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Roger Casale (Wimbledon): Is the hon. Gentleman arguing that Britain should not be a net contributor to the EU budget? If so, which countries does he believe should be net contributors? Obviously, some countries must be net contributors and others net gainers from the budget.

Sir Teddy Taylor: Had I been in charge of the negotiations, I would have said that there should be no budget at all. In the context of Europe, if we ask what benefit comes from the expenditure on gold, the answer is none at all. What advantage does anyone derive from the CAP? It is the biggest protection racket ever devised by man. The farmers had a wonderful time for the first five years, but now farmers in all constituencies are suffering. How has Europe helped the fishing industry?

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How has it helped anyone? Instead of trying to renegotiate the amounts of money involved, we should ask whether there is any point at all. The hon. Gentleman is an enthusiast for the EEC, but does he really think that Europe would be worse off if there were no expenditure at all? I think that it would be much better for Europe, its industry and its people if there were none.

Roger Casale: In one respect, I agree with the hon. Gentleman: the EU is in need of reform. The CAP in particular is in need of drastic reforms. However, what arguments and tactics would he adopt to bring about such reforms?

Sir Teddy Taylor: To be honest, if the hon. Gentleman is talking about reforming the CAP, he should forget about it—it is not possible, it will never happen. The sort of mini-changes that are being made simply enable us to kid ourselves, because when decisions are made by majority vote, it is not possible to get the sort of structural changes that are needed—majority agreement will never be reached. Governments of both parties have tried to mislead themselves into believing that reforms can be achieved and that renegotiation is on its way, but they are kidding themselves. We have power only when money is being requested—that is the time at which we should promote change.

I ask the hon. Gentleman and the current Government, as I asked the previous Government, to think about the point of European expenditure and to consider whether Europe would be better off if we had no expenditure at all. I mentioned the regional grants that will pour into my constituency and cost this country twice as much as the grants themselves. We ask whether the money will be wisely spent, but when we look around Britain for silly things on which money has been spent, we find that grants have formed the basis for many of them. We must think about carefully about those questions.

Because of our relationship with Europe as set out in the Bill, we have to do some silly things, one of which is to promote or pump up the euro. Everyone knows that all previous single currencies have collapsed: unless we are like America, with one Government, one Treasury and a feeling of nationhood, the single currency will collapse. We all know that that will happen to the euro, but we have been propping it up in various ways, one of which—apart from direct intervention—has been to tell the Bank of England to sell its gold and put 40 per cent. of the money into euros.

The Bank has sold more than 200 tonnes of gold. All I want to know is how much money we have lost. The price of gold has, unfortunately, risen since we sold. We know that the price of the euro today is about the lowest it has ever been and that it has gone down some way since we bought euros. I simply want to know how much we have lost. I think that that is a reasonable question. When I asked Ministers that question, they told me that it would be misleading to give me that information, so I wrote to that terribly nice man, Sir Edward George, Governor of the Bank of England, asking him to tell me. He replied that he was sorry, but that he believed

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Ours is meant to be a democratic assembly and I think that the taxpayer is entitled to know how much money has been lost by selling the gold, how much has been lost by buying all those euros, how many euros we have, and what is going to happen.

If we look back into history, we will see that it always happens the same way. Say a country—for example, Ireland or Germany—is doing too well and is too prosperous—

Roger Casale: Given that the hon. Gentleman clearly believes that the EU costs too much and that reform is impossible, is it his view that Britain should withdraw altogether from the EU?

Sir Teddy Taylor: That is not possible. I know that the hon. Gentleman has not been a Member of Parliament long, but he must wake up to reality: Britain does not have the power to withdraw from the EU. I cannot be drawn into wider issues, because this is a Second Reading debate, but be should know that we cannot withdraw. Even if everyone wanted to leave the EC and if every Member of Parliament including the Prime Minister and the Leader of the Opposition voted for it, it would not work: we would be taken to the courts for breaching the treaties. We do not have the power to do it. That is why the hon. Gentleman should adopt an extremely cautious approach to all new developments—all the new money spent and all the new powers given away.

The sad fact is that we cannot withdraw—Britain does not have the power. If we passed a Bill stating our intention to withdraw from the EEC, it would not work. The European treaties are not like a treaty with, say, Belgium or France, which can be torn up and that is that. We have handed over the power; it has gone. I voted against every one of those treaties, as the hon. Gentleman will find if he cares to look up my record; I am sorry that we ever agreed to them. Now, because Europe is heading for the horrible problems that always accompany a single currency, we have to be extremely careful about giving away additional power. Most important of all, we must avoid being over-optimistic.

Mr. Barry Gardiner (Brent, North): I am trying to follow the hon. Gentleman's logic—I am sure it is in there somewhere, but I am not with it at the moment. If he accepts that withdrawal is impossible and he opposes the Bill—I presume that he will vote against Second Reading—he should argue for something else in its place, but no amendment to the Second Reading motion has been tabled. What is the logic of his position? Would we simply be left—

Mr. Deputy Speaker: Order. The hon. Gentleman is embarking on a speech, not making an intervention, and I suspect that he is going to lead the hon. Member for Rochford and Southend, East (Sir T. Taylor) astray if he is not careful.

Sir Teddy Taylor: Quite right, Mr. Deputy Speaker. I do not want to be drawn into those broader issues.

I would argue for the following simple course of action. We should say that we will not agree to any new treaty until an escape clause is written in, so that countries that

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want to leave can legally do so if their Governments and their people want that. We do not have that power now, but it would be great if we had. However, that is a wider issue.

I have spoken for far too long, so I shall forget about the rest of my speech and conclude by making one simple and sincere point to the Government. Please stop being over-confident and thinking that everything will be better. Many people have said that they will reform the CAP, but look at the facts—it is not happened. We have only made a tiny change in prices and transferred the responsibility for paying grants called area payments to our national Governments.

The Government should stop kidding themselves—in particular, they should stop kidding themselves that the Bill will not cost more money. Provisions for European taxes have been written in. Such taxes have not been levied yet, but the fact is that everything in previous treaties has happened, because the Europeans say that we have agreed to some proposition and we have to agree to something that emerges from it. We are getting in deeper and deeper. I hope that the Government will stop being over-optimistic and that they will stop trying to pretend that things are happening that are not happening.

I regard the Bill as perhaps the best deal that the Government could negotiate in the circumstances, but it will do us no good. It will open the way to our losing additional power and I am convinced that, in two years' time, our net contribution will be far greater than the £4 billion it was this year.

7.59 pm

Mr. David Drew (Stroud): I am delighted to speak about the Bill on Second Reading. Although I missed some of the proceedings, including most of the maiden speeches, I picked up the flavour, or tenor, of the debate from the introductory speeches.

I heard part of the very good maiden speech of my hon. Friend the Member for Caerphilly (Mr. David) and what I suppose can be described as the re-maiden speech of the hon. Member for Castle Point (Dr. Spink). I am not sure what a retread is—I thought it was something that one put on one's car when one could not afford a new wheel—but I am sure that we could use a far more complimentary word to describe his speech. I share some common ground with the hon. Gentleman, who referred to the success of his football team, Canvey Island; their success was achieved at the expense of my football team, Forest Green Rovers, who lost in the final of the Football Association trophy. Perhaps we can turn that around in future.

Before turning to the Bill, I welcome my hon. Friend the Economic Secretary to the Front Bench. I hope that she has an enjoyable time as a Treasury Minister and that I do not make her job too difficult this evening.

I wish to concentrate on reform of the common agricultural policy. Most Members will know that in the previous Parliament my interest was mainly in agriculture, which is not unimportant. If the Berlin Council and the legislation that has consequently been introduced are to succeed, it is through the reform of agriculture that moneys will be allowed to square the circle. I make no apology for concentrating on that part of the package but, in doing so, I am sure that I can comment on the wider package.

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I share the view of my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard) that the Bill is rather opaque and that it is therefore difficult to know exactly how it will work in practice. In particular, I am still struggling with the mechanism by which we move from a VAT contributory regime to one based on the GNP of the nations of the EU. I am sure that that will make sense in due course but, for the moment, it leaves me mystified. I am certain that we will get further clarification as debate proceeds in this place.

In concentrating on the way in which the CAP reform is a crucial part of the whole package, I should like to highlight two possible dilemmas that have to be overcome for change to be handled properly. The first dilemma, as has already been said, is that overall reform is dependent on agricultural reform—one supposes that that involves the reduction of the support mechanism payments through the production mechanism. If the EU is to continue, that system will need radical reform; if it is not reformed, the EU will be bankrupted when the new countries join. I know that there is a strength of purpose and a desire to do good things, and although I do not go along entirely with the remarks of the hon. Member for Rochford and Southend, East (Sir T. Taylor), I feel that there have been many missed opportunities in reform of the CAP. If we are to get it right this time, reform must be radical and complete; it must recognise that the new countries coming in will want a say in the regime that will come into play even before they sign on the dotted line to join the EU.

The second dilemma relates to the first and concerns the subject that I raised when I intervened on the hon. Member for Kingston and Surbiton (Mr. Davey), the spokesperson for the Liberal Democrats. The changes are predicated on the fact that reform of the CAP regime will mean, effectively, moving towards a free market system, which will further enhance the globalisation of agriculture. I am pointing out that dilemma because the producers and consumers whom I talk to are rather sceptical about the benefits of globalisation. We have only to look at the recent protests which, in some ways, littered the streets of the major European capitals—I do not excuse the protesters' behaviour—to realise that certain aspects of globalisation are, at the very least, questionable.

We are talking not just about the necessary reform of agriculture per se, but about what will come with that. Such reform is linked to the World Trade Organisation and the gradual liberalisation of our trade. There was a dispute about the multilateral agreement on investment and, more recently, an argument about the possible globalisation of services, both of which have led to a great reaction, most of it negative. Agriculture involves a further aspect: in many ways, the markets already trade on it, but it falls between the extreme of the free market and the protected ways in which different parts of the world control the supply and purchase of agricultural products.

We are experiencing a dilemma concerning our handling of that problem. Unless we can resolve that, finance will not be available to allow the EU to continue, expand and take care of existing problems. I therefore urge my hon. Friend the Economic Secretary to explain how we can push forward agricultural changes and guarantee that that will take place before there is any further expansion; we must not threaten certain things, as some of us believe that they could have a deleterious effect on the future of agriculture.

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I know that the easy answer is that we should look at a different way of funding agriculture and encourage different agricultural systems. I certainly welcome what will come with the change in legislation: the encouragement of more rural development and the expectation that the second pillar—which has been referred to as a stump—will grow a limb that can stand up on its own, rather than being supported by other mechanisms. If we are to change agriculture for the better, that cannot happen a day too soon. Certainly, producers, who are currently facing difficulties, want assurance that change will not be achieved at the cost of any further difficulties in their production.

Also, consumers need to be satisfied that the way that they can obtain food is by paying a fair price. I have never been one to argue, in this place or outside, that that should be the lowest price. I worry when people speak of agricultural benefits for the consumer in the form of lower prices alone. Have we not learned enough from recent crises to know that food cannot be produced at a cheaper price without impairing quality or choice? We must make sure that a balance is struck, and I am not sure that free market solutions through the globalisation of agricultural production are the best way to achieve that.

Several other speakers mentioned the fact that, as a result of the Berlin Council, the British rebate will be guaranteed and other countries will not be asked to contribute more. Wearing my agricultural hat, I must say that I have always had reservations about the true benefits of the Fontainebleau opt-out and the fact that we received a rebate of our contribution. Some of the problems visited upon the agricultural industry of late are due to the fact that when we call, as many of us do, for agrimonetary compensation, most of it comes from the British Exchequer, because we are locked into the price and currency mechanisms. It was always said that 78p in the pound would be paid back in that way.

We may find that acceptable, given the wider benefits that have accrued from Fontainebleau, but I do not believe that that is as good a deal as some people would have us believe. We are building upon it, as it is difficult to go backwards and consider a new mechanism. If the UK renegotiates its rebate, other countries will expect to be able to do the same. It is interesting to note that four countries have been able to reduce the amount that they contribute towards our rebate. I wonder how they achieved that; perhaps we can learn from them. If lower contributions are paid and higher rebates are demanded, somebody has to pay for that. Like the insurance principle, if one pays less in, there is less available when one needs to draw the money out. That has cost us dear in recent times.

Those are the two fundamental dilemmas facing us. I would be far happier if we got on with agricultural reform, so that the CAP could meet the needs of both producers and consumers. There are, of course, many other pressures on the system, not the least of which are those that will result from the expansion of the EU in due course.

I do not know whether either or both of the two main Opposition parties intend to vote against Second Reading tonight. In the main Opposition party, there seems to be a split between those who want a plague on all European houses, and who will see the Bill as a further ratcheting

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up of integration and will therefore vote against it on principle, and those who will take a more pragmatic stance on the Bill. Among some of those bidding for the leadership, there seems to be the view that the party misjudged what the British people would stand for with regard to further European progression. They are therefore seeking a compromise position. When they present their tax and spend proposals, it will be interesting to see whether they aim to draw back money from Europe or take a more pragmatic line.

The Liberal Democrats remain the most enthusiastic Europeans in this place, notwithstanding the views expressed by some of my hon. Friends. The Liberal Democrat view seems to be that an opportunity was missed, and that the changes proposed in Berlin could have progressed further and faster. I am not sure whether that is realpolitik and therefore possible, or just a typically optimistic stance.

Some positive measures have come out of Berlin. If we can get the budget under control—a feature that some of us thought was lacking from previous negotiations—that would be widely welcomed. Only time will tell whether that will be possible and whether it will yield further dividends through more reform in the future. I see the merits of the proposals, but if change is to occur, the process must be speeded up and must carry the people along with it. That will not be easy, because of the scepticism being expressed about globalisation. Perhaps other hon. Members can help me out of that dilemma. I look forward to hearing from my hon. Friend the Economic Secretary how the changes are to be made real.

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