Mr. Skinner : I am interested to hear what the hon. Gentleman has to say about the shock to the system and the therapy that he advises will be good for us. How much coal shall we sell when we have had this shock?
Mr. Davies : If we really believe in markets, the answer to the hon. Gentleman's question must be determined not by me or the House, but by the market. Human history shows that those who did not believe in markets ended up paying a high price in economic terms, and, ultimately, in political terms as well. I see that I carry my hon. Friends with me.
I emphasise once again the importance of the principle which is at stake. Therefore, I support both sides of the Government's motion. First, I warmly welcome the first serious moves to try to introduce real competition into these key areas of our economy. Secondly--it follows on naturally--we should be particularly careful, cautious and vigilant about the mechanisms that we put into place to secure such an important aim. The question of how we can achieve our objectives is complex.
I congratulate both the Government and the European Commission on all the work they have put into these documents, which obviously reflect many thousands of hours of competent human consideration. That consideration was not in vain because when we succeed in abolishing nationalistic public procurement in the European Community we shall--
Mr. Cryer rose --
Column 281That labour was not in vain because, when we have got rid of nationalistic public procurement in the European Community, we shall have completed an excellent day's work for employment, for prosperity and for the competitiveness of these important British industries in the future.
Mr. Frank Doran (Aberdeen, South) : This is the first time I have ventured into one of these European debates, and it is obvious that they have their own complexities and intricacies. I shall try to keep my remarks simple so as not to incur the opprobrium that other speakers seem to have provoked.
I have a particular interest in the offshore oil industry which is based and centred in my constituency. There is extreme concern in all parts of the industry, on the part of the operators, the oil producers and the contractors who provide services.
I stress the importance of the offshore industry to us. The Government have received £68 billion in tax and royalties from the North sea in the past 10 years. The oil industry spends about £3 billion a year on goods and services in Britain, so it is crucial that nothing be done to interfere with the smooth running of its operations or to undermine the valuable contribution that British industry has made to this area.
We are developing a technology and expertise in this country which is making us world leaders in the offshore industry. It is important to realise that that industry could be undermined by these proposals. That is certainly the view expressed to me by the people involved in the industry at all levels--the producers, the major companies from around the world which have operations in the North sea, and those who provide the technology.
The opposition that the Paymaster General expressed to the proposals was welcome, but the manner in which he expressed it, and the possibilities of defeating the proposals, did not satisfy me. It does not appear that the Government are doing much to fight the corner of my industry in Aberdeen--
Mr. Charles Kennedy (Ross, Cromarty and Skye) : As the hon. Gentleman is speaking on a subject and to a theme that I very much endorse, may I take this opportunity to say, on behalf of Highlands Fabricators Ltd. in my constituency, of which the corporate planning manager is John Wood-- also the chairman of the United Kingdom Module Constructors Association-- that the company supports the thrust of the hon. Gentleman's comments? I hope that the Minister will seriously consider them.
Mr. Nigel Spearing (Newham, South) : The motion says that the Commission's broad approach should be supported, but the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) and my hon. Friend the Member for Aberdeen, South (Mr. Doran), who know about the offshore oil business, say that something is at stake here. Could the broad approach be modified in the way that the Paymaster General described, or does it imperil the prosperity of the industry?
Most of the larger fields have now been developed, and we are embarking on a phase in which exploration and development costs will increase, possibly dramatically. The finds that the industry will make will be much smaller, and there will have to be intensive research and development into ways of increasing the recovery rates from the fields. High capital and operating costs will be involved in building, developing and operating safely on ever smaller and more marginal fields. All this may be undermined.
The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned what Mr. Ian Wood had said to him. He is a constituent of mine and he has presented me and the Department of Energy with a detailed report on how he views the position. He is the managing director of one of the largest contracting firms in the North sea--an Aberdeen-based, Aberdeen-developed and now international company operating here and in the United States, where it has made some significant acquisitions. It is a tremendous success story for a north-east of Scotland company.
He points out the effects of increased bureaucracy. There is a potential for a hugely increased bureaucracy. The offshore construction industry is entirely dependent for survival on the operating companies letting contracts for their projects. He has given me a step-by-step appraisal of the number of stages involved in contracts, and it is fairly considerable. Most of these contracts are well over £125,000, the limit referred to in the EEC order. As all these stages in the draft directive come into force, at every stage a delay would occur to allow for placing of advertisements and of intent to let a contract. There would be a lengthy tendering period, and after the award of the contract a period to allow for appeals. These are all bureaucratic steps which are unnecessary in what is already a highly competitive industry.
Mr. Wood then talks about the implication for standards. There are two standards in the offshore industry : the American standard and the United Kingdom standard. Over the past 15 to 20 years, through the constant effort of all those concerned in the United Kingdom offshore industry, a great deal of time has been spent in raising standards and quality assurance. This has resulted in a number of British standards being introduced which are considered to be of great value. Where these do not exist, American standards are enforced in the industry throughout the world.
This directive will undermine that process, which has been taking place over the last 15 to 20 years. We shall find that the British standards become less relevant, which would make it much more difficult for our own industry, which has developed its own standards to a very high level, where they are accepted internationally, to compete outside the EEC. That is obviously of considerable concern, particularly to my constituents, looking at when the oil finally runs out.
Column 283We want to encourage the development of a manufacturing and technological industry which can export its expertise to the rest of the world. We do not want to be confined to the European market. Finally, I come to safety. There are real concerns within the industry that the present close attention to safety which has been forced upon the industry, mainly because of the Piper Alpha disaster, is likely to be undermined because of the possibility of lower standards being required because of the extra cost of these particular measures and the implications of taking them through the industry. This represents a serious threat to the wellbeing of one of our most important industries.
I said earlier that I would try to keep my remarks simple. It is a fairly simple issue. Will this industry, which is vital to the future of our country, be supported or not? It strikes me, having listened carefully to what the Paymaster General said, that it will certainly not be supported by this Government.
Mr. Teddy Taylor (Southend, East) : I should like to ask the Minister two questions. In agreeing 100 per cent. with the wise words of my hon. Friend the Member for Stamford and Spalding (Mr. Davies), I should say that the one thing worrying everyone in the House is what indication we have that there is the slightest possibility of this freedom happening. Our experience of the EEC is that we have the most splendid pledges, the most wonderful promises, the greatest visions, but they do not actually happen.
For example, we had a lot of discussion not too long ago about spending controls. We gave money in exchange for them, and we saw a reference in the Court of Auditors' report, but we might as well not have had them, because, despite having an official limit of 3 per cent. on extra spending, the Commission spent 18 per cent. more. However, it did not matter because an accountancy device was found. We find the same on agricultural reform. We are constantly told that things will change. We were told there would be a price freeze which would mean everyone would get a green pound adjustment and surpluses would disappear. I am afraid we are always being told that next year things will get better, and they never do.
If we had genuine free international competition in public purchasing it would be good for us, good for Europe and good for all the countries of the world. What worries me about the EEC is that, instead of getting free trade, we will simply surround our purchasing agencies with a pile of extra bureaucracy.
The Minister is well aware that two institutes have already expressed fears about the many forms to be filled in and the information to be provided, and have said that genuine free trade simply will not happen. That is not simply a silly point. The Minister must be well aware from the sad occasions on which he has had to admit that his hopes have not been realised, that this is probably what will happen.
As I said to the Minister last week on a similar issue, is there any way in which he can adjust these proposals to allow any kind of easy arbitration so that if someone feels that he is being blocked out or is not getting a fair deal he can get redress? My hon. Friends who love the Common
Column 284Market and hope that it will be a great thing must be well aware in their hearts that there will be no free trade but much bureaucracy, many more forms, and that Britain will give some contracts to companies in Europe but that the same will not happen in reverse. The Minister may well think that that will happen, but if he has any doubts about it he should consider what happened today on the question of tobacco. We were told by the Common Market that we would have to put different advertisements on tobacco packets to discourage smoking. The same Common Market sent our Government an official letter saying that we had to cut the tax on cigarettes. The Treasury and the Department of Health had to say that that would mean more cigarette smoking. The Common Market spends £500 million every year to subsidise the tobacco industry and pay for research into how European tobacco can be made more palatable to smokers.
Mr. Aitken : Before my hon. Friend gets carried away by the theme that everything is the same, may I draw to his attention one important change? On 14 November the Government refused to accept an amendment suggesting that the basis on which we were asked to endorse the tobacco products labelling directive was contrary to the single market legal requirements, despite Mr. Speaker's Counsel's recommendation. Despite the refusal by the Under-Secretary of State for Health on that date, today the Secretary of State for Health was in Brussels vigorously opposing the very grounds that his hon. Friend had endorsed. There has been--
Mr. Taylor : Most of us are happy that at last the Government appear to be waking up to the realities of the European situation. We do not know what change in policy might come, but at least we know that there is discussion. That is good, even though it is taking place at half-past 11.
Is there anything that the Minister can do to see that something happens apart from extra costs and extra form filling? We should be worried about this. I urge hon. Members to look at the White Paper on developments in the EEC that we are debating on Thursday to see what has happened to our trade. In 1970 our export-import ratio with Europe was 143--
Mr. Taylor : I am simply trying to say that over that period of 20 years our export-import ratio has gone down from 143 to 72, and that is rather significant for Britain. I hope that we shall not make the same mistake again in these proposals on public purchasing. If we do, we will once again be caught out and will lose. We shall find that our costs will increase because of more form filling and that we will not have the free trade that we want.
What exactly does the Minister mean in relation to article 24? He must be well aware from his visits to America and from the views expressed by American businesses and those in other parts of the world that many people rightly or wrongly suspect that all the 1992 rules are concerned not with free trade and competition but with a
Column 285bit more protectionism. Article 24 is abundantly clear. It says that we can keep out competition if half of it is foreign. I am not quite sure what "foreign" means. Does it mean that we can include EFTA and eastern Europe, the United States and Japan? The Minister must be aware that this is purely a matter of blind protectionism. It is a matter of saying that we may be willing to consider free trade and competition--
Mr. Taylor : I can assure my hon. Friends that as a Conservative I am totally opposed to blind protectionism. I am in favour of free trade, as I hope my hon. Friends are, although I have doubts about my hon. Friend the Member for Harrow, East (Mr. Dykes), who seems to have some strange ideas which are becoming out of date in the party, with all the changes that are taking place. He may have been in the mainstream at one time. He is certainly not now.
May we be told what the Minister proposes to do about all this? With almost everything we do in the EEC we are damaging the Third world, damaging freedom of trade and undermining GATT. Does the Minister intend to propose to the Council that article 24 be deleted, or is he simply saying in his courteous and gentlemanly way that he agrees with my general sentiments? How do the Government intend to ensure that this provision works, and what will they do to prevent its being used as a means not of providing free competition but of discriminating against the rest of the world?
Mr. Nigel Spearing (Newham, South) : The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) asked the Paymaster General in an intervention some procedural questions, to which the right hon. Gentleman appealed to the Chairman of the Scrutiny Committee, asking if it was not a discharge of the responsibilities laid on Government by the resolution of the House of 30 October 1980.
I am glad to say that the letter of that resolution is being carried out by this debate, and therefore--as the Chairman of that Committee--I can give the Paymaster General an affirmative answer to his question. There my function as Chairman of the Committee ceases and henceforward I speak as the hon. Member for Newham, South. While I agree that the letter of the law is being carried out, I am far from satisfied with the way in which the spirit of the law is being carried out.
This and similar debates are limited to an hour and a half, which is not sufficient, given the importance of the topic. Tomorrow night we shall be invited to debate mergers and unless there is a motion down to suspend the rule, we shall have to debate that important issue, about which the Select Committee took evidence from Lord Young for an hour and a half, in one and a half hours.
The Paymaster General will remember from years ago that the hour and a half rule was introduced only in 1951 for this country's secondary legislation, or statutory instruments. We are not tonight debating a piece of secondary legislation deriving from a Government statute. It is a piece of super- primary legislation contained in some 300 pages. This is equivalent, therefore, to a Second
Column 286Reading debate of a Bill of that length. So we are having to compress a debate on important matters of principle into an extremely short time.
The hon. Member for Selly Oak wonders whether we can get rid of all this late-night business and have some daytime debates. That may be possible, but we would have to face up to the fact that we would be taking on double or treble the amount of legislation in a normal parliamentary year.
Mr. Spearing : Very well. That would be about the ratio of importance to time that EEC matters would have to be given, and I think I see the hon. Member for Harrow, East (Mr. Dykes) nodding in agreement.
Mr. Beaumont-Dark : If it meant giving up two or three days a week to debate those issues, the country would be alerted to the fact that we were becoming a glorified parish council in relation to what is happening in Brussels. Better for us to do that than for us to do it by surreptitious means.
Mr. Spearing : I refer the hon. Gentleman to the investigation now taking place by the Select Committee on Procedure. If he thinks that that ratio and time scale is right, whatever the result, he--and other hon. Members who feel the same way--should give evidence to that Committee to that effect. He may be right in that it would have the secondary effect of alerting people to something of which they may not at present be aware.
The matter that we are debating is the subject of two explanatory memoranda from the Government. Earlier this year it came before the Scrutiny Committee and we said that we wanted more information. I have to thank the Paymaster General for producing his second explanatory memorandum, which was signed only on 10 May and sent to the Committee and on which we based a report which is in the Vote Office.
But I have to tell him that are getting into very deep water. Here we have the theory of an open market, flat-table theology, well expressed by the hon. Member for Stamford and Spalding (Mr. Davies), and in order to obtain something that we have had on a national basis throughout Europe before we have 300 pages of legislation, all of which has to be administered and checked and for which new machinery has to be installed. In other words, freedom of competition does not necessarily mean freedom from bureaucracy. That is something that free marketeers and enthusiasts for capital competition on the Government Benches ought to bear in mind, because it is not necessarily possible to have one without the other in every respect and there is a classic case of it in this measure.
Market magic when applied to this area may not produce the expected results because this set of regulations is clearly supplier-oriented. We have already heard from the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) how it will affect the offshore oil industry. How
Column 287do we know that it will not affect many other industries similarly by hog-tying the rights and demands of the purchaser?
The Paymaster General mentioned the CBI evidence. He did not mention, although I think the hon. Member for Southend, East (Mr. Taylor) did, the Institute of Purchasing and Supply. He may have received a memorandum from the institute, but he did not mention it in his speech. It is a very important body because, as I understand it, it represents the corporate interests of the purchasing organisations of public authorities, local government, national Government and publicly funded organisations, as well as private organisations. It represents a huge purchasing power in the nation, and it tells me that this whole organisation is not in favour of the consumer or the corporate interests of the consumer in terms of safety, standardisation and value for money. It should appeal to hon. Members, particularly Government Members, because it is weighted, as I have said, in favour of supplier opportunity and not the convenience of the consumer.
Indeed, if we listened very carefully to the Paymaster General's speech we detected that in the Whitehallese which he trotted out. I would not criticise him personally for that. Why should he, from the Treasury, have to go into the details of the vast range of industries affected by these proposals? Why it has come to the Treasury rather than the DTI I do not know. I would suggest that as a function it would perhaps go more suitably to the DTI because surely the DTI should be more aware of the difficulties that will occur for the purchasing organisation. So I detect from the speech of the Paymaster General that the Government do not really want this at all, for some very good reasons.
I come now to some quotations from the memorandum which the Paymaster General sent not just to the Committee but to the public. I think the newspapers have got it wrong when they say that Government memoranda are not available until the Scrutiny Committee reports ; they are available in the Vote Office. Paragraph 4 says : "Consultation is continuing and will be supplemented over the next few months by a series of briefing meetings with representatives of interested trade associations."
It goes on :
"Many of the principal concerns about the present proposals, however, are shared by both purchasers and suppliers."
So there does not seem to be much enthusiasm in that area. Paragraph 8, "Main implications for purchasers"--the customers, with whom we are all directly or indirectly involved--says :
"They are concerned, however, that the proposals should be amended to reduce very significantly the constraints on good purchasing practice and to limit the administrative burdens that they believe would result".
That needs quite substantial amendment and, as we said in the report of the Scrutiny Committee--and I quote direct from paragraph 25 of the Minister's own memorandum on a matter which has not yet been raised but is of great current significance :
"A particular concern of UK suppliers and contractors has been the provision allowing concessionnaires in this sector to award contracts to associates and affiliates without going to competition. This is believed to give special treatment to a large part of the French water supply industry."
Column 288Does that mean that it would affect those parts of this country's water supply industry owned by French interests? It is clear that it might.
We must conclude on any objective criteria that the proposals will not be much good for this country or for the collective interests of purchasers, and that they will probably be a burden on suppliers. In short, it is something we could well do without. But unfortunately, as the memorandum states, the measure is subject to qualified majority voting in the Council of Ministers. I hope that a sufficient number of other nations share our doubts.
I am informed that other nations are not so well developed in their public purchasing arrangements. If the interests of purchasers in other countries are not so well organised as they are here, their Governments will not have the same doubts that we have.
Although the right hon. Gentleman did not say as much, he pointed to the possibility of the proposals going the way of tobacco--of which we had a dramatic example this very day. In other words, despite the right hon. Gentleman's words, it is possible that we could be outvoted. We return to the merits of the whole matter, on which my views are well known. I will detain the House no longer, except to say that those right hon. and hon. Members who participated in certain debates 10 years ago are entitled to say to the Government, "We told you then. You haven't seen anything yet. Wait until the next lot. It will get worse and worse."
"changes are desirable in the proposed directives to prevent the imposition of unnecessary burdens and constraints."
I am happy that my right hon. Friend the Prime Minister has asked all Ministers to be more alert to such proposals. I am worried, as are all right hon. and hon. Members, and not because we are anti-Common Market. It is not true to say that, because one does not speak up for something to do with the Community, one is somehow violently anti-Europe. I recognise that we must play our part in a Europe of which our country is a part. Nevertheless, more and more right hon. and hon. Members genuinely feel that the bureaucrats in Brussels or in Strasbourg, or wherever they hang out from time to time, are concerned with dragging more and more power into the vacuum of their lives--and with sucking out the life of this country, this Parliament, and our people.
All we ask of the Government and of Ministers is that we should not be presented with anodyne motions. We make that request whether the Minister concerned is my right hon. Friend the Paymaster General or--a latter-day convert--my right hon. and learned Friend the Secretary of State for Health, who went to Europe and fought for this country at long last, even though he lost 11 to one, because my right hon. Friend the Prime Minister told him, "For God's sake, go and do something for Britain" If we vote against such motions, as in this case, and such directives are still adopted, it will serve to alert the public that the powers of this Parliament are ebbing away. We are ultimately elected by British people to represent British interests. There is nothing shameful about standing up for one's country. But if the House is presented with such motions day after day--or should I say, night after late night--we shall in the end become what my right hon. Friend the Member for Old Bexley and Sidcup,
Column 289shamefully, wishes us to be, and have no more power than the governor of a united European state similar to Arkansas or Iowa. I did not come here to be a governor of Arkansas ; I came here to speak for Britain, and what is shameful about that?
I welcome the hon. Member for Wrexham (Dr. Marek) to these debates in apparent succession to the hon. Member for Vauxhall (Mr. Holland). There were occasions when I had doubts as to whether he had arrived at the right ground, in the context of his speech tonight. I am sure that he was playing himself in, but I am sorry that his innings did not last long enough for him to score any runs. He and others raised the question about the Government's support for the motion. The Government's support for the motion rests firmly on the connection between the motion and the single European market, and the Government's determination to achieve the single European market. That is completely separate from some of the other ideas from Brussels which are questioned by the United Kingdom Government. The hon. Gentleman said that we should try to get something right for once. If he re-heads my speech, he will find that the Government's intentions are directed at that purpose. The hon. Gentleman and his hon. Friend the Member for Aberdeen, South (Mr. Doran) mentioned the safety record. He will note that my speech contained specific references to that.
My hon. Friend the Member for Stamford and Spalding (Mr. Davies) concluded by warmly welcoming competition, but said that we should be careful about the mechanisms. I hope that the Government are seeking to do that. The Government have taken the view that the Commission's proposal on upstream oil and gas is not appropriate because of the degree of competition in that industry which the hon. Member for Aberdeen, South mentioned.
Mr. Brooke : It would be mistaken to assume that the Government have not made their position absolutely clear on upstream oil and gas. The argument has been put in Brussels and in discussion with individual member states. I would not want to claim that the Government can take sole credit, but it is significant that the main committee which is involved in the European Parliament has already voted to exclude upstream oil and gas from the directives. My hon. Friend the Member for Southend, East (Mr. Taylor) asked me whether it would work and said that it was surrounded by bureaucracy. He said that I was constantly having to eat words that I had uttered in previous debates. I know that he will be generous enough in future, when some of the Government's predictions come to pass, to acknowledge them.
The amendment to which he spoke, although it was not possible to select it for debate, implied that it was within the Government's power not to approve a proposed directive, but with qualified majority voting the most that we could do would be to vote against the adoption of a common position. The amendment also urges the
Column 290Government to seek clarification on the enforcement of compliance. We would certainly seek more than clarification in that regard. My hon. Friend intervened in my speech and returned to the subject of article 24. The Government policy is to ensure that purchasers are not required to give preference to Community offers. In other words, the situation should remain permissive, but it is necessary to recognise that that means taking on strong forces within the Community which seek to make the Commission's proposal more protectionist. We have taken the view that it is right to allow purchasers to reject offers of third country origin, if they wish. Our objective is to obtain a wider agreement in the GATT that will ensure that suppliers from the Community get a fair chance in the third countries concerned.
The hon. Member for Newham, South (Mr. Spearing) referred to the Institute of Purchasing and Supply. I hope that the institute will acknowledge that the purpose which the Government seek to achieve by our proposals for making the directives more effective is in line with its objectives.
I think that my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was speaking to the general spirit of European debates rather than to the motion. He would almost certainly be supportive of the Government's view that a single European market should be achieved.
I know the difficulties of conducting debates of this sort in one and a half hours after 10 o'clock at night. I express appreciation to the House for the amount of ground that we have been able to cover in a relatively short time.
Question put :--
The House divided : Ayes 97, Noes 17.
Division No. 203] [11.45 pm
Bennett, Nicholas (Pembroke)
Brooke, Rt Hon Peter
Campbell, Menzies (Fife NE)
Carlisle, Kenneth (Lincoln)
Coombs, Anthony (Wyre F'rest)
Coombs, Simon (Swindon)
Cope, Rt Hon John
Currie, Mrs Edwina
Davies, Q. (Stamf'd & Spald'g)
Davis, David (Boothferry)
Fishburn, John Dudley
Griffiths, Peter (Portsmouth N)
Gummer, Rt Hon John Selwyn
Hargreaves, Ken (Hyndburn)
Hicks, Robert (Cornwall SE)
Howarth, G. (Cannock & B'wd)
Howell, Rt Hon David (G'dford)
Hunt, David (Wirral W)
Johnston, Sir Russell
Jones, Gwilym (Cardiff N)
Jopling, Rt Hon Michael
King, Roger (B'ham N'thfield)
Knight, Greg (Derby North)
Maude, Hon Francis
Mayhew, Rt Hon Sir Patrick
Meyer, Sir Anthony
Miller, Sir Hal
Mitchell, Andrew (Gedling)
Nicholson, David (Taunton)