscaping, building design, socioeconomic

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matters and so forth for their general advisers.
I welcome the committee's recognition of the need to provide assistance to the less favoured areas. Agriculture alone cannot provide the answer to all the difficulties faced by rural communities; and I agree with the noble Baroness, Lady Seear, over this. But of course it does provide the essential foundation for their continued existence. Farming occupies a unique position in the rural life of the uplands and it must be maintained if we are to stem the decline in population. The way to achieve this is by promoting farming practices which are most appropriate to our upland areas without compromising their value as a leisure resource. The greatest contribution which they can make is in livestock production and in maintaining a genetic pool of hardy breeds. So often that is done by the family units to which the noble Baroness, Lady Seear, rightly paid such tribute.
The payment of special headage allowances on cattle and sheep which are kept in the less favoured areas, is intended to compensate for the natural and substantial handicaps which are faced by livestock producers in these areas. These handicaps are faced in some degree by all producers in less favoured areas, whether they operate on a large or on a small scale. Indeed, far from being their belonging to the large, impersonal "agribusiness" farmer, the larger herds or flocks in many cases tend to be those maintained by the family farms which form the nuclei of the rural communities. I think that the committee is right to conclude that these payments should continue, irrespective of farm size.
My noble friend Lord Brookeborough said that he always liked to give me a punch from behind. I must say I admire his clarity of exposition. I am used to receiving such treatment from my noble friend, but I do not take that in any ill heart. He was very persuasive, and he said, of course, that the Government have given no indication that the extended less favoured areas will receive the same level of aid as existing ones. He went on to say very persuasively that it would show the Commission that we really meant business if the Government were to do this.
My noble friend knows perfectly well the situation; that is, that the Government have made the application to the Community, that the Community is taking this not only seriously but urgently, because we heard from the Community on 7th February last asking for more information so that it could clarify our application. My noble friend knows that the position is that we have not committed ourselves as a Government to provide the same level of funds for extended areas as there are at present in existing areas. That is the position as it is at the moment.
The committee stated its view that the present measures in support of the less favoured areas were not entirely adequate because they do not provide the broadly based infrastructural support which is needed in order to maintain the economic and social fabric of the smaller rural areas. I accept that there is some scope for diversification at the farm level into tourism, craft industries and so forth. But there are many areas where the tourism or craft industry potential is
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severely limited, and there are other areas where it would be difficult to reconcile a yet further increase of tourists together with the conservation of the countryside.
My noble friend Lord Middleton asked whether we could not raise the limit on grant aidable investment for tourism. The directive 75/268 permits grant to be paid on a total investment for tourism of just over £8,000. We do not implement this provision partly because the assistance for tourism is available from other sources, such as tourist boards, and also it is limited to farmers in less favoured areas who have development plans, which would restrict it considerably. I agree that there is a case for reviewing this provision with a view to making it more attractive.
Those are the reasons why the Government have been looking at the possible role to be played by the integrated development programme. One of the three such programmes, which have already been agreed in the Community on an experimental basis is being implemented, as the noble Lord, Lord Cledwyn of Penrhos said, in the Western Isles of Scotland. But the noble Lord, Lord Walston, said that this had not been a success. This is one of the three proposed pilot programmes. It is the only one which is currently in progress and it was begun only within the last 12 months.
Lord Walston: My Lords, I am sorry to interrupt the noble Earl but what I hoped I said, and what I intended to say, was that my impression was that the scheme was being a great success.
Earl Ferrers: My Lords, in that case I do apologise for misunderstanding or mishearing the noble Lord. Be that as it may, the same argument applies, that it is too early, as yet, to discover how successful it has been; but it will certainly provide us with a lot of valuable experience to guide the production of future programmes.
Lord Sandford: My Lords, I wonder whether I may interrupt my noble friend, as he has left that point now, because we do not quite have the record straight about this. I said it had failed to meet our hopes and expectations of it that we expressed in our earlier report three years ago. I am still convinced of that and the Minister of State for Scotland said as much to Sub-Committee G the other day. He said that all we could claim for this was that it was a rather more elaborate and extensive agricultural extension scheme, and in that respect I am sure it will be a success. There are all the indications that it will be a success. What we have yet to see is a proper fully-integrated rural development programme coming from the Commission and supported by the Government. It is now too late for this particular scheme to fulfil those expectations.
Earl Ferrers: My Lords, I am sure that that has put the record straight. My noble friend said, first, that he was convinced it had not been a success and went on to say that it had been a success. All I would say to him is that if he would be good enough to wait a little longer we will be able to assess the implications of the whole project and see how we can take it from there.

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I cannot agree with the Select Committee's proposal that the expenditure of farm capital grants should largely or entirely be diverted to support marketing and processing, but I was interested in its views on Community Regulation 355/77, which provides aid to improve the marketing and the processing of agricultural and fishery products. The regulation has just been extended for two years and will now end on 31st December 1984.
I agree totally with the committee that the promotion of better marketing and processing is of immense importance for the future. The noble Lord, Lord Cledwyn, as well as the committee, highlighted a substantial problem which we have with the regulation. The National Farmers' Union said that only a relatively small proportion of applicants for grant were successful and they might have to wait a considerable length of time before learning of their success or otherwise. I can quite see their anxiety that the regulations may not provide the real stimulus to investment which is needed. It is said that improvements could be undertaken without knowing whether an EEC grant was going to be obtained or not. I think that there occurred in the report the suggestion that if it did come it was sometimes a happy bonus. Although it did not quite put it this way, the committee insinuated that there is not much point in trying to inject a stimulant when the horse has already run off. The regulation has, nevertheless, positively encouraged some sectors or regions to analyse their future priorities and it may, in certain cases, have brought such investment forward. But to solve the major drawback of the regulation, the Committee has suggested that every eligible project should be aided and funds should be made available accordingly. As an alternative one could draw the terms of the scheme very tightly and so match more clearly the number of applicants for the funds available.
The suggestion that every eligible project should be grant-aided would be very costly. On past records, the cost of the scheme would more than double. For example, in 1982 requests by applicants in the United Kingdom, which were being considered for the first time, involved aid of some £23 million, while the funds which were made available in the United Kingdom were only £8.6 million. The noble Lord, Lord Cledwyn, asked whether there had been any progress in increasing the receipts to the United Kingdom under this regulation. In the first two years of its operation, the United Kingdom received less than 12 per cent. of the funds available, excluding special amounts for the Mediterranean; but, following representations to the Commission, since 1980 we have received just under 15 per cent., so there has been a marked improvement.
I am bound to ask whether the large blanket increase in aid would be well spent, or if the scheme would not, in fact, just become an open-ended cheque rather than an effective incentive for good investment. We cannot just assume that every project which is eligible under the present scheme will use the funds well. If discretion to select the best projects did not exist, stricter conditions and narrower limits of eligibility would have to be drawn in order to ensure that funds went only to sound projects. The committee also took the view that the regulation could be improved if national
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authorities were responsible for administering grant arrangements. They felt that it would ensure that applicants were soundly advised of their chances, and that the delay in learning of the success or otherwise, of their applications would be reduced. I accept that there is an unfortunate delay, but there is always a degree of uncertainty in any discretionary grant scheme.
But behind it all is, of course, the need to market properly; and the noble Lord, Lord Cledwyn, referred to Food from Britain, I would merely repeat what I said to the noble Lord, Lord John-Mackie, at the beginning, that this new organisation has incorporated the producers, the processors, the manufacturers and the retailers and they are all dependent upon each other. The retailer has to supply what the consumer wants and 75 per cent. of the food which we produce in the United Kingdom has to be processed. Therefore, our processors must compete with our competitors and our farmers must, if the processors are to succeed, provide exactly what the processors want. Both producers and processors must provide quality, consistency and constancy. It is not enough just to produce what you like. One has to produce what is required, because it is the buyer who is all-important. That is the great problem for Food from Britain. It is not the intention of Food from Britain to promote British food because it is British, but because it happens to be best. That is what is intended.
I should like to thank the committee for their report and, indeed, your Lordships for what you have suggested this afternoon, because the timing of the report and the debate is impeccable. We are in the early stages of reviewing the structure directives and the committee's findings, and our debate here this afternoon, could make—and I feel confident enough to say that it will—an important and influential contribution to that review.
5.52 p.m.
Lord Cledwyn of Penrhos: My Lords, I shall be very brief, because there are important debates to follow. I should like to thank all those who have spoken in this debate. Every speech has reflected some expertise related to farming, and also a wealth of experience, so I am extremely grateful to noble Lords who have taken part. We are particularly grateful to the noble Earl for his summing-up and for giving the official reaction. I understand some of the apprehensions which were voiced by the noble Lord, Lord Middleton, the noble Viscount, Lord Brookeborough, and the noble Lord, Lord Monk Bretton. They will be comforted this evening that they were supported by the noble Earl the Minister of State. No doubt, there is a good deal in what the noble Earl said, but he and they must give due weight to what the committee said after considering this matter for several months.
I will quote one sentence from paragraph 81, because it needs to be quoted at the end of the debate. They said:
"When so much agricultural produce is in surplus in the Community and unemployment is so high, capital aid from public funds that has the effect of adding to the surplus or of increasing the number without work can no longer be justified."
That is the core of the committee's case and that, also, must be taken into account.

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The committee were chided by my noble friend Lord Northfield for paying insufficient attention to environmental considerations. We know about his interest in this field, and the contribution that he makes. But the committee had a huge task in looking at the whole field of the socio-structural system, and all the directives, regulations and terms of reference are pretty well summarised in paragraph 10. My noble friend reminded me of the preacher, who had preached extensively on the four Gospels and on the Acts for about two hours, and delivered a very powerful sermon. But, at the end of it all, the senior deacon came to him and complained that he had not dealt with the Book of Revelations. There is a limit to what any committee can do in a given period of time. I should have thought that my noble friend's case was so important that it might be referred to the joint consideration of Sub-Committee D and Sub-Committee G on the environment. This is something which the Select Committee on the ECC might consider in due course.
On that point, I know that the House will be grateful to my noble friend Lady Llewelvn-Davies, the new chairman of the ECC Select Committee, for sitting throughout the debate and for taking an interest in it. We appreciate that very much, as we do the presence of the former chairman, my noble friend Lady White. I omitted to do one thing, and that is to thank the witnesses who came to give evidence. They spent a great deal of time in preparing material for us and in giving evidence. Without them, we could not have produced the report. In its length, content and common sense, I think that this debate has been very well worth while.
On Question, Motion agreed to.

ECC 20th Report: Strategic Minerals
5.55 p.m.
Lord Kings Norton Lord Kings Norton rose to move, That this House takes note of the Report of the European Communities Committee on Strategic Minerals (20th Report, 1981–82, H.L. 217).
The noble Lord said: My Lords, the report is the result of a detailed inquiry made during the first half of 1982 by Sub-Committee F of the European Communities Committee into the supply to the Community of materials of mineral origin which are vital to the Community's economy. That it is of considerable importance was evidenced by the reception which the report received last October from both the daily and the technical press, and today it is particularly topical because of the report a week ago that Her Majesty's Government were stockpiling certain non-indigenous metals of the rarer kinds. Last Tuesday The Times published an important leader under the heading "Precious Metals" which, in effect, extends consideration of the supply of, and the demand for, strategic materials to the world scene. I must emphasise, however, that the report which I am bringing to the notice of your Lordships is primarily concerned with the interests of the nations of the European Community.
The impetus for our inquiry came from a Commission paper, referred to in the report, proposing a four-
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year research and development programme, designed to strengthen the supply lines to the Community in the raw materials from external sources on which the Community is heavily dependent. This programme, with some amendments, was adopted by the Council on 17th May last year. The programme is elaborate and includes the study of metals and mineral substances, of uranium, of ceramics, of wood, of recycling and of the substitution of materials with vulnerable supply lines by others which are more readily available.
But Sub-Committee F decided that adequate inquiry within a reasonable period into all the areas covered by the programme was not possible and that, at any rate in the first instance, they would confine consideration to the areas of metals and mineral substances. It is this area which is the subject of the report, which, because of the nature of our inquiry, we have called Strategic Minerals. The sub-committee received evidence from a large number of organisations and individuals. As your Lordships will see from the minutes of evidence, the latter were people of distinction and included witnesses of eminence from the Community, from France and from Germany.
The countries of the European Community are highly dependent on other countries for their supplies of metals and non-fuel minerals. Indigenous sources are insufficient for the Community's needs, and this is a situation which is not likely to change. How, then, are those sectors of EEC industry which are vital to its economy, and which are dependent on metal and mineral imports, to escape disruption if the normal sources of supply should fail? These are the minerals to which we have applied the term "strategic", and this is the problem to the solution of which the inquiry was aimed.
We had first to ask ourselves what criteria should be used to establish which materials and minerals are strategically important to the Community as a whole. Having decided on the criteria, we had to decide by them which metals and minerals were indeed strategic. According to the Institute of Geological Sciences—and the sub-committee agreed with the institute—the term "strategic" should be defined in terms of "criticality" and "vulnerability". I apologise for the jargon which I am introducing, but it is not the committee's. "Criticality" is in effect the degree of importance of the contribution a particular mineral makes to a vital sector of the national economy. "Vulnerability" is the degree of reliance which the consuming country can place on continuity of supply.
Ideally it should be possible to establish a list of strategic minerals and metals used by the Community—those being defined as "strategic" which can be identified as being critical to vital sectors of the economy and, in addition, not produced to any great extent within the Community. The situation, however, is not so clear cut. Decisions on criticality are to some extent dependent on subjective judgments and on whether substitute materials can be found. Nevertheless, we did decide upon a list of metals and minerals which have critical roles in the Community's economy. This list, of 11 materials, is in paragraph 39 of the report.
In our study of vulnerability we concluded quite early in our inquiry that there is no cause for concern in the case of any mineral about imminent exhaustion of reserves. Supplies to the Community are thus unlikely to be disrupted through depletion of resources. There are, however, obviously other factors which could contribute to short-term shortages of some materials and minerals. For example, when Canadian nickel miners went on strike in 1969 the United Kingdom suffered the greatest metal crisis since the war. Further, inadequate investment in production capacity in a mine can result in periodic shortage when demand exceeds ready supply. There is also the tendency in some developing countries towards production of a metal instead of export of the metallic ore for production elsewhere. This can clearly produce shortage until a new balance is achieved.
Leaving aside this secondary kind of vulnerability to short term disruption, the sub-committee decided to treat as potentially vulnerable only those metals and minerals for which the Community is more than 85 per cent. dependent on outside sources, irrespective of the country of origin. In this connection, your Lordships will be interested in paragraph 43 of the report, where the Community's percentage import dependence on metals and minerals which are in some degree produced within the Community is listed. Associating criticality and vulnerability leads to the interesting short list of materials strategically most important to the Community, given in paragraph 55. They are chromium, manganese, phosphate rock and the platinum group of metals, of which the most important are platinum, palladium, iridium and rhodium. Certain other critical minerals which are also vulnerable are amenable to substitution and so represent a strategically less important category. They also are listed in paragraph 55 of the report. Silver and tin, which are indeed basically vulnerable, are not in the list because they are extensively recycled—that is, recovered from scrap and used over and over again.
For three of the four strategic materials—namely, chromium, manganese and the platinum group—the Western world is overwhelmingly dependent on two countries, South Africa and the Soviet Union, and although this concentration has not occasioned any inconvenience to the Community in the past, a greater spread of supply sources would logically be more satisfactory. That is why the large reserves of important minerals in China, in Antarctica and, it is thought, in Greenland are of great interest, although many years of investment and development will be necessary before any of them can make significant contributions. Another source of supply which may one day be exploited is the polymetallic nodules which occur on the floors of the deep oceans. These are rich in manganese, which is one of our four strategic minerals, and in cobalt and nickel, which occur in the list of rather less strategic minerals to which I have referred.
More immediate as extensions of current sources of supply, however, are the resources of the developing countries of Africa, the Caribbean and the Pacific, known for short as the ACP countries. Africa particularly appears to have great potential. There is every reason to believe that if mining companies based in the Community could develop new mines in the less
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developed countries, called LDCs for short, not only would the Community benefit from the new sources of minerals but the host countries would benefit economically, too.
As a result of the Lomé Convention, financial aid, which can be used for mineral resource exploitation, is already available to ACP countries, and the European Investment Bank has also made finance available for mining investment projects. Two specialised aid schemes, known as STABEX and SYSMIN, are administered by the commission under the Lomé Convention. The latter is of special relevance to our inquiry. It was devised to mitigate the effect of a reduction in an ACP country's capacity to produce or export certain mineral products. To be eligible, a country must depend on a listed product for at least 15 per cent. of its export earnings and must have experienced a drop of at least 10 per cent. in its production of, or export capacity in, that product. The 15 per cent. figure is reduced to 10 per cent. for the least developed ACP countries. The mineral products covered are copper and the associated cobalt, phosphate, manganese, bauxite and alumina, and tin. The committee would like to see chromium and platinum added to the list and, to encourage the development of their known sources, would like to see the 10 per cent. figure further reduced.
The committee further believe that development aid outside the Lomé Convention could be so administered as to encourage mineral resource development in the less developed countries. Such aid cannot be expected to replace the role of the international mining companies, but consulting companies and survey geologists from the Community could be asked to favour ventures in LDCs beneficial to the Community, particularly in the areas of strategic materials. Further, development aid to students from the LDCs to enable them to study at Community educational institutions should be so allocated that more can be trained in mineral resource development.
The committee concluded that aid should be tailored to support the mining industry and its free market system, and that Community involvement in the existing framework of mineral marketing should be limited to backing long term sales contracts and to offering guarantees in mineral development financing.
In the present period of recession and falling metal prices, capital expenditure on mining operations is curtailed. Furthermore, some mines will become uneconomic temporarily and may be forced, because of short term considerations, to close, despite having adequate reserves. Reopening such mines can be more expensive in the long term than keeping them open on a care and maintenance basis. The committee believe that in certain circumstances Community funds should be made available to keep selected mines ready for increased production when demand is restored.
The European Community does not have a formal raw materials supply policy. It is, however, engaged in activities which are elements in an overall policy, such as the research and development programme which I mentioned at the outset, and the financial aid under the Lomé Convention to the ACP states. A Community policy could be expected to develop by the accretion of other elements. Among the countries of the Community, the only one so far with a formal

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policy on strategic minerals is France. This is based on the recognition that France has not enough indigenous material resources for its needs. The French Government's chosen instrument for developing and implementing mineral policy is the Bureau de Recherches Géologiques et Miniéres, which has close links with industry, operates joint ventures with private companies, and engages in exploration. France is also alone among Community countries in operating an official stockpiling policy which aims to store sufficient materials to provide French industry with a two-month emergency supply.
The West German Government believe that primary responsibility for the supply of raw materials rests with industry itself. The part played by the Government is limited to improving and safeguarding the general political and economic conditions in order to stimulate research and reduce the risks in prospecting and exploration.
The most important conclusion in the report before your Lordships is contained in paragraph 94:
"In this enquiry the Committee considered twenty-four metal and mineral groups. For the most of them the evidence confirmed the Community's high dependence on external sources of supply. But it also gave reassurance that there was no cause for concern about imminent reserve exhaustion for any of them. Supplies of metals and minerals to the Community are therefore unlikely to be disrupted through depletion of resources".
The report recognised, of course, that abundant reserves are no guarantee against periodic shortages; there are always possibilities of disruption of supply through, for example, political disagreements, industrial action or lack of new investment. Such considerations did not, however, lead the Select Committee to recommend any change in the Government's attitude on strategic minerals. But as I mentioned at the beginning of my speech, change is taking place. We are now told that the Government have decided to stockpile chromium, manganese, vanadium and cobalt, which are two metals from our strategic list and two from our rather less strategic list.
It will be interesting to learn from the noble Lord, Lord Trefgarne, whether the report has been of help to the Government in reaching their recent stockpiling decisions, and whether these decisions represent the first stage in the formulation of a more comprehensive policy for strategic minerals. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Strategic Minerals (20th Report, 1981–82, H.L. 217).—(Lord Kings Norton.)
6.4 p.m.
Lord Strabolgi: My Lords, this is an important report and the Select Committee and Sub-Committee F are to be congratulated on a very searching and thorough document. We on this side of the House are glad that the noble Lord, Lord Kings Norton, has introduced the report so lucidly.
As the report makes clear, the indigenous resources of the EEC are not sufficient for the Community's needs. The Community is dependent upon imports for certain essential metals and minerals. It is therefore necessary for the United Kingdom and her partners in the Community to have certain options available
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against any possible disruptions of supply from overseas due to political or other reasons. We in Western Europe are heavily dependent upon South Africa, to give one example, for platinum and chromium. According to the report, South Africa supplies 77 per cent. of the world's platinum needs and 35 per cent. of its chromium. Other African countries possess potential mineral resources. Zambia has copper; Ethiopia and Zimbabwe both have platinum; Ghana, Gabon and Zaire all have manganese; and there are chromite deposits in Madagascar and in the Sudan. However, the committee were told that there is great need for more geological exploration. There is also an urgent need for more nationals of the third world to receive higher education in mining technology; I am very glad that the noble Lord, Lord Flowers, is to take part in this debate.
There may be vast mineral wealth in Antarctica, although the ice sheet will make exploration and eventual recovery difficult. Furthermore, there is no firm basis for states to secure exploration and exploitation rights over an area of the world where seven states, including the United Kingdom, claim territorial sovereignty and where other countries such as the United States, the Soviet Union and Japan do not recognise the claims of territorial sovereignty by any state.
The report believes that China could eventually become an important source of mineral supplies to the Community, although witnesses from Western-based mining countries who had visited China stated in their evidence to the sub-committee that there are various practical problems in the way, at least for the foreseeable future.
As the noble Lord, Lord Kings Norton, said, it appears that France is alone among the Community countries in adopting an official stockpiling policy in order to provide French industry with a two-month emergency supply. According to the evidence submitted to the committee, chromium is included among four metals selected by the French Government for stockpiling; the others being copper, lead, and tungsten. I should like to ask the Government—in view of what was said by the noble Lord, Lord Kings Norton, about a change in their policy—whether their long-term policy is towards stockpiling, and whether we have any long-term contingency plans; or do we prefer to leave supply and demand to market forces? May I remind the Government that the United States has become concerned about the strategic position of certain metals and has decided to stockpile?
In this country, as paragraph 107 of the report points out, financial pressures have recently forced BSC to reduce stocks of chromium from 24 weeks' supply to less than half that total, although two months' supply of chromium would cost only £3 million—an example of cheeseparing which is, of course, counterproductive. The committee believes that the Community—in view of the relatively low cost of limited stockpiling—should advise key industries on optimum levels of stocks. An advisory role by the Community is thought to be preferable to a formal policy of mineral purchase.
The Community is doing a good deal to research and develop new sources of raw materials through the

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European Development Fund which, under the second Lomé Convention, has allowed about £2,600 million to the ACP countries, some of which can be made available to financing mining and energy projects under Article 59. It has already been agreed to provide finance to Zambia and Zaire in respect of their copper and cobalt mines. It was suggested in evidence to the committee that additional minerals and metals should be added to the list covered by Lomé II for inclusion in the next convention. An example that readily springs to mind is platinum, which is listed in the report as one of the four metals and minerals of prime strategic importance, as was said by the noble Lord, Lord Kings Norton.
It has also been proposed that future policy should tend towards establishing a larger number of modest sized projects under Lomé which would expand in line with increasing demand; in other words, that the goal should be to establish more but smaller mines in order to avoid over-production and to ensure a greater diversity of mineral sources for the Community. As negotiations to establish a third Lomé convention are due to start in September, perhaps the noble Lord, Lord Trefgarne, would let the House have the Government's views on this proposal.
There are resources of manganese and cobalt, both strategically important, under the sea, but the last United Nations Law of the Sea Conference (UNLOSC as it is called) decided on a vote that there should be a transfer of technology by mining companies to the third world. Britain, the United States, West Germany and Italy have all had reservations, not unnaturally, and both the United Kingdom and the United States have declined to sign the treaty. As the sea could provide a useful alternative source of these minerals, some calculate at a lower cost, will the Government state what their future policy is respecting this proposed law of the sea treaty?
As far as the mineral exploration of the United Kingdom is concerned, two factors have proved to be a positive disincentive to mining companies. First, there is the matter of mineral rights. Coal, petroleum and uranium belong to the nation; other minerals do not. Sometimes mining companies have to deal with hundreds of mineral owners before they can secure the property, and this can take years and is a serious disadvantage. The second factor is that the proposed drilling programmes often run into strong opposition on environmental grounds. Both these factors tend to inhibit investment.
It is clear from this full and detailed report that the supply of certain minerals, even if these exist in abundance, is vulnerable to various dangers such as political instability, industrial action or inaction, or the shortage of investment capital brought about by lack of confidence in a particular area. In Antarctica there are difficulties of terrain and climate, to say nothing of the multitude of territorial claims. China, where it is believed there are vast resources, is not thought at present to be particularly attractive from the investment point of view of the mining companies, as many practical problems still exist. In the United Kingdom a plethora of private mineral rights of almost Byzantine complexity and an active environmental lobby do not encourage mining companies to
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undertake mineral exploration and development. As the report points out:
"While political risk has been cited as a barrier to investment in some countries, environmental risk is as much a barrier, if not a greater, in others".
The report goes on to say that in the United Kingdom and in parts of Europe environmental considerations have inhibited investment in primary processing and also in mining, particularly in scenic areas. It is clear, therefore, from this inquiry that although there is no cause for concern about the imminent exhaustion of mineral reserves, as Lord Kings Norton said, nevertheless there should be no complacency, as these reserves, both in the Community and outside it, are vulnerable to various other factors which, I regret to say, are mostly manmade. As I said, there is no room for complacency. I am sure we are looking forward to the noble Lord, Lord Trefgarne, telling the House something about the Government's long-term contingency plans.
6.24 p.m.
Lord Flowers: My Lords, those of your Lordships who, like myself, had the honour to serve on your sub-committee under the chairmanship of the noble Lord, Lord Kings Norton, can say quite sincerely how much they enjoyed the experience and how grateful they are to him for introducing the debate today in such a comprehensive fashion, and for explaining the jargon we found it necessary to use. I am very happy also to follow the noble Lord, Lord Strabolgi, with whose speech I was in very substantial agreement.
The report, if I may say so, is exceptionally well researched, for which thanks are due not only to our staff but also to the witnesses, who took so much care with their written evidence. I should like, if I may, to mention just one of them, which I can do without being invidious because he has, most lamentably, died since giving oral evidence to us. I mean Professor Marston Fleming, who appeared before us as a former President of the Institution of Mining and Metallurgy. He was better know to me as Dean of the Royal School of Mines and Pro Rector of Imperial College. He was a very close colleague of many who took part in our inquiry. I know that in his retirement he devoted several weeks to the preparation of the institution's evidence, and I am authorised to say that behind the scenes he was a tower of strength to our specialist adviser throughout our study. It was, I think, during the institution's evidence that it came out most clearly that, in the event of a disruption of supplies from South Africa, or more generally from southern and central Africa, the Soviet Union, because it is a large-scale producer of many of these strategic minerals, would find itself in a stronger position than the countries of the West might like.
Our report is a quiet one; it predicts no catastrophes. There is no geological evidence to suggest early exhaustion of any of the strategic minerals. But some minerals that have to be imported are vulnerable to short-term disruption of supply for political or for economic reasons, and so we should not be complacent. Last week's news that the Government have been modestly stockpiling some of these vital materials seems, therefore, if true, to be a step in the right direction. It was taken ahead of most countries of

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the Community except France, but I hope others will follow. I welcome it on behalf of my noble friends on this Bench, and, at the behest of the noble Lord, Lord Tanlaw, on behalf of his noble friends also.
However, one should also not be complacent about the minerals which we produce in substantial quantities within the Community, and which for that reason are not classified as strategic in our report. Economic resources do become exhausted in time. Sir Kingsley Dunham, former Director of the Institute of Geological Sciences of the Natural Environment Research Council, NERC, reminded us vividly that during the 19th century Britain was the leading producer not only of coal and iron but also of tin, copper and lead. That is certainly not the case today, although the unexpected discovery of huge and profitable deposits of zinc and lead in the Republic of Ireland makes one wonder whether a further wave of mineral exploration might not be justified within the Community.
In Britain, we have the deep geology programme of NERC. This helps mineral exploration by revealing the structure and composition of concealed masses of crystalline rock and by indicating the geological setting in which certain types of mineral deposits are formed. There is an analogy here with oil and gas exploration, which starts by considering the sedimentary basin as a whole, then establishes geological structures where hydrocarbons might be formed, and only after that ventures on expensive drilling. In other words, by means of basis research one can set up a geological model to guide mineral exploration.
The current British programme embraces a line from the Hebrides down through the Irish Sea to the west of Cornwall, where seismic work has indicated the nature of the underlying rocks. Somewhat later in time, although grander in design, is the European Geotraverse Programme, which is being launched by several countries, Britain included, under the auspices of the European Science Foundation. Jointly they will investigate the earth's crust and mantle along a traverse reaching from the northern Baltic Shield through Scandinavia and central Europe to the transition zone between the Eurasian and African plates in the Mediterranean. It is hoped that the traverse may later provide the north-south backbone of the skeleton that encompasses all of Europe, east and west. In turn, this European study is to be seen as a major contribution to the International Programme on the Dynamics and the Evolution of the Lithosphere, which involves all the earth sciences throughout the world.
Accordingly, the European traverse project is expected to contribute to the delineation of possible areas of deep ore concentration as well as of fossil fuel resources, geothermal provinces and regions of geological instability such as earthquakes and landslides.
The British contribution to this international programme comes through the research councils. I would hope that it could be granted somewhat higher priority, not only by the British Government but by the European Community in general. In terms of economic rather than political interest, it is likely, I think, to bear fruit much sooner than the expanded programme for Antarctica.
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But, to go back to our report and to minerals there classed as strategic, it is clear that it would be sensible for Britain to assist in the development of the resources of Zimbabwe, Zambia and Zaire, through technical participation in exploration and mining operations, and through the training in this country of African technicians and mining engineers. The noble Lord, Lord Strabolgi, has emphasised the importance of this, and I was glad to hear him do so. That way we insure against difficulties arising in South Africa, and we protect those countries of Central Africa from the predatory instincts of the Soviet Union.
There is already a tremendous amount of experience of mineral exploration in this country, especially in the development of new techniques. To mention that which I know best, in the 1930s Imperial College began to develop training and research in applied geophysics with the assistance of the old Department of Scientific and Industrial Research. After the war, and together with industry, we took the lead in developing applied geochemistry as a tool for mineral prospecting. We also led the world in the development of mineral technology, with which the late Professor Fleming was concerned, and in the study of rock mechanics applied to opencast mines. That was mostly before my time, but now we are engaged with University College London in the first British postgraduate course in remote sensing, with mineral exploration very much in mind—a subject that is now under investigation by your Lordships' Select Committee on Science and Technology. The development of research and training in methods of mineral prospecting not only helps the mining houses, but also assists exploration companies and others who provide services to the mining industry here and abroad. It is a field in which we are rather good in the United Kingdom.
There is also China, which appears to have immense resources and where, perhaps through Hong Kong, we could provide a similar service. Our report says very little about China and even less about South America. In retrospect, it seems surprising that we record the interest of West Germany in Brazil and leave it at that. Professor C. T. Shaw tells me that Brazil is not only a major mineral producer already: it is, in his opinion, the one relatively underdeveloped country in the world whose mineral resources potentially rival those of China. More generally, South America is an area where the Community, and not least Britain, could sell its technology, consulting services and relevant education and training.
It would be wrong to sound too bullish about overseas prospects. I was brought up sharp by reading again the final paragraph of written evidence from the Institution of Mining and Metallurgy, in which it says:
"Attempts to diversify sources of supply are attractive, but this can only be achieved by encouraging new supply capacity into an already surplus market. Even if the surplus position were to change, it is still unlikely that additional capacity representing diversification would be the natural (most viable) development".
But, of course, the institution was referring to changes in short-term prospects and I was referring to the eventual benefits of long-term research programmes, so there is really no disagreement. We are, in any case, discussing tonight the Community's research and development programme for strategic minerals, which covers the period 1982–85 and will cost altogether 54

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million European currency units, and whose benefits are likely mostly to be long term. Our report concerns itself almost exclusively with the metals and minerals sub-programme, costing 25 million ECUs.
There are also programmes of 6·5 million ECUs for the recycling of non-ferrous metals, and of 10·5 million ECUs for the study of substitution, both of which are intended to encourage savings of essential raw materials. Recycling is a topic of greater importance than we were able to give it in our report, except to note that a degree of self-sufficiency can be achieved by recycling scrap even where there is little or no primary production. Among the vulnerable materials, silver, tin and platinum group are already extensively recycled.
I should like to see more serious applied research throughout the Community devoted to recycling, and so I think would noble Lords on the Liberal Benches. There are the costs of collection and of reprocessing, certainly, but to set against those there is usually a large saving in energy for the primary processes. There is also a considerable advantage if mining would otherwise have to take place in an environmentally sensitive area. One should not forget that environmental considerations played a part in the decision not to extract low-grade copper deposits in Snowdonia. Mining operations can nowadays be conducted with surprising finesse, but I suspect that one pays less attention to other people's environment, especially in other countries, than one does to one's own.
We shall be talking about energy and the environment later this evening. For the moment, therefore, let me say merely that I was pleased to sec the emphasis which Mr. Crowson of RTZ gave in his oral evidence to recycling and to substitution. I hope we can emulate him some time in this House, but in the meantime. I warmly commend the report to this House and I thank the noble Lord, Lord Kings Norton, for presenting it to us.
6.39 p.m.
Viscount Hood: My Lords, may I ask your Lordships' kind indulgence in making my maiden speech. I am indeed grateful to the noble Lord, Lord Kings Norton, for giving me this opportunity.
Strategic minerals present an interesting contrast. On the one hand, they are now freely available at prices generally unremunerative to the producer. On the other hand, there is growing concern as to adequate availability in the longer term, and it is to the longer term that I should like to address my few remarks. Few mining companies today are operating at a profit. A number of mines and smelters have been closed and countries which are largely dependent on mining operations—I am thinking about Zambia, and perhaps Zaire and Chile—are in some economic difficulty.
Added to the lack of profits are the environmental expenditures to which the noble Lord, Lord Strabolgi, has already referred. However necessary these may be, they do not generate profits, nor do they produce reserves for the future. The scale is very large and I give as an example a major American copper producer which has spent 600 million dollars on environmental expenditure, which is broadly the equivalent of its
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total net profit for the last 10 years. Under those circumstances not much can be expected of the existing mining industry. It has its problems in keeping its head above water.
But the lack of profits and the environmental expenditures add a further problem—namely, that the value of existing mining companies on the stock markets of the world are a small fraction of what it would cost to reproduce the facilities which they currently employ. Again perhaps I might give the example of the same American copper producer. It has a market capitalisation—to use perhaps a stock market term—of about a billion and a quarter dollars. If the working capital and the investments are taken out, the main copper producing activity—mines, smelters, refiners and fabrication facilities—is worth about 900 million dollars in the market. A major future prospect in Central America is estimated to cost twice that amount and to produce half the amount of copper—a ratio of 4:1. Under those circumstances, it is hardly surprising that the investor looks to the existing mining company rather than hazarding capital in future reserves to be exploited.
That is important because in recent years the oil industry has invested very large sums in mining. The great proportion of this investment has gone in acquiring existing companies. Your Lordships will recall the case of the British Petroleum Company acquiring the Selection Trust Group; and its subsidiary in America, the Standard Oil of Ohio, acquiring the Kennecott Corporation. No doubt the strength of the oil industry strengthens its mining subsidiaries, but it is not the same as putting the same amount of money to work on finding new resources for the future.
There had been hope and expectation that important additional reserves would be available before too long from the bottom of the ocean. It is, indeed, true that there are vast resources of manganese, nickel, copper and cobalt in the nodules three miles down in the middle of the Pacific and maybe also the Indian Ocean. The problems of bringing them to the surface and extracting the metals from the nodules—a new form of metallurgy—are very considerable. Much money has been spent on it, but the activity of the various groups has now virtually ceased for two reasons. First, it would need a very important increase in metal prices to justify the investment by a private mining group. Secondly, the stringent conditions of the law of the sea are such that they appear unacceptable to private mining interests. As things stand, I fear that the exploitation of the deep sea resources will be long delayed.
There are, indeed, reserves ahead of the mining companies, but the unexpected can always happen. In fact 20 per cent. of the copper produced in the world today comes from a small area in Central Africa: the northern part of Zambia and the southern part of Zaire. Those countries have their problems, but their problems are nothing to those of the lines of communication to the sea. I should here declare an interest. I am a director of the Benguela Railway, which is one of those arteries running from the borders of Zaire through Angola to the South Atlantic at Lobito. This railway has been closed effectively to all mineral transportation since 1975 because of guerrilla activity. The trunk line to the east which comes out in

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the Indian Ocean at Beira is closed for similar reasons. The line through Zaire and the line called The Tazara, which comes out at Dar-es-Salaam, are crumbling under the weight of mineral exports. As a result, more than half of the minerals mined in Central Africa have to go through Zaire, Zambia, Zimbabwe and South Africa in order to get to market. I need not stress to your Lordships the vulnerability of a route of that nature.
I have indicated my views on the difficulties of long-term mining and come now, in the few minutes remaining of my maiden speech, to some ideas. I think that two things are required: first, a remunerative level of prices; and secondly, some assurance for long-term investment. I believe that mining prices will rise in due course, and I only hope that, when the point comes, they do not rise too rapidly because of lack of supply. But it is the assurance which is the great problem. One must think in terms of investments of a billion dollars certainly on deep sea, and likewise on land.
To get that kind of capital moving requires some kind of assurance against political risks because many of the best opportunities are indeed in the third world. That is where the environmental problems are perhaps the least, and that of course is where the capital investment is most urgently needed. There is, indeed, reference in the report to the possibility of schemes of investment insurance. I hope, indeed, that the Community will pursue this, because mineral reserves are only of economic value when they have been opened up to exploitation by investment.
6.48 p.m.
Lord Kearton: My Lords, it is my good fortune and privilege immediately to follow the noble Viscount, Lord Hood, and to congratulate him on a superb maiden speech. Not only was it lucid and most elegantly expressed, but it was based on practical matters and on a lifetime's practical experience. The House is very much indebted for the contribution which the noble Viscount, Lord Hood, has made to this debate, and I am sure the whole House will join with me in hoping that the noble Viscount, having cracked his duck, as it were, will now frequently take part in debates in your Lordships' House.
My noble friend Lord Flowers has already referred to the privilege it was to sit on this committee under the chairmanship of the noble Lord, Lord Kings Norton. I must confess that when the subject matter was announced I had a certain sinking feeling of the heart. I thought, "This is going to be long, drawn out, tedious and perhaps even boring". But nothing of the kind. Under the direction of the noble Lord, Lord Kings Norton, we had a most fascinating time, a most educational time. We heard from a remarkable array of witnesses and, with the help of our expert staff and the chairmanship of the noble Lord, Lord Kings Norton, the best was brought out of these witnesses. So I think that the report will stand as a reference document for many years to come on all matters to do with rare metals, strategic metals, important metals and all the other terms which are used to describe those metals which we import in such quantity.
Unlike previous speakers I am not an expert in these matters, and so I hope the House will forgive me if my
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own comments are made with rather a broad brush. The report quite rightly says that the United Kingdom and the Common Market are highly dependent on external countries for the supply of most of the metals and minerals they consume. To begin with one had a frisson of alarm at this situation. Here we were, a vast trading community, and yet vulnerable because of our dependence on other countries for the supply of our vital metals and minerals. But as the inquiry proceeded, to me at any rate, these worries were largely put at rest. The evidence we had indicated first that there were no shortages of any of the metals or minerals which we were considering, and there were likely to be no shortages in the context of a peaceful decade or so. In other words, provided we have world peace it seemed unlikely that any shortages would develop much before the end of this century. It also became apparent that the free world had adequate working stocks of all the metals under consideration, and gratifyingly that the free market mechanism had worked very well indeed in making all the various materials available to the consumers.
As my noble friend Lord Hood indicated, prices in real terms have been very low in the last few years because of the world recession, and in spite of a recent flutter it seems that prices are unlikely to rise for some time, except perhaps for short bursts of speculation. As my noble friend Lord Hood reminded us, it means that most of the present mines are having some difficulty to make a good profit. To replace those mines with equivalent capacity would be enormously expensive, and today's prices certainly are not high enough to justify any fresh investment.
If demand goes up, if the world recession starts to lift, and if all the efforts of substitution have not choked off the demand for some of the metals and minerals, we may arrive at a situation where demand starts to overtake capacity. Not for many years, as I say, but it could happen. From the point of view of economic reserves we do not have much to worry about. Every major mining house seems to have major deposits well known to them ready for development when the time comes, provided the price is right, provided the political assurance is there, and provided some continuity can be seen. But there is certainly no impending shortage of any of the metals or minerals on which the world depends.
Reference has been made to the nodules, on the deep ocean floor, particularly in the mid-Pacific, and that these represent a major new world resource; a world resource which many developing nations, and I think many laymen, think holds the key to the future of plentiful metals and minerals at low prices. The evidence indicated that this was not so. The actual reserves on the ocean floor capable of being mined are not infinite. In fact, it is doubtful whether they add up to the reserves of the metals concerned—largely manganese, and some nickel and cobalt—already available on land. Of the nodules, only about 15 per cent. have metal contents which may make it likely that they will ever be treated in order to extract metals from them. As the noble Viscount, Lord Hood, reminded us, we are not going to go into the Pacific to recover these nodules for some considerable time. My own guess would be not for a couple of decades.
The Community directive we were considering in

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the committee is relatively small beer in the sense that some £15 million has to be spent over four years additional to, and supportive of, private enterprise, essentially on a research basis, in order to prospect for minerals more efficiently, especially within the Common market, to engage in recycling, and related activities. Of course the committee came to the conclusion that this is a sensible thing to do, and warmly endorsed the Community directive.
With regard to the second Lomé Convention which allows spending on mineral development, it is interesting that in spite of all the talk we have had about the prospects in the developing countries for minerals, the amount which was allocated to such work was very small. The second Lomé Convention envisaged some £2,600 million available for general development in these countries. The only things we discovered which were fairly firm was one copper mine project involving about £23 million, and under SYSMIN, in order to keep mines going which otherwise might be in trouble, Zambia was going to get £32 million for copper and Zaire was going to get £23 million for cobalt. So in the context of the £2,600 million which the Lomé Convention was envisaging, a tiny proportion was going on developing the mineral resources of the ACP nations.
The committee considered stockpiling. As has already been said, France has a programme to build up two months' stock very slowly. They are going to take three to four years over it. The estimated cost is about £400 million. Although France is building up a stockpile, one could not say that they are running mad over it. They are taking it very gently. Germany is essentially leaving it to private enterprise, with perhaps just a little priming money from the Government.
If we consider Japan, which is one of the most dynamic industrial nations of the world today, their programme is astonishingly modest. They are going to increase their stocks of eleven critical materials from 10 days to 60 days. Even then, they are only going to start in April this year, and are aiming to take until 1987 to build up the 60 days' stocks. Japan, a country which could be regarded as the most vulnerable of all the industrialised nations through lack of vital raw materials, is not panicking about building up stocks of metals and minerals.
The United States has the largest stocks. They started their stockpiling post-Korea. In the intervening 25 years they have blown hot and cold. They have decided to increase stocks and then to decrease them; increase them, and decrease them; and so on. At the moment they are below the peak level they reached, and the best information is that they currently amount to about £5 billion, which is not an enormous amount, and quite a lot of this is excess stocks of silver which they propose to sell by degrees in order to build up stocks of cobalt and other metals.
The noble Lord, Lord Kings-Norton, has already asked the Minister whether the Government's recent action in having a small stockpile has in any way been influenced by the committee report. It is only human for most committee members to hope that this has been so. It is a gentle effort, according to the newspapers, and the amounts spent range from a low of £10 million to a high of £50 million. Of the four
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metals mentioned—cobalt, chromium, vanadium and manganese—the country imports in a year £125 million worth, so the stockpiling at the low end is barely a month's supply, and at the top end four months' supply.
We have a feeling perhaps, as the noble Lord, Lord Strabolgi, pointed out, that British Steel is so penurious these days that it finds difficulty in holding a minimum stock of essential raw materials, and that perhaps these stocks that have been built up will be largely used by British Steel and by the British aviation industry and are the Government's way of helping British Steel, as much as anything else. Whatever the reason, it is to be welcomed and commended. It is not often that the Government get kind words, rather surprisingly, but in this area they deserve the congratulations of all of us for making some move to establish some modest stockpile of essential materials.
I repeat, it was a privilege to serve on this committee under the noble Lord, Lord Kings Norton. I came out of it myself greatly heartened that the Apocalypse is not going to be upon us—not, at least, for some years—and that we can all sleep relatively peacefully, and in the next 10 years or so follow a modest Government policy of having a little stockpiling here and there, but without losing our heads in any way whatsoever.
7 p.m.
The Duke of Portland: My Lords, I wish to draw the attention of the House to the problems now facing the mining industry, and I shall be doing so from a slightly different aspect from that outlined in the excellent and most lucid speech of my noble friend Lord Hood.
Until the early 'seventies demand for minerals grew fitfully around a rising trend. The growth rate slackened substantially as the 'seventies drew to their close and as projects matured that had been conceived in the more buoyant earlier period. However, meanwhile, investment in new capacity has continued in many areas, albeit at a slackening pace. As a result, there is considerable over-capacity worldwide which has not yet been absorbed. This over-capacity will remain after general economic activity has risen from the present recession.
In 1981 and the first half of 1982 average market prices fell close to or below the industry's median costs. In the short-term, consumers may benefit from unsustainably low prices and ready availability of supplies, but this can be achieved only at the expense of a progressive run-down of the mining industry's financial capability. This run-down has been temporarily disguised by new investors, such as the oil companies, but the latter's interest appears recently to have been dulled by the continuation of the recession and by an improved understanding of the mineral industry's economics.
There is now a risk that the only large new projects to be developed in the forthcoming years will be those pursued by national Governments and by international agencies. As the main burden of the weak metal markets has fallen on privately-owned mining companies, which have been forced under market pressures to reduce their output, state-owned companies, supported by ever-increasing subsidies, have been able to shelter behind their Governments.

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If all producers followed the same rules, reliance on the market to restore the balance between supply and demand might well be most appropriate, as those mines with the higher costs would close down and the most efficient would remain in business. But where a mine is a major source of employment and of foreign exchange, the policies of Governments have often led them to support inefficient production. To secure a natural balance between supply and demand, and to ensure that all efficient producers, regardless of their ownership, have an opportunity to compete, is a more important objective today than to encourage investment in new mines and primary processing plants.
Although the rate of growth of demand may have slackened, existing mines are becoming steadily depleted. Today's need is to assist the market to remove capacity that is permanently obsolete because it is in the wrong place or because its cost structures have been outmoded by technical and economic change. International aid agencies have tended to insist on the maintenance of export volumes as a condition of their assistance. Consequently, debtor countries have been required to sustain their output of commodities that can be sold only at rock-bottom prices. Aid might often be more effective if the aid agencies took account of world markets before imposing unsustainable export goals. It is hoped that such overall considerations will lead the aid agencies to encourage Governments to direct resources from the least efficient mines to the improvement of the remainder, or even to the development of other industries.
Anti-trust legislation is not designed for the present circumstances of the mineral and metal industries, where there is a clear need to shut down obsolete capacity. Co-operative arrangements between producers, if closely supervised by the competent authorities, will not necessarily reduce effective competition in a world complex; nor need they include anticompetitive devices such as import restrictions, market-sharing or price-fixing. A far more pragmatic approach is required than the present legislation allows if markets are to perform their proper function of the efficient allocation of resources.
Governments have increasingly regarded their mineral industries as a convenient source of revenue, a sort of milch cow. Ever more sophisticated tax regimes have been designed to cream off what are often described as "surplus" or "windfall" profits and to retain the major share of economic rent for the state. Since such tax systems seldom average profits over good or bad years, nor take, account of the insidious effects of cost inflation on real returns, their overall effect is to lower the average post-tax profitability of the mining industry. Shaving off peak profits reduces the ability of mining companies to build up financial resources to tide them over periods of depressed prices. In consequence, their debt burdens are increased and they may be forced to sustain their output in the face of weak demand in order to service their debts. Their flexibility of response to market fluctuations is reduced, and their ability to finance exploration. Contrary to widespread misconceptions, the average returns in mining are no
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better than those in manufacturing, but they are far more variable and risky.
Failure to recognise the cyclical nature of mining industry profits spills over into many national spending programmes, and insufficient is spent in good years on the maintenance and replacement of the mines and processing equipment that provide the taxable surplus. Once a mineral deposit has been discovered, there is a natural desire to develop it as rapidly as possible as a source of wealth ready at hand, and yet the mere existence of a mineral deposit is only one element in a successful mineral enterprise. Its grade, physical and chemical characteristics and location are other important dimensions of its economic viability. The existence of an adequate market at a sufficiently remunerative price is also crucial.
Exploration programmes have often been pursued over the past 20 years without regard to the economics of their subsequent exploitation. There is no shortage of ore reserves for most minerals, but it is necessary to determine whether the ore reserve is viable in every respect. Most countries need to look more closely than hitherto on the economics, and in particular the underlying market conditions of any project, and to make sure that they are not being bamboozled by optimistic consultants.
The European Commission has proposed a regulation providing for loans for exploration programmes in mineral raw materials within the territories of the member states. The Commission's proposal assumes that the main barrier to exploration in Europe is finance. In practice, there are legal, physical and regulatory obstacles to mineral development in many member states which may prove to be far more serious barriers to exploration than a lack of funds. Nevertheless, it is clearly desirable that an up-to-date inventory of Europe's mineral resources should be produced, using modern exploration techniques; but any funds that may be allocated for this purpose should be devoted to drilling, the costs of which are, in western Europe, three times those in Canada, Australia and certain states of the United States.
Many senior and highly experienced individuals in the mining industry believe that recent developments are different in kind, as well as degree, from those up to the mid 1970s. They think that there are afoot profound structural changes that require similar changes in the attitudes of both companies and Governments towards existing production facilities and new investments. These changes are more persistent and more far-reaching than the typical up and down swings of the business cycle. My Lords, they merit further investigation and consideration.
7.11 p.m.
Lord Energlyn: My Lords, I should like to add my congratulations to those already expressed to my noble friend Lord Kings Norton, and in particular I wish to express my admiration of his work and that of his splendid committee, because it has added another chapter to the study of this subject—strategic minerals. In that sense, too, I should like to express my congratulations to the noble Viscount, because his maiden speech also will add a very important chapter to the studies that people such as myself make of this wide-ranging subject.

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I should like to approach the report more from its subject matter than from its contents. We use the subject of strategic minerals in training strategic mineralogists and mining engineers. We use case histories such as those that have been added to by this report and by the noble Viscount. We use these case histories to train the strategic mineralogist in how to look at the trends and the straws in the wind of strategy, and therefore he has to become conversant with a large range of different subjects, and not least with the study of geopolitics. He is asked to look at and study the original treaties by Karl Ratzal, the originator of geopolitics.
Being a strategic mineralogist means that one belongs to a somewhat cynical profession, because a good strategist bases his work on distrust and suspicion of the motives of his competitors. For example, how would a strategic mineralogist react to the recent announcement that, for the first time, Britain is to stockpile so-called strategic minerals? He would weigh up the necessity against our history. It was never necessary for us to stockpile strategic minerals while we had the Empire, and afterwards the Commonwealth, because within that area we owned a third of the world's known mineral resources.
A strategic mineralogist would then question why Germany and Japan are not openly stockpiling. He would try to find out why—and that would not be easy. What do they propose to stockpile privately? They have declared some of the stocks, but most of the important ones are still in the private sector. He would look critically at the seemingly harmless financial investments of Germany and Japan in deposits of uranium in Australia. Neither of these countries can use it for military purposes. They need it for the creation of nuclear power stations, and I shall later explain the significance of this. He would think it also significant that Russia and Japan have a joint company, which has been operating since 1963, under the title of the Soviet Mineral Product Trading Corporation—an obvious undercover source of strategic minerals for Japan.
That is the approach of a strategic mineralogist. I use the term "valuable" in relation to the report because it contains substantive evidence for an escape route from the industrial trap in which we find ourselves today, and which is the root of our unemployment problem.
Permit me, my Lords, to continue this approach to the subject, and to illustrate how geopolitics comes into the picture. When Professor Haushofer, the disciple of Karl Ratzal, the father of geopolitics, masterminded the resources of the Third Reich, he developed certain themes. He feared the material resources of the British Empire; so he cultivated fellow travellers, such as Mackinder and Oswald Mosley. He decreed that Sweden, Portugal and Spain should be allowed to remain neutral. He needed their strategic minerals, but, in addition, he had to have neutral ports to give him unmolested access to the trade routes of the world. For example, when Japan went into the war she was short of mercury. Spain was then the world's largest supplier of cinnabar, the source of mercury. A whole year's output of mercury was loaded into a German submarine, which escaped through neutral
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Spanish waters and headed for Japan. We caught up with it and sank it in the territorial waters of Malaya, where it still lies as an embarrassing monument to the Germano-Japanese alliance.
As your Lordships well know, before war broke out Japan was stockpiling metals and petroleum derived mainly from America. In fact she bombed Pearl Harbour with American steel. That is an example of the need to study surpluses, in this case scrap metal. One should study them as carefully as one studies shortages in assessing strategy.
No sooner had the dust of Hiroshima and Nagasaki settled, than the Emperor was back in business, creating his new empire, the commercial empire of Japan. Filled with remorse over the atom bombs, the magnanimous Americans—bless them!—have allowed the Japanese to repeat the performance. They have enabled Japan to become the world's largest importer of scrap metal. This enables Japan to provide her manufacturing industries with cheap iron and steel. Japan has scoured the world for scrap metal and, as I mentioned earlier, has a company operating from Russia. Why does Russia join in? Obviously, with the money that she receives from Japan she can buy wheat and other things that she needs that cost foreign currency. But there is also the advantage of having an ally such as Japan on the other side of China. Those are the factors which a strategic mineralogist must look at when he is assessing his own particular strategy.
I should like to be a little constructive and say that there are lessons to be learned from the content of the report and from what might be regarded as a cynical, yet nevertheless constructively critical, look at our future. If we are being contained by material resources then we must think out some form of counter action. Therefore, we must look at the weaknesses of those who are causing us to become entrapped. Japan is dependent entirely on imported raw materials, but among them is one perhaps that we might lose sight of. It is the most important strategic mineral in the empires of iron and steel; namely, metallurgical coal. This is rapidly becoming in short supply all over the world. The only way to mass produce iron and steel without metallurgical coal is to use arc smelters. Therefore, one can read into Japan's attempt to develop geothermal energy and her desire for uranium to create nuclear power stations her need to serve these arc smelters of the future. That is the way that she looks towards freedom from shortage of metallurgical coal.
I should like to turn now to the Russian scene, because this is a very constructive one. The Russians learned from us the technology of gasification and they have exploited it to an extent greater than anyone else in the world. It is, therefore, no surprise to find that they are now running an electric power station of 500 megawatts near Moscow which uses the age-old technique of sucking direct current electricity out of coal gas. I am informed that they also have under construction in Siberia a 1,000 megawatt coal gas-fired power station.
The country which has plenty of coal—and the Japanese have not got it—can follow suit and create direct current electricity power stations with coal gas. This could be the constructive point that I want to bring to the notice of your Lordships. The Japanese

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are inevitably committed to contractual agreements abroad for iron ore and they realise that this will become more and more costly although iron ore is in plentiful supply; so arc smelting could be one way in which she could keep up her end and continue to create surpluses of iron and steel which she is dumping into Europe and anywhere else in the world. But I think that her days are numbered.
I think that this is where we come in with our assessment of the strategic resources of this country. We won the war on low-grade iron ore and we still have 50 years of supply of the same Jurassic iron ore, considering consumption to be at the same rate as it was during the war. It was iron ore which made places like Corby and Scunthorpe. We have not used this iron ore in great quantities since the war because of the rising cost of fuel and the dependence of the technique on the use of metallurgical coal. But we now have the technology to smelt Jurassic iron ore by means of arc smelters. We have the coal to produce the gas, to produce the electricity, to run the arc smelters. That is the pattern that I present for your consideration: that we have all the material resources inside Britain and, therefore, we can structure the costs across the table as a pure paper transaction to price the end product—which is iron and steel priced at a level that no foreigner could even begin to compete with.
That, in essence, is the outline of a strategic plan which I offer to the Government for consideration. How could we put it into operation? I suggest—and I have suggested it before—that this can be done very simply because in our nationalised industries we have all the elements of the administrative organisation required for this enterprise. I would recommend the formation of a board of directors. The directors would be the chairman of the British Gas Corporation, who would be responsible for the gas-powered direct-current electricity power stations; the chairman of the CEGB, who would be responsible for the construction of the arc smelters; the chairman of the British Steel Corporation, who would be responsible for the supplies of iron ore and the running of the furnaces; the chairman of the National Coal Board, who would be responsible for the supplies of coal for the power stations; and the presidents of the relevant trade unions, who would be responsible for the welfare of the workers.
Therefore, in all seriousness, I recommend this as a strategy that the Government might look at. I can assure them that everything that I have said can be supported technologically in depth. If it were brought about, what a shot in the arm it would be for our manufacturing industries if they could have their base metals at a price controlled in-house as a take-off platform for competitiveness abroad.
7.27 p.m.
The Earl of Bessborough: My Lords, I am glad to follow the noble Lord, Lord Energlyn, with whom I worked very closely on the committee of inquiry into the research associations. As usual, he has made an important contribution to this debate, as he does to any debate in which he chooses to speak. I should like particularly to congratulate my noble friend Lord
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Hood on his excellent maiden speech. I am particularly happy to be speaking in the same debate as he; for his brother, for whom the House had a great affection, was, in fact, best man at my wedding. My noble friend is clearly one of the best men in this debate. He has spoken with great authority on a subject with which he is clearly familiar. We must all hope that he will address your Lordships' House frequently, for he is certainly a great asset to this House.
I must also thank the noble Lord, Lord Kings Norton, for having chaired so admirably the subcommittee of which I had the honour to be a member. It has been one of the most interesting on which I have served. Unfortunately, I did not attend the first two meetings last year since I was in South Africa and in Namibia where, among other things, I was visiting the impressive Rossing Uranium Mine and discussing some of the very problems posed in our report. My main observation this afternoon is that, like other noble Lords who have spoken, I hope the conclusions in the report will not lead your Lordships to feel that we in the committee were in any sense complacent in view of the ample resources which at present exist for the minerals and metals used by member states of the European Community.
We must recognise that in certain circumstances shortages could occur. We must accept South Africa's dominant role in many of these fields. I was much struck by the remark of Mr. Robert MacNamara, the former chairman of the World Bank, in Johannesburg in October of last year, to the effect that Western nations must begin stockpiling strategic minerals in anticipation of a possible increase in racial conflict in South Africa. We have heard that France has already begun this stockpiling. I hope that Mr. MacNamara, a former United States Defence Secretary, was perhaps unduly alarmist when he issued this warning among several other dire predictions of South Africa's future after his month-long study tour. However, there was some wisdom in his urging America and the Western nations to anticipate such an unhappy eventuality by increasing their stockpiles and developing alternative sources, particularly minerals such as chromium, manganese, vanadium and platinum. He also recommended that the West should develop contingency plans to share whatever supplies of these minerals remain available in the event of a South African ban on exports.
Your Lordships may have been interested to read the answer of Professor Davis, of the Institution of Mining and Metallurgy, to a question that I put to him—Question No. 403 on page 141. I asked the professor whether he thought that the Soviet Union were likely to exploit Western difficulties in the event of a disruption of supplies from South Africa, particularly in regard to the platinum group and manganese, by withholding their own exports of these metals. Professor Davis agreed that an extremely difficult situation could arise if the Soviet Union were the other major world producer of those commodities, almost all of which now come from South Africa. The question was of course a political one, and Professor Davis would not venture an opinion on whether the USSR were likely to withhold these minerals, but he agreed that they had the capability of doing so if they wished.

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Whether they would wish to do so for political or military reasons is of course another matter. If the Soviets wished to do so for commercial reasons, Professor Davis thought that they would merely take advantage of a commercial situation which they could exploit, as they have done in the past by selling commodities such as gold at advantageous terms on the world market. We would thus have to go for alternative sources, and he mentioned in particular Australia which, in the relatively short term, could be exploited to fill the gap. But in the case of some other metals—and I particularly mention vanadium—this would not be so easy and the gap in time would be longer. Professor Davis, nonetheless, seemed to think that, given time, these pressures were soluble.
In so far as stockpiling is concerned, I was interested to hear what noble Lords have said about the intentions of the Government, and of course there was an article in yesterday's Sunday Telegraph on the subject. The Sunday Telegraph said that the Government have recently been building up their stocks of manganese and chrome. I hope that my noble friend Lord Trefgarne will be able to confirm this in his reply. I believe that there was a Written Answer on this subject in another place, but I wonder whether he can tell us what the stockpiling is likely to be. Will it be three months, as I think the Mining Journal suggested this week? The noble Lord, Lord Kearton, made certain observations on this subject. If my noble friend could enlighten us I am sure that this will greatly interest your Lordships. If this is a matter on which it is too sensitive to give us the details, I shall of course understand.
Noble Lords have spoken about the resources of the sea and its polymetallic—particularly manganese—nodules. I am not going to say more about that. I recognise what the noble Lord, Lord Kings Norton, and indeed my noble friend Lord Hood said on this subject, which unfortunately has become highly emotive, as has the whole subject of deep sea mining and of course the Law of the Sea Conference. I should, however, like to say something about the People's Republic of China, which I have visited.
As your Lordships know, it is generally accepted that China is richly endowed with mineral resources; and in recent years Western based mining companies have been invited by the Chinese to submit proposals which might lead to joint ventures. In his admirable memorandum, Mr. Beckett, of Consolidated Gold Fields, has given us a picture which confirms that the mineral resource potential of China is enormous. But as the noble Lord, Lord Strabolgi, said, there are serious practical problems concerning exploration and development. However, I was glad to hear Mr. Beckett say that despite the problems he and his associates were prepared to keep going back to China.
I was also interested to hear what Dr. Duckworth and Mr. Brook of the Fulmer Research Institute had to say on this subject, and especially about tungsten, which China has been supplying for such a long time. I was also interested to note that the Chinese are now finding new minerals in the North West and Northern China, which I know. However, they will clearly have to invest considerably in transport to get these minerals out.
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On exploration in non-Community countries, I was glad to hear Mr. Cahalan of RTZ say that he understood that proposals for expenditure on work outside Community countries were acceptable within the Community's new programme; that there had been some work on the generic technologies of exploration within the EEC's CREST programme; and that this point had been well taken in Brussels.
There was interesting evidence too from Mr. Willox, the director of Hunting Geology and Geophysics Limited, on research supported by the EEC and the European Space Agency, particularly on synthetic aperture radar, which is sponsored by those two bodies. Like the noble Lord, Lord Flowers, as a member of Lord Shackleton's Sub-Committee on Remote Sensing, I believe that this may be an important new field to be developed which will have relevance to the earth resources satellite—ERS1—which should be launched in four or five years' time. This is long-term research. There are certainly American companies, and indeed a Canadian company, which are working on this kind of airborne radar. They will no doubt seek to fly over more of the developing countries. I agree with Mr. Willox that there may be a good deal to be learned in Europe about what radar can do. But, like the noble Lord, Lord Flowers, I believe that generally speaking more research and development might be undertaken within the EEC framework.
I should also like to raise one other point—I was not certain whether to raise it but the noble Lord, Lord Flowers, did raise it and that is the question of home exploration and the kind of "Irish style deposits" which Sir Kingsley Dunham described in the report in so far as the Pennines, North Wales and the Mendips are concerned. Is prospecting likely to continue in these areas, despite the fact that I understand the ground is contaminated?
As the noble Lord, Lord Kings Norton, told us, all members of your Lordships' sub-committee were impressed by the work of the French Bureau de Recherches Géologiques et Miniéres, the BRGM. Dr. Lautel gave an interesting account of their work, and particularly of how they were represented in some 40 countries, not only in former French territories but, for example, in Portugal, South America, Africa and Europe—indeed, almost everywhere, including China, although, as Dr. Lautel said, China is a long way away.
However, when the noble Lord, Lord Kings Norton, asked Mr. Clay, who is chairman of the mining group of the Liaison Committee for Non-Ferrous Metals in the Community, whether in his opinion the reasons which determine French policy were equally compelling for us in Britain, Mr. Clay replied: "No, because the French position is different." France's interest in mining copper was very much less than ours. France was more vulnerable than we were in Britain. We in Britain had communications with companies all over the world and were in a much stronger position. However, Mr. Clay paid a very special tribute to the marvellous interplay of the French between industry and Government, with people moving from one to the other so that the system which they had set up worked remarkably well.
These few remarks—too long, I fear—summarise the few glosses which at this late hour I would put on

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this very useful report. In conclusion, I should like to join with others in repeating the gratitude of the subcommittee to our specialist adviser, Dr. Buchanan, to the witnesses and of course to the indefatigable clerk, for all the work they did in preparation. But above all, I would repeat what I said at the outset: I do not think we can risk being complacent in circumstances of political instability and the possiblility of increased racial conflict in a country on whom industry in the West, including the European Community, depends so very extensively.
7.44 p.m.
Lord Trefgarne: My Lords, there are three reasons why I am so pleased to be standing here tonight to reply to the debate. First, it gives me a chance to express the Government's view of the report which the committee under the noble Lord, Lord Kings Norton, has so magnificently produced. Secondly, it has given me a chance to listen to the galaxy of talent which the debate has brought forward—talent both academic and industrial; and last, but by no means least, it has given all your Lordships the chance to hear for the first time my noble friend Lord Hood, in making his maiden speech. I believe I speak for all your Lordships when I say that it was a great pleasure and privilege to listen to my noble friend. I hope that we shall hear from him again soon and often.
The report which the sub-committee produced struck a chord in me because I remember working once, soon after I left school, at the Fulmer Research Institute, whose officials gave evidence to the subcommittee. I cannot pretend to have contributed in any way to the wisdom on this subject—I do not think I did much more than wash test-tubes and prepare specimens for examination—but certainly I had the privilege, if I remember rightly, of working under Mr. Brook at that time.
The supply of strategic minerals is an important subject, although it does not appear to have been debated in your Lordships' House for at least 10 years. It was, of course, about 10 years ago that the sharp rise in oil prices drew attention to the vulnerability of countries which do not produce oil, including all members of the European Community, except the United Kingdom, to interruption in supply of essential commodities,
The Community is similarly very heavily dependent on external countries for its supplies of metals and some non-metallic minerals. At the same time, Governments overseas have become interested in processing their own minerals to obtain a larger share of the added value. In these circumstances, there is a growing awareness of the importance of minerals being readily available to Community users and, within the Community, member states are themselves aware of the need in respect of their own countries.
It is therefore right that the Select Committee should have addressed themselves to considering the strategic minerals, defined as those which are both vulnerable to disruption of supply and critical to the Community's economy. The Government accept these criteria but they are in part subjective, as the noble Lord, Lord Kings Norton, said, and the Government would not necessarily choose the same priority candidates as the Select Committee.
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Noble Lords will be aware of the Answer, given a week ago in another place in reply to a Question from the honourable Member for Bedford, that the Government have decided to establish an appropriate stockpile of strategic minerals and that a large part of the purchases for this financial year had been completed or the arrangements were well advanced.
Several noble Lords asked me about this matter, including my noble friend Lord Bessborough. I find myself in some difficulty at this point because it has been decided, for very good reasons, that details of the stockpile should remain confidential. The costs, too, are confidential, but I can say that a supplementary estimate of the costs will be laid before another place in due course. Your Lordships will know of the convention that it is not proper for me to announce what a supplementary estimate may be in advance of notification to another place.
My Lords, your committee clearly sympathised with the desirability of a stockpile of strategic minerals in this country, but it might be useful nonetheless if I set out in a little more detail the background to our decision. In general we believe it is for industry to hold the stocks it needs, and in deciding what is appropriate it should have regard for more than the very short term. Industry is in the best position to hold stocks economically. We consulted industry in 1980 about the security of supply of strategic minerals, and in response industry stressed the need for a reasonable level of stocks. But most companies said they could not, in present financial conditions, afford to hold more than a minimum level.
The Government regret this but they decided that the dangers to British industry as a whole if supplies of a few minerals were disrupted were such as to justify the Government's financing a small stockpile as an insurance. We will, of course, review the need for this when industry can take over the burden. The need will also become less pressing if we are successful in programmes of research, in the Community and in the United Kingdom, on diversifying sources of supply of strategic minerals, on wider recycling of primary minerals and on finding substitutes for them, to which I will refer in a moment.
May I now turn to the conclusions reached by the noble Lord, Lord Kings Norton, and his committee on the various aspects of the supply of strategic minerals. I hope your Lordships will find it helpful if I comment on these conclusions under two main headings; that is, those concerning internal Community action and those concerning external Community options.
The Government agree with the committee's conclusion that the Community should support research in the areas identified in the report as being of strategic importance to the Community. Your Lordships will know of the four-year research and development programme in the field of raw materials adopted by the council last May, which has been referred to by at least one noble Lord. The main aim of this Community research programme is to increase Community self-sufficiency where this is economic or can be justified on other grounds, in particular by developing new technologies for the use of indigenous resources.
A total of 54 million European currency units, equivalent to some £27 million, has been made

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available for the programme, which includes, among other things, research into exploration techniques, recycling and substitution. Proposals from all Member States were submitted by their respective industries, universities, research associations and Government research establishments in the autumn of last year. Final decisions have not yet been taken, but the Government are confident that the Community will give priority to the areas mentioned in the committee's report.
The report observes that the Community's own processing capacity would be undermined by encouragement given to processing of metals in producer countries outside the Community. The Government are certainly aware of this potential problem. However, a balance has to be found between the needs of producing countries, on the one hand, and Community industries, on the other. An increase in processing in producer countries is to be expected, but I would hope it could happen at a rate which allowed adjustment at a tolerable rate within the Community. Similarly, there has to be a balance between environmental concern and the need to develop mineral resources. Views may vary as to where these lines should be drawn, but the Government accept that the observations in the report are valid.
I am afraid the Government do not agree with the conclusion of your committee that Community funds might be made available on a selective, stop-gap basis to preserve mining operations which are viable only in the long-term. In our view, responsibility for mining operations lies with the mining companies, who must balance future market prospects against closure or maintenance costs. I think that view is not too far removed from the view of my noble friend the Duke of Portland. I suggest that this role is not one which the Community should assume.
The Government also have reservations about your committee's conclusion that the Community should monitor industrial stockpiles of minerals and advise key industries on optimum levels of stocks. Clearly, the Community have an interest in encouraging industry to hold sufficient materials for their business, but details of stock levels are commercially sensitive and I do not think that the Community should try to monitor them. The judgment about the appropriate level of stocks in manufacturing industry must be mainly a matter for the industry concerned, which has prime responsibility for ensuring supplies of its raw materials. At the same time, as I have said, the Government recognised that industry was not at present in a position to stockpile against interruptions in supply in the longer term and decided that it was right for the Government themselves to establish a small stockpile of the most critical and vulnerable materials.
My noble friend Lord Bessborough, incidentally, has asked whether prospecting is likely to continue in areas such as the Pennines, North Wales and the Mendips, despite the fact that the ground is contaminated. I would think it most likely as those areas are well known to be metal-bearing, but the methods we use will obviously have to be those which can cope with the contamination. However, the main problem with prospecting there appears to me to be
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the environmental objections which have been raised. As I have just said, there has to be a balance between environmental concern and the need for mineral development, but I do not think that we can resolve those differences here this evening.
May I now turn to what might be termed the external Community options on which your committee reached a number of conclusions? The committee considered the scope of the SYSMIN scheme which has been introduced under the second Lomé Convention. That scheme provides aid to help offset the effect of a reduction in an ACP country's capacity to produce or export certain materials. Your committee expressed the view that chromium and the platinum group metals should be added to the list of these materials. The convention does not preclude the addition of these materials, but under present arrangements it is for the ACP countries concerned to make their case, including a reduction of the qualifying percentage. It would then be for the Community to consider the case on its merits, and Her Majesty's Government would not want to prejudge the position.
Your committee also holds the view that the European Investment Bank's activities in making available finance for mining projects which are of interest to the ACP countries should be encouraged. The Government agree, but the Community must of course consider the competing claims on its budget. The committee believe that development aid outside the Lomé Convention should play an important part in the development of strategic mineral reserves.
The Government note that Community training aid includes subjects related to mineral resource development as one priority. Within our own bilateral programmes the Government are willing to help developing countries, for example, with resource surveys, advice and training within the finance available in cases where the Government concerned also see this as important.
Your committee considered the relationship between the activities of the European Community and the private sector concerned with these minerals. It was impressed by the views of the mining industry that attempts to stimulate investment unduly could lead to over-capacity, with consequent implications for the economics of its operations. It also expressed concern that SYSMIN, to which I have already referred, should not subsidise high cost and inefficient operations.
The companies explained that the free market mechanism has proved remarkably efficient in ensuring supplies of minerals to the Community. The Government certainly agree with those sentiments. However, although the Government are aware that certain countries do provide guarantees covering equity mining investment against both political and commercial risks, we are not yet convinced that this is the right course for the Community to take. Her Majesty's Government therefore have reservations about the committee's conclusion that the Community should help make finance available for mining projects by offering long-term guarantees or backing long-term sales contracts.
The committee has properly addressed itself to the question of possible new sources of raw materials.

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Your Lordships will be aware that over the past decade the United Nations Law of the Sea Conference has been engaged in deliberations on many aspects of international law affecting the world's oceans, including a régime for deep-sea mining. This was very much in the mind of the noble Lord, Lord Strabolgi, of my noble friend Lord Hood and of one or two other noble Lords. The final text of the Law of the Sea Convention opened for signature on 10th December. But Her Majesty's Government have decided not to sign the convention because the provisions relating to deep-sea mining, including the transfer of technology, are unacceptable.
Throughout the deliberations of the conference the objective of Her Majesty's Government was to negotiate an internationally-agreed convention which would benefit mankind as a whole. In the event, this has not been achieved. The final text of the convention was not adopted by consensus because, although agreement was reached on areas such as navigation, the continental shelf and pollution, it was not possible to reach agreement on a deep sea mining régime.
The Government consider that the provisions for detailed regulation of mineral production by a centralised international bureaucracy, for a subsidised international mining operation on behalf of the developing countries and for compulsory transfer of mining companies' technology to that operation and to developing countries, can serve only to deter investors. Such a system is clearly not in the interests of the development of the world's resources, which the convention seeks to promote. Furthermore, the undesirable regulatory principles on which this régime is based could set damaging precedents for future negotiations covering resources.
Our misgivings are shared by other Governments, both within and outside the Community. The Federal Republic of Germany, Italy, Belgium, Luxembourg and others, including the United States, of course, have not signed the convention, and even those states which have signed, including France, the Netherlands and, latterly, Japan have called for improvements in the deep sea mining régime.
If the convention is to succeed, it must be generally acceptable. We shall be working with the international community to seek satisfactory improvements to the deep sea mining provisions. Our objective is still a generally agreed régime. It is important that we should continue to work towards a convention which the United Kingdom and other states could accept and, eventually, ratify, rather than settle at this stage for a package of which a major element is unsatisfactory.
May I turn now, briefly, to just one or two points that have been raised during the course of the debate? First, the noble Lord, Lord Flowers, raised the question of the European Geotraverse. This is a deep seismic profile from the North Cape to the Mediterranean. I understand that the United Kingdom is not directly involved, but perhaps the noble Lord will allow me to study rather more carefully what he has said and, if there is any further comfort that I can give him, I will write to him and do that.
My noble friend the Duke of Portland raised two points, in particular. As I think I said earlier, I agree
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with his concern about the effect on the mineral market of projects supported by Governments and international agencies which may not be exposed to market disciplines. I also agree about the need to consider co-operative arrangements between companies supervised by the relevant competition authorities, in order to achieve the necessary rationalisation, so as to preserve the best parts of industry.
The speech of the noble Lord, Lord Energlyn, was, as always, particularly interesting. I hope, again, that the noble Lord will allow me to study it and, perhaps, be in touch with him if there is anything that I ought to take up with him.
The noble Lord, Lord Strabolgi, referred to the position in Antarctica. Antarctica is certainly an area which could contain important mineral resources, although, as the noble Lord said, no deposits have yet been found. The Government are currently taking part in negotiations on a minerals régime to cover that area. It is possible that there are resources of platinum, vanadium and chromium in the continent, but the problems of exploration, exploitation and ownership are complex, and it is unlikely that production in Antarctica will be achieved in the foreseeable future.
My noble friend Lord Bessborough and, indeed, the noble Lord, Lord Strabolgi, referred to the prospects in China. I know that this is a matter which the committee looked at as well. China is certainly known to have substantial mineral resources, which could one day be a valuable source for the Community. The Government agree with that and we are confident that the mining enterprises, too, are aware of that country's potential. But I think that the problems of exploitation of those resources ought not to be underestimated, particularly the domestic problems within China.
Again, I thank the noble Lord, Lord Kings Norton, and his colleagues for this most useful report and for drawing it to your Lordships' attention tonight. As was to be expected from a committee with such distinguished and experienced members, the report has formed a useful basis not only for this debate, but also for the Government's thinking and for the background to the decisions that we have recently taken. Indeed, we have taken a significant step along the route which the report signposts, and I hope that the committee will be happy with that.
Lord Kings Norton: My Lords, the hour grows late and still the House has a great deal of business before it, so noble Lords will be relieved to know that I intend to make no comment beyond thanking all noble Lords who have contributed to a most interesting discussion, the highlight of which, undoubtedly, was the maiden speech of the noble Viscount, Lord Hood. I feel that I have to study the speech of the noble Lord, Lord Energlyn, tomorrow morning. I do not feel equal to studying it any more this evening. I have, too, to look very carefully at what the noble Lord, Lord Trefgarne, has said, to discover the degree to which the Government disagree with the conclusions of the report. I hope that my judgment this evening, that the disagreement is not too serious, will be borne out by further examination.
On Question, Motion agreed to.

Immigration Rules: Statement of Changes
8.5 p.m.
Lord Mishcon Lord Mishcon rose to call attention to the Statement of Changes in Immigration Rules, laid before the House on 9th February; and to move for Papers.
The noble Lord said: My Lords, I rise to move the Motion standing in my name on the Order Paper. As your Lordships will know, that Motion calls the attention of this House—I would say all sections of this House—to the Statement of Changes in Immigration Rules that was laid before another place on 5th February. It was passed in another place, after some unsteady and undignified perambulations of a usually sober and upright Home Secretary.
The rules could be attacked from many points of view. They could be attacked because there is harshness of treatment of dependent relatives. They could be attacked because there is some harsh treatment of visitors. There is the cruel uncertainty as to children born here, but not born here of those who are entitled necessarily to stay here, the jus soli, to which we have referred in this House on previous occasions, having now gone as a result of its revocation by the Government, in spite of the fact that it is embedded in our tradition and has been so embedded since the days of Edward III. One could object to the present system of assessment of evidence. But what I want to concentrate on tonight, on behalf of the Opposition, in calling attention to these rules is the plight of women settled here who want their husbands or fiancés to join them in this country.
Let me admit immediately that there is a need—this is a common thought of both sides of this House—for some kind of immigration control. But the difference is that immigration control can be exercised so that one is fair, merciful and socially responsible. That is the divergence of view between the Government and the Opposition together with, I hope, all sections of this House, even those of rather more liberal views on the Government Benches, because these rules that we are considering tonight are unjust, anti-social, anti-family, sex discriminatory, racially discriminatory and, most likely, contrary to the Convention of Human Rights which we, together with 21 other nations, entered into solemnly some 30 years ago.
May I deal briefly with the history. The history is that in 1974 a Labour Home Secretary resolved, as did the House, that there should be no difference in the cases of men and women, where the husband was in the United Kingdom and wanted his wife or fiancée to join him and where the wife was in the United Kingdom and wanted her husband or fiancé to join her. I admit that that was done after a great deal of thought, but a very clear decision was made by that Labour Government, which were not careless regarding their duties. In 1977 safeguards were employed in order to ensure that advantage was not taken of this permission and that in cases of bogus marriages advantage was not taken of the rules which gave equal treatment to black and white and to men and women.
The Conservative manifesto of 1979 stated:
"We shall end the concession introduced by the Labour Government in 1974 to husbands and male fiancés".
Certain members of the Tory Party appear to have
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flexible consciences over many matters which appeared in their manifesto; and they do not appear to be unduly concerned that some of the matters contained in that manifesto have not been adhered to. But so far as the Tory Party is concerned there is not the slightest flexibility over their declaration about the Labour Government's 1974 provision which gave equality to the sexes and to people of all colours and races within the United Kingdom. As a result, in December 1979 a ban was placed upon husbands or fiancés coming into this country. Discrimination both as to sex and as to race was thereupon introduced, thereby completely negating what had been done in 1974.
It may be thought that one is being unfair in saying that this was racially discriminatory. It will be said that the Conservative Party in Government are very clearly carrying out their manifesto obligation. But that is not so. They did not just decide that the 1974 provisions should be revoked, as they stated in their manifesto. They made an exception: that this ban should not cover husbands and fiancés of British-born women or British women one of whose parents was born in the United Kingdom. It does not require a great deal of imagination to know that in the main those provisions covered white people, certainly not black people.
The Select Committee on Home Affairs which sat in 1979 and 1980 took a great deal of evidence, including evidence from the noble and learned Lord, Lord Scarman, who said quite clearly that in his view the 1980 rules breached the convention which this country had signed. Indeed, three cases were brought before the commission alleging breach of the convention. The commission decided in May 1982 that all three cases were admissible. These cases have not yet been tried, but the commission's decision means that a prima facie case has been made out. The Government therefore felt that they had to do something. Moreover, the British Nationality Act had been passed.
Therefore, they issued a White paper in October 1982. Because it is important, may I refer the House to paragraph 50 of that White Paper, which relates to husbands and fiancés. It says:
"An entry clearance will be refused if the entry clearance officer has reason to believe (a) that the marriage was one entered into primarily to obtain admission to the United Kingdom; or (b) that one of the parties no longer has any intention of living permanently with the other as his or her spouse; or (c) that the parties to the marriage have not met".
Those are fairly stringent conditions. According to the White Paper, however, entry clearance would be refused only if the entry clearance officer had reason to believe that one of these three matters had not been satisfied; otherwise, it was his duty to allow entry to the husband or fiancé. Completely different provisions applied in the White Paper the other way round. If a male wanted a female to have entry as his wife or fiancée, none of the provisions I have just read out applied.
When this White paper was debated in another place the Opposition decided, despite the fact that there were matters in the White Paper to which they could object, that at least it had a liberalising effect on the cruel December 1979 regulations, called the 1980 rules, and that therefore they would abstain—as they did—when statements were subsequently made by the

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Home Office carrying out, as it was thought, the White Paper. What then happened was that in the debate on the White Paper a most extraordinary attitude was adopted by right wing members of the Government. The result was that the Home Secretary felt that he had to take back the White Paper provisions and look at them again.
Having surrendered to the strident voices which were heard to this effect, in December 1982 a statement of changes was brought before the other place. Instead of containing the provisions and the onus which I have already mentioned, an entirely different situation was created. Paragraph 41 says:
"An entry clearance will be refused unless the entry clearance officer is satisfied that it is not the primary purpose of the intended marriage to obtain admission to the United Kingdom and that there is an intention that the parties should live together permanently as man and wife, and that the parties to the proposed marriage have met."
In other words, the onus is thrown completely the other way.
I should like to deal for just a moment with the sheer iniquity which exists in regard to somebody anxious to come over and join a wife or fiancé to set up family life in this country in a way most of us want to encourage among all our citizens irrespective of race, colour or creed. What is the situation of that person when confronting an immigration officer? He has to satisfy the immigration officer, because unless the officer is satisfied there will be a refusal, that what he wants to do is to enter the country for an intended marriage and that his primary purpose is not to obtain admission to the United Kingdom. The onus is upon him.
Can your Lordships imagine an immigration officer asking this question? "Why are you thinking of setting up home in the United Kingdom?" Answer: "Because my fiancée is there." Question: "Yes, but presumably your fiancée could go with you to another country—or indeed return to the country which you are now leaving?" Answer: "Well, you see, she has told me so much about the United Kingdom and about life there. I admire what I have heard, and would like to live there and work there." One immigration officer might well say, "Ah, obviously the primary objective here is not the marriage, which could take place anywhere, but is as a result of this expressed love for the United Kingdom and our way of life. From that point of view, I don't think that the regulations are being carried out and in those circumstances I am afraid that I am not satisfied."
This is so iniquitous—that the onus should be presented in this way. The one who will be punished, presumably, will most likely be the one who is most frank and most open. We would as a result be ruining lives which could otherwise be perfectly happy family lives.
When the matter went back to another place, it went back with the onus changed and with a two-year provision instead of a one-year provision, which was in the White Paper, in regard to marriages which did not subsist and where indeed there could be a deportation order made. There was an extraordinary alliance in another place when these rules came to be approved or disapproved of. The Liberals, the Social Democrats and the Labour Party were united in opposition. But some Right Wing Tories decided that
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even these provisions were not stern enough. So rather like Beauty and the Beast—and I will not say which is Beauty and which is Beast—they appeared to come together, and there was a vote that defeated those rules. The Home Secretary had to think again and was placed in a most invidious position.
There then emerged the rules which we are now considering. The onus is still there on the applicant in a most unjust manner. The sex discrimination is still there. The racial discrimination is still there. The only alleviation was that the two-year provision to which I referred a moment ago has now become one year again, and some things have been said about deportation which are a little softer than those which were said before.
If ever your Lordships are in doubt as to the message sent out by the Home Office in regard to these rules and the way in which they should be applied, I hope that I shall satisfy your Lordships as to what the immigration officers think is their duty and as to the way the Government are taking pride in the rigorous manner in which these rules are being observed. I will in conclusion merely quote from the Official Report for another place, from Volume 37, col. 243, where one finds the words of the Minister of State at the Home Office, Mr. David Waddington:
"We greatly strengthened the safeguards in 1980 and we are now building on them further with the change in the burden of proof. The House might be interested to know how stringent are the tests. From 1 January to 8 February, 47 husbands and fiancés were granted entry clearance and 61 were refused in the Indian subcontinent. That represents a refusal rate of 56 per cent. Of those refused, more than one third failed to qualify because the couple had not met—a requirement that we introduced in 1980 and are keeping."
If I may close the quotation for a moment, I would say this in parenthesis: this was, of course, hitting at the arranged marriage which are so much a part of the life of the Indian sub-continent—and which may be strange to us, but which at all events seem to subsist rather longer than our own, despite our different modes of dealing with these matters. I continue quoting:
"Many others failed to satisfy the entry clearance officer that the primary reason for the marriage was not immigration. Again, we are keeping that safeguard. The refusal rate of 56 per cent."—
said the Minister, proudly—
"compares with a refusal rate for husbands and fiancés of only about 10 per cent. under Labour's rules. I emphasise that the 56 per cent. relates to applications decided under provisions of the disapproved rules, the substance of which we are now asking the House to accept."
That ends the quotation. This House can only express its profound disapproval tonight, and I hope that it will. It can do no more than express its disapproval of rules which—as I have tried to say—are completely anti-social and completely destructive of what could otherwise be healthy family life in a section of our community whose members all of us, I had hoped, would try to make happy, satisfied and useful citizens of this great country once they were here. I beg to move for Papers.
8.30 p.m.
Lord Avebury: My Lords, the noble Lord, Lord Mishcon, has rightly said that the immigration rules could be attacked from many different points of view. From the experience that I have of working closely

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with the Joint Council for the Welfare of Immigrants over many years, I can certainly endorse his statement and I can say without fear of contradiction that the immigration rules as they are applied—not necessarily as we read them—do cause immense hardship and suffering. Although inevitably we shall be concentrating this evening on those parts of the rules which affect husbands and fiancés and not on immigration policy generally, it ought not to be forgotten that the question of husbands and fiancés formed part of the Tory policies that were developed in a climate of hysteria and fear about immigration generally that was deliberately whipped up by the Tory Party before the last election.
And that atmosphere was not created only by a few crypto-fascists on the right wing of the Conservative Party. It was the Prime Minister herself who made a not unimportant contribution when she referred in a "World in Action" programme to the fear, which she alleged existed, that this country might be rather swamped by people with a different culture. She added that if there is such a fear people are going to react and be rather hostile to those coming in. So among other promises that were made in the Tory Party manifesto was the promise that they would end the concession, which was introduced by Mr. Roy Jenkins when he was Home Secretary in 1974, which allowed husbands and fiancés to enter on the same basis as wives and women fiancées. They also promised, by the way, that all those who were lawfully settled here would be treated equally before the law. There was no way in which they could posssibly have reconciled those two diametrically opposed undertakings.
In reality there was not any such danger as the Tories pretended. The international migration figures which have just been issued for the year ending June 1982 show a net outflow of people from this country of no less than 80,000 persons, and that figure was almost exactly the same as was recorded in the previous year ending June 1981. So, contrary to the assertions of some Tories, migration as a whole, does not exert pressure on jobs, housing, health or the social services—these pressures that figure in the mythology of the racists. The overall movement of peoples resulted in an easing of unemployment and a reduction in the demand on public services of all kinds. Nor should it be overlooked that because most of the people arriving in this country for settlement are dependent children, young fiancés or spouses and young non-patrial citizens, they make less demand on social services than the native population. Many, of course, go into business on their own account, creating new employment for others.
As to the risk of cultural conquest by the minute trickle of immigrants, that idea would really be very laughable if it was not for a small and vociferous claque of fascists trying hard to whet apprehension concerning the level of immigration. The diversity of cultures certainly creates some problems for every community, including the natives, but, on the other hand, it immensely widens the horizons of most people and enriches the lives, I would suggest, of both the minorities and the majority. As people learn to communicate across the membranes—not barriers—of language, race and religion, they do come
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to respect and admire each other and each other's cultures, and to understand the other cultures without necessarily losing anything of their own. I believe that the Tory Party misjudges the mood of the country when it portrays the entry of every single individual into the United Kingdom as a possible threat to good race relations, and the extension of stay outside the narrow framework of the rules of everyone here for a temporary purpose likewise as a threat to good race relations.
I believe that most people consider that some sort of controls are necessary, but they do not believe that those controls have anything to do with the maintenance of good race relations within the boundaries of the United Kingdom, except that where somebody from an ethnic minority is unfairly excluded that may well create a grievance among the whole of his community, which obviously is harmful to race relations. This is tacitly recognised in the administration of control, since a wide descretion is given to the Secretary of State to admit or to allow to remain outside the rules. In the case of short-term visitors the Secretary of State may grant temporary admission to a passenger, so that he or she may have the stay here requested, although technically never admitted to the country.
The former Minister who dealt with these matters at the Home Office, Mr. Tim Raison, said on one occasion that he received something like 1,200 letters a month, which gives some indication of the extent of the personal difficulties which do arise. I believe that if members of the public could look at these cases individually they would say that a more generous and compassionate treatment ought to be accorded in many instances and that the obsession with numbers leads to real hardship and suffering. If we take the case of elderly parents, a particularly vulnerable group against whom the Tories erected higher barriers when the rules were last altered, it has to be shown that the person seeking entry has no other close relatives to whom he or she could turn in the country of origin, and, if the parent is below the age of 65, that his or her standard of living is substantially below that in his or her own country.
In a recent case which I dealt with before an adjudicator, the elderly mother concerned, who wanted to come to live with her son in the United Kingdom, had a brother living in India, although he was several hundred miles away from her home village and there was no evidence to show that the brother was prepared to support her, but the fact that he might have done so was enough to require the adjudicator to turn down this elderly lady under the rules. But he qualified his rejection of her application by saying that this was precisely the kind of case which ought to go to the Minister for the exercise of his discretion. When I wrote to the Minister calling his attention to the adjudicator's remarks, he turned down my representations, referring specifically to the Tory Party manifesto as his reason for doing so. Is this really what people thought they were voting for, that an old lady should be prevented from coming here to spend her last few years with the son who wanted to care for her within the family? Is that what the Tory Party means when it talks about upholding the sanctity of the family?

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I turn now to the particular question of husbands and fiancés The changes that were introduced by this Government in Command 7750 were racially and sexually discriminatory, incompatible with our international obligations, and contrary to natural justice, as I tried to demonstrate in the Motion that I moved in your Lordships' House on 11th December 1979.
I was not alone in advising the Government, in particular, that their rules violated the European Convention on Human Rights. As the noble Lord, Lord Mishcon, has reminded us, some very eminent legal advice was already available to the Government at that time, from the noble and learned Lord, Lord Scarman, and also Mr. Anthony Lester, who gave evidence to the Select Committee mentioned by the noble Lord, Lord Mishcon. We advised that sooner or later cases would be bound to be brought in the European Commission of Human Rights at Strasbourg, and that once again we should be forced to withdraw a provision that was shown to be racially discriminatory. The Government chose to ignore that advice, but, instead of entering into debate with those of us who were criticising their policy in the House, they contented themselves with the bald claim:
"We believe that we have strong arguments with which to justify these proposals if they should be challenged."—[Official Report, 11/12/79; Col. 1126.]
That is a quotation from the noble Lord, Lord Belstead. The same phraseology was used by Ministers in this House and in another place on several different occasions. The proposals were challenged on the Floor of the House, but the Government reserved their answer for possible use in another forum several years later.
Clearly, if this conduct is to be allowed it would strike at the very root of parliamentary democracy. It is a most pernicious doctrine that when a Government does something which is alleged to be a violation of human rights, they are not bound to deal with any attack on their proposals in Parliament, but they may treat the accusations as mere committal proceedings, the substantive defence being reserved for Strasbourg. I hope that whatever view your Lordships will take of the rules now before the House, your Lordships will agree that the Government set a very dangerous precedent then, and it is one which should not be allowed to pass without severe criticism.
Over three years later the Government are being forced to back down because of what has happened in the Commission. We still do not know what the arguments were, and it would be interesting to know. Perhaps the noble Lord can enlighten us on how many lawyers they employ on the cases at Strasbourg that have been mentioned and at what cost so far. In these new rules a fiancé or a husband is to be admitted if he satisfies the conditions already laid down, provided the wife is a British citizen. There is still the element of sex discrimination since a woman, as the noble Lord, Lord Mishcon, reminded us, has to be admitted as the wife or the fiancée of a man who is merely settled. At least one of the cases before the ECHR, that of Mrs. Arcely Cabales, concerns the husband of a woman who is settled. Mrs. Cabales, as the noble Lord may be aware, is a state enrolled nurse who works as a psychiatric nurse at the Bethlem Royal Hospital. She has been in
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Britain for 15 years and if she returned to the Philippines to be with her husband, the Minister suggested—that is, the Minister until recently, responsible for immigration in the Home Office, Mr. Tim Raison—that she would be unable to follow her profession because the SEN qualification is not recognised in the Philippines, as it is not in most parts of the world.
Hers is one of the cases that the ECHR has found to be admissible, so that the changes in the rules now under consideration have not got us off the hook. Mrs. Cabales may be entitled to apply for British citizenship after so many years residence here, and certainly others who are settled in Britain and who want to bring husbands or fianceś in will be so entitled. But the British Nationality Act which came into force on 1st January has resulted in such a flood of applications that a backlog averaging two years has built up in their processing, so that a women who, even under these restrictive rules, is supposed to have a right to live here with her husband, will not be able to exercise that right for two years. The position of a non-patrial citizen who was given the second-class status of British overseas citizen under the British Nationality Act is even worse.
Suppose that such a woman has entered the country immediately after the Act came into force on 1st January. She would have waited in the queue for about six years and eight months in order to do so. She then has another five years' wait until she is eligible to apply for proper British citizenship, and another year whilst her application for registration is being processed. It may be a further 18 months before her fiancé, who might be the boy living next door to her before she left India and to whom she was promised, can enter as her fiancé. So this young man will have had to wait nearly 15 years to enter this country and marry the girl to whom he was betrothed.
There is another cause for anxiety, which the noble Lord, Lord Mishcon, mentioned, in the formula now adopted. The immigration officer or the Secretary of State has to be satisfied that all conditions laid down are fulfilled, instead of merely having reason to believe that they have been. As the noble Lord explained, this shifts the onus of proof on to the applicant for admission, or for renewal of leave to remain. However, in another place the Minister declined to give any explanation of how this would operate in practice. The dialogue which the noble Lord imagined taking place between the applicant and the entry certificate officer does not, in fact, portray what has been actually occurring during the past few years and, no doubt, will be intensified as a result of this shift in the onus of proof.
I was in Bombay in 1978 and I sat in during interviews between applicants for entry into this country as fiancés and the ECOs. The ECOs asked extremely leading questions about the intentions of the young men. In one case the young man had come to Bombay from a village in Gujarat. He was asked what his earning capacity had been in the village and what it was in Bombay. Of course, it was higher in the city. He was brought into the position of agreeing with the ECO that he had come from the village to Bombay in order to increase his earning capacity. The ECO then said, "Is not that the real reason why you want to go to Britain? Do you know what the average wages are

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there?" The young man said that he did not. "Come, come", said the ECO, "are you telling me that you do not know that the wages available in Great Britain are many times higher than you would receive in Bombay?" The young man said: "All right, perhaps they are. I suppose that is possible". The ECO said, "Is not this the real reason why you wish to go to Britain, and is nothing to do with this proposed intention to get married? You are only going to get married because you think this is a way to secure the higher paid jobs that are available in the United Kingdom". That was the burden of the questioning put to the young man. If the young men do not answer these questions satisfactorily—it is impossible to imagine how they would—they are refused, and the percentages quoted by the noble Lord show that they are being refused.
How do the parties concerned prove that they both have the intention of continuing to live together? Can the noble Lord the Minister satisfy the House that he intends to continue living with his wife? Does she intend to continue living with him? The noble Lord may say that that is an impertinent question for me to put to him across the Floor of the House, but impertinent questions will be put to all these people who wish to come here and live with their wives.
The Confederation of Indian Organisations has sought clarification on what the couple will have to do to convince the Home Office, but the answer to that question can only be derived from the instructions to immigration officers which, of course, have never been published. If the noble Lord will tell us that he will publish these instructions to immigration officers I should be delighted, but I should also be extremely surprised.
In another place the Minister said that it was odd for the House to concentrate on the rights of husbands and fiancés when the figures were so small. We know that for the Tories it is numbers that matter and not the principle, because that has been the leitmotif of their policy for the past 20 years, and they are still being true to form. As far as we in the Social Democratic/Liberal Alliance are concerned, the principles must be established first and these will be the principles of the European Convention on Human Rights and the United Nations Covenant on Civil and Political Rights. We believe in the right to marry and to found a family, and we believe that this entails the freedom to live with one's spouse in one's own country or in the country where one is settled. When we get the opportunity we shall amend these rules so as to bring the United Kingdom into conformity with the spirit, as well as the letter, of our international obligations. We shall remove racial and sexual discrimination from the ports of entry, as we removed it within the boundaries of the United Kingdom.
Lord Monson: My Lords, before the noble Lord sits down, I wonder whether he can answer one question? Are not the immigration controls of most new Commonwealth countries every bit as strict, if not stricter, than British immigration controls?
Lord Avebury: My Lords, I have quite enough in dealing with the Home Office without dealing with the immigration policies of other countries.
The Bishop of Chelmsford: My Lords, the noble Lord, Lord Mishcon, has covered the ground so adequately that I am in the happy position of being able to abandon the greater part of my speech. I will, therefore, just give the peroration to it.
I entered the drama at the point where the Minister was preparing his second list of rules. Many people, I think, expected that he might go back to his original draft and, in spite of objections on other grounds, those of my point of view would have been happier than with the other versions we have had.
However, the proposed rules now before us do not return to the November draft. While the Home Secretary has returned to the one-year rule for husbands and male fiancés entering to join their settled wives and fiancées, he has in fact kept the other changes, especially the one which concerns the burden of proof. Your Lordships will remember that the burden of proof was moved from the immigration official to the man seeking to join his wife or fiancée settled here. So unless he could demonstrate that he met the test, no right of entry would be given. In spite of what the Government are saying in public about this, it will have the effect of stopping a very large number of men coming to this country, particularly from the Indian sub-continent. We have already heard from the noble Lord that during a set period 56 per cent. of all applications were refused.
It would appear that the real aim of the rules is not about proving the genuineness of the marriage and preventing people using marriage as a way of entry, but simply to stop entry in any significant way by this route. Those who adopt my views have a number of objections, of course, to this. It will have the effect of disrupting marriages and personal commitments. We have already heard harrowing stories of what is happening in many cases, and we have read of others. Secondly, it is an intolerable intrusion into personal privacy where the state has no rights, really, beyond supporting people in their marriage contracts and in their obligations. Lastly, surely it is in contradiction of a fundamental principle of British law that people are innocent until found guilty by those who believe them to have committed an offence. This rule is apparently based on the principle that you are guilty until you prove yourself innocent.
Thus far, churchmen and many others have been united in opposing all such rules, in opposing the nationality Bill in principle and in calling on the Government to offer a new type of leadership in their role, in response to some clear moral principles. It seems that the Government, which believe in supporting marriage and family life—as, of course, they do—and which dislike the state interfering unduly in the lives of their citizens—as, of course, they do—can hardly justify these rules on their own grounds.
8.52 p.m.
Lord Chitnis: My Lords, I was glad to see that this House was going to be given an opportunity to debate the changes in these rules, but I hesitated about participating in the debate myself because these occasions can so often become just a dialogue of the deaf, with faults on both sides. The Asian community in this county—that is, the immigrants themselves and their children who have grown up in this country

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knowing no other as home—are no doubt at fault in not understanding the suspicion, the mistrust and, in the case of some members of the Conservative Party, the loathing which appears to greet the prospect of any number of Asians, however small, coming to settle in this country. But, on the other hand, the Government perhaps do not understand the resentment and the fears that such episodes as we have been through over the past few months, as these rules have been debated, arouse among Asians.
For the Asian community in this country knows perfectly well that it is about them that the argument is being conducted. However carefully these rules are phrased, however much Rule 2 may say that immigration officers will carry out their duties without regard to the race, colour or religion of people seeking to enter the United Kingdom, in practice the thrust of these regulations is going to affect not the Norwegians or Americans who want to come here, not even primarily the black people who want to come here, but the brown. It is hypocritical to pretend otherwise. I really do believe that many members of the Asian community in this country find the hypocrisy that shrouds the debates on the subject almost as offensive as the discrimination which the rules contain.
I think that what we also find distasteful, and particularly in the debate that was held in the other place last week, is the type of party back-chat: the way that one party can acquit itself of introducing racist legislation by saying that the other party started doing it first. I admit, or at any rate I hope, that Asians do not read Hansard with great avidity, but I can imagine what it must look like to them seeing leading politicians of all parties—Socialist, Social Democrat and Conservative—swapping reminiscences of the shoddy history of how discriminatory law and practices have been progressively introduced into this country. That hardly makes those members of the community who are here, who intend to stay here and who are trying to be useful members of the community here, feel welcome.
Then, of course, as all the speakers so far have mentioned, there is the business of the burden of proof being shifted to the male fiancés. This, of course, is distasteful, and we already know of cases of couples being asked highly personal questions in interrogations before and after their marriage, to ensure that their entry here was not just for immigration purposes. Presumably, such cases will now become more widespread. If this is to be so, then I see no reason why the Minister should not tell the House—more importantly, should not tell entry clearance officers; and most importantly of all, should not tell the people whose lives will be affected—precisely how they are to meet this requirement and precisely what evidence it is that they must produce in order to prove this fact. It would clearly be unfair to leave this to the subjective discretion of entry clearance officers, and I do not suppose that the Home Office proposes to do so. But it is thoroughly unfair to applicants if the instructions and the criteria by which their applications are to be judged are not made public. If, on the other hand, the Minister declines to do this and believes that these instructions must remain secret, then I hope that at least he will tell the House tonight why this must be so.
Altogether, I think that this has just been another
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pathetic episode in a pathetic tale, and I come to a rather gloomy conclusion. It was said in the other place that if the very small number of male fiancés and husbands was allowed in unprevented, unchecked and unharassed, then there would be damage done to community relations in this country. I do not accept that for one moment; but even if there is the slightest truth in it, far more damage has been done to community relations here by the Government's mishandling of the changes of these rules.
8.58 p.m.
Lord Hatch of Lusby: My Lords, the issues of discrimination which appear in these rules have been more than adequately covered by previous speakers and I do not intend to repeat them. I want to take a somewhat different approach to this very important issue. These rules, and the way in which they have been devised, in my view infringe the spirit, if not the letter, of the British constitution. As your Lordships know, the British constitution does not recognise political parties; it recognises Parliament.
Last October and November the Government produced a White Paper which was approved by Parliament on 11th November. Not only was it approved by vote, it was approved by the Minister concerned, and I quote from the Official Report of the other place of 11th November, volume 31, at column 751:
"the approach that we have adopted in the White Paper and in the debate is not merely defensible but positively right".
That was Mr. Timothy Raison, at that time Minister of State speaking for the Home Office on the-debate on the White Paper last November. There was then a vote, and Parliament approved. The other place approved by a vote. The White Paper was approved in this House.
Then what happened? Then came pressure, not from Parliament but from within the Conservative Party—only from within the Conservative Party. The Neanderthal men of the Conservative Party made representations to the Home Secretary. So with cynical, dishonourable machinations what had been voted by both Houses of Parliament was changed; was changed, in the view of most of us, for the worse.
More stringent regulations were placed on what had been, even in the White Paper, a set of discriminatory rules. But that was not enough. That did not satisfy the backwoodsmen. In December they rejected the new regulations put before them by the Government. What happened then? Then, after the defeat of this squalid hybrid, a defeat by Parliament, the contemptible haggling resumed. What for? What part of Parliament had declared itself against the White Paper and the principles embodied in that White Paper? Only a section of the Conservative Party. It was solely for the purpose of party expediency that the haggling continued until it had produced this unprincipled mess of pottage that we are debating tonight.
Unfortunately, that mess of pottage was approved by the other place last week. I say "unfortunately", not just because I am against it, but because that vote last week prevents us in this House from amending, or rejecting, these rules. So much for the House of Lords as a revising Chamber! So much for the House of Lords as an institution capable of saving this country from dishonour!

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But why was last week's vote in the other place on the revised regulations—regulations revised solely in order to attempt to secure unity within the Conservative Party—more important than the vote on the White Paper of last November, which gave Parliamentary approval to the principles embodied in that White Paper? How can these be changed simply from within the Conservative Party? Is this parliamentary democracy? Not as I understand the British constitution.
I want to ask the Minister who is to wind up four specific questions. It has already been established that there is discrimination on grounds of sex, on grounds of race, so far as these rules are concerned. I want to ask him specifically: why have the principles of the White Paper been changed after Parliament gave those principles its approval? I stress the word "Parliament".
Secondly, do the Government approve of sex discrimination within their legislation? I think I know the noble Lord well enough to know that he will not stoop to the depths of his honourable friend in another place answering last week when he was asked the same question, and he answered at column 245 on 15th February:
"The rules treat the sexes differently. I remind the right hon. Gentleman that the sexes are different".
How contemptible can you be of the principles and the normal courtesies and the honesty of parliamentary Government! He goes on to say:
"the fact that we have been generous about wives does not mean that we can afford to be equally generous about admitting husbands. Why should we be equally generous?"
That, my Lords, was the answer of the Minister in the other place to the second question that I have asked tonight: do the Government approve of sex discrimination?
Does this not smack of those Victorian values which the Conservative Party is now supposed to be adhering to? Is this what the Conservative Party means when it talks about a family policy? I think that the Leader of the noble Lords opposite would be rather alarmed if she were to enter this Chamber now and find how much interest there is in her own party, the Back-Benches of which are occupied by one member of that party when we are debating the intimate, direct personal family values of many British citizens and British inhabitants.
Thirdly, do the Government approve of racial or, as it is better called, colour discrimination in immigration? Though it should be noted, by noble Lords opposite in particular, that these rules affect quite a considerable number of white women, almost the entire impact is upon coloured women. Do the Government approve of racial discrimination in their legislation?
Finally, I come to the point that has been raised by a number of noble Lords previously, the British tradition of law. Is it not the tradition of British law, as the right reverend Prelate mentioned, that anyone is assumed to be innnocent until proved guilty? There are signs that that principle is being eroded in legislation now going through Parliament. Apart from the rules we are considering tonight, the Data Protection Bill has a similar ambiguity in regard to that principle. Further, if the principle were being
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maintained in these rules, the onus would be on the Administration, not on the individual who is attempting to enter this country.
I join the noble Lords, Lord Avebury and Lord Chitnis, in asking the Minister to say what instructions have been given to immigration officers. It seems doubtful whether they are being told that they must make an objective rather than a subjective test when, as has been mentioned, the wording has been altered from "reason" to "belief" to satisfy them. Whether or not the Government intended it, that seems to be a signal to immigration officers, a signal which could easily—in view of words spoken in another place by, among others, Ministers—suggest that the arranged marriage must lead to the assumption that its only purpose is to allow the husband or fiancé to enter this country. I hope that will be wiped out totally from the Immigration Service. Mr. Timothy Raison, at the time he was at the Home Office, made it clear that in his view the arranged marriage should not be assumed to be a device for immigration entry.
I draw the attention of the Minister to the case which was heard and judged in your Lordships' House just 10 days ago, that of Khera, when the judgment of 1980 was reversed and what is known as the "duty of candour" was removed, so that the onus has now been placed back where it always should have been, namely, on the Home Office. Has the noble Lord, Lord Elton, looked at that judgment and recognised its importance and significance to this debate? The rules we are considering include not just husbands and fiancés; they go much wider than that and, in particular, I draw the noble Lord's attention to Part 12 and the powers of deportation.
Since that judgment, are the Government reexamining those cases—particularly the Filipino cases which were very prominent—of workers who were treated as illegal immigrants before that judgment was made? Are those who are still here to be allowed to stay in this country, and are those who were deported, or persuaded to leave, to be permitted to return? It seems to me that, arising out of that judgment from our noble colleagues the Law Lords, there is an onus on the Government to state where they stand on this important issue of immigration, which has affected many hundreds of families.
I can do no better in concluding than refer to some words of a colleague of the noble Lord, Lord Elton, a member of the Conservative Party in another place, who only last week described these rules as a sacrifice of principle, of people and of patriotism. For what? For party ambition. If there are noble Lords opposite or members of the Minister's party who still retain any adherence to the principles of which I have spoken, is it not time that we saw some protest from the opposite side, and is it not time that we saw some resignations, too?
9.14 p.m.
Lord Elystan-Morgan: My Lords, I doubt whether there is in this House any noble Lord or noble Baroness who does not feel some sympathy for the noble Lord the Minister who will shortly be replying to the debate. We feel sympathy with him in the unwholesome task that has been thrust upon him. We have no doubt that with superb advocative skill he will

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yet again give us the benefit of his splendid intellect, but we doubt very much whether even he can justify the unjustifiable or defend the indefensible. We feel some sympathy also for the right honourable gentleman the Home Secretary, who has indeed many endearing and laudable qualities. But since the White Paper of October of last year, he has been concerned with meeting the banshee howls of anguish from the more unreasoning quarters of his party by seeking to make dulcet sounds of appeasement to mollify the malcontents in his own party. His loyalty to the Prime Minister is of course touching, but, as so many speakers have already said, it has been at the expense of loyalty to those ideals of justice and compassion which, over many generations, and through the hands of many different administrations, the Home Office has cherished and fought to preserve.
My noble friend Lord Mishcon said that the attitude of the Home Secretary was undignified, and most certainly so it is in this situation, In this most delicate, most potentially inflammable context of race, is it not sad to see a Home Secretary applying his wits not so much to the massive problems that confront him as to those raucous noises of protest that are behind him on his own Back Benches?
That is not an exaggerated charge. I say that because the marriage provisions—and, I appreciate that, as the noble Lord, Lord Avebury, has said, they are not the only objectionable part of the rules, but they are matters on which we have to concentrate in the time available—manifest the unwholesome face of British politics. Their very purpose, as well as their effect, is to perpetuate discrimination between one class of British citizen and another, between men and women, and between one form of marriage and another. We say that those rules offend against justice and equity. They are objectionable and tyrannical in their present effect, but we believe that they will be even more disastrous in their long-term consequences; that the evil that they do will live long, perhaps even after they have been withdrawn.
I should like to turn specifically to what is no doubt the core and kernel of objection to those particular provisions, and that is the blatant and deliberate discrimination against women; a point that has been touched upon by every speaker up till now. Until Rule 48 of the rules, the wife is placed in a situation wholly different from that of the man. Under that rule the man settled in Britain can bring his wife here, with only very few, and indeed perfectly reasonable, restrictions. Once the marriage has been proved, his case is made out; and this is the irony of it: it does not matter whether the marriage is an arranged marriage, or a Western-type marriage—no distinction is drawn, nor should it be.
However, when one looks at the situation from the side of the woman, one sees that the case is entirely different. She is made the subject of the most rigorous conditions. The point which I wish to emphasise and which I think has not as yet been touched upon is that no distinction is drawn between the woman who is British by birth, or British on account of one or more of her parents having been born here, and the women who is settled and is registered British. They are all in the same category so far as these restrictive provisions are concerned.
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From these Benches, we say that there is no earthly justification for such a deliberate form of discrimination. I anticipate that the noble Lord the Minister will say, "Well, the case for the distinction is this: normally a woman will move to be at the locus of her husband's work, she will move to his domicile because his work is there. So when the opposite happens, when a man moves to the domicile of a woman, your suspicions should immediately be roused". We say that that is nonsense. We say that we live in a changing world, and that the number of cases with which the House is here concerned is modestly few. It is calculated that at the very highest the number of applications per annum is only of the order 2,500 to 3,000, and, in any event, it is conceded that there is a minority—and it is only a minority—of husbands who join their wives in this way who, for the most genuine, domiciliary reasons, wish to move and join their wives. Therefore, we say that there is no justification for this distinction, this discrimination, against women, and its effect is to place women altogether in an inferior category. It is an attack, therefore, not just upon coloured women but on women in general.
May I now turn to the question of the attack on the arranged marriage. These provisions are deliberately aimed—there can be no avoiding this—at the arranged marriage. The effect of placing the onus of proof upon the applicant is to say, "We start from the proposition that the arranged marriage is a bogus marriage". There is a world of difference between the arranged marriage and a bogus marriage, but the Government, it seems, are either incapable or unwilling to draw that proper distinction. It is either that lack of capability or that unwillingness that gives a clue to their essential attitude in the matter. This is the stuff of real racism. My Lords, no doubt there are a few abuses. Last year, about 150 husbands and fiancés were returned to their own respective countries because they had come here for the purpose of taking part in bogus marriages. One has to admit that. But that is a very, very small number, bearing in mind the assiduous researches and inquiries that are made and the scrutinies that are carried on from day to day. If it is only 150 that can be discovered, then it must be conceded that the vast majority of arranged marriages are not marriages arranged for the purpose of immigration at all but for the basic purpose of marriage itself.
The arranged marriage is an institution hallowed by many centuries of tradition in so many parts of the world, especially in Asia. Who are we to pass a value judgment on that marriage? The point has been made already by my noble friend Lord Mishcon that this is at a time when, among so many scores of thousands of people every year in Britain, the institution of marriage breaks down, and when we have now reached the sorry plight of one marriage in four—nearer one marriage in every three—failing to last the full duration. No one can level such an accusation about the arranged marriage. It is stable, it is permanent, it is the basis of those respected societies. We have no right to say that, because it is different from ours, it is ipso facto bogus.
Many, indeed, all, who have spoken already in this debate have touched upon the question of uncertainty and insecurity that will follow in train upon these regulations and rules. By placing the onus of proof on

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the applicant, I believe that the applicant is placed in an impossible situation. As a matter of law and as a matter of evidence—and I speak as one who is concerned with these matters day in and day out—how do you establish a negative intention? You cannot screw the top off a person's head and look into his mind and say, "Am I sure, or, on a balance of probability, am I satisfied, that that person has not got that negative intention?"
Of course, once the fact of an arranged marriage has been established, as the noble Lord, Lord Avebury, put it so succinctly, what more can the applicant show by way of evidence? He is in an impossible situation. No doubt there will be guidelines laid down for immigration officers. But at the end of the day it will be a very subjective judgment. It was said of equity in the 14th century that it varied as did the length of the foot of the Chancellor. I appreciate that I am in the presence of at least one distinguished former incumbent of that office.
We say that up and down the country of Britain when these rules come into force their implementation will vary according to the depth of patience and compassion of the individual immigration officer. It is inevitable that there will be suspicion and bad feeling and damage done to race relations that will undo the splendid work of men of compassion and foresight over many generations.
What is the justification for these rules? We say that there is none. Why are they made? They are made essentially because a pledge was given by the Conservative Party in 1979. I ask the House to listen to this quotation dealing with the question of pledges given by parties at election time:
"But in practice while before the election the manifesto is written rather like the advertisement for a patent medicine, after the election it is treated as a pronouncement from Sinai with every jot and tittle of the unread and often unreadable document reverenced as Holy Writ. The actual situation with which a new government is confronted is often vastly different from what it was imagined to be in opposition, and the measures proposed in the manifesto often include the impossible, the irrelevant and the inappropriate. But it is here that the doctrine of mandate takes over".
The writer goes on to say that that doctrine is profoundly unconstitutional. The author of these words was the noble and learned Lord the Lord Chancellor in his Dimbleby lecture of some years ago.
Many have already dealt with the progression from the original rules of October, the defeat of the Government in December by a majority of 18, and how the Government, rather than accept the clear will of 90 per cent. of the Members of the House of Commons who are for a more ameliorated form of rules, nevertheless have pandered to the small band of raucous extremists. As I said in opening, we fear indeed that a high price will have to be paid for a display of Thatcherian arrogance and intransigence in this matter.
The control over immigration is something that we all accept. Control there must be, but it must be fair, it must be humane and it must be civilised. It must, we say, conform not only with those humanitarian standards to which we as a country are committed by treaty and convention, but, even more important, with those ideals of tolerance and compassion which form the very bedrock of the British community. When we
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mention price, let us remember that it is not a price that is paid once and for all. In this case, the Government have pandered to blackmail. They have paid the Danegeld but the Dane will not go away.
9.29 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, last October my right honourable friend published a White Paper containing his proposals for changes in the immigration rules. We had a debate on the White Paper, when this House agreed to take note of it, as did the other place. After the debates my right honourable friend laid a statement of changes in the rules before Parliament. However, the new rules were disapproved by the other place. Under the procedures laid down in the Immigration Act 1971, those rules, which came into operation on 1st January, had to be replaced, and it is the replacement rules which we are considering today. They have been in effect since last Wednesday.
It may he as well to remind your Lordships' House of why changes in the immigration rules were in fact necessary at all. The rules which applied until the end of last year reflected the nationality law which was then in force. But the British Nationality Act 1981, which came into effect on 1st January this year, made many important changes. These changes have to be reflected in the immigration rules, and so some amendment of the rules was inescapable.
As we have seen from the debate today and from previous debates, there are widely differing views about what form the amendment should take. Most, though not all, of the discussion has been about the rules about husbands and male fiancés. Under the rules which applied until the end of last year, a woman had to be a citizen of the United Kingdom and colonies and have a connection with this country by birth in order to qualify to bring a husband or fiancé here. The rules were drafted at a time when our nationality law contained no definition of who in fact did have a close connection with this country. The British Nationality Act now provides such a definition: they are British citizens. Now that we have a defined status of British citizenship, it is clearly both logical and right to rely upon that for the definition in the immigration rules of those women who, because of their close connection with this country, should be allowed to live here with the husband of their choice.
It was clear from the debates here and in another place that it was the wish of the majority of Members in both Houses to see all British citizen women treated alike in this matter. The Government have carefully considered their proposals, and remain satisfied that they are the right ones, in the light of the new British Nationality Act—which, may I remind your Lordships, is already in force. These rules therefore give all British citizen women the same right to live here with their husbands, irrespective of whether or not they have a connection with this country by birth. The noble Lord, Lord Elysian-Morgan, took up that point, and rightly so. It does much to weaken points made by other noble Lords on discrimination between cases.
Noble Lords opposite have suggested that we should have gone further and given all settled women the right to be joined here by a husband, even if they are not our

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citizens. But the Government have consistently taken the view that the right to bring in a husband should be limited to women who really belong to this country. Acquisition of our citizenship is an important step, which demonstrates that a person has decided to throw in his or her lot with us. If a women chooses to retain the citizenship of another country rather than take ours, we see no reason why she should be able to bring her husband here. Normally, there should be no obstacle to the couple living in the country of which one of them is a citizen; and this seems to us the sensible course.
I turn now to the safeguards in the rules against abuse by people seeking to use marriage as a way into the country. Both here and in another place there has been a great deal of debate about the safeguards. There can be no doubt that safeguards are necessary, because there is plenty of evidence that without them there is abuse. Even the previous Government recognised this. It is true that they relaxed the rules for three years, but after that they found it necessary to introduce some restrictions, as the noble Lord, Lord Mishcon, told us in his opening speech—and at this stage I ought to acknowledge the service he has done to the House by giving us the opportunity for this debate tonight. They brought them in in 1977, but they were, in fact, inadequate.
This Government brought in stricter safeguards in 1980, and there is no question of our removing any of those. We thought it sensible, though, when we were extending to all British citizens the right to bring in a husband or fiancé, to look at the tests again to see if they should be strengthened even further. As a result, we decided to introduce three extra safeguards in the rules which were laid before Parliament in December. These were, first, to extend the period of temporary stay of a husband from one year to two; secondly, to tighten the deportation rules; and, thirdly, reverse the burden of proof so that it would be for an applicant husband or fiancé to show that he qualified to come here, rather than for immigration officials to show that he did not.
The extended probationary period was strongly criticised in another place by honourable Members who considered that it was wrong to withhold the grant of settlement for so long a time. They pointed out that there was an increased chance of marriages breaking down if the period was extended to two years, and that in some cases there would be children of the marriage who would suffer hardship from the removal of the husband. It was also felt that the extended period placed undue strain on the marriages concerned. My right honourable friend has considered these arguments carefully and has decided that in the light of the views expressed it would not be right to proceed with an extended probationary period of two years—something which does not cause distress to the noble Lord, Lord Hatch of Lusby, as a departure from what had earlier been decided. The rules laid before your Lordships therefore restore the period to one year, as was the case under the rules made in 1980. My right honourable friend has, at the same time, removed the change in the deportation rules, which was linked with the extension in the period of temporary stay.
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There is, however, the third change I mentioned, which relates to the burden of proof and which the Government have decided to retain. A good deal has been said about this, much of it somewhat misleading and some of it very odd. I must say it was greatly diverting to hear a lawyer of the eminence and recent preferment of the noble Lord, Lord Elystan-Morgan—on which I congratulate him—railing against the absurdity of anybody trying to establish a balance of probabilities about someone's motives, other than by removing the top of his head to look inside. But it is seriously important to say quite clearly what the change means. In future, if a case is evenly balanced, an applicant will not be able to qualify to come here. We do not expect that there will be very many such cases. Nevertheless, where they do arise, in our view it is proper that the application should be refused. The benefit which the applicant is claiming is a very important one—settlement in this country. It seems entirely reasonable to ask him to make out his case for it. The change does not place an impossibly difficult test on an applicant. The standard applied is the balance of probabilities, no more, and that is the normal test in all civil matters.
The noble Lord, Lord Hatch of Lusby, in a fine-sounding speech, suggested that not exactly the letter of the constitution, because there is not a letter in our constitution, but its spirit has been violated, Parliament shaken and democracy itself weakened, by the Government's significant departure from the lines set out and approved in the White Paper. He pointed that the other place had approved a policy within the White Paper and that, when we came to produce rules to apply under it, pressures developed within another place and, because all those pressures were in one quarter of the House, that in some way seemed to him to be improper and a departure from parliamentary principle that the responsible Minister should seek, as he always must, to achieve the concurrence of the whole House or a majority of the whole House in the passage of legislation. That is perfectly normal procedure. There are many precedents for it and I cannot accept that what was done was in any way unusual or contrary to the constitution which we all serve.
Lord Hatch of Lusby: My Lords, Parliament had already approved the White Paper. Both Houses of Parliament had approved the White Paper in principle. I still ask the Minister, why did he change them?
Lord Elton: My Lords, Parliament expressed an opinion and then it expressed another. Human beings do it, Parliament does it. There is nothing irreversible about expression of opinion in that Chamber or in this. That may annoy the noble Lord, but I am afraid it is so.
If I may return to the question of the burden of proof, entry clearance officers and other immigration officials will continue to examine applications in the same way as before, and there will be no fundamental differences in their approach. The matters on which they have to be satisfied are set out in the rules and are the same as before.

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Some noble Lords wanted me to publish or to secure the publication of the instructions to entry officers. These are internal working documents and, since they are primarily designed to frustrate those who are seeking to come into this country, for reasons which are not acceptable to us, to publish the test on which this is done would plainly tend to weaken the effect of the test itself.
Lord Mishcon: My Lords, would the Minister forgive me for one moment? One quite understands why there may be an answer to the question: "Please, what are immigration officers told?" Will the noble Lord the Minister tell me: is the general tenor of the instructions that immigration officers are to adopt a sympathetic, tolerant reaction to these matters and to give the applicant the benefit of the doubt?
Lord Elton: My Lords, the tenor of the instructions is exactly as set out in the rules. They reflect the rules, and the purpose of the rules is to remove any doubt as to whether a person is coming here to marry, and, consequently, to settle down, or to settle down and therefore to marry—
Lord McIntosh of Haringey: My Lords—
Lord Elton: My Lords, I think that I must limit the number of interruptions. Could we spread them out a little? On this subject, the noble Lord, Lord Avebury, asked me whether I intended to continue to live with my wife. I am happy to tell him that the question is in no way embarrassing, because I do. If she lived elsewhere and I wished to join her there, particularly if we were not yet married, I would find nothing impertinent, as he put it, about such questions when I made my application. That is not impertinent. It is strictly pertinent, and I would expect to have to satisfy those concerned with my admission to that other, and, no doubt, desirable, country, that I did indeed intend to marry her and that I was not using her as an excuse to secure entry only.
Lord Avebury: My Lords, I merely ask whether the noble Lord expects the House to rely on his unsupported assertion that he continues to live with his wife, and whether the immigration officer, in asking this same question of the intended fianće or husband, will accept the person's assertion that he does intend to continue living with the person whom he is applying to join here, or whether he will apply some additional test?
Lord Elton: My Lords, cases will differ, will they not? In my case, I would be able to point to a long association, would I not? Before I married her, the association, was somewhat shorter. But I think it was conducted in terms which made my original intentions pretty clear to me, if they did not make them pretty clear to her.
Since I have now digressed from my text, perhaps I may turn to the right reverend Prelate the Bishop of Chelmsford. I did not entirely understand why he should assume, as he appeared to assume, that in every case where such a requirement is made of an intending immigrant, it should inevitably come down against the
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genuine, as well as the spurious, applicant. This is an assumption behind the objections which a lot of your Lordships had. It is very laudable. We expect to find lame dogs and underdogs, and to help them in this country. But I think it is wrong to assume that everybody who comes up to the entry clearance officer and says, "I wish to come to live in your country" is 100 per cent. honest, in that he wishes to come to live here simply in order to live with his chosen spouse.
The noble Lord, Lord Mishcon, suggested that a man who said that he wanted to marry and live in the United Kingdom would be likely to be refused entry clearance on the ground that the primary purpose of marriage was to gain settlement, if it was possible for him to live in the country of his origin together with his wife. I think I have already answered that, but the entry clearance officer will have to decide whether the primary purpose is immigration. He will look at the whole of the evidence, just as he would in the case that I was trying to apply to myself. This is precisely what he has had to do since the noble Lord's own Government introduced safeguards into the rules in 1977. I apologise to the noble Lord, Lord Chitnis, for referring to the origins of this, but I think it is fair, if people are going to tar us with one end of the brush, that the tar should remain on their hands on the handle at the other end of the brush. We have changed the burden of proof but not the essential test.
The noble Lord, Lord Mishcon, said that his party had been careful in introducing the 1977 safeguards, and I find it hard to see why he thinks that in building on their safeguards we have made them objectionable. I would remind your Lordships in any case that, even if a particular decision which is reached on an entry application seems to the applicant to be unjust, it is not necessarily final. There is right of appeal to the independent immigration appellate authorities against a decision to refuse an entry clearance. There is also an appeal, of course, against a decision to refuse leave to remain. The position of the applicant is, therefore, fully protected.
Much of our debate has been about husbands and male fiancés, but it would be a mistake to think that they account for all, or even a large part of, immigration. It is important to keep our concern about this one aspect of immigration in proportion. This Government are firmly committed to strict immigration control. We said in the manifesto that we believed that strict control was essential in the interests of good community relations.
The noble Lord, Lord Mishcon, made much of his claim that this is an anti-social measure, but the rate of entry of people of different backgrounds has to be related to the capacity of our society to absorb them. Particularly at a time of high unemployment, there is a danger that if people are fearful about levels of immigration it will lead to damaging tensions. Control is not designed to protect one sector of our society only. I think I ought to repeat that. Control is not designed to protect one sector of our society only. It is, we believe, essential to the welfare of our national community as a whole. Settled immigrants as a whole stand to lose as much as any other group from uncontrolled immigration into the country which is now their own. I cannot agree, as the noble Lord, Lord Avebury, appears to believe, that individual cases

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should not be closely scrutinised unless one is also prepared to submit the control of overall numbers to an equal scrutiny. To do that would be irresponsible, and one does not need to be a fascist in order to say so.
Lord Avebury: My Lords, the noble Lord has turned my argument on its head. What I said was that if the Tories pretend that the entry of every single person is a threat to good race relations, they are by that very statement stirring up racism.
Lord Elton: My Lords, I am tempted to say that I find most of the noble Lord's arguments better on their heads, but I will not. The way the noble Lord has put it is the one which I should like to tackle. If the total number of immigrants rises beyond a certain proportion of the national total, clearly that is a destabilising and threatening facet. Everything which has been said from the Opposition Front Bench appears to echo that. One cannot arrive at a total without it being made up of individual cases, and in order to restrict the total it is necessary also to scrutinise the individual cases. The noble Lord writes to me and to my honourable friend with such a plethora of individual cases that I thought I ought to take this opportunity to mention to him that even those, added together, amount to a considerable total.
The basis, therefore, of our approach is strict control. The figures show that we have achieved this. The number of people accepted for settlement has become less under this Government. The number of acceptances during last year was the lowest since Commonwealth immigration control began 20 years ago. This represents a fall of about one-quarter compared with the equivalent figure when we took office. The majority of those who are accepted are the wives and dependent children of men who are already settled here. They have a statutory right to come, or have been the subject of undertakings by successive Governments. Such wives and children accounted for as many as two-thirds of all the people accepted last year from the New Commonwealth and Pakistan.
A small number of people are accepted as holders of special vouchers under the scheme set up for our passport holders, mainly in East Africa. Acceptances in other categories are limited to the absolute minimum. The entry of dependants other than wives and children is restricted to urgent and compassionate cases. The criteria for the issue of work permits are now stringent.
That leaves husbands. We have ended, as we said we would, the last Labour Government's concession to husbands, and as the noble Lord, Lord Mishcon, rightly said, we have no intention of going back on that. Under our rules, the right to bring in a husband or fiancé is restricted to women who have a close connection with this country. It is subject to stringent safeguards against abuse, which we have tightened even further in these rules. Last year, less than 3,000 husbands from the New Commonwealth and Pakistan were granted settlement, and most of those qualified under the previous Government's rules.
One or two points were made during the debate, upon which I believe your Lordships would want me to spend only a moment. One of the many charges
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which the noble Lord, Lord Mishcon, levelled at the new rules was that they distinguish between men and women. Other speakers said that they are sex discriminatory. I must accept that they do distinguish, but to call it "stooping to the depths", as did the noble Lord, Lord Hatch of Lusby, seems to me to lose touch with all common sense.
There is, after all, a notable difference, and it is an economic difference, and there is nothing wrong in my honourable friend referring to it. It is an economic difference between heads of households and their dependants. Some of your Lordships may regret it, but all of us must recognise the fact that in our society the head of the household—by which I mean the principal breadwinner—is still more likely to be a man than a woman. In the society of the Indian subcontinent from where the vast majority of those applicants will come, it is infinitely more so. The pressing reason I advance, therefore, and it is made infinitely more pressing by our present uncomfortable level of unemployment, is that we simply cannot afford to let an indefinite number of breadwinners into this country at this time and not expect that to stir up anxiety.
It has also been suggested that, because the rules restrict the right to bring in a husband to women who are British citizens, they are in some way racially discriminatory. That is not so. The rules give precisely the same right to all British citizen women, irrespective of their racial origin. To the noble Lord, Lord Chitnis, I will say merely that about 85 per cent. of the men who are specifically admitted for marriage into this country are in fact from the Indian subcontinent.
In view of the hour, I will write to the remainder of your Lordships to whom I have not replied. I will conclude merely by saying that we shall continue, as now, to keep a close watch on immigration trends. Any Government know that they must be prepared to face unexpected developments in relation to immigration, and this makes it particularly important to monitor developments closely. Immigration policy will be subject to continuous re-examination in the light of changing circumstances, in order to achieve our objective—which is strict control; strict control in the interests of the British people as a whole. When I speak of "British people" I make no distinction as regards their race, their colour, their origin or indeed the several kingdoms, et cetera, of which this country is made up. I mean the whole of our community. If we are to develop into the racially diverse and yet harmonious future that we look for, and within that to remain strong and without great pressures and divisiveness within us, then immigration does have to be controlled.
There will always be difficult cases at the margin. We have looked at those this evening. Some of your Lordships are not content with what we have done. I believe that it is right and I do not believe that it is immoral, anti-social, anti-family or sexist. I think it is preserving a viable and attractive future for the whole British people.
Lord Hatch of Lusby: My Lords, before the noble Lord the Minister sits down, is he aware that during his peroration he made a Freudian slip, when instead of referring to "immigration" he referred to "Commonwealth

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immigration"? Does this not bear out what we have been saying from these Benches; that the rules are designed on a racial basis? Perhaps it would have been more accurate if the noble Lord had referred to "New Commonwealth immigration". These are not immigration rules for the Commonwealth; they are immigration rules. May I ask the noble Lord whether he will—
Lord Elton: My Lords, with the leave of the House, I had sat down. It is customary to make an interjection but not a speech. The noble Lord asked me if I was aware that I had referred to "Commonwealth immigration"? I am not aware that I referred to it in any sense in which it was not acceptable. If it was a slip—and I know not whether it was Freudian—then if
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the noble Lord seeks to prove a point, I think he wants something stronger on which to base his proof.
Lord Hatch of Lusby: My Lords—
Lord Elton: I do not intend to give way again, my Lords. If the noble Lord wishes to speak again, it will have to be in another debate.
Lord Mishcon: My Lords, I am most grateful to all noble Lords and to the right reverend Prelate who participated in this debate. My Motion called for Papers. I have an idea that if they were to be delivered, they would be so embarrassing to the Government that I wish to show the mercy they have not shown in this matter and beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

The Commission on Energy and the Environment
9.55 p.m.
Lord Nathan Lord Nathan rose to ask Her Majesty's Government whether they have any intention of reactivating the Commission on Energy and the Environment presently in abeyance, and if so, when.
The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. The short history of the Commission on Energy and the Environment can be briefly stated. Its origin lies in the 6th Report of the Royal Commission on Environmental Pollution, Nuclear Power and the Environment (Cmd. 6618), which saw the need for an independent high-level body to provide advice on energy strategy, taking account of ecomonic, social, technical and environmental considerations.
The commission was established administratively as a standing commission, appointments being made jointly by the Secretaries of State for Energy and the Environment in consultation with the Secretaries of State for Scotland and Wales. The announcement was made in another place by the Secretary of State for the Environment on 2nd March 1978, On 9th July 1981, the day after completion of the commission's report on Coal and the Environment but before its publication, the Secretary of State for the Environment announced in another place that it had been decided to allow the commission to fall into abeyance. He said that their report, together with the 6th Report of the Royal Commission on Environmental Pollution, Nuclear Power and the Environment would provide the Government with comprehensive and authoritative surveys covering the major areas of interaction between energy policy and the environment. He went on to say that the Government would reconstitute the body if it proved necessary. So it lies presently in abeyance, and, as I understand, has no members because the periods of appointment have expired.
The position subsequently became less clear when there appeared in Hansard for 26th January 1982, in a Written Answer at columns 299 and 300, among a list of bodies abolished or reduced the name of the commission against which appears the decision to wind up with the date when implemented, July 1981. And again, in Hansard on 19th January 1982, in a Written Answer at columns 223 and 4, the same entry appears. Perhaps the noble Lord the Minister, in his reply, will say whether the original announcement of 9th July 1981—that the commission is in abeyance—or that in the subsequent Written Answers, that it had in July 1981 been wound up, is correct. If the commission is in abeyance, is this a terminal sleep prior to death or is it just a temporary respite from labour? Whichever answer is correct—and we shall much look forward to hearing it—the country has suffered a misfortune.
I became interested in the idea of such a commission some 10 years ago, just before the oil crisis broke, in connection with a study of energy and the environment by a group of which I was chairman to which that crisis gave added urgency and relevance. In the
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past 10 years great strides have been made in integrating environmental factors into all sorts of development from the earliest stages of planning. The proposal of a commission made all those years ago was primarily to achieve that objective in the context of energy policy.
The implementation of energy policy requires longer lead times than almost any other industrial enterprise. Time is measured not in years but in decades. For instance, if a decision is ultimately taken to proceed with the PWR power station now under inquiry at Sizewell, it will be contributing to electricity supply sometime in the 1990s and onward, and not at all in the 1980s. The same time-scale applies in relation to opening up coalfields and oilfields under the sea. The technology available now is the basis of a decision to take effect some 10 years hence, and the environmental consequences envisaged now will arise then.
This enormous lead time means that somebody must be charged with the responsibility for working out the options available in relation to energy policy over a long span of time. The target time for a study made now must be the turn of the century and later. This is of course what the noble Lord, Lord Flowers, did in his monumental report on Coal and the Environment.
But it is not sufficient for the commission to be called upon from time to time to produce a monumental and authoritative report on some major issue. There needs to be constant reassessment, in the light of technology as it develops, of the direction in which it may be desirable and practicable to move. Developments may open up new options not dreamt of when the original major report was made. A report such as Coal and the Environment is like a snapshot in time. Constant review and reassessment of the conclusions reached and the options open need to be made. So it is with the environment, too. The environment and attitudes to the environment have changed enormously over the past 50 years, and particularly in the last 10, and are likely to continue to do so. What was acceptable 50 years ago would not be acceptable now.
The environment of which I speak is not only that affected by pollution but also, for instance, intrusion on the coastline or the landscape by development. These changing attitudes to the environment have to be considered in relation to options open in the context of energy policy and may materially affect that policy. On this ground also, therefore, it is important that the commission should keep constantly under review the proposals it has put forward with a view to ensuring that they continue to be environmentally acceptable. But I envisage that the commission would not confine itself within even these broad boundaries. It would also have to consider, in relation to an energy strategy, the economic, social and technical implications, including the industrial back-up required and the consequences of providing it.
But no energy strategy has much to do with reality unless some assessment is made of the total energy required and the different sources best adapted to meet different needs. For instance, electricity produced by one or other prime source of energy is best suited for certain purposes alone, such as lighting and the

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operation of electronic apparatus and electric machinery. It is, however, notoriously inefficient in providing space heating. But the amount of space heating required greatly depends on the thermal efficiency of the buildings to be heated. Since space heating absorbs a high proportion of all energy used, the potential for saving energy there vitally affects the total energy required to be produced. The whole question of energy conservation is, therefore, inherent in the development of an energy strategy. Likewise in that context, the best source of heat has to be considered and the best means of providing it. That is a subject of great complexity and of great importance and is one to which the Commission on Energy and the Environment contemplated devoting itself in its next study, as reported in the report Coal and the Environment at paragraph 3.41.
Of course, the House of Commons Select Committee on Energy, in its 5th Report for the Session 1981–82, produced a valuable report on energy conservation in buildings. But this whole field is ripe—over-ripe—for a major study by such a body as the commission.
The publication of the commission's reports would have the effect, as indeed it has in the case of the one which it has published, of informing the public generally, Members of Parliament and Government, and they should, as this one has, promote debate within and outside Parliament so that judgment exercised by Government in determining policy should be based on the best available information which should be generally available.
The work of the commission, I suggest, would help to remedy the lack of continuity in past energy policy and enable economic, industrial, social and environmental subjects which are national problems to be considered within a national agency; and it would enable them to be brought into account in the formulation of energy strategy rather than subsequently, when they may be insoluble and frustrate that strategy.
The Inquiry at Sizewell presently being conducted provides an example of a difficulty which is inherent in our planning procedures. Two quite different matters are really under consideration there. First, there is the question of whether we really need electricity generating capacity; and, if so, whether that should be provided by nuclear power and what type of nuclear reactor is appropriate. And, secondly, the question, which is specific to the site selected, as to whether the nuclear power station should be built there. The first series of questions are of a national character upon which the commission's views would be immensely valuable and, if contained in a published report, could establish many of the facts and clarify the options open. In this way the commission would be carrying out one of its most important functions of providing information and educating the public. This is of quite special importance in relation to energy policy because the production and distribution of usable energy has such widespread and important implications in so many fields.
The public is not now ready to accept the decision of Government on matters of this importance unless it is
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provided with information from an independent source upon which it itself can reach a judgment or at least understand the factors involved and the options available. The commission would provide that independent source of information.
The crucial importance of energy supplies to the nation, the diversity of interests involved in their development and the lack of co-ordination of these, lead inevitably to the necessity for a standing commission. This is no less true now than it was when the Royal Commission on Environmental Pollution made their recommendation in the sixth report or when the commission was created. Indeed, 10 years ago, when we were considering energy and the environment, we were ourselves impelled to that conclusion.
The commission has died not with a bang, but with a whimper. An urgent decision requires to be made to revive it and give it new vigour. I very much hope that in answering this Unstarred Question the noble Lord the Minister will be able to say that that is what he will do.
10.8 p.m.
Lord Tanlaw: My Lords, we are grateful from these Benches to the noble Lord, Lord Nathan, for drawing the attention of your Lordships' House to the subject of this Unstarred Question. Certainly I think that a commission on energy and the environment as a monitor of what we are doing in the energy field can only be beneficial. The only question I have is as to whether this is the right vehicle for monitoring the principles upon which the noble Lord bases his intervention.
I wondered whether the noble Lord, Lord Nathan, had read the Atkins Report when he made his reference to space heating. I should like to feel that combined heat and power were very much at the back of his mind when he did that. I see a role for electricity through combined heat and power and district heating, in attacking the space heating market in the year 2000 when presumably gas will be too highly priced for this purpose.
My intervention from these Benches tonight is to say only one thing and to do that very briefly. As chairman of the parliamentary group on alternative energy strategies, one would like perhaps to see a body similar to, or the re-emergence of, a standing commission on energy and the environment take a look at alternative energy strategies. Coal has been covered in great depth by the report of the noble Lord, Lord Flowers, and nuclear power and conservation have been dealt with by Government committees in considerable depth. What is missing at this stage is investigation into the role of alternative energy strategies and how it affects the citizen and the law.
New types of passive energy are now being taken much more seriously and in a practical way. If that is the case, it will impinge on the environment and on our society. Let us take as an example solar heating or the photo-voltaic panels which will now be available in quantity and at a reasonable price on the market. Many householders may wish to put these on their roofs. This presumably entitles them to access to sunlight. What happens, for instance, if a large building goes up and blocks the sunlight onto the roof

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of the building of the household? This is not covered in the law of ancient lights or any other law. The legal profession will have to look into what are the rights of those householders who wish to put up photo-voltaic cells or solar heating. Perhaps there is nobody better qualified than the noble Lord, Lord Nathan, to advise us on the law here. What are the legal rights of such a householder, and what are the rights of a developer who wishes to put up a large building which will then cast a shadow over the householder who has a solar device on his roof?
There are other points to consider about windmills in the environment. Although they are a passive form of energy production, they impose upon the environment, and in some cases could cause visual pollution. I believe that they may possibly create television interference. There could be occasions such as happened recently in Somerset. When an application was made to a planning board to put a windmill on the top of a hill, the planning board agreed that the windmill should be put up not on the top of the hill but in the valley below, in order that it should not detract from the view. We are going to get strange decisions of that kind for these new alternative forms of energy.
There is the question of wave power devices. I am not sure whether the law fully covers who is responsible, if such devices become a regular feature of our foreshores, if they break loose from their moorings and affect marine life. We have to look into these things if alternative energy sources are to be a practical part of our life in the energy field. There is the fact of water power. The law has already changed to allow those who wish to put water-wheels in a river so that in fact this is no contravention of the water boards' rules and regulations. But, if too many water turbines go in a river and reduce its flow, is this something that is socially, or legally, acceptable to those who live downstream?
There are a number of other areas on which the commission could investigate and help being a little nearer to reality these devices which people consider will only have a place in our environment many years ahead. That is not the case. Those speakers who have given addresses to PARIGAES, as it is called, to well-attended audiences, are beginning to show that alternative energy is going to become part of our life, and yet I am not sure that the law, or society, is ready to accept these devices. If they are to play a part in the energy equation, then perhaps it is essential that a commission such as the one described by the noble Lord, Lord Nathan, should use this as a subject to benefit all those who are interested in the energy scene.
I rather welcome this Unstarred Question by the noble Lord. I disagree with some of the points that he has made, but, on balance, a commission on energy and the environment could have a place other than that which it is in at the moment—for it is in abeyance. It should be brought to life and given something to do, and I have given one area in which it could be of benefit to society.
10.15 p.m.
Baroness White: My Lords. I intervene briefly in this short discussion in support, in particular, of the
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noble Lords, Lord Nathan and Lord Flowers, because Lord Nathan was himself the chairman of the pioneer inquiry into the subject of energy and the environment which produced a remarkable and impressive report which came out, as he remarked, nearly 10 years ago, in 1974. That set a large number of people thinking on the matter, much more profoundly than they had ever done before.
It was a personal privilege for me to be a member of the Royal Commission on Environmental Pollution during the time when Lord Flowers was its chairman, when we considered nuclear energy. I realised how fortunate society had been that he was asked to be chairman of the new Commission on Energy and the Environment. Anyone who sat under the chairmanship of the noble Lord, Lord Flowers, will recognise that he is one of the best chairmen for a subject of this kind that one could find. Apart from that, the Sixth Report of the Royal Commission on Environmental Pollution, which studied nuclear energy, is now itself nearly seven years old. In any case, the major subject of our investigation then, which was the fast breeder reactor and its possible consequencies, has not yet been as far developed as possibly we then thought it might be.
I will not comment beyond a sentence or two about the way in which the Commission on Energy and the Environment was disposed of, if it has been disposed of. Most of us were struck by the discourtesy, which was extreme even for the Department of the Environment, which has a very poor reputation so far as courtesy is concerned to people serving on voluntary bodies. I speak more particularly of members of the councils for national parks; people have been virtually dismissed without their knowledge, not knowing whether or not it was the last meeting they were attending. The way in which this was done was nothing of which that department could be proud.
We have never really been told what is the attitude of the Government. As I understand it, the Government were not enamoured of the proposition in the report Coal and the Environment, yet the proposition, it would seem to me, was one of considerable importance to the public interest because, in essence, it was suggested that the next area of investigation should be whether the balance of investment between energy supply and energy efficiency was right. That is a subject in which I should have thought the public interest was closely involved. It went possibly beyond the terms of reference of the commission, in so far as it was clearly something which should go well beyond a narrow interpretation of the environment. Possibly it was the fact that the commission was intended to be concerned primarily with the environment which was the difficulty the Government found. But that surely could easily have been remedied by extending the terms of reference.
One can only assume that the Government imagine that the public are entirely contented with the present state of discussion on energy policy and, in particular, on the comparisons which the intelligent lay person endeavours to make between the desirability, efficacy and possible hazards of different forms of energy. It is extremely difficult for the lay person to make a judgment between the claims that are put forward by the protagonists of the different kinds of energy which

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are available. For example, anyone who has had the pleasure of listening to Sir Walter Marshall giving evidence would be astonished if he became a protagonist for anything other than nuclear energy.
The noble Lord, Lord Tanlaw, mentioned what is commonly called alternative energy. A number of possible forms of securing benign forms of energy, as they are apt to be called, are less fashionable today than they were seven or eight years ago. But few of us are in a position to make intelligent comparisons. In other words, it would appear to me that the question to which the commission wished to address itself was an entirely proper one; namely, the question of the balance of investment, and I would have hoped that it would have been the balance of investment, between not only energy production and energy use, but also the different forms of energy which are available to us. I think that the noble Lord, Lord Nathan, was entirely correct in referring to the present inquiry proceeding at Sizewell. Plainly that will be confined to particular questions of nuclear power.
But there are other possibilities. For example—and I have given the noble Lord, Lord Skelmersdale, notice of this point—some of us should be very much interested to know whether the Government have any intention whatever of pursuing the suggestions made in the report on the Severn barrage, which was published some time back, by the committee under the chairmanship of Sir Hermann Bondi. It did not make positive recommendations, but it investigated in some depth yet another source of energy—hydroelectricity from what is possibly one of the best estuaries in the world for that particular purpose. However, the committee suggested that before firm decisions could be taken further, investigation, in particular environmental investigation, was necessary and that it should be set in train forthwith. We have heard no more about what is to happen on this front. We understand that some private persons—at least one consortium—are interested in the scheme; and now, as anyone who read The Times the other day will have noticed, there is apparently strong necessity for proceeding with the construction of an alternative crossing of the River Severn—a new Severn Bridge, because the present one is collapsing. Those two things are not directly interconnected, but obviously one is germane to the other, and if investigations of any kind into the sedimentation of the estuary and so on take place, the sooner they are started, the better.
But we are left simply in limbo on all these matters, and it is for that reason in particular that I am especially grateful to the noble Lord, Lord Nathan, for having raised this Question, not only out of regard for the Commission on Energy and the Environment in particular, but also out of concern for the public interest in a very complex area, where informed, reliable and objective guidance is greatly needed.
10.23 p.m.
Lord Flowers: My Lords, as former chairman of the Commission on Energy and the Environment, I am particularly grateful to the noble Lord, Lord Nathan, for putting his Question. I also greatly appreciate the kind words that have been uttered tonight about the work of the commission and, in the case of myself, by
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the noble Baroness in particular. I shall, however, be brief lest it be thought that I wail at my own wake. I should just like to put right a few matters of fact, if I may.
When our magnum opus, our report on Coal and the Environment, was nearing completion, I asked to see Ministers to discuss the future of the commission. The Secretary of State for Energy, then Mr David Howell, and the Minister of State at the Department of the Environment, then Mr Tom King, received me very courteously, and for about an hour we discussed what the commission might do next if it were to remain in existence. I told them, first, that in any case I was myself unable to continue as chairman because of other commitments. I should not like there to be any misunderstanding about that. All members of the commission, including myself, had served out their full term of three years, and the staff were being required for other duties by their parent departments. There was never any question that with a new chairman, new members and new staff, we were discussing in essence the appointment of a new commission, albeit with the same title and, presumably, with the same broad terms of reference; namely,
"To advise on the interaction between energy policy and the environment".
That being said, however, I told the Ministers that we thought that there was a good case for the commission to be continued in order to investigate those aspects of energy policy which had serious potential implications for the environment, and vice versa—for it is a two-way matter; some environmental requirements (for example, lead-free petrol) cost energy. Moreover, I reminded them that in March 1978 the Energy Council, that curious creation of Mr Tony Benn, had been abolished—to nobody's surprise, to be sure; but with the unfortunate result that there was no independent body concerned with energy policy in the round. I thought that we might be able to deal rather effectively with some of the more general problems with which the Energy Council had been presented.
The particular proposal that I put to Ministers was the one eventually spelt out in our report, to which the noble Lord, Lord Nathan, referred, and, had the Government agreed, it would have been the next major subject of inquiry for the commission. In paragraph 3.41 of Coal and the Environment we said:
"We see considerable merit in a major study evaluating the risks inherent in a supply-orientated policy compared with a policy emphasising efficiency in energy use. Such a study would need to encompass, inter alia, the implications for the fuel mix of energy pricing policy, oil and gas depletion policy and high and low electrification. It would also examine the environmental impacts of energy conservation, not all of which are necessarily advantageous".
My noble friend Lord Hunt has asked me to say that this proposal was greeted with enthusiasm by the Council for the Protection of Rural England in spite of some reservations they had about our coal report. It would, of course, also have involved study of combined heat and power, as the noble Lord, Lord Tanlaw, would have wished. It was eventually decided, and announced in the most courteous terms, that neither this nor any other subject within our terms of reference seemed important enough to justify keeping in being a high-level body of the sort the Government were kind enough to say that we were. So we fell into

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abeyance with the publication of Coal and the Environment; and I am a bit sorry.
As the noble Lord, Lord Nathan, has explained, the essence of our work (which has now been lost) was to bring together in genuine partnership people from different Departments of State—principally Energy and Environment, but others, too—and from different backgrounds to consider the very difficult problems of actual or potential conflict of interest and to try to find acceptable solutions. We sought a broad consensus between all the many interests involved in environmental debate about energy supply and use. Whether we (or, rather, our successors) would have succeeded in the new task, I do not know; but I think that our coal report is some indication of what might at least have been attempted in the still broader field of energy conservation.
The coal report was completed in July 1981. Since then I have become quite convinced that the subject proposed for the next inquiry was a good one. I hope that your Lordships will soon receive a report of the European Communities Committee dealing with the rational use of energy, to use the European phrase. In the course of the investigation, witness after witness volunteered or agreed how important would be a study in depth of the desirable balance between investment in energy supply. In the months following publication of the local report, the Department of Energy had already moved some way towards meeting us. There had been a change in the pattern of membership of the Advisory Council on Energy Conservation to bring in more industrial experience. The Armitage-Norton Group of management consultants had been commissioned to report on investment by industry in energy conservation; Rayner scrutiny had been announced to see whether Government involvement in energy conservation could be better organised. I believe that the Department of Energy has itself made a recent submission on this subject to the Sizewell inquiry—based on what real evidence I cannot imagine. Apart from that (and I have not seen the submission myself) there is no way of telling whether the breadth characteristic of the Commission on Energy and the Environment will be displayed by these various bodies because so far their findings have not been revealed. Perhaps the noble Lord the Minister will be kind enough to indicate when he expects them to be published. When we eventually see them we may be better able to judge whether Ministers were right to allow the commission to fall into abeyance.
I am glad that it was the noble Lord, Lord Nathan, who put this Question tonight because it was in his own report Energy and the Environment, published in 1974 on behalf of the Committee for Environmental Conservation, the Royal Society of Arts and the Institute of Fuel, and to which he has referred, as did also the noble Baroness, Lady White, that the noble Lord wrote:
"A policy for the development of energy resources must be created in the context of its environmental and social consequences … Protection of the environment cannot be separated from the other objects of a policy for energy; the present skirmishing between environmental interests and the energy industry benefits neither side …".
Those were the words which inspired the Commission on Energy and the Environment to go about its work
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in the way that it did. No other official body so far has responded to that inspiration. It will be a pity if the rational consensus which the noble Lord advocated, and we tried to find, once more gives way to ill-considered skirmishing.
10.31 p.m.
Lord Energlyn: My Lords, I should like to thank the noble Lord, Lord Kirkhill, for allowing me to intervene. I do so because I feel very strongly in support of Lord Nathan's Question. I endorse everything that the noble Baroness has said in referring to the noble Lord, Lord Flowers. His remarks enforce in my mind the fact that I would prefer to see this subject dealt with by a commission, if only for continuity, rather than by some kind of Select Committee.
It has a more definitive approach to any of the problems, but for me it would be a body to which one could take new ideas and they would be received by people who can give them expert judgment and convey good advice to the Ministers concerned. If I may at this late hour illustrate my remarks by three examples: the noble Baroness referred to the Severn estuary. There we have some rival considerations as to whether you make a barrage across the Severn or whether you harness the estuaries like the Neath estuary. These are rival considerations. If one was able to go to a commission of this kind, the people who are promoting these concepts would be told: "No, you are wasting your time", or, "Please go on". A Select Committee could not do that, but a commission could.
The second example is very much related to the commission's work on coal. There are two major breakthroughs in the use of coal to which I have been privy. The first is that it has now been proved in Australia—and I am closely connected with the experimental work—that if you literally pour powdered coal on a hot bed of sand it automatically distills off petroleum. This is a major breakthrough. My Lords, where do you place such an idea? If we took it to a Select Committee, we would waffle around it for days, even months and years. But a commission would say "No, you put it there or you put it here".
Even more dramatic—and I referred to this earlier this evening—is the production of direct current electricity from coal gas. This is a major breakthrough in Russia. Again, if one was looking for a platform from which to project this into Government a commission would be the obvious body. With those few remarks, I strongly support my noble friend Lord Nathan.
10.35 p.m.
Lord Kirkhill: My Lords, we must all, I think, be indebted to the noble Lord, Lord Nathan, for raising this Question in your Lordships' House this evening. In my view, it is worth recalling the terms of reference of the commission appointed by the then Government in March 1978 under the distinguished chairmanship of the noble Lord, Lord Flowers. These terms were to advise on the interaction between energy policy and the environment. The committee therefore would have to consider the environmental implications,

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nationally and globally, arising from the production and the use in the United Kingdom of coal, oil nuclear power, gas, electricity and renewable sources. The commission would be concerned with pollution, examining the interface between energy policies and led-use planning and the implications of such policies for the natural world and the urban environment, all of which suggests a fairly wide remit, as your Lordships might agree. Incidentally, the origins of the commission, as the noble Lord, Lord Nathan, has just mentioned, were indicated in the Sixth Report of the Royal Commission on environmental pollution, nuclear power and the environment, which gave a firm indicator of the need for a separate body to advise specifically on the interaction between energy policy and the environment.
It was against such a background and at a time when this island is hopelessly polluted from so many sources that on 9th July 1981 the then Secretary of State for the Environment announced that the commission would be put into abeyance. Just after that announcement, the commission published its report Coal and the Environment, to which the long-awaited Government response must not only now be considered to be due but, depending upon one's view, very much overdue.
When calling a halt to the standing commission's activities, the then Secretary of State for the Environment, Mr. Heseltine, said:
"We hope that the new Parliamentary Select Committees will play an important part in the development of appropriate strategies and in the discussion of these issues generally."
In fact the two Select Committees involved, Energy and Environment, have not, since their inception, examined any topic which could hitherto have come under the standing commission's remit. Thus the issues which were considered sufficiently important to warrant a standing commission in 1978 have now been superseded by the need to eliminate quangos.
If the Government no longer need the standing commission to provide authoritative advice on the interaction of energy policies and the environment, is it because the advice is no longer necessary or because it is now coming from another source? The standing commission was also expected to:
"examine the environment side or renewable energy sources".
It is therefore an interesting comment on the Government's commitment to renewable energy sources that, having considered the issue of coal, they announced:
"There is no other single area of such significance as to justify at present exhaustive examination by a group of the Commission's standing".
That was Mr. Heseltine replying in another place on 9th July 1981 at col. 215 of Hansard.
Of course, I realise that the noble Lord, Lord Skelmersdale, in his response is likely to say that all will be revealed—at least, probably not all, but all that the Government wish to reveal—when they make public their considered views. But we have been waiting since the autumn of 1981 for the Government's views on the coal study report. Can we now be told if the period of silence is about to end?
10.40 p.m.
Lord Skelmersdale: My Lords, I am most grateful to the noble Lord, Lord Nathan, for asking this Question. That so much of this brief debate has been well-informed is due in no small measure to the efforts of the noble Lord himself. As the noble Baroness, Lady White, has made clear, there is widespread interest in this subject, following almost a decade of intense debate. The noble Lord, Lord Nathan, has gathered about him a whole galaxy of noble Lords who are both knowledgeable and, if I dare say so, impressive in their experience and expertise. Their views will, of course, continue to be very carefully considered by the Government.
The noble Lord's working party's report on Energy and the Environment, as we have been reminded this evening, published in 1974, when concern for the security of our energy supplies was first seriously expressed, initiated a lively debate and made a number of constructive recommendations. The noble Lord has since then continued to play an important part in many subsequent discussions, including the debates in this House. As a current member of the Royal Commission on Environmental Pollution, he is well-placed to continue providing the Government with his valued advice in this important area. I most certainly take his point about long lead times for the energy-producing industry. We will come to that, perhaps, in a minute.
Perhaps I could start by reminding the House, as the noble Lord has done, of the origins of the commission and the work it had completed before the Government announced, in July 1981, their intention to put the commission into abeyance. I must obviously repeat that word: it was, and it is, "in abeyance". No decision has been made to consign it to the other world, as the noble Lord might have said. Irrespective of the lists that he quoted from Hansard, the point has always been made that if there was a pressing need then the commission would be reactivated.
The noble Lord also made the point that there was a need for an independent, high-level body to advise on energy and environmental issues. That was raised by the noble Lord's working party, and was subsequently taken up in the 6th Report of the Royal Commission on Environmental Pollution, Nuclear Power and the Environment. In their response to that report, the Government recognised this need, and the Commission for Energy and the Environment was duly appointed in March 1978 by the then Secretaries of State for Energy, the Environment, Scotland and Wales. The suggestion has been made this evening that this immediately caused an embarrassment for the present Government. I can assure the House that this cross-fertilisation between departments is not seen as a bad thing and was no contributory cause to the commission being put into abeyance.
The commission's terms of reference were:
"To advise on the interaction between energy policy and the environment".
The commission itself decided, under the chairmanship of the noble Lord, Lord Flowers, that, in view of the work of the Royal Commission on nuclear power, it would turn its attention to coal. It resolved to make its first major exercise an examination of

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the environmental implications of increased coal production and use. The commission's report Coal and the Environment was published, as we have heard, in September 1981. It has generated a good deal of discussion, and has led to debates both in this House and in another place.
I turn now to the reasons for allowing the commission to fall into abeyance on completion of that study. As my right honourable friend the Secretary of State for the Environment made clear in July 1981, this decision was taken as part of the Government's continuing review of public and advisory bodies. It was felt that the Government had available to them up-to-date, comprehensive and authoritative analyses of the two main areas of interaction between energy and environmental considerations—nuclear power (from the Royal Commission on Environmental Pollution) and coal (from the commission we are discussing this evening). At the same time the Royal Commission on Environmental Pollution were also examining the environmental implications arising from oil exploration and production at sea. No other single area of such significance seemed to justify extensive analysis by a group of the standing of the Commission on Energy and the Environment. Nevertheless, the Government stressed then, as they have done since, that they would continue to look for advice on specific related issues to the Royal Commission and to the Advisory Council on Energy conservation, and would, as the noble Lord, Lord Kirkhill, reminded us, expect the Parliamentary Select Committees on Energy and the Environment to have an important role in relation to energy and environment questions. The Government believe that these arguments still apply.
The noble Baroness, Lady White, almost went as far as accusing the Government of complacency in the matter of the public's understanding of energy facts and policy. We are not complacent, and my comments on Sizewell, which I shall make in a few minutes time, will, of course, refer to this. The noble Lord, Lord Kirkhill, said that the question is, as I had intended to say: which body should undertake the work that we are told from time to time should be done? We do not think it is right for us to reactivate the commission at the present time. The noble Lord, Lord Flowers, has at least given us the benefit of the doubt and said that he will be better able to judge when the Government's answer to Coal and the Environment is published. It is in an advanced stage of preparation, and will be published very shortly. As I said, we therefore see no case at present for reconstituting this commission, but will continue to keep the position under review.
As some noble Lords have pointed out, the commission themselves indicated in the now famous paragraph 3.41 of the report on coal that, had they not been put into abeyance, they would have wished to carry out a study comparing the risks of an energy policy orientated towards supply with those of a policy emphasising energy efficiency. But, in reality, there is no simple choice between investing in energy production and investing in conservation. For example, energy supply investments can themselves be important for conservation in replacing old plant with new, more efficient capacity.
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Action on both supply and conservation are needed, and both are being undertaken. The Government's view is that economic energy pricing, together with the provision of the best available information to the consumer, offers the best way to achieve an efficient allocation of resources in the energy sector.
Turning back to the Statement last summer of my right honourable friend the former Secretary of State for the Environment, it is not, of course, for either me or the Government to find subjects for Select Committees of either House to investigate. But while I take the points made by the noble Lord, Lord Energlyn, I do not myself believe that he is right in every case.
Noble Lords have also rightly emphasised the importance which they attach to public debate on energy and environmental issues, and to improvements in the way in which major energy developments are handled in the town and country planning system. The Commission on Energy and the Environment made a number of recommendations designed to achieve these ends. They included proposals for earlier discussion on the need for individual energy projects, and to make the public inquiry procedures more effective.
As my noble friend Lord Avon said in the debate on the Coal Study in the House last May, the Government are determined to find an acceptable way forward on these issues. We have demonstrated our willingness to explain the basis of current policy and to provide relevant information and analyses. We also accept the need to get more consideration of industries' land requirements into local development plans, in advance of individual projects coming forward for approval. In that way, we might have a better-informed debate about alternative locations and provide more certainty for the industries themselves. Discussions on these matters with the energy industries and with the local authority associations have been cordial and constructive. The Government's response to the Coal Study, which, as I have already said, is due shortly, will indicate the progress that has been made.
The noble Lord, Lord Nathan, mentioned a subject to which I said a few minutes ago I would come; that is, the very wide-ranging remit of the Sizewell inquiry. That inquiry is considering the case for a PWR to be built at Sizewell. All the relevant issues will be considered, including those that the noble Lord mentioned. This also covers the question of the need for another power station at all. But the fact that such an inquiry can in fact take place, without the benefit of the Commission on Energy and the Environment, must mean that the commission is not the only vehicle to advise the Government and the nation on any subject which is currently being examined. The Sixth Report of the Royal Commission on Environmental Pollution on nuclear energy and the Government's response to it provide, of course, a background to many of the issues under consideration at the Sizewell inquiry.
The noble Lord, Lord Flowers, asked about outstanding reports on conservation. I must confess straight away that he has completely "thrown" me regarding the Armitage-Norton Report. I do not know

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of it, or whether it is yet published. I will write to the noble Lord on that point.
As far as the Advisory Council on Energy Conservation is concerned, the next report to the Secretary of State is due at the end of this year. A copy of the Rayner scrutiny was recently sent to the Select Committee on Energy in another place and their response is awaited. The Department of Energy paper on conservation versus supply has been published. It is available from the Department of Energy and it has been sent to the Sizewell inquiry to which, of course, it is peculiarly relevant.
The noble Lord, Lord Tanlaw, mentioned alternative energy and the problems associated with it. Advice on the environmental impact of alternative energy will come in general terms from the Royal Commission on Environmental Pollution or the Department of Energy's Advisory Council on Development which oversees the development programme of alternative energy.
The noble Baroness and one noble Lord—possibly the noble Lord, Lord Energlyn—mentioned the Severn Barrage. Living as I do in that part of the world, it is also of intense interest to me. Following the publication of the report of the Severn Barrage Committee under the chairmanship of Sir Hermann Bondi, the Government invited public comment. Some 70 responses were received from local authorities, environmental bodies, engineers and individuals. The majority of responses were in favour of the barrage and called for further studies. Following this, two official working parties were set up to assess the report and its recommendations. One looked at the energy and economic implications of the scheme and one looked at the environmental and socio-economic aspects. These working parties reported to energy Ministers in May of last year. They are still deciding exactly what they shall do with these reports. However, also in May 1982, a consortium led by Taylor Woodrow, called the Severn Tidal Power Group, came forward with its own proposals. These consisted of a more limited programme of feasibility studies, and if these were propitious the group would build and operate the barrage with private finance. Discussions with this group are continuing. No other definite proposals have been suggested to the Department of Energy from any other source.
Baroness White: My Lords, could the Minister indicate whether this particular consortium were requiring the Government to put their own public resources into the necessary feasibility studies or whether they themselves were going to undertake these, regardless of whether or not there was Government assistance?
Lord Skelmersdale: My Lords, the current plan is that this will be a joint project but, as I say, discussions are still continuing and I am unable to make any definitive announcement at this moment.
I hope it will be clear from what I said earlier that the Government's decision not to reactivate the Commission on Energy and the Environment at present has not been taken lightly. We share your
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Lordships' concern that there should be full consideration given to the environment in energy policy matters. Many of the recommendations made over recent years by the Royal Commission on Environmental Pollution, the Commission on Energy and the Environment, and others, have been accepted by Governments of all parties. These have led to changes in attitudes and in practices that should help to ensure that choices on energy developments are made with full regard to the effects on the environment. There is, of course, always room for improvement. The Government will continue to seek independent advice when and where they consider it to be necessary.

Lloyds Bowmaker Bill [H.L.]

  Parkeston Quay Bill [H.L.]
  The Examiner's Certificates that the further Standing Orders had been complied with were ordered to lie on the Table, and the Bills were committed to Unopposed Bills Committees.
  House adjourned at five minutes before eleven o'clock.

  PASSPORTS AND COMPUTER RECORDS
  PASSPORTS AND COMPUTER RECORDS
  IMMIGRATION AND COMPUTER RECORDS
  IMMIGRATION AND COMPUTER RECORDS
  WANDSWORTH: RUBBISH REMOVAL
  WANDSWORTH: RUBBISH REMOVAL
  CRIMINAL JUSTICE ACT 1982: IMPLEMENTATION
  CRIMINAL JUSTICE ACT 1982: IMPLEMENTATION