House of Commons Hansard Debates for 28 Nov 1994

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If any hon. Member thinks that there is something eccentric--or, dare I say, Euro-sceptic--about the Court of Auditors' report, I invite him or her to look at the 12th report of the Select Committee of the House of Lords, published on 19 July 1994. I quote from its opening paragraph:

"this is the Select Committee's fourth report since 1989 on fraud and financial irregularity in Community spending. Our 1989 report found that huge sums of Community money were lost each year because of fraud; that financial management was weak; that the failure both to detect fraud and take action when it was detected allowed the fraudsters to continue in business; and that for years there has been no political will to tackle the problem."

That point was made by the previous Chancellor. So much for Mr. David Williamson's assertion that the

"document was not about fraud but about financial management." The sheer effrontery and negativism of the Commission when faced with such a damning report is truly breathtaking. There is not the slightest sign of repentance, nor of any will whatever to deal with the problems so well described and adequately documented in the Court of Auditors' report.

Still more revealing of the Commission's attitude was the announcement on 3 November of the distribution of portfolios among the new Commissioners, due to take office on 1 January 1995. Given the significance of the issues of fraud, waste and common agricultural policy expenditure, one might have expected that the allocation of responsibility for dealing with financial control and fraud would have been placed on the shoulders of one of the senior Commissioners. Did it go to Sir Leon Brittan, Mr. Bangemann, Karel van Miert, Mr. van den Broek or any of the men of some weight in Brussels? Not a bit of it. The responsibilities were given to number 19 in the new pecking order of 21 Commissioners--Mrs. Anita Gradin, the new Swedish Commissioner, whose portfolio includes immigration, home and judicial affairs, relations with the ombudsman and, last of all, financial control and anti-fraud measures. I have no doubt that she is an excellent lady, but inevitably she has no experience whatever of dealing with the long-term budgetary controls and fraud problems of the Community.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich): I hesitate to argue with my right hon. Friend, but the only decent sign among those Commissioners is Anita Gradin, who is not only a very brilliant lady but one who has undertaken a great deal of careful study of the way in which the Commission works, as she did all the negotiating for Sweden. That is the only good thing to be said of the present incoming Commission. I hope that my right hon. Friend will accept that the Commission has inadvertently appointed the one person who can actually do something useful.

Mr. Shore: That would be a very welcome event. It would be a bit like the good fortune that overtook the Government when the pound was forced out of the exchange rate mechanism in the summer of 1992.

Mr. Toby Jessel (Twickenham): Is the right hon. Gentleman aware that I happen to know Mrs. Anita Gradin quite well, as she was chairman of the Council of Europe committee on migration and refugees, of which I was vice- chairman about 10 years ago? She had a very

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compassionate attitude towards refugees and migration problems, but I would not see her as having tremendous rigour in the capacity to root out fraud.

Mr. Shore: We shall see. I do not wish to say anything other than good words about Mrs. Gradin, but she faces a formidable task. There is indeed an Augean stable to be cleaned out in Brussels in this respect.

I come back to the point that I made at the start. Given the arrogance and insolence of the Commission, there is no way in which we shall achieve redress for our grievances about fraud and waste unless we have the resolution to deny supply. There should be no increase in own resources unless and until those reforms are carried out. That is why the Bill should be voted down today.

I now turn to what is being claimed by the proponents of the Bill.

Mr. Quentin Davies: Will the right hon. Gentleman give way?

Mr. Shore: In a moment.

We are debating, as we should, the motion that was tabled by my right hon. Friends for the House to consider and vote on tonight. It is a very modest amendment indeed. It simply says that the Bill "is not an acceptable measure as it increases the United Kingdom's contributions to the European Union"

without first dealing with fraud, waste and the common agricultural policy.

On the merits of the issue, I believe that not one hon. Member in any part of the House would disagree with those sentiments. As we all know, however, Conservative Members are to be ferociously whipped into the No Lobby, with threats of expulsion and deselection directed at dissenters. I deeply regret the fact that the Government have chosen that course and that they have sought to turn the whole issue into a vote of confidence in the Prime Minister.

It is a vast oversimplification to claim, as the Chancellor did today, that the proposals are an international treaty that we are honour bound to approve. In fact, it is not a treaty at all. It is a decision made in the Council of Ministers and it is given treaty form only by the peculiar definitions of the European Communities Act 1972. It would be entirely proper for the House to amend the Bill so that its implementation could be delayed and made dependent on effective reforms to deal with waste and fraud. Under the threat of dissolution, our debates on the Bill will be reduced to what is virtually a farce. That is a misuse of the House of Commons on what is essentially a piece of domestic and financial legislation. As the scope of the European treaties continually widens, we find that an ever-growing area of our national affairs is being subjected to ministerial decision making without prior approval by the House of Commons. That is a threat to our democracy and it is one that all democrats in the House, regardless of party, should resolve to defeat tonight.

5.50 pm

Mr. Peter Brooke (City of London and Westminster, South): Last time I spoke in the House, I was followed by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I do not know how long we can sustain this mutual succession of speeches. The right hon. Gentleman

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confers distinction on every debate in which he takes part, without my necessarily agreeing with much of what he says.

One can have a claim on the attention of the House tonight only if one is brief, for the issues are of straightforward simplicity and the number of one's colleagues who wish to speak is voluminous. The laws of arithmetic, therefore, reinforce the argument for brevity. I want to make just three points this evening, even if that is three times as many as Lloyd George urged on a new Member. Before doing so, I need to say a brief word about the speech of the shadow Chancellor, the hon. Member for Dunfermline, East (Mr. Brown). The hon. Gentleman is a historian and he gave us a history lesson on confidence votes. Into that history lesson he introduced the bizarre scenario of Harold Macmillan delegating the defence of the Government, on a confidence vote on the night of the long knives, to Selwyn Lloyd who had been the principal victim of that event. I realise that the Labour party orders these matters differently, but I believe that the only virtue of the bizarre scenario that the hon. Gentleman painted was that it was a harbinger for the bizarre scenario of his whole speech, in which he argued that a wrecking amendment was not at variance with the Labour party's support for the agreement reached at Edinburgh.

I said that I had three points. The first is that the principle of an international deal entered into by this country should be adhered to. Second Reading is at the level of principle. All of us know that, if the Whips Office did not exist for any length of time, the House would suffer a collective nervous breakdown. One has only to spend an evening here on a series of amendments on a free vote to recognise the force of that. There is a corollary, which is that international statesmanship, or even national statesmanship, is not possible unless it is reinforced by the disciplines of the Whip in this House. Moreover, for all the cries of "perfidious Albion", our allies have long found our word to be reliable. One might, to coin a phrase, say that it is part of the national heritage.

My second point relates to fraud. Of course we all detest fraud. For all of us, our annual reading of the report by the Court of Auditors is always among the gloomiest reading of our year. However, we have long winced at the most obvious solution, which is to give the Commission greater powers to monitor and investigate the actions of member states in the area. We in this country have confidence in our institutions and we do not see why they should be second-guessed by foreigners. I share the misgivings of some of my hon. Friends about ceding that authority, although it may be the price that we have to pay to secure supervision of the affairs of other member states, whose institutions we trust less, and thus to diminish fraud in the Union.

All of us bring our own impedimenta to the House. Before I joined the Government, I chaired a business for five years. That business operated in 12 countries, five of them within the European Union. Having lived twice on the continent, I possessed a certain scepticism about mutual accounting standards and business ethics. In the end, one had to rest, in the private sector, on employing a single firm of international auditors which applied the

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local standards in each country. The universality of that firm was an improvement on doing as we do now and relying on the member states' own standards.

If we wish to sleep at night on the reliability of what is done in our name, further authority may need to be ceded. Opposition Members who ask for that may approach the matter with an underlying sympathy different from that of many of my hon. Friends. I hope that I can appeal successfully to many of my hon. Friends to visit the Court of Auditors, as I have done in the past and as I hope to do again, to get at what would be the most efficacious moves against fraud. That brings me to my third point. Conservative Members who ally themselves with the Labour party on this issue run the risk of ending up with something far worse than they currently oppose. Lady Thatcher's first Administration lost only one vote in this House. I have some reason to recall it as I was the pairing Whip. A number of my hon. Friends decided to oppose an immigration order because they felt it to be insufficiently strong. The Opposition opposed it on the opposite ground--that it was too strong. There was a non-contest on the principle of the order. I remember that event vividly because I brought my right hon. Friend the Member for Witney (Mr. Hurd), now the Foreign Secretary, back from a visit to Nepal for a vote that we won by 270 to nil. The event so struck my right hon. Friend that he put it into his next novel --although, since truth is always stranger than fiction, he made the majority only 17.

The eventual Division was won by the Opposition and some of my hon. Friends. This had the consequence that the Government, as they could not strengthen the proposition without risking losing the support of others of their hon. Friends, had no choice on the arithmetic but to bring in a proposal that was even less satisfactory to their hon. Friends, but which was acceptable to the Opposition. Thus do we sometimes, in the name of principle, give ourselves an outcome that we do not remotely desire.

I support the Bill and I support the negotiating skills in Edinburgh of my right hon. Friends, including my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), which afforded the Bill to us.

Mr. Deputy Speaker (Mr. Michael Morris): I remind the House that Madam Speaker has said that from 6 o'clock speeches shall be no longer than 10 minutes.

5.57 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye): The right hon. Member for City of London and Westminster, South (Mr. Brooke) has a near- impeccable reputation in the House for fair-mindedness, which was on display in his contribution. Being fair-minded, however, he would have to acknowledge that it is not a quality overwhelmingly in evidence in the Cabinet and, in particular, in the Chancellor of the Exchequer. There will be a Division at the end of the debate tonight, although there is broadly based, all-party support for the principles of the Bill, because of the thoroughly cynical decision by the Government to turn the debate away from a motion on Europe and on the Bill, into a vote of confidence in themselves.

The more significant contribution, in terms of Conservative party politics, came from the right hon. Member for Kingston upon Thames (Mr. Lamont), the

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former Chancellor of the Exchequer. He spoke about the way in which we now have Government by threat of collective suicide. He seemed to present himself, in that sense, as some kind of Samaritan who was there to counsel and to help. I am not sure whether the Prime Minister thinks of his former friend and Chancellor as the good Samaritan in all this. It certainly seemed to me that, although the right hon. Gentleman may not yet be a stalking horse, he made more than a little of a stalking speech. The Prime Minister will have to worry about the position in which the former Chancellor is attempting to put himself perhaps not later this week, but in one year's time. The fact that we are at an impasse on the Bill is entirely a reflection of the "Perils of Pauline" style of premiership of the present incumbent. It has to be said, however, that to start with a Bill that, if there were a free vote on its merits in the Lobbies tonight, would command a majority of five to one, with hon. Members from all parties supporting it, and then to manage to turn that into a confidence issue on which the Government's majority will be much smaller speaks volumes for the Government's party management and parliamentary management.

The Chancellor tried to argue on European grounds and it was notable that he turned his attention to the issue of confidence only at the very end of his speech. Indeed, he was not very anxious to take too many interventions on that. That simply reveals or confirms that he knows that this is just a piece of chicanery from the Government. It is a constitutional absurdity to suppose that any Opposition party would express confidence in a Government who are regarded with utter derision and contempt by the voters of this country--as was further revealed by the leaked memorandum from their own deputy chairman only one week ago--particularly when that confidence is vested in Europe, and when the Chancellor of the Exchequer has spent an hour and 10 minutes at the Dispatch Box arguing non-stop and to a standstill with his own Back Benchers, by trooping through the Lobby in support of them. The Government do not have confidence in themselves on this issue and therefore they should not look to the Opposition parties to express any confidence in them either.

The problem throughout, of course, has been one of leadership. When the Prime Minister became leader of his party, he largely got that job because of who he was not. If he hangs on to it, he will hang on to it because of who he is not. That is the fundamental weakness of the Prime Minister's political position--not least where Europe is concerned. Indeed, his first two sound bites laid the seeds of what may well be his future destruction and perhaps even the destruction of his party. He began by saying that he wanted Britain to be at the heart of Europe. There was much talk of Helmut. We do not hear so much about Helmut these days, but it was Helmut this and Helmut that and how we were all together at the heart of Europe. The first major summit was when Helmut came to Chequers and the whole tone had changed from the days of the previous Prime Minister.

Then, of course, the Prime Minister negotiated his opt-outs and his anti- social chapter position at the time of the Maastricht treaty, and he came out with the other very revealing sound bite: "game, set and match". Those two sound bites set beside each other reveal the dilemma of the man himself. He cannot have it both ways. He cannot be at the heart of Europe and then talk of scoring tricks

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and deals over Europe and our supposed partners. There is no consistent leadership from the Prime Minister on the fundamental issue that is dividing his party and enfeebling his

Administration--Europe.

Since the last general election, we have had the initial hesitation over Maastricht and then the trumpeting of the fact that Maastricht should be approved for what it was not going to do, what it did not apply to, and what we had managed to extricate ourselves from. The Prime Minister has sought to play the European card in a negative way and he has left all the positive initiative to his malcontents on the Back Benches who are sceptical, or opposed, or Euro-phobic, or whatever the appropriate expression may be.

Mr. John Biffen (Shropshire, North): Conservatives.

Mr. Kennedy: Conservatives. I am happy to have that

all-encompassing term of abuse applied if that is what the right hon. Gentleman wishes.

In the House, and as a feature of the Government, we now have a party within a party. In the 1980s, Militant Tendency may have been a problem for the Labour party, but it was as nothing compared with the Euro-sceptics on the Conservative Benches. They run their own Whip, they organise their own votes, they have significant editorial endorsement from powerful people in powerful places, they even--essentially--run their own party headquarters. There is a party within a party and that party cannot expect the confidence of the Members of this House when it is internally split from top to bottom on the issue of Europe.

We may, therefore, be about to see a historic split affecting the Conservatives. The Labour party falls out--internally--from time to time, and we have been known to have our own domestic grief from time to time as well. The thing about the Conservatives though, is that when they split, they do it in style. They usually do it for at least a generation. It does not happen very often, but it is fun to be here when it may be happening and to watch it taking place. They are really the Fortnum and Mason of party splits and I pay tribute to that.

Mr. Bernard Jenkin (Colchester, North): Will the hon. Gentleman give way?

Mr. Kennedy: I shall give way to one of the English federalists as opposed to one of the Christian Democrats.

Mr. Jenkin: I take note and I take heart from the fact that the hon. Gentleman is not taking great pleasure in telling his voters why he would vote for more money for the European Community.

Mr. Kennedy: I shall happily go on to express that in a moment, but I felt that it was perhaps of more immediate interest to remind the voters of the internal agonies among Conservative Members, because, after all, they form the Government.

There will be a further implication of the way in which the issue has been turned into a vote of confidence. It will have a damaging internal effect in the Conservative party. I am not particularly bothered about that, but I am more concerned about the damage that it will do to the position of the country in the run-up to the next intergovernmental conference. The Prime Minister, having paid such a heavy price in whipping his malcontents into the Lobby tonight, is bound, in terms of his party management, to respond in

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a more nationalistic and Euro-sceptical way in the run-up to that IGC. That will not be in the best interests of the country because we need to be at the heart of Europe.

We already began to see that--although the Chancellor, unfortunately, did not give way to an intervention on this matter and therefore managed to avoid clarifying his own position--at the end of last week from the Foreign Secretary, who, ever so significantly and subtly, edged the formal position of the triumvirate at the top of the Cabinet away from its downright stated opposition to an eventual referendum. I do not have difficulty with a referendum, but the Prime Minister and the Chancellor and the Foreign Secretary will have to make a bonfire of their vocabulary over the past few years if that is the way in which they are to sue for peace at the IGC and on the European issue generally in their party in the context of the next general election. Perhaps whoever makes the winding-up speech tonight could take the opportunity to clarify the current stated position of the Cabinet on an eventual referendum.

Frankly, at the end of the day, the wording of the Labour party's amendment is neither here nor there. It is a vote about confidence in the Government- -the context of it so decided, so put down and so phrased by the Chancellor especially, but by the Prime Minister as well. On the basis of European policy, there is no doubt that one cannot have confidence in the Government. Therefore, the argument about what will happen if the amendment is passed is largely sterile. If the amendment is passed, we know what will happen. The Prime Minister will be into his limousine and off up Pall Mall to seek a dissolution from the Queen. There will then be a general election and, undoubtedly, a change of Government.

Whatever the complexion of the Government who come in, it is difficult to envisage a future Government being more divided or more tortured internally on matters European than this one. Therefore, this measure would be reintroduced. Even if we reach the stage that we did over Maastricht, when Denmark said no on the first referendum, the European powers that be will still be able to find a formula, a means and a mechanism to sort it out eventually. So, let us not have any of this utter nonsense from the Chancellor that failure to pass the Bill tonight will mean a general election and a change of Government, which would destroy it all.

The issue is not really the Bill and its merits. Its merits are clearly shown, and it enjoys all-party support. What is at stake here is the future of the Government. It really puts it all in context when one thinks of the history of Europe and some of the famous places from Berlin to Brussels and even to Bruges. It seems now that the only person whom the Chancellor is willing to acknowledge has any consistency in his party is the hon. Member for Billericay (Mrs. Gorman).

If those who want to speak for little England are to be consistent, they should vote for little England at the end of the debate. The fact that they will not do so shows that they know that electoral extinction would follow. Therefore, knowing that, my unfortunate conclusion is that the Conservative Members will not be going back to their constituencies to prepare for opposition, but, by God, they should.

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6.8 pm

Mr. John Biffen (Shropshire, North): May I first declare an interest? I am a non-executive director of J. Bibby plc, a South African company which has a substantial subsidiary in Spain related to the construction industry, and one may assume that it will benefit from the Edinburgh arrangements. I wish to speak briefly about public spending in the European Union, the question of having this debate on an issue of confidence and the general election.

The House has been so conditioned by battles over public spending-- involving not many of those in the Chamber now, but certainly their forebears--going back centuries, that the issue of public spending and how it is financed is at the very heart of politics. On that test, it seems to me that European public spending is flawed in its conception and execution. Everyone who is concerned about public spending as an instrument of social policy should be deeply anxious about that factor.

I will quote Nye Bevan for the Leader of the Opposition because I gather that to mention socialism in his presence will make me, as near as I can be, a yobbo. At the party conference of 1959, Bevan said:

"The language of priorities is the religion of socialism." There seems to be a dangerous lack of focus about Community spending because, in a sense, it is a product of so many layers of authority. One is almost diffident about praying in aid the virtues of the Treasury, but wherever public spending is concerned, there is much merit in having a disciplined hand.

The Minister of State, Treasury (Mr. Anthony Nelson) indicated assent .

Mr. Biffen: I notice that the Euro-enthusiast and Treasury Minister is nodding in agreement.

I shall refer to my constituency, out of deference to my electors. The 5b area status has been conferred on Shropshire by the European Union. That is modest spending, but it has already raised an absolute hornet's nest of competing claims, local authority prejudices, delays and general condemnation of the Treasury, which has been contrasted with the more open- handedness of Brussels. It all adds up to a less effective application of public spending.

In deference to Scots Members present, I noticed an even better example of that in The Times under the heading:

"Hebrideans look to Brussels for £6 million bridge."

I am not saying that looking is receiving, but the article states:

"The bridge between Scalpay and Harris in the Outer Hebrides would only span 180 yards of water, a crossing that takes 10 minutes by ferry. Islanders are optimistic that funding will come from the European Union. Last year the Highlands and Islands were granted Objective One status".

No doubt the bridge will be called "Son of Humber". I do not for a moment say that the project will be landed, but it gives one an insight into the focus of spending in the European Union.

Mr. Salmond: Will the right hon. Gentleman give way?

Mr. Biffen: If the hon. Gentleman will excuse me, I must try to keep within my time limit.

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Mention has already been made of fraud. I will not add to that except to say that no one knows the extent of the fraud. It is all very well to stand up and to bluster and assert that it is nothing like the figure that has been created in such and such a paper. It is generally acknowledged that fraud is substantial. I rest my case with the 12th report of the House of Lords Select Committee on European Communities.

My next point is the most unnerving point of all. There is an erosion of standards of fiscal responsibility which seems to be pervasive. The House of Lords Select Committee states:

"as in previous inquiries we detected a worrying absence of indignation at the amounts of fraud and mismanagement in the Community's finances."

All the cures and improvements, and the Court of Auditors, will falter against the difficulty of devising a system of application which does not merely take account of national culture, but which does so in a form that relates to all other national cultures, which are almost certain to be different. I am not saying that the Nordic experience is different from that of the Latin, but if one could examine the figures, I would not be surprised if there were a difference.

The Liberal party is right to argue for the repatriation of the common agricultural policy. That is a difficult objective, but ultimately the situation can be dealt with only by diminishing the basis of public spending in the Community and not by alteration of the controls. All that becomes even more imperative as we move towards the expansion of the Community to include the central European countries.

I want now to refer to the confidence motion. The Prime Minister has every authority to call a confidence motion. Such motions have often been called in the past. I particularly have in mind Winston Churchill demanding confidence after losing a vote on the Education Bill in 1944. I do not believe that that was his finest hour. Looking back, it is clear that that debate, which was about equal pay in the teaching profession, was a sign of the desire for major social change which was enthroned in the 1945 general election. Perhaps the easy recourse to a confidence motion means that one might be a little blind elsewhere in one's political judgment.

Although I will gladly conform with the confidence vote, as I have always told my constituents I would, I am anxious about it. In that regard, I want to quote Lord Howe, partly because the Chancellor of the Exchequer was his Parliamentary Private Secretary at one time. I hope that his comments will be a beneficial influence. Lord Howe said of modern authority that it was "government by explanation". That is what we grievously need over the next year and a half.

The next general election will not be fought with a parade ground as the battlefield; it will be fought over much more difficult terrain and that leads me to the attitude which must be struck if the Conservative party is to have a credible position.

The absence of confidence in the issue exists because there is ambivalence in Conservative party policy. That ambivalence exists because we cannot resolve whether we are going to move from our present position on the opt- out on the single currency. That opt-out is merely a policy of postponing what one wants to say until later in the day. It has very little by way of quality of leadership about it.

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If, as I do, one takes as one's text the Prime Minister's article in The Economist of a while ago, one has a most comprehensive and authoritative exposition of a Tory attitude which looks to the nation state as the centrepiece of European policy. In that context, the natural corollary is a monetary policy which provides for co-operation on the basis that individual states may vary their own national exchange rates. That is the framework for monetary co-operation. It is European in character, but it preserves to the nation its own final judgment.

I notice that my hon. Friend the Member for Portsmouth, South (Mr. Martin) is in the Chamber. I read with much interest his letter in The Times today. He got it exactly right. We need a set of principles which will complete our general attitude to the Community and to its evolution and our commitment to the widening of the Community and which will enshrine our belief that the national state is the natural fulcrum for the pursuit of that policy. In doing that, one cannot leave out, ignore or postpone the final crucial question about economic and monetary union. A party that believes in national institutions, its national heritage and its national destiny must have a national context in monetary union.

6.17 pm

Mr. Denzil Davies (Llanelli): As the Chancellor of the Exchequer pointed out, the Bill will increase the ceiling on our contributions from the original figure of 1.2 per cent. to 1.27 per cent. Whatever one says on either side of the argument, the increase in the ceiling represents a victory--perhaps a small victory, thanks to the Government's negotiating prowess--for the centralised institutions of the European state against the nation states in the continuing struggle between the centralised state in Brussels and the powers of the old nation states of Europe. This debate is about that struggle and no doubt future debates will follow that course.

The Chancellor had to concede that our contributions are going to rise. He said that that was a price that we have to pay for a seat at the table. Years ago, apparently, our contributions were a price to be paid for membership of the club.

In 1972, there was much talk about subscriptions to clubs. We now have a seat at the table. That is all very well. However, I have always asked--I never receive an answer--why most members of the club and most of the people who have seats at that table do not have to pay anything. Indeed, until very recently--perhaps it is still the position this year--only Germany, as it is now called, and the United Kingdom have to pay for a seat at the table or a subscription to the club. Hon. Members shake their heads, but there might gradually be one or two other countries. France, perhaps, is coming in, but, in general, the largest subscriptions are being paid by two countries. The argument does not hold water.

The Chancellor took us back to 1984 and the Fontainebleau agreement. I shall refer back a little further in the short time at my disposal. In about 1976, the then Chancellor of the Exchequer, now Lord Healey, asked me as a Treasury Minister to try to do something about the escalating costs of the EEC budget. I do not know what crime I had committed for him to ask me to do that, but it was a frustrating exercise. As a result of the brilliant negotiations that were carried out by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and Lord Rippon, as 1979--the end of the transitional

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period--was coming upon us, subscriptions and net contributions to the club were increasing rapidly. By 1979, they reached £1 billion or even £1.5 billion.

Of course, I like to look back and think that I laid the groundwork--all the hard work--for the Fontainebleau agreement. Margaret Thatcher, as she was referred to by the Chancellor, managed to negotiate that agreement. It was fortuitous that Spain, Greece and Portugal wanted to come in at the same time, and there was an opportunity to open matters. For a few years, there was a holding back of our net contributions, but they have gone up again--almost £2.5 billion this year and probably £3.5 billion in three or four years. The ceiling has gone up; contributions will again be increased.

The amendment, which I wholeheartedly support, in the name of my right hon. and hon. Friends, calls for a cut in common agricultural policy expenditure. I wish that we could cut expenditure on the common agricultural policy. Indeed, I was a member of a Government who tried very hard to cut that expenditure. The present Government have probably done their best, but it is not in the power of Her Majesty's Government of whatever party to cut that expenditure--we need 12 countries to agree. The extraordinary written constitution that we have foisted upon ourselves means that even our legislature cannot change the constitution; we need the agreement of 12 other countries.

By all means let us cut common agricultural expenditure, but that would be extremely difficult without the consent of the others. I am told that the Poles are going to do that for us. Around the year 2000, the Polish cavalry will come in and lay about the common agricultural policy, and that will be the end of it--perhaps. Perhaps by the time we negotiate with eastern Europe, it will be possible to destroy that monstrosity. It will certainly take a long time. My constituency is in west Wales--one could say west Britain. Some of my constituents are a little concerned when they look across the Irish sea and they discover, apparently, that the moneys that come back to the south of Ireland now represent about 6 per cent. of the gross national product of southern Ireland. They ask, "Why should we in Wales contribute that £2.5 billion or £3 billion a year when, across the water in Ireland, in many areas incomes per head are higher than in some parts of south Wales?"

Let us consider an even smaller country, Luxembourg. It has the highest income per capita in the European Union and it is the second largest net receiver of money from the European Union. Again, my constituents ask, "Why should that be so? Why do we have to pay the price for the seat at the top table and the subscription to the club?"

There is a contradiction. Tomorrow, the Chancellor will announce, so we are told, £4 billion or £5 billion cuts in public expenditure. Of course, those reductions in public expenditure will not fall upon our contributions to the EEC. Those contributions are outside the PESC--the Public Expenditure Survey Committee--as it used to be called. It does not matter whether the Chancellor knew what the forecasts were, because, in respect of the expenditure round, the contribution had to be made. But the £2.5 billion to be paid this year will have to come out of the rest of public expenditure.

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There is no free lunch. In modern jargon, it is known as disinvestment. We invest in one sector and we have to disinvest in another. We invest £2.5 billion in the public expenditure of the European state and we disinvest £2.5 billion in the public expenditure of the United Kingdom. My right hon. Friends, when they form a Government, will face that problem. The cuts that will have to happen will, as usual in terms of public expenditure, fall on the needy, the old and the unemployed.

There is a contradiction on Maastricht, too. I hate to bring up Maastricht again, but I know that the Chancellor has now read the treaty. Maastricht imposes clamps. It imposes restrictions on public expenditure and the public borrowing of nation states. We are not supposed to spend too much, we are supposed to spend less, yet, of course, we can spend money to hand it over to Brussels, because Brussels can spend more. That is part of the struggle--it is part of what is actually happening. The Chancellor talked about subsidiarity. Apparently, the money also was to enable one word in the treaty to be turned into a brilliantly illuminating paragraph describing subsidiarity. The very payment of £2.5 billion--the very raising of the ceiling--is contrary to the concept of subsidiarity.

The Government are concerned about subsidiarity. They wish to reduce rather than increase the ceiling, just as we wish to do away with the common agricultural policy and return to a system of national aims for agriculture. That would be subsidiarity. The Chancellor wrote me a letter. I gather that all hon. Members received a letter from the Chancellor. It started, "Dear colleague". I really thought that that letter should have gone to the Minister of State, Foreign and Commonwealth Office, whose last name is Davis and who has one of my first names. I sometimes receive his correspondence and I always scrupulously turn my head the other way and put it back. When I saw the Chancellor's "Dear colleague" I almost did that, but then I thought, "No, perhaps it has a wider circulation." Lord Healey, when he was Chancellor of the Exchequer, had his problems between 1966 and 1968--we all did--but I do not remember our problems being so great then that he had to write letters to the then Opposition, asking for support to spend more public money. That shows the measure of the panic which appears to be at the heart of the Government when it comes to Europe.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The Chair has a problem now; I must stop the right hon. Gentleman.

6.27 pm

Sir Peter Hordern (Horsham): I can remember Lord Healey, when he was Chancellor of the Exchequer, having problems of his own in turning back from the airport. Other hon. Members will remember that, too.

One of the interesting points of the debate is the lavish attention that is being paid to the Public Accounts Committee and the effort to control fraud and waste. I do not think that I have ever heard so much attention being paid to it. I was a member of the PAC for 20 years. At that time, our debates took place on one day late in the Session. There was never a Whip, of course. Our debates were badly attended and only members of the PAC were present. I suppose it is an advance to have so much attention paid to the PAC, particularly by Opposition Members.

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