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The amendment, in drawing attention to public waste in the European Union, is very important and it needs to be debated. I am grateful for that. However, it seems that the issue of public waste was raised in the amendment merely as a peg on which to hang a reason to vote against the Government in a most important vote of confidence. I think that the European Communities (Finance) Bill appears to be quite reasonable. Two years ago the Prime Minister came to the House to make a statement about the legislation. As my right hon. and learned Friend the Chancellor of the Exchequer said earlier today, at that time there was only one voice against it on the Government side; nobody else objected to the increase in expenditure because it was very modest.

Much more attention has been paid to the fact that the arrangements for financing the Community, which were made under the 1988 agreement, have been very erratic. It is true that the expenditure of extra money--some £750 million--comes at a time when it is convenient for the critics of the Bill to lump it together and say that the situation is out of control. It is uncertain because it involves forecasts which are based on future estimates of gross domestic product. The reason why it appears that we are having to pay more this year is that our GDP has risen at a faster rate than that of other members of the European Union. So I do not think we can use that argument in objecting to the increase in payments. In any case, the amount of subscription to the European Union was set in stone many years ago and was passed by the House.

The increase in expenditure which was decided upon in the Edinburgh agreement is only £75 million in 1995 and £250 million in 1999. I think that the Edinburgh agreement has other advantages, too: notably, we shall no longer be the second-largest contributor of funds to the Union. France, the Netherlands and, per capita, Austria and Sweden will contribute more. It is also a real advance that future contributions will be related to proportion of GDP rather than VAT contributions. That is the right way to go.

All in all, I do not believe that the Bill places a substantially greater burden on this country than that which we carried before. However, there are other burdens in all the nooks and crannies through which the European Union and the Commission, in particular, can get involved in our national life. The burden comes in the European Commission's essentially corporatist approach, its social chapter and the existence of the cohesion and the structural funds. Yet I cannot help but wonder how many Members of the House would wish us to leave the European Union, for all its faults, after 20 years of membership. Our whole trade and investment system is deeply embedded in the European Union. At a purely practical level, if we were outside the European Union, how could we influence it about landing rights at Charles de Gaulle airport, for example, which Air France is trying to prevent British Airways from using?

There are other reasons for our remaining in the Union which have been gone over many times. This country has acted as a magnet for overseas investment and it is plainly in our commercial interests to remain a member of the Union and to have an influence over the future pattern of Europe.

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Meanwhile, we have to deal with the current imperfections of the European Union. I am privileged to have been the chairman of the Public Accounts Commission for the past five years. In that capacity, I have seen a good deal of the Comptroller and Auditor General and we have had a number of discussions about fraud and waste within the European Union and how we might be able to combat it effectively. I have corresponded with both my right hon. Friend the Prime Minister and the Chancellor of the Exchequer about the matter.

I think that right hon. and hon. Members are perfectly correct to point to the scandalous imperfections and examples of fraud and waste within the European Union and its total failure of will to deal with these problems. However, if we are to deal with fraud and waste effectively we will have to give the European Commission and the European Parliament more power than they have at present. There is no way that we, as a nation, can affect European Union spending; that is an inescapable dilemma.

The European Parliament has useful powers in relation to the European Commission. But hon. Members who have served on the Public Accounts Committee will know that it all depends on how these powers are used. They will recall that if a permanent secretary was due to appear before the Committee, he would take a week off work to prepare. I would like to think that some Commissioners at the Berlaymont building would miss even a lunch in order to prepare before appearing before the budget committee. It would do them no harm to miss a few lunches.

The European Parliament is not sufficiently addressing the powers that it has to tackle the European Commission about waste and fraud. However, not even those extra powers will be sufficient in themselves to address the problem. Ultimately, the European Union should not allow funds to go to a member state for any purpose--cohesion, structural or agricultural--until the frauds and waste which have been discovered have been properly reimbursed and penalties have been imposed.

My right hon. and learned Friend the Home Secretary wants member states to pass the appropriate laws. That is a matter for them to decide. They may agree to do so, but I wonder whether the pace of legislation to deal with fraud and crime in Greece or Italy, for example, will be as rapid as it is in this country. I rather doubt that it will. Therefore, the only satisfactory way in which to deal with these problems is for the European Commission to withhold its funds.

Sir Teddy Taylor: It cannot be done.

Sir Peter Hordern: My hon. Friend may say that, but it can be done, and I have it in writing from the Chancellor to say that that is the case.

It might help if the United Kingdom PAC were to meet the PACs from other member countries. I think that the incidence of fraud and waste brings the European Union into contempt, and the European Parliament and the Commission must come to grips with the problem. It is far and away the most important duty of the European Parliament.

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Whenever I mention the matter to my friends in the European Parliament--as, I dare say, my hon. Friends have done--I see their eyes glaze over. They like to debate these matters, but they do not like to do the invigilation and investigation.

Dame Elaine Kellett-Bowman (Lancaster): Will my right hon. Friend give way?

Sir Peter Hordern: No. I am sorry, but I am very short of time. Many improvements need to be made.

Unfortunately, fraud and waste have an effect upon the regard in which the European Parliament is held. The voter turnout at the European elections demonstrated a lack of confidence in Europe. It is always very dangerous to depart too far from our democratic roots and support. Whatever Europe thinks of us, national Parliaments are democratic institutions which enjoy the largest measure of popular support. That is certainly true in this country.

Mr. Deputy Speaker: Order. The right hon. Member's time has expired.

6.38 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney): It is a pleasure to follow the right hon. Member for Horsham (Sir P. Hordern), who spent his 10 minutes reminding the House, rightly, of the important and different traditions by which parliamentary sovereignty and accountability have developed. I remind the right hon. Gentleman that it is a rich irony that in this parliamentary Session we celebrate the tercentenary of the parliamentary Session of 1690 to 1695 which basically invented democratic accountability as we have come to know it.

Accountability was invented using financial control of the Administration of the day, through the first Public Accounts Committee, which was directly elected by the House in the 1690 Parliament. The parliamentary Session of 1690 to 1694 saw the first annual estimates presented to the House. Those changes to procedure ensured the continued stability of parliamentary institutions. Exactly 300 years ago this Session we established the principle of annual Sessions of Parliament. Before that, even in the British tradition, the House of Commons was more a matter of occasion than an institution. It could go for years without even sitting.

That position is fundamentally different from what happened on the continent and that is why our definition of sovereignty is different from that of any other country in Europe. We define loss of sovereignty as loss of parliamentary control over our financial affairs--rightly so, because that is the basis on which we have conceived the idea of sovereignty. That interpretation cannot be found anywhere on the continent. The Spanish Cortes, the Bundestag, and the Greek, French or Italian Parliaments do not have that sense of continuity. Nor have they defined sovereignty in institutional terms, as we have. It is richly ironic that we are debating a Bill which will again transfer significant sums of money outside the control of the Public Accounts Committee and outside any form of scrutiny.

I listened with interest to the speech of the shadow Chancellor, my hon. Friend the Member for Dunfermline, East (Mr. Brown). He has to admit, as we all do, that we no longer have control over the money that we agree to

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pass to Europe. It will not be subject to Public Accounts Committee scrutiny. It cannot be subject to a minute from some permanent secretary such as Sir Tim Lankester which said of the Pergau dam affair, "I do not believe in and do not underwrite this type of expenditure." There is no such equivalent procedure in Europe. Therefore, we are abrogating a measure of parliamentary sovereignty if we support the Bill.

I should like to demonstrate the point. Where will the money go that we are supposed to vote to transfer? It will go to one form of expenditure that I should instinctively support. The financial perspective for 1993 to 1999 shows an increase of more than 42 per cent. in EC overseas aid programmes. I have examined the management and financial accountability of such programmes. I am talking not about fraud but about the processes of ensuring financial accountability. One reads report after report. The House of Lords has submitted reports and the Court of Auditors has reported on EC overseas aid expenditure.

I find it impossible to accept the line, which I think the right hon. Member for Horsham tried to persuade us to accept, that we should continue giving the money in the hope that it will some day be made more accountable. I cannot see how a 42 per cent. increase in a budget which already cannot easily be accounted for and which is riddled with waste and duplication of administration will improve the programme. Every investigation has emphasised the waste in European overseas aid programmes. I do not understand the logic of increasing the budget. I do not understand how, if the budget is increased to that extent, we will manage to make it more financially accountable and less wasteful and gain control over the fraud and mismanagement. It is a large aid budget and it is not working effectively, as anyone who has examined it agrees.

If one wanted an example of how parliamentary sovereignty has been eroded, overseas aid expenditure is as good as any. As a result of the increase in overseas aid expenditure in Europe and elsewhere, next year more than half the budget of the Overseas Development Administration, a major part of a Government Department of the British state, will be outside the scrutiny, power and responsibility of the House of Commons and its Committees. More than 50 per cent. of the budget of one major agency will be spent by agencies outside this country which are not subject to the Public Accounts Committee, to estimates or to control by the House.

I came into the House more than 25 years ago believing in the concept of parliamentary sovereignty. It may sound old-fashioned, whiggish or whatever one may like to call it. I still believe in it. I have watched the erosion of parliamentary sovereignty. I have to confess to the House that I have condoned it. I did not do very much on the Single European Act. I looked up the debates on the European Communities (Finance) Bill in 1988 and I took no part. I scarcely voted, but nor did the House. The Committee stage was cleared in one evening. The Third Reading was nodded through without a debate. Half the Chancellor's case was that we did not oppose the Edinburgh summit agreement in 1992. All right. We are waking up fast. The likes of me are waking up and are no longer willing to support and condone the loss of parliamentary sovereignty represented by the Bill. Therefore, I shall not only vote for our Front-Bench amendment but vote against the Second Reading of the Bill.

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6.44 pm

Sir Teddy Taylor (Southend, East): Over the years, I have had a few rows with my Front Bench about the European Community. I remember resigning from a Conservative Government--probably before you were born, Mr. Deputy Speaker--because they decided to join the EC. I remember exchanging rather tough words with a lady for the first time when the previous Prime Minister was in office. It is unfortunate that in the debate tonight an enormous number of people will vote for what they consider a load of rubbish. We have enthusiastic Euro-supporters who will vote against the Bill tonight. That seems silly. I know that a substantial number of my hon. Friends who are opposed to what is happening feel obliged to vote for the Second Reading of the Bill.

I shall be in trouble because I am afraid that I cannot support the Government in the Lobby tonight. All that I want to do is say a few things to my colleagues which I hope that they will remember. Unfortunately, I shall be in great trouble. Happily, I have a splendid constituents association which supports me. However, no one is safe, because we have a regional chair of the Conservative party who has all the management skills of the late Robert Maxwell and all the charm and good humour of the hon. Member for Staffordshire, South-East (Mr. Lightbown). In that situation, we have to worry. However, I am not worried. We have to ask ourselves what people should think about this evening. First, I plead with colleagues to consider honestly whether they are not losing every battle on the EC. If they do so, they will see that that is what is happening. Let us take the repeated statements year after year that agricultural reform is coming, something is around the corner and spending is falling. Please look at the financial papers and see what has been happening. My colleagues will see that expenditure is increasing.

The Government say--the Chancellor said it today--that our proportion of the total budget is going down. My hon. Friends should ask him what is happening to domestic spending on agriculture. There has been a shift of expenditure from the EC to member states. Sadly, it breaks every record. The Government say, "Please vote for us because now we have control. We have budgetary limits." My colleagues should look at the budget for 1995. They will see precisely and clearly on page 13 that spending will bust through the legal limits by more than £1,000 million and that it will be done by means of accountancy devices. That is exactly what happened the last time that we had limits. I ask my colleagues please to stop thinking of controlling European legislation. I had the pleasure only this week of meeting representatives of Thamesway, my local bus company, a super bus company which runs buses all over the place. Colleagues should ask local bus companies what will happen with the EC construction directive on buses and coaches. It will make massive changes. It will make the use of double deckers impossible. It will insist on all sorts of extra exits. It will involve massive spending. It is a load of nonsense. When we ask the Government what they can do, they say that, sadly, it is a majority vote issue.

I appeal to my hon. Friend the Paymaster General, who is one of the most honest and accurate Ministers, to remember the issue of freedom of trade. Does he

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remember PMS, one of my local firms? It is a super firm employing 200 people. It made £2 million profit last year. I received a letter from it only today, which says:

"It would appear that the EC is determined to destroy our business."

It had been told that it had to reduce its business by more than 50 per cent. It imports stuff and re-exports it. What can the Government do? Basically nothing, because although they voted against the relevant measure, it went through by majority vote. I plead with my colleagues to stop thinking that they are winning the battle and stop pretending. Sadly, expenditure and interference are increasing and the economic situation in the EC is getting worse. If hon. Members doubt that, they should ask what the European Community's trade is with the rest of the world.

Secondly, we must ask ourselves how on earth we can support extra funding for the EC when spending is so dreadfully tight at home. On Friday, I went to Lancaster school in Southend--I am sure that no one has heard of it-- which is a school for severely disabled children. They are in wheelchairs and have appalling disabilities. A report issued in 1992 states:

"The accommodation . . . is unsuitable for the needs of children with severe learning difficulties. The majority of classes can only be reached by external sloping pathways, 2 bases are in relocatable classrooms, toileting and changing facilities are poor, and there is little specialist therapy accommodation."

In 1994, the inspectors' report stated:

"Problems with the school building had a detrimental effect on the pupils' education."

The Health and Safety Executive said that the paths and slopes were unsuitable for wheelchairs. Why can something not be done? For the simple reason that there is no money.

Yesterday, a lady from Cluny square visited me. Her son-in-law told me that she is desperate to get into a retirement home, but cannot do so because, sadly, Essex county council says that there is no money. With a situation like that, how on earth can any Member of Parliament in all conscience vote for extra cash to go to an organisation that wastes money as though it were water? It is not right.

In fairness, the Government fight very hard to sort things out and we know that a Labour Government would do exactly the same, but what should we be doing today? I hoped that the Government would start to tell the truth to troublesome Back-Bench Members. That is a shocking thing to have to say to any Government or Opposition, but I mean it sincerely. Unfortunately, Ministers who are Euro-enthusiasts put things one way--Opposition spokesmen who are Euro-enthusiasts do the same. For example, let us try to get across what the balance of our trade is with the European Community. What is the expenditure and how does it compare?

Unfortunately, we heard only last week that there had been some error of calculation and we had to spend an extra £731 million on the EC this year--almost as much as the £900 million that we have paid in value added tax on fuel during the year. We want to know when the Government found out about the error. The Chancellor told us, first, that he could not remember and, then, that it was not on his mind when he wrote to Members of Parliament. We simply have to tell people the facts and, once we have done so, we must ask about the options.

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All this talk of how we will stop fraud is so silly. No matter how many Euro-policemen one employs, one cannot stop fraud when one has a policy that invites it and it is absolute nonsense to say that one can. All those Members who say that we should have more Euro- policemen and open up more offices must know that that is madness and cannot work. We must decide that the common agricultural policy should be scrapped and how we should go about it.

I hope that the Government will appreciate that people's views are changing. Anyone who doubts that fact should remember what happened at the Conservative party conference in Bournemouth. It was tragic that no one wanted to talk about the European Community at the conference, but every meeting organised by the Euro-sceptics or the anti-market groups was packed out. We had to turn people away, and it was not because speakers like me were brilliant but because the average Conservative knew that something was going very wrong. Young people are getting worried. They are worried about the threat to our democracy and they are wondering what is the point of voting for all those clever politicians at the next election when all their powers are being given away. I hope that we will think of a way of asking the people of Britain whether we should have a separate relationship with the European Community and how they would like to express a view on the subject.

I am very distressed because I am in no sense a conspirator against the Prime Minister, who is a decent and honourable man. If I have the opportunity to vote in a leadership election, I shall do so. I am not trying to rock the Government in any way, but I hope that they will accept that some hon. Members think it outrageous, impossible and wrong to vote for extra cash for the EC when it wastes so much money.

I well remember walking down Southend high street with my lovely wife on Saturday. I could not walk down that street again next week and be straight and open with people if we decided to pour even more cash into that wasteful, fraudulent and non-democratic organisation. I very much regret that I cannot vote for the Government tonight, but obviously I wish them well.

6.54 pm

Mr. Mike Gapes (Ilford, South): It is a pleasure to follow the hon. Member for Southend, East (Sir T. Taylor). His remarks were obviously very sincere. He and I come to this debate from very different positions, yet we will, I hope, be in the same Lobby tonight--if the hon. Gentleman is not there, he will in sentiment be in the same Lobby as Opposition Members.

Clearly, this debate is not about European Union expenditure. It is a dry run for the intergovernmental conference debate that is yet to come and reflects the internal schism in the Conservative party. The real issues in the debate are obscured by the way in which it has been conducted.

At the risk of being unpopular with the majority of hon. Members in the Chamber, I shall say why it is essential for people to put matters into perspective. Our total domestic product is about £400 billion. We are discussing total expenditure on the European Union of about £2.5 billion. The United Kingdom has the eighth-largest gross

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domestic product per capita in the Union, yet we are the second-largest contributor to the budget. Clearly, that is unacceptable and it must be changed.

The real reason for the size of that contribution is not the increases that were agreed at Edinburgh but the fact that agricultural spending still takes a disproportionate amount of the European Union budget. It is not surprising that the Government are not doing anything substantial to remedy that problem because, after all, the Conservative party represents very large agricultural interests that do not want fundamentally to change the common agricultural policy, the set-aside arrangements and all the other scams and scandals that apply not only where there has been fraud but to the way in which urban working people and consumers are punished because of the interests of the agricultural lobby.

Speaking as a Member of Parliament for an urban constituency with no agriculture, I believe that it is about time that the majority of people got a better deal through lower food prices and more efficiency, which is in their interests, rather than having to pay others not to produce, or to produce alcohol that is converted to vehicle fuel and tobacco that is unsmokeable and stockpiled. That nonsense cannot go on. That is why it is essential that we reform the common agricultural policy.

On fraud and the role of the auditors within the European Union, some people in the European Parliament in Brussels are fighting very hard to get a grip on the work, led by members of the socialist group such as Terry Wynn and John Tomlinson. It is not for the European Parliament to decide what resources are required to carry out the inspections and how many people should carry out the work; that is a decision for the Council of Ministers.

My hon. Friend the shadow Chancellor said that the British Government failed to take up funding that was available for anti-fraud measures. Worse than that, the British Government have resisted efforts to increase the budget heads so that people can carry out that work. If our Government were serious about action against fraud, they would be doing all that they could, not merely on a national basis but on an international, European Union, basis. We also have the opportunity to do something fundamental about the common agriculture policy, and all the problems associated with it, in the next few years during the debates about enlargement. I was alarmed to read in a newspaper today that one of the Commissioners is suggesting that the CAP be extended to Poland. In their discussions over enlargement with the central and eastern European Visegrad countries, the Government must be clear that we are not just going to transpose the existing CAP into 17, 20 or more countries. We must use the opportunity of enlargement to break and erode the CAP and to reduce expenditure on agriculture. We must not build in even worse problems for the future by trying to finance surpluses, overproduction and set-asides in Poland, Slovakia, the Czech republic and Hungary. I say that as somebody who is firmly committed to enlargement and who wishes all the democratic countries of Europe ultimately to be part of the same political and economic system within the European Union. Of course, we are not trying today to resolve those matters.

As long as this lame-duck Government persist in hanging on to office by threat, bluster and blackmail, they will be clearly incapable--because of their internal divisions--of doing anything constructive or on a

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collective basis with other Governments or with the European Parliament to assist in making changes in the process. We must wait for a change of Government, and for a Government who are committed to reforming the common agriculture policy, to rooting out fraud and corruption and to co-operating and building up structural funds. We must shift the balance in the EU budget towards areas of need, combating unemployment and implementing proposals--such as the Delors package--which will deal with the problems that Europe is facing. I regret that the debate is not focusing on the issues. I hope that we will soon have a Government who are able to set us on that path. 7.1 pm

Sir John Cope (Northavon): I shall refer to the first terms of the Bill, because it is on Second Reading that we shall be primarily and most importantly voting at the end of the debate.

I was closely involved with the issue as a Minister when I was at the Treasury, from the election until July this year. Given the freedom of the Back Benches and some time for reflection and hindsight, I remain a supporter of the actions that were taken by my senior colleagues at the Edinburgh summit and brought into effect by the Bill. I believe that it was an extremely good deal. My opinion was enforced by the fact that--as far as I can gather from his response to an intervention--even the shadow Chancellor thought it was a good deal. He did not criticise the deal during the whole of his speech, and that seems to be the position also of the Liberal Democrat party.

Of course, we can all imagine a more desirable deal for the United Kingdom being achieved if we did not have to reach agreement with others. That is also true of each of the other 11 countries that were represented around the table, each of which could have prevented an agreement. But we in the House must live in the real world, and the Edinburgh deal was a good deal for the United Kingdom.

As a result of Edinburgh, the total increase in European Community expenditure has been slowed down, and the proportion of Community expenditure that falls on the UK has also been reduced. As for total expenditure, there is always plenty of debate in this Parliament and elsewhere about individual programmes within the Community. But the key overall figure is the own resources ceiling which restricts the total amount that the Community can spend under every head by reference to a percentage of GNP. As we know, that proportion was 1.2 per cent. by the time of the Edinburgh summit. I say to my hon. Friend the Member for Southend, East (Sir T. Taylor) that, whatever creative accounting may be attempted on individual bits of expenditure--as he suggested in one instance--the own resources limit applies in total to all the expenditure. That was the key figure at Edinburgh.

Just before Edinburgh, the Commission proposed a series of increases, starting with 1.22 per cent. in 1993 and rising to 1.37 per cent. in 1999. The Commission thought that those rises were a compromise between member states such as ourselves that were very restrictive on the amount of spending and those that wanted to spend more. If that compromise had been in place this year, the Community would have been able to spend 1.27 per cent. of GNP. In fact, we will not reach 1.27 per cent. until 1999. Of course, this year's increase is nil.

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The final agreement was to reach less than half the compromise increase two years later than was proposed, but there was also hard negotiation on the various member states' shares of total expenditure, and once again I believe it to be a good deal. There was shifting of some of the weight of expenditure from the VAT resource to the GNP resource, which helps our cash flow and means that--over the term of the agreement--the proportion of Community expenditure funded by the UK will go down.

In turn, the deal means that the number of states that are serious net contributors to the Community will increase and, as we have heard, enlargement will take that process further. That will make our position in the Economic and Finance Council and in the Budget Council much easier. It is also potentially very important for the changing culture of the Community, and the Council of Ministers in particular, with regard to value for money and fraud. I observed part of that process myself before I left the Treasury. I am sure that my right hon. and learned Friend the Chancellor and my hon. Friend the Paymaster General will do all they can to build on that advantage. I believe that, for those two primary reasons, it is a good deal for the UK. But, of course, it was a deal, and I and others believe that it depends on the belief that it is in the UK's interests to continue to belong to the European Community. I believe that because of the inward investment that has come to my constituency and to others all over country. I believe that it is also in our interests to be part of a large and prosperous home market--not to protect that market but to act as a base from which to trade around the world, particularly against other great trading blocks. It is better to work with our nearest neighbours and rivals to ensure the free movement of goods and services and proper uniform standards. Our membership of the EU also increases our leverage in world negotiations. Above all, it is wise to have "jaw-jaw" rather than "war- war", and I am talking about trade wars as well as the shooting wars from which the European Community originated. "Jaw-jaw" can sometimes be extremely hard work in the European Community. I have represented this country from three different Departments on the Council of Ministers and a number of other Councils. I was much involved during the UK's presidency, when I was president of the Budget Council. I know exactly to my cost--I lost sleep because of it--how difficult negotiating within the Community sometimes is. However, if we belong to the Community, it is necessary for us to take part in all its work. We must negotiate the best deals we can, as was done successfully by the Prime Minister, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) and the Foreign Secretary at Edinburgh.

It has always been obvious to me that the Bill would be of the first importance. The supporters of the Government are expected, of course, to support all the major Bills introduced. There is nothing new in that and I was not in the least surprised when my right hon. Friend the Prime Minister spelt that out in the debate on the Queen's Speech. An idea has grown up, too, that because opposition to a Bill is regarded as incompatible with full membership of the Government's parliamentary party, the Opposition parties are therefore obliged to vote against it as well, regardless of whether they support its aims. In fact, the Labour and Liberal Democrat parties seem to support the purpose of the Bill.

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That decision to oppose is a distortion of our constitution and promotes to absurd lengths the idea that the duty of the Opposition is to oppose. Of course I realise the temptation to the Opposition parties. I am cynical enough to realise that they cannot resist it. Their excuse is concern about fraud and the mismanagement in the Community, but we are all concerned about that, too. The Opposition also know perfectly well that the United Kingdom Government, of all Governments, have been the strongest in the Community in combating fraud and mismanagement. The Opposition know that that will continue to be the case.

If our Parliament can find better ways in which to scrutinise such expenditure, we should, by all means, consider them. We could, for example, consider the suggestions put forward in the amendment tabled by my hon. Friend the Member for Stafford (Mr. Cash) and others, which has not been selected. A change of that kind, however, should not be seen as a reason to decline to give the Bill its Second Reading. It deserves support from both sides of the House. 7.11 pm

Mr. John D. Taylor (Strangford): In common with the right hon. Member for Shropshire, North (Mr. Biffen), I must declare an interest, because I have been associated with companies that have benefited from funding through the International Fund for Ireland, which is partly financed by the European Community.

As is well know, the Ulster Unionist party has consistently opposed the integration of Europe. We are strong Europeans and believe in co-operation in Europe, but we do not believe in subjecting the United Kingdom to control from Brussels. That has been our line consistently.

What concerns us as a parliamentary party is the attitude of the Government to the Edinburgh agreement. They are treating it as though it were a foreign treaty. They argue that it represents a political commitment and has placed on Parliament an international obligation to rubber-stamp what was agreed in Edinburgh. I believe, however, that the Prime Minister went to the conference in Edinburgh and made a decision that requires the approval of the elected Members of Parliament of the United Kingdom. They are neither delegates nor rubber stamps but representatives, who have the right to express their views, yea or nay, on the Edinburgh agreement.

The agreement has two adverse effects. First, it is yet a further move in the direction of an integrated Europe. It increases the United Kingdom's contributions from own resources to the European Commission's budget. Secondly, it brings into being the cohesion fund, which benefits European regions, as well as four European nations. Some of the regions within those four nations, however, are much richer than many of the regions in the eight other countries that have been excluded from the benefits of that fund. I think immediately of some regions in Scotland, which have been denied any benefit from it. Among the favourable aspects of the Edinburgh agreement is the British Government's success in drawing attention to fraud and waste and the successful decision at least to curtail agricultural expenditure.

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In the few minutes allowed to me I should like to discuss the implications of the agreement for Northern Ireland. Northern Ireland receives a considerable amount of money from the European Union, but it must be said that were we not a member of that Union, the national expenditure on Northern Ireland would be even greater than the money that we receive from Europe. That must always be borne in mind. Of greater concern to us, since we are in Europe and receive European funding, is that the funding from the Commission is politically motivated. The spending priorities are not those that we in the United Kingdom would have chosen and are certainly not those that we in Northern Ireland would prefer.

The International Fund for Ireland, for example, concentrates mainly on cross-border projects. It also spends money on some other projects that we consider wasteful, such as butterfly parks, a golfing video, as well as £40,000 on Lord O'Neill's steam engine, which closed down a few months later. The money wasted through that fund is also politically oriented expenditure. For example, 20 villages were selected to receive money from that fund, but even though the majority of villages in Northern Ireland are unionist, those selected were nationalist majority villages. That kind of policy, funded by the European Community, is creating unease and irritation among the unionist majority community in Northern Ireland. It represents an abuse of power by the European Community, through the International Fund for Ireland, and, as a result, the majority community in Northern Ireland is now losing out.

Another example of such political motivation will be announced next week, with the allocation of a further £300 million for Northern Ireland. We welcome that money, but, once again, the European Union is about to say that that money can be spent only on cross-border roads. Not a penny of that money can be spent on priority roads for Northern Ireland--for example, the Supermac junction on Saintfield road, the busiest junction in Northern Ireland, which has to deal with 50,000 vehicles a day. Instead it must be wasted on small roads across the border.

An important internal road in the west of Ulster runs from Omagh to Enniskillen. That road is especially important now that Omagh has lost its maternity hospital, which means that women must travel to Enniskillen. No money can be spent on that road from the new funding. That is the type of thing that is upsetting people in Northern Ireland.

We look forward to the intergovernmental conference in 1996. I hope that the United Kingdom Government will bring to an end the movement towards a federal Europe. That would ensure that we end up not with a Europe of regions, but a Europe of co-operating sovereign states. The Government should also, finally, commit themselves to opposing a single currency, otherwise its introduction would mean the final destruction of the United Kingdom as an independent nation. I hope that we will have some offer from the Government to the effect that, after 1996, it will be the people, through a referendum, who will have the right to decide what happens in our future relations with Europe.

We have been asked how we intend to vote tonight. It has been alleged that there is a deal between the Ulster Unionist party and the Government. Let me make it clear that there is no deal, nor is there need for one, because in the context of the developing situation within Northern

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Ireland, Her Majesty's Opposition support the Downing street declaration, just as Her Majesty's Government do. Therefore, any change in Government would have no effect on the present process in Northern Ireland, so there is no need for any deal. The Ulster Unionist party is not afraid of a general election either; my party would welcome it, because, in the present circumstances, we would do well in Northern Ireland.

Our decision on the Bill will be based not on Northern Ireland politics, but on today's debate--Europe and where we are going in it. The Government may have done some bad things, but when we look at the alternatives we see a Labour Opposition, and, even worse, a Liberal Democrat Opposition, who give the impression that they would accept every demand and every expenditure call from Brussels. They would query nothing. They accept everything coming from Brussels. Until Her Majesty's Opposition take a firm line and stand up for the interests of the United Kingdom in Europe, I am afraid that the Ulster Unionist parliamentary party could not identify itself with the policies of the Opposition tonight.

7.19 pm

Mr. William Cash (Stafford): The proposition that "I know I am right" has now been elevated into a new constitutional doctrine. It whips a coach and horses through our history and traditions. It sweeps away the struggles of Pym and Hampden to establish our parliamentary rights against the absolutism of the Crown and asserts a new and dangerous concept--the divine right of Government. Then we had regicide; now we have suicide. Now the Prime Minister in effect declares that the Government can do no wrong-- but he is not here today.

We have been told that the Bill is introduced and must pass as a matter of honour. We have been told that the presidency conclusions at Edinburgh amount to an international commitment, an international obligation. It has been described as a treaty obligation. That is not so; and no one seriously believes that we would have lost the rebate successfully secured at Fontainebleau.

The own resources decision became legally binding as recently as 31 October this year, but that was dependent on it being enacted in the House according to our constitutional requirements. That includes the rights of Members of Parliament.

Much has happened since the Edinburgh Council and--as my right hon. Friend the Prime Minister said when we were chucked out of the exchange rate mechanism--circumstances have changed. Not least, we have the compelling evidence that fraud in the European Community has not been contained. Far from it; as the current Court of Auditors report clearly shows, it has got worse in spite of the Maastricht treaty.

There has been more than enough reason not to implement the presidency conclusions since December 1992. They were concluded immediately after our ejection from the ERM, since when our gross domestic product has grown, and will grow as non-EU exports improve, as the revised figures that the Chancellor of the Exchequer has belatedly presented to the House demonstrate. He of course had to do that after having said on a radio programme that my figures were rubbish. Nothing said today alters that.

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There is also the repudiation by the Court of Auditors of the accuracy of the GNP figures. Then there is the Conservative European manifesto of May and June 1994, which clearly states:

"We will resist all pressure to increase the ceiling on spending in the Community."

Why, then, did we break that commitment to our own people, our own voters-- as we did over the tax promises in our general election manifesto of 1992 as a result of the disastrous experiment in the exchange rate mechanism? A mere four months later, on 31 October 1994, we broke that commitment. That itself was a mere 10 days after the Chancellor had gone to Brussels and had given in significantly to the Italian blackmail on Italy's milk quota fraud. The Bill is tainted with fraud.

The Prime Minister could, and should, have said no on 31 October, and gained the approval of the electorate. As when he refused to veto economic and monetary union, and as when the Danes first rejected Maastricht and he let them down, as when he stubbornly stayed in the exchange rate mechanism- -which nearly destroyed our economy--and as when he failed to say no to qualified majority voting, the chasm between promise and performance grows wider and wider as the tectonic plates of the European issue move beneath us.

As Francis Bacon said:

"Nothing destroys authority so much as the unequal and untimely interchange of power pressed too far and relaxed too much." My amendment would draw powers back to the House--to the democratic, independent, all-party scrutiny of the Public Accounts Committee, in co-operation, as I have always argued, with the European Parliament and in contact with the Court of Auditors, but in line with the promises of Maastricht: the Government's commitment to enhance the powers of national Parliaments, as yet ignored.

Edinburgh was a failure, as I said at the time. We gave in to Kohl's intimidation and Gonzalez's avarice, largely because of threats that we would be drawn away from enlargement. We should have stood up to them and used Edinburgh to renegotiate Maastricht. We would not be in this dangerous position, in the run-up to 1996, if we had.

So what is to be done? I will not support the Labour party, which would simply enact the Bill. Our argument is won, but the taxpayer will pay, either under the present Government or a under Labour successor. It would be worse than a pyrrhic victory to defeat the Government tonight. In "Murder in the Cathedral" we are told: "it is the greatest treason to do the right thing for the wrong reason."

Tonight, some will do the wrong thing for the right reason. In my constituency annual general meeting last year, I was advised to recall the words of Winston Churchill:

"Your first duty is to your country; your second duty is to your constituents; only in the third instance is your duty to your party's policy and programme."

Those people have been magnificent.

We are being whipped to do the wrong thing for the wrong reason. That is a disgrace to our parliamentary democracy, and makes more and more valid the claim of Chancellor Kohl's foreign policy spokesman, who said:

"Those who cling to national sovereignty are seeking solace in an empty shell."

We have been warned.

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