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Let us assert our confidence in the House by refusing a single currency now, by tackling fraud as my amendment proposes and by holding a referendum on this issue as a last resort--before the intergovernmental conference, and the prospect of a sell-out worse even than that at Maastricht. We could, and I would still urge that the Government do so, withdraw the Bill.

7.25 pm

Mr. George Stevenson (Stoke-on-Trent, South): There can be little doubt that fraud is a justifiable cause for concern, and that it is growing. One of the main reasons why fraud is growing is the complete failure, especially by the Government, to control, let alone eliminate, it.

The Court of Auditors reports in the past 10 years or so have shown that it believes that at least 10 per cent. of the European Community budget is subject to fraud. I believe, and I think that most right hon. and hon. Members believe, that that is the tip of a very large iceberg.

I was staggered by the Chancellor's statement earlier, when he criticised the theory that fraud could amount to about £6 billion. He pooh-poohed that. He said that that was pure speculation, and completely irresponsible. The 10 per cent. figure that the Court of Auditors has identified--I repeat that it is the tip of a large iceberg--will account for fraud of £4.5 billion per year. The figure that the Chancellor so arrogantly dismissed is not too far away from the facts with which we are now presented.

The Government claim that they have targeted fraud. I want to show that their aim is severely defective. The fundamental reason for that is that the common agricultural policy system is inherently fraudulent.

In 1992, the then Minister of Agriculture, Fisheries and Food, the right hon. Member for Suffolk, Coastal (Mr. Gummer) came back to the House and claimed that the changes to the CAP were not only Tory-inspired but a victory for Europe, for Britain, for the farmers, for the taxpayers and for the consumers. I believe that claim to be as bogus as the claim by the Government that they are winning the battle against fraud.

We should separate the facts from Government propaganda--propaganda which, I believe, is designed to hoodwink the public further. A report published by the Court of Auditors this year highlighted a crucial element in the system of fraud--the export refund system. The export refund system is fertile ground for the fraudsters. A crucial element in control of the export refund system is accurate recording of production. The Court of Auditors report showed that two states in the European Union had a satisfactory system of production records. The Court of Auditors report also said that the records of the Netherlands, Italy and the United Kingdom were never examined. Therefore, the system of production records for export refunds in the United Kingdom--not according to the Labour party or the Euro-sceptics, but according to the Court of Auditors--was "not adequately covered".

Another aspect of the control of fraud in export refunds is the reliability of information provided by member states. Under the relevant regulations and articles, each member state is required to produce, every three months, a report notifying the European Commission of fraud cases. In three member states, such reports were not

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respected: those states were Greece, Italy and the United Kingdom. How can the United Kingdom Government claim to be winning the battle against fraud when, in the crucial matter of export refunds, the Court of Auditors has criticised their record so severely? That is what the Court of Auditors said; but what is the United Kingdom's record over the past decade or so? I was interested by the suggestion of the right hon. Member for Horsham (Sir P. Hordern) that the Commission ought to stop the flow of funds to member states that are not dealing adequately with cases of fraud. That is indeed an interesting concept, but let us examine the United Kingdom's record. Over the past 20 years or so-- the Government have been in office for most of that time--5,775 fraud cases have been reported. The Chancellor said today that the Government were giving the highest possible priority to the defeat of fraud, and that they had made most of the running in the progress made towards that end; but the UK record tells a different story. The Court of Auditors report suggests that only 27 per cent. of the amounts involved in the fraud cases identified in the United Kingdom has been recovered: in other words, nearly three quarters of those amounts went straight into the fraudsters' pockets, and remains there. The Government's complacency strikes me as staggering, and the Court of Auditors has pointed out that the result is far short of what is required.

The common agricultural policy is responsible for the basic problem: until it is fundamentally reformed, fraud will flourish. It is a gluttonous creature, demanding to be fed, and the Government are instrumental in providing it with a financial feast. It was argued in 1992 that the reforms made in that year would put the CAP on a strict diet, but that cannot happen. We should not be fooled by the Chancellor's statement about what will happen by the end of the decade. In 1992, the CAP budget was £21.2 billion; in 1995--four years after we were promised that the reforms would deliver the goods--that budget will increase to £27.1 billion. That is a 25 per cent. increase since 1992, and it is not--as the Chancellor has claimed--a trifle; it is a scandal.

The Chancellor said that he must amend the United Kingdom's contributions by some £720 million. Let me give some further examples of fraud. We can remain within the CAP guideline only by ignoring the annual cost of devaluation--about £1 billion a year--by deferring olive oil payments for future years--about £900,000 a year--and by using reserve money-- about £350,000 a year. That is not contained in any document, but it is outside the guideline; it is another example of the fraudulent way in which we are trying to con the public. The CAP is loaded with fraud, and another fraud is the one being perpetrated on the British people.

The Bill is not acceptable in the terms in which it is drafted, and I hope that hon. Members will support the amendment. The Government have failed to combat fraud; they have no effective policy to reform the CAP; and there is every sign that they will continue to pour more resources down the plughole that is the common agricultural policy. 7.34 pm

Mr. Ray Whitney (Wycombe): Time and again, the hon. Member for Stoke -on-Trent, South (Mr. Stevenson) called for the reform of the common agricultural policy

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and I do not believe that a single Conservative Member would disagree with him; my point to him is that, in 1992, when a reform of the CAP last took place--again, I know of no hon. Member who would deny that that was a step in the right direction--his party gave the reform no support. That puts its record into context.

We have heard a good deal today--and, indeed, from the media in the weeks running up to the debate--about the iniquity and wickedness of this cruel Government, who have demanded that Conservative Members vote for the Bill's Second Reading and turned the vote into a vote of confidence. Words such as "blackmail" and "bullying" have been used. A number of my hon. Friends--a small number, usually known as the Europhobes; that is one thing that the Leader of the Opposition got right--have been going from media studio to media studio complaining about the denial of freedom that has been imposed on them. My hon. Friend the Member for Stafford (Mr. Cash), who is not present now, even prayed in aid the glorious names of Pym and Hampden in connection with the dreadful things that are being done.

If that were the whole truth, it would indeed present a dreadful picture. The picture is giving serious concern to many people throughout the country and many members of party associations, but the reality is entirely different. As so often happens, that reality is being regularly and deliberately obscured by the very agency that is meant to bring enlightenment: the media have worked themselves into an ecstasy--a frenzy-- about the whole episode, joining our party's Europhobes in whipping up a lather of indignation.

In fact, there would be no need for any of this if there were any question that the Opposition operated with the slightest degree of honesty and responsibility. As has been made clear, they entirely support the objectives of own resources enlargement; we can debate the details of that issue, but the effective debate is not on that territory.

This appears to be a debate about fraud. It is a relatively new tactic. I have good reason to believe that the Labour party, certainly, had no intention of missing what it saw as an opportunity to attack and embarrass the Government, knowing the parliamentary arithmetic which, sadly, clearly applies in the Conservative party. Labour's original tactic, or pretext, was to use the social chapter and the differences of view across the House on that subject: that was to be the casus belli of this evening's challenge. Then, riding to Labour's rescue came the report of the Court of Auditors, which was taken up on all sides--and an admirable cause it is.

One of the many ironies in the present circumstances is that the power and impact of the Court of Auditors is now greater, thanks to what was achieved by my right hon. Friend the Prime Minister's initiative as a result of the Maastricht negotiations. The Court is now a Community institution and the impact of its report is therefore that much greater--although it is important to retain in context what my right hon. and learned Friend the Chancellor said about the scale of fraud. Of course, any amount of fraud is too much, but the scale of this fraud has been grossly exaggerated-- although we must go on working to get it right.

That is really just a question of parliamentary tactics, particularly on the part of the Labour party. It is, I think, a measure of the frenzy created by the present political climate that the spotlight is not on the total inconsistency of the Opposition's position: we are seeking to obfuscate

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their support for the European Community and own resources enlargement, and the pretext that they are using. The Opposition use that pretext, not least because their record in combating fraud and in seeking reform of the common agricultural policy is so dreadful. Another irony is that one or two of my hon. Friends might abstain or join the two major Opposition parties in the Division Lobby when their objectives are totally opposed.

My final point is, sadly, addressed largely to Conservative Members. Seven words in the English language are damaging at the moment to the Conservative party, to the Government and to British special interests. They are, "I am in favour of Europe, but." That attitude is sapping and damaging Britain's position in developing a Europe with which we can live and in which we can prosper. One or two of my hon. Friends have taken a consistent and honest position on Europe--they have said from the beginning that they oppose our membership. Of course, they are wrong and deeply misguided, but I respect their opinions and the consistency of their position. My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) joined that band some weeks ago at our party conference in Bournemouth. In his speech in a fringe meeting there, he seemed to accept that Britain would consistently be outvoted by 11 to one on virtually any issue. He is deeply wrong and misinformed, but at least he is now clear that he has joined the ranks of the totally negative.

We can deal with that tiny minority in the Conservative party. It is much smaller than the minority of Labour Members against Europe. The position of Front-Bench Labour party spokesmen flops and flips and it has done so eight times in the past 10 years. At the moment, the pro-Europeans are in the ascendancy, but a large minority of Labour Members are permanently hostile to Europe and we have heard one or two of them in the debate. The minority of Conservative Members who hold such a view is small. I ask them to clarify their position and genuinely to consider it.

Those Conservative Members go around constantly attacking Europe, ignoring its achievements and the vision and potential that Europe offers us, when three or four countries, if Norway gets it right, are knocking on the door to enter Europe, understanding that it is not just a free-trading area. Those three or four countries will become members when my hon. Friends are making it difficult for us to stay in Europe and, by implication, want us to get out. They do great harm not only to our party, but to our country.

The sort of Europe that most hon. Members believe in has huge potential. It is a Europe of nation states, where we collaborate, where our interests are served and where we work out our own salvation where it is most sensible-- at the national level. That is the principle of subsidiarity. We have a great opportunity now and we shall have a wonderful opportunity in 1996. That opportunity, however, will be destroyed unless my hon. Friends stop saying, "I am in favour of Europe, but." They should start saying, "The sort of Europe that we believe in is . . . " Millions and millions of our fellow Europeans would share that sort of Europe with us.

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7.43 pm

Mr. Ieuan Wyn Jones (Ynys Mo n): With the greatest respect to the hon. Member for Wycombe (Mr. Whitney), I think that he was not totally open when he attacked the Opposition parties for seeking to defeat the Government tonight. He knows well why the Opposition parties are lined up against the Government. It is not because we are debating extra money from the United Kingdom budget for the European Union--the opposition has nothing to do with that. It has nothing to do with fraud or reform of the common agricultural policy. The opposition is all to do with confidence in the Government. I cannot understand why, when a natural majority exists in the House for accepting the principles of the Edinburgh summit agreement, the Government have contrived to defeat themselves. I find it amazing that they have decided to make this an issue of confidence. Euro-sceptics on both sides of the House have decided to man the barricades on the issue, which, on the scale of things European, is small beer.

When one considers the decisions that were taken from 1971 to the time of the Maastricht debates, and when one considers what choices face the United Kingdom up to 1996, the possibility of having the Whip withdrawn over a measure such as this beggars belief. I do not understand why Conservative Members have decided to man the barricades.

Let us be clear about the decision that was taken at Edinburgh in 1992 and let us accept the reason why we should support the principle behind that decision. We should support it because the Maastricht treaty contains commitments on social and economic cohesion. There was an acceptance by countries of the European Union that, if they were to achieve economic and monetary union and if they were to improve their economic performance, they needed an increase in structural operations, including structural funds and cohesion funds.

Plaid Cymru agrees that the own resources ceiling should be raised from 1.2 per cent. to 1.27 per cent. in 1999 to enable peripheral and poorer regions of the European Union to benefit from Union membership. We accept that that must happen. The problem we have with the Edinburgh decision is that it does not accept Wales' particular position in the new European Union.

Hon. Members must accept that the Welsh economy, particularly the west Wales economy, has a fragile base. Many parts of rural Wales are still highly dependent on, for example, agriculture and tourism. The economy must diversify. Parts of industrial Wales have suffered from the recession and from structural changes. If all pockets of unemployment are to be reduced, the economy must diversify. The problem is that although, under the Edinburgh agreement, resources for structural operations will increase by 43 per cent. between 1993 and 1999, Wales will not receive the real benefit of that increase. Because we have no voice where it matters in Brussels, we are denied access to funds that will improve Wales' economic performance in the run-up to eventual economic and monetary union. Let us remember that countries that have objective 1 status and that can attract cohesion funds will be the real beneficiaries of the Edinburgh agreement. Let us remember that 62 per cent. of all structural funds will go to regions and nations that benefit from objective 1 status.

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Some regions in the UK will benefit. The highlands and islands of Scotland will benefit for the first time under objective 1. Merseyside will benefit. Northern Ireland has benefited for at least two periods, but areas in Wales could benefit. They qualify under any objective criteria.

Mr. Rowlands: Mid-Glamorgan is one of them.

Mr. Jones: Yes. Gwent, Dyfed and Gwynedd are others.

Because Wales lacks the political clout to secure objective 1 status from Brussels, the Welsh economy will suffer a net loss of at least £800 million between 1995 and 1999. If we had secured the sort of funding that the Edinburgh agreement was supposed to give peripheral and marginal areas, our economic base would have substantially improved.

Wales would qualify also for cohesion funds, because the criterion under the Maastricht treaty is any country having a gross domestic product of less than 90 per cent. of the European Union average. Only four countries meet that criterion--Spain, Portugal, Greece and Ireland. Wales would qualify. The cost to the Welsh economy of failing to attract cohesion funds will be at least £417 million between 1995 and 1999.

The failure of Wales to qualify for objective 1 and cohesion funds will cause the loss of £1.2 billion between 1995 and 1999. If Wales had a proper voice in the European Union, it could have attracted those moneys. They are not extra funds. We ask only for qualification under the existing own resources decision that increased the ceiling at Edinburgh.

We must examine the role of the Secretary of State for Wales in the damage that has been done to the Welsh economy as a result of our failing to have a proper voice in Europe. His predecessor eulogised at a Conservative party conference about what he described as a Europe of the regions. He said that Wales should play its part as a region--we would say, as a nation--in the European Union. He pioneered agreements with other European regions--Baden- Wurttemburg, Rhone-Alpes, Lombardy and Catalonia--and said that Wales should move in the same direction by having an independent, distinctive voice in the Union. Today, we have a Euro-sceptic as Secretary of State for Wales, who gets Euro-sceptic Back Benchers to ask him questions, so that he can say why Wales should look to Westminster rather than to Europe for its salvation. This afternoon, the hon. Member for Colchester, North (Mr. Jenkin) asked if it was true that Wales receives £6 billion a year from Westminster to pay its way. Does not the hon. Gentleman realise that that £6 billion comes from the pockets of Welsh taxpayers? Wales does not receive from Westminster funds to which it has not contributed.

The Secretary of State for Wales underestimates the contribution that Europe can make to the future of the Welsh economy. He denies us access to funds to improve our transport and technology infrastructure, so that Wales could play a full role on the European stage. Wales can flourish within the Union only if it continues to enjoy its own identity and breaks free of the shackles of the centralised British state.

7.53 pm

Mr. John Wilkinson (Ruislip-Northwood): My right hon. Friend the Member for City of London and

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Westminster, South (Mr. Brooke) said that we all brought our own impedimenta to this debate. I confess to bringing my own intellectual bags and baggage. It may be that right hon. and hon. Members say that I habitually travel light. So be it. I admit, however, to a fundamental and deep preconception against the Bill

In many studios and numerous forums over the past few days, I have been asked how I will vote. I answered that I am against the principle of the Bill but would listen to the debate and make up my mind according to the arguments. Having done so, I hold to my original belief that the proposed legislation is neither in the interests of my country nor to the benefit of my constituents. Last Wednesday, my Conservative association's executive committee wrote asking me to give an undertaking that I would support the Government in all votes which they deemed to be issues of confidence. I replied that I could only give my constituents my integrity and judgment-- that I would, in the last resort, do that which I believed to be right.

The matter has been extraordinarily escalated by the Government. When I watched television on Saturday night, I saw my right hon. Friend the Member for Richmond and Barnes (Mr. Hanley). I canvassed for him at a Lambeth by- election, and at Richmond in 1983 when he just squeezed home. He is a constituent of mine and has been a friend for many years. I heard him suggest that Conservative Members who vote against the Government, abstain or even seek to amend legislation were in danger of disciplinary action, losing the Whip and, by implication, being deselected.

Being deselected is an occupational hazard--much less hazardous than some I have known in my past. In any case, it is no bad thing for Members of Parliament to be answerable to their electorate at all times, and I wholeheartedly welcome that. However, the extraordinary congruence of events over the past weeks and days has compelled me even more urgently and insistently to obey my conscience. The Government, blithely and apparently happily, forwent the Conservative commitment to privatise the Post Office, did not press ahead with privatising national air traffic control services, and did not seem to mind that their long-stated commitment to making it easier to mobilise our reserve forces was not to feature in a Bill. Yet they chose to press ahead with this legislation which in my judgment, as I said in the letter to my constituency executive, is not recognisably Conservative.

It is with a heavy heart and some sadness that I say that my original view has not been shaken. Let us consider the financial perspective. How can it be right for a Conservative party that believes--if it believes in anything these days--in controlling public spending to allow an extra 3.3 per cent. in real terms to be assigned per annum to Brussels until the end of this decade? It goes against everything that my right hon. and learned Friend the Chancellor has suggested. As others have remarked, my right hon. and learned Friend will be seeking in his Budget tomorrow to impose cuts in future spending plans.

My right hon. and learned Friend then said, and I refer directly to his speech, that only one of his hon. Friends--my hon. Friend the Member for Billericay (Mrs. Gorman), whose perspicacity in the matter as well as her tenacity and courage I admire--had complained about the cost of the Edinburgh deal when the statement was made to the

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House after the Edinburgh summit. This was hardly surprising, since at that time all our attention was focused on the fact that our Danish friends had voted no in their referendum and we were wondering what arrangement would be cobbled together to secure a different outcome for them in their next referendum.

On amendments, is it really so awful for Conservatives--honest Conservatives, loyal Conservatives, trustworthy Conservatives--to say that it is inappropriate for us to pass such an amendment as that tabled in the name of the Leader of the Opposition? It reads: "That this House believes that the European Communities (Finance) Bill is not an acceptable measure as it increases United Kingdom contributions to the European Union without action by Her Majesty's Government to cut fraud and waste in Europe or to reduce expenditure on the Common Agricultural Policy."

I do not want to personalise the matter or to refer to my right hon. and learned Friend the Chancellor, but I see no way in which one could soft- shoe shuffle around this. It was put to me in a television studio this morning, "Your party, Mr. Wilkinson, are in danger of being labelled as sleaze bags." The proposed legislation does to some degree by statute institutionalise fraud. This will be the case unless efficient and effective methods to curb fraud are put in place before the Bill's enactment. So I do take the amendment seriously. My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) referred to the true cost of membership of the EEC. In his speech there was no sleight of hand about what additional money over and above that previously anticipated we would have to finance. He referred to the true cost up to the end of the decade. The opportunity cost, too--inasmuch as the gross contribution--is just as important as the net cost. It is a fact, is it not, that every penny devoted to Brussels is fuel to the motor of European integration. The motor of European integration is fired and fuelled by our taxpayers' money at a time when--perhaps tomorrow it will be confirmed--our taxpayers will see VAT on domestic fuel doubled and other imposts will be applied from the next financial year. Many taxpayers have suffered deeply in the recession, which was intensified by our membership of the exchange rate mechanism.

We heard speeches from the right hon. Members for Llanelli (Mr. Davies) and for Bethnal Green and Stepney (Mr. Shore) and from the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands)--all of them honest gentlemen and all of whom were respected Ministers in Labour Administrations. They have seen over the years how the institutions of the Community work.

My hon. Friend the Member for Wycombe (Mr. Whitney) referred to the Johnny- come-latelys--those were not his words, but we can refer to ourselves as such--who have only recently understood how much the EEC would cost, unlike my hon. Friend the Member for Southend, East (Sir T. Taylor), who has always comprehended what the EEC was about and how much it would cost. For me, the Damascus road conversion came when, following the first Danish referendum result, I read the Maastricht treaty. It is plain to see--for all who would read it--that it is a blueprint for a united states of Europe. The more money we provide--the Bill is an example--the nearer the day will come when we are part of a super-state without our fellow countrymen ever having had a chance to express their opinion.

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I rest my case on this final point. One of the most treasured, most valued, most prized and most important responsibilities of the House is the voting of supply, which we do by tradition annually. The Bill seeks not quite to grant a blank cheque to Europe, but if the rate of growth continues to be as high as it is now--way above that predicated in December 1992, when the original decision was taken--it will mean a substantial transfer of resources from our fellow countrymen, to their detriment, not only to the wasteful and in some instances corruptly managed central institutions of the embryo European super-state but, through cohesion and structural funds, to Portugal, Spain, Greece, southern Italy, and so on, for industries to be developed there which will grow and compete and put our own people in this country out of work. In those circumstances, how can one say that we are acting as loyal Conservatives and responsible Members of Parliament if we renege on our traditional duties to our constituents and allow ourselves, as this Bill proposes, to bind future Parliaments which will succeed us?

I know that my right hon. Friend the Prime Minister is a very nice man. I have never had cause to exchange a single cross word with him. He has always been a good listener, but that reputation accords ill with his behaviour over the proposed legislation before us. I believe that he has said that one of his great political heroes, apart from Iain Macleod, for whom I share his admiration--his rhetoric was formidable and was certainly an inspiration to many, including myself--was Neville Chamberlain. To me, and for the Conservative party, today was as climactic a moment as when the anti-appeasers stood their ground over Munich in 1938. It was my hon. Friend the Member for Stafford (Mr. Cash) who, at a private meeting--I beg his indulgence if I quote him in his absence--said that we should remember that Winston had to face a vote of confidence in his own constituency when he voted against the Government over Munich.

We must not take analogies too far, but it seems to me that Her Majesty's Government bow down and appease Brussels all the way along the line and the danger is that my right hon. Friend the Prime Minister, like Neville Chamberlain, will be swept away from office, perhaps as a consequence of his weakness, some two years hence. My only hope is that our party will not be swept to destruction in that same tidal wave. I believe that, if we stand our ground and hold fast to what we believe to be right today, we are much less likely to be so.

8.8 pm

Mr. Nigel Spearing (Newham, South): The hon. Member for Ruislip- Northwood (Mr. Wilkinson) mentioned Neville Chamberlain. I happen to remember the said gentleman as Prime Minister. People said that he was very good for Birmingham but he could not deal with foreign affairs. Perhaps that might be the same with the present Prime Minister, the nice gentleman to whom the hon. Gentleman referred just now.

The hon. Gentleman refocused our attention on supply. The European Community constantly reiterates its basic democracy. I would challenge whether, in fact, our form of democracy is at all compatible with the treaty's. I believe that Government after Government will be entangled in treaties that are incapable of providing the fruit that they promise, because of their constitutional

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structure, which prevents some hon. Members from doing what they want in this country and which I believe does not allow the Labour party to do what it would wish to if such treaties did not exist. The difference between Neville Chamberlain's situation and the present is that whereas Chamberlain was up against armed force, all Prime Ministers and all Governments of this country for the foreseeable future, unless the position changes, will be fighting the treaties, which are difficult to alter. That is the problem that will face any Government.

The right hon. Member for Northavon (Sir J. Cope), a former Treasury Minister, reminded us that this was economic warfare. Indeed it is, because the treaties set up economic warfare and economic competition. The Conservative party believes in economic competition in this country and pretty well everywhere else. If there is to be economic competition, one has to have a legislative framework. Once the legislative framework has been set, by democratic means one hopes, one knows where one is. The trouble with the treaties is that they get negotiation and legislation hopelessly tangled together. The framework of the economy, in terms of legislation, gets tangled up with finance and we find ourselves in constant difficulty. Truth is supposed to be one of the first casualties of war. Unfortunately, truth has become the casualty of the treaties and of the economic warfare within the Community. That has been vividly illustrated today. A former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), has confessed to us that the granting of substantial sums to eastern Europe for reconstruction was done over a dinner table. Is that the way in which to vote money? Of course not. Did we know about that? No, but we know the truth now because more and more hon. Members with experience are spilling the beans.

What about Edinburgh? We are told tonight, "Oh, under the Edinburgh arrangement, we had to pay up because we had to ensure that the Spaniards would move forward with Europe." Why should there always be a succession of changes in the European Community? Why does it have to introduce yet another move towards centralisation before the previous move has been assessed and before its results have been analysed? There is an answer to that question, which I shall not venture tonight, although we must bear that point in mind. As the hon. Member for Ruislip-Northwood said, when the Edinburgh summit was announced, we were told that the discussions would concern the Danes, enlargement and this, that and the other. We now hear that the agreement was made to keep the Spaniards on side and to reconstruct eastern Europe. That is why the Government then agreed not just to retention of the rebate--that is fine for the moment--but to an expansion of the expenditure envelope. That is what we now discover two years on.

The truth is a casualty even inside the Cabinet. I heard the Secretary of State for Defence say on television last week that the Bill was a treaty commitment. I intervened during the speech by my hon. Friend the Member for Dunfermline, East (Mr. Brown) to remind him and, indeed, the Chancellor-- who has reminded us that he does not know what the treaty is about--about the nature of that commitment. The Chancellor said that the Bill was a treaty commitment and I pointed out that article 201 of

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the Maastricht treaty makes it exclusively the responsibility of each country's legislature, in our case this House.

Article 201 says that after consulting the European Parliament on the proposals, the Council, acting unanimously,

"shall lay down provisions . . . which it shall recommend to the Member States for adoption in accordance with their respective constitutional requirements."

That was to happen after the proposal had been put to the Council and to the Edinburgh summit. In other words, far from saying that it is a constitutional duty of the House to pass the Bill, the treaty gives the House the option to say no. It also gives the House the option to say no to supply or, as the Labour amendment says, the option to say no unless and until action is taken on fraud, waste and the common agricultural policy. The amendment does not wipe out the possibility of enactment altogether. Unless a legislative assembly or a democratic body representing taxpayers has the ability to control expenditure, both in taxation and the distribution of expenditure, it cannot control the Government.

The Government, by coming along tonight on the basis of confidence, are confessing that in earlier negotiations, behind closed doors and in secret, they committed the House and the country to expenditure. The Government say that the Bill is so important for future negotiations that they will have to face that for the good of the country, they must get it through, whatever its merits, and eschew the opportunity of saying, "unless and until there is better control of misappropriation and fraud, and better this and better that." If the House agrees to a Second Reading tonight, it will break one of the historic and fundamental defences of the citizens of this country because it will be agreeing supply reluctantly. In some ways, that is redolent of the supply that used to have to be granted to the monarch. Parliament used to have to supply the deficit in the monarch's own accounts from the revenues that it collected. It supplied the difference between the monarch's accounts and his expenditure. That is the basis of what we are now doing.

I want to be a little more popular in my remaining points. What I have said will be clear to those in the House today, but I am sure that the public are completely foxed by what has been going on in the past few weeks. Unless I was a Member of this House, I think that I would be foxed. Even now, I am not altogether sure of certain things because the arithmetic is so complex, and so on. We do not know what the extra payment will be. As the Chancellor himself told us, the figure is calculated retrospectively and it depends on so many economic factors that we do not know what it will be.

I used to have a constituent whom I will call Bob who is, unfortunately, no longer with us. He was a gatekeeper at Tate and Lyle and he had been in the forces. He used to question me closely on these matters. When the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) was negotiating all this, he came to a halt and Lord Rippon came to a stop. The right hon. Member for Old Bexley and Sidcup and President Pompidou had a chat and after that chat, negotiations went ahead. Bob said to me, "That Pompidou, he saw Mr. Heath coming." Bob would say to me now, "Why is the House having to do this?" I would say, "Because it is like a cheque that has to have two signatures. Mr. Major signed two years ago in Edinburgh and he is now asking us, as the second

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signatory, to sign. The problem is that we did not understand at the time--and it was not made clear--why our country was signing it. We have the right not to sign it."

Bob would say, "But look, we are going to get more back, aren't we? All this money is coming back to us." I would say, "Not exactly because at the moment, we are paying much more in than we get back." The 1992 figures tell their own story. Gross contribution is £6.7 billion, receipts are £2.8 billion and net receipts are £3.9 billion. The rebate is £1.8 billion and the final net contribution is £2.1 billion. That rebate is all important, as has been admitted. Bob would say, "That's all right. It is in the treaty, isn't it?" I would say, "Sorry, Bob, but the answer is no. It runs out in 1999." Bob would ask, "What happens then?" I would say, "I happen to know that the Germans are very keen on doing something about the situation, not just with us but with France, because they are the major contributors and Germany is a bigger country than the United Kingdom. The Germans have said that they do not want the situation to continue into the next century." Bob would say, "Surely people understand that. It is only a leasehold." I would say, "Ah, Bob, but the EC works like this. It works by the current politicians getting off the hook by providing future politicians with insoluble problems. When we get to a problem, the reason why a decision was taken will have been forgotten and the people responsible will have retired and be out of the way." It happens like that time and again.

I believe that Bob has a point. One of the problems is that everywhere in the country--we know this from our constituencies--we are offered funds. Funds are not just being misapplied, as we know, but are questionable. The other day, the Select Committee on European Legislation discussed a proposal relating to education. The proposal said that 1996, the year of the great treaty, will be the year of lifelong education and the European Community will spend the equivalent of £6 million telling us, all over the Community, that education in life is so important. There is hardly a person in this country who would not agree with that. Of course it is important. Is that money going towards further or adult education? No, yet the EC is telling us through agencies, through advertising, through projects and distribution and conferences just how important education is. That is the sort of thing for which we may have to pay.

Bob would say, "Well Nigel, that is not very good, but, of course, we still have our foreign policy, haven't we?" I would say, "Well no, not exactly, Bob. We now have a common foreign policy." Bob would say "Well, what about the United Nations and the Security Council?" I would say, "Well, I am afraid that that is common as well because we have a common foreign policy. We sort of co-ordinate life and we have an obligation to that".

Bob was an ex-service man and he would say to me, "What about our Army? We have the Army and the Queen is the head of the Army. Surely we can send our soldiers where we like." I would say, "Well, I would like to think that. But in any peace operation, for anything such as the tragedy that we are now seeing in the former Yugoslavia, there is a common policy." He would say, "Who would make the decision? Would it be our Parliament, or the Queen?" I would say, "No, I am sorry, Bob. It would be the Union president." He would ask, "Who is the Union president?" I would say, "Well, we do

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not know." Bob would say, "What do you mean, you don't know? Surely you, Nigel, know all about the EC. Who is the Union president?" I would say, "It changes every six months." "Oh," he would say, "so in 1996 or 1997, when we have to send some troops somewhere and it is under the European Union, not the United Nations or NATO, and we do not know how it will work out, to whom will they be accountable?" I would say, "Under the treaty terms that we have now signed, they will be accountable to the president of the Union for that six months." Bob would say to me, "Nigel, are you mad or are you telling me the truth?" I would say, "Unfortunately, Bob, I am telling you the truth."

I do not think that any hon. Member in the House would challenge anything that I have said in respect of fact in my speech. We have a Black Rod of Brussels who knocks on the door of this Chamber. The Black Rod of Brussels is summoning us not to a legislative assembly, one which we in the end control, but to decisions which have been made behind closed doors by the princes of Europe--those now and in the future.

8.21 pm

Mr. Richard Shepherd (Aldridge-Brownhills): The hon. Member for Newham, South (Mr. Spearing) is right. The country is confused. Two weeks ago, the Government began with a putative majority of 500--more than 500-- on this issue. By the end of last week, we were into a suicide pact. Yet the atmosphere in the House is hardly the thought that the Government will- -remotely--lose tonight. There is no sense of urgency about it; it is a nonsense found out. I cannot explain to anyone why hon. Members may have the Whip withdrawn, or why the Government perceive a crisis on this issue, above all other issues, in their legislative programme. I merely reflect on the curiosity of it. I shall return to that point a little later.

I shall look at two statements made by the Chancellor of the Exchequer. We have not discussed European finance in the terms that we have a control over it, or that we may stop the sending of money, taxes, tariffs, or levies to Brussels, since 1988. The Chancellor of the Exchequer said of the taxation of the United Kingdom by Brussels, "It is utterly beyond the control of this House." That was his statement during his powerful speech this afternoon. He has actually sounded the death knell of the House, has he not? We were founded on the control of supply, so that our citizens would bear the charges and impulse of Government for the purposes of this country and that we had the final word on it. "No, no," says the Chancellor, "it is now utterly beyond the control of this House."

I have no vanity about that in a personal sense. The Chancellor means that taxation is now utterly beyond the control of the electorate, the people, the citizens of this country who make our industry and our wealth. They are now taxed by treaty and sent to a foreign capital, Brussels, as I see it, without any intervention from the House and with no annual review, which the Government currently have to face in seeking the funds to maintain our own institutions and our own patterns of expenditure. No, no, this is more sacred than that, because we may not interfere.

All I conclude from those words of the Chancellor of the Exchequer is: give Brussels a penny more, and the day after tomorrow, when the Bill has been passed, no

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matter the fraud, waste or deception, he will again announce that those moneys, cast aside in one evening, are now also utterly beyond the control of this House, and therefore the people. Perhaps the Cabinet will reflect that that may be the source of discontent which ignites this nation on the European issue. Once a passage has been made, that is irrevocable and irreversible if the bureaucrats and the unelected people who now govern us in fundamental law have their way. That was what the noble Lady Thatcher meant when she said that it was a ratchet and that once it gained one inch, it was for ever given. That is what we have seen in Europe.

When I first came to the House, this Europe did not have the presumption or the pretension that it could tax us directly without us having a word, without us being able to say that the exigencies of Britain, our care, or our interests in our own people, must come first. The Chancellor of the Exchequer made light of the costs of the membership of a club and, of course, concentrated, as all Governments have, on merely the net contribution. I was thrilled when my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), the former Chancellor--it always takes the leaving of office to discover truths; it is one of the most remarkable things in this House--discovered the quantum. If I were to demur from anything that he said, I would say that he took Lady Thatcher's abatement out of the quantum. In point of fact, under the Community taxation rules, we have to pay the full quantum, so that by 1996-97, it will be £10.3 billion. Then, one year later, the rebate will be paid back. Therefore, the burden of taxation in the current year falls on us all as the total quantum. As my right hon. Friend rightly pointed out, are those objectives and matters on which we should necessarily spend our own money? That is a question that is properly for the House of Commons.

Forgive me for particularising, but I thought that wonderful speeches were made by two Opposition Members. One was made by the right hon. Member for Llanelli (Mr. Davies), to which we have become used, and the other was made by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). They reminded us of what the essential heart of our institution is about. If we cannot control money, we cannot control our own Government. Yet, our own Government turn round to us and blithely say that those controls are now utterly beyond the control of this House and therefore of the people. That is why this is a fierce debate in one sense. We believe in the rights of our electorate and, as many hon. Members have said, we believe that we are here only because people have put trust in us to express honourably and truthfully what we feel on the great public policy issues of our day.

Why, of all the measures, has it been decided that this is a confidence measure? I am rather old-fashioned. My view is that if a Government propose a measure, it is defeated and they believe that the loss of that measure is so profound to their existence, they should stand by a separate confidence motion. That used to be the tradition of the House. The danger to the House is that if the Government start particularising every piece of legislation as a confidence motion, in the short term, they can bring about the ruin of their country and, in the long term, they can bring about their own ruin.

Every Conservative treats this issue solemnly because of the fear that, in the balance of judgment in the cabal of Cabinet members, who sat together and weighed up the

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issues, they came to the conclusion-- whether due to spite, not fact--that the destruction of my party and of the constituency associations across the country would be the consequences of the Government not getting their way on what Americans would call merely a line amendment to the budget. We are considering a small matter, almost immaterial in public expenditure. So we all ask ourselves why the Government draw the line on this one issue--note that it is not the debate next week about VAT on domestic fuel. If the Government lose that measure, that is just a small part of an overall Budget. The House has not denied the Government the funds to maintain the government of this country and its institutions. One ponders why, and we must listen very carefully to what the Government have to say in that regard.

My second bite at the speech made by my right hon. and learned Friend the Chancellor of the Exchequer is that he said that we are talking about a major international agreement. Other hon. Members have referred to the nature of this major international agreement. Let us be quite clear: this is not the end of the cold war as in Paris; this is not a meeting between Mrs. Thatcher and Mr. Reagan agreeing on solemn undertakings in the advancement of our international benefit.

This is now meant to be a Community in which, I regret, my own Front Bench insisted on us all becoming citizens together. When the Council issued its direction four weeks ago that the process should come forward, that Council comprised common citizens of a Union to which I am not attracted.

How can one argue that one's common citizen--one's neighbour--has formed a solemn international agreement? One cannot do that. That is part of the deception with such arguments. One can use the argument one way or the other. I am now very used to that from Front-Bench spokesmen. They say one thing today and another tomorrow, and they hope that we do not notice the difference. They have a pretty good stab at reconciling matters.

What we now have is jovial bluff. We are told that this is a solemn international agreement with citizens sitting around the table prepared to divvy up, in an unchallengeable fashion for a period of time, indefinite in the memories of this House, and forward for years, a certain source of finance. That is the solemn international agreement, but it is not borne out by the treaty. That is a proper mechanism which supports, according to the treaty and our own domestic law, the supremacy of the House in these matters. The Government must follow the traditional methods and constitutional arrangements of this country, as must each other respective member of the Union. There is nothing odd about that. As I said, we shall have a vote on VAT next week. The Government do not threaten resignation if they lose the increase in VAT. In fact, I rather suspect that there would be a cheer from Conservative Benches if that occurred.

One should reflect on why, in all the legislative programme, this one tiny issue is set out. I am going to suggest something that I find very uncomfortable. We are governed by a cabal that is federalist in its intentions. It has told us, "Softly, softly, catchee monkey." It has told us over the years, "We resist." However, I listened to a Labour Government and read a Labour White Paper which said that if we were to vote for common

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arrangements for free trade, we should not believe that we would lose control over anything as we had an absolute veto on everything. The Foreign Secretary does not have a view on anything in these matters. He is an agnostic on the single currency. On the other hand, a powerful, young and thrusting hopeful in Cabinet tells me that he thinks that this is dreadful and that it will have consequences. With the brio from the Chancellor of the Exchequer, he understands why we should join. What guidance. On the one hand, yes; on the other hand, no and, from the Foreign Secretary, "I'm an agnostic." No wonder there is concern and disbelief about the Government's position. It is a matter of, "Not by my words do you judge me, but by my deeds." Since I have been a Member of this place, we started from a position of very little government from Europe. We are ending up with a formidable body of law in respect of which the Chancellor says that it is utterly beyond the reach of this House. The constitutional position is wrong if he is right. However, I know that he is wrong: it is within the reach of this House.

What do we do about this? We are confronted with the fact that we no longer have a free choice in the matter. I can speak only for myself. However, I was first chosen by good and honourable people. I was elected by an electorate whom I hold to be good and honourable. Like every other hon. Member, I have tried to honour those relationships. If the Government think that by stuffing my mouth with gold or offers of reward, or by withdrawing the Whip, they can alter the first trust in a democracy--that of a Member and his constituency--they misjudge their party and the Members of this House.

We must be true to ourselves, or the electorate will have no confidence in the most important institution in our democracy--a free Parliament. In the end, that is what I stand by. I do not wish to see a Government go down. We know that that is a fatuous proposition: they will not go down. How have we got into this state? I ask the House to reflect on the men who comprise the Cabinet and to think: is their judgment sound in these matters that they can create turmoil of this nature?

I do not want the Government to go because I believe that the programmes that we have set out and that we have struggled to accomplish are worth while and appropriate. However, I say this in a personal vein so that they may understand the agony that they have placed on their own hon. Members: how could I face my electorate, when clearly I have stood before them and said, "I stand not for giving money to something that is corrupt."? From the time I was born until today, I have been told that if people spend money foolishly, withhold the source of the funds. That was a principle of this House. Where do we stand without it?

The Government have misjudged the temper of their own nation and they have misjudged the truthful intent of their own party. They will see people go through the Lobby, but in their hearts they are damned.

8.36 pm

Mr. Stuart Randall (Kingston upon Hull, West): I had not planned to speak in this debate, but so many of the speeches have been so utterly depressing that I felt that I needed to say something that sounded pro- European Union and not like a lot of anti-European rhetoric. However, I must confess that some of the views are

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