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7.10 p.m.

Lord Bruce of Donington: My Lords, it is always a very great pleasure to follow the noble Lord, Lord Boyd-Carpenter, in economic debates of this kind. At the outset I should like to associate myself with his remarks about the imposition of a 17.5 per cent. rate of VAT which I believe is quite monstrous. At the same time I am aware of the expenditure constraints on the Government at present. Quite clearly, it is in the best interests of the nation as a whole that such expenditure as the Government believe it right to make is made with the object of securing the greatest possible value for money; that there should be as little waste as possible; the maximum amount of efficiency in financial administration, and so on.

In that connection later I propose to follow the noble Lord's remarks concerning the new own resources decision that has to be made on the limitation of the amount of funds to be provided to the European Community. As time passes, our own affairs, as I shall seek to show, are increasingly bound up with the

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financial decisions which are made in Brussels as well as those which are made here in support or otherwise of what is decided in Brussels.

Before dealing with that aspect of the matter I must deal with the supposition that has frequently been expressed, although in pleasant and elegant terms, by the Benches opposite about the prosperity and prospects of this country. According to the noble Earl, Lord Ferrers, the economy is now soundly based, inflation is well down and we have the best prospects for 20 or 30 years. It is customary--and it takes very strong people to do otherwise--to look at it from one's own point of view, position in society, standard of living, one's own personal prospects and matters of that nature. It is perhaps as well that the deputy chairman of the Conservative Party should remind those of us who may have forgotten that:

    "There is a feeling of powerlessness and insecurity about jobs, housing, health service, business, family value, crime etc and no vision of where we are heading".

He continues,

    "the reality is now that the rich are getting richer on the backs of the rest, who are getting poorer".

Those are the remarks of the deputy chairman of the Conservative Party addressed to the Prime Minister and his close associates. It differs from the version that we heard from the noble Earl, Lord Ferrers, this afternoon. It is of course the harsh reality that the living standards of at least one-third of the British population are below those which the Council of Europe has determined to be the poverty level. In point of fact, it is true that the bottom one-tenth of our population has suffered from deprivation since the Government came into office and that in real terms their living conditions and the funds available to them have declined by about 10 per cent. At the same time the fortunes of those in the upper section of our community have improved by something like 60 per cent. in money terms. Those are the realities.

When we talk about economic affairs--with all due respect to my noble friend Lord Eatwell who is a professional economist--we are talking in terms of political economics. A really vibrant society which is at ease with itself is a vital requirement for the continuous advancement of the living standards of all its people. One cannot expect an economy to function properly if it is based on the deliberate creation or the conscious tolerance of an underclass who increasingly cannot share in the personal serenity which is given to so many of us--perhaps to the remaining half or three-quarters of the population. The underclass live in appalling conditions. They live in houses which are unfit for human habitation. They live without any perspective enabling them to hold any kind of constructive view of the society in which they live. When they are not sleeping in doorways they are crowded into hovels.

One cannot speak of an expanding economy, one which is prospering or which is sound, if conditions of that kind are present, unless there exists some essence of solidarity between all the income ranges in this country and unless people can reach some fundamental agreement and confidence, not necessarily expressed in terms of income or wealth equality, but through a sense

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of belonging to a nation or a community. Those factors lie at the root of any economy which can even approach calling itself sound, mildly prosperous or stable.

What bothers me is that the Government seem to talk with two voices. We have one voice in the deputy chairman who obviously has contact with the people. The Government's definitions of the various types of expenditure on which they embark make the mind boggle. At present, in order to achieve financial stability, as they call it, or sound finance, as the noble Lord, Lord Boyd-Carpenter, would call it, we have some most extraordinary expenditures. I shall not go into all of them, but they include the literally billions of pounds which are contributed to the European Community. The figures show that over the past 15 years, after accounting for all abatements, all receipts, we have spent some £18 billion net on Europe. As the noble Lord, Lord Hooson, reminded us in the debate the other day, the overwhelming mass of our trade is with Europe. Therefore there is a pay-off.

What the noble Lord did not talk about, and what no one ever talks about, is the composition of that trade, because during that same 15 years we have accumulated a trade deficit of some £73 billion with the rest of the European Community. So we have been paid £18 billion net in order, apparently, to secure a trade deficit of £73 billion. That does not sound to be good business or value for money.

I am not saying for one moment that we should not make a contribution to the European Community. There are in many ways sufficient benefits in terms of mobility, the opportunity to get to know one another in Europe and to trade with Europe, perhaps to justify a modest contribution which apparently other countries do not have to make. But we must subject that expenditure to the normal value for money criteria which we would adopt in respect of other expenditures. I raise the point with a degree of emphasis, because the Chancellor of the Exchequer took the unusual course of circulating a letter to Members of another place setting out his reasons for advocating that we support the new limits that were set up and agreed at Edinburgh. Even he apparently made some mistakes. After accusing those of us who queried the figures of being idiots, he admitted that he had made an error of £700 million, which is not all that frightfully good. I suggest therefore that we should take a more critical view of that matter.

Do Her Majesty's Government ever express any dissent over such matters upon which they are prepared to stand? We had the case of the Italian and Spanish Governments exceeding their quotas. They were fined some £3.3 billion between them. The Italians threatened that they would not pass the budget unless that fine was reduced. What harm would it have done us, as net contributors, if the budget was not passed? Why not call their bluff, instead of making that ridiculous statement which he must regret--to which I will return later when we discuss the Bill which may or may not come before us--and pretending that it was wiser to settle out of court, and say, "Look how much we have gained!"?

Exactly the same consideration arose in connection with the European Parliament. The European Parliament invested heavily in a new building in Brussels capable

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of accommodating the newly increased representation. It spent some millions in doing so. Ah, ah! The French wanted a new parliament in Strasbourg, so what did they do? They too tried a bit of blackmail. They threatened that unless the Parliament was built in Strasbourg, and the contract was signed in Strasbourg--incidentally without competitive tendering--they would not agree and would veto the newly increased representation to the European Parliament of ourselves--we only had one or two more Members--and more particularly Germany which was to have 14. They stood on it. They declined to pass the agreement.

The European Parliament became party to that as well, because its Members also did not agree. The bureau met, without notifying its members, and passed the matter, quite illegally of course. But who bothers about illegality? We live in a Community in which the British try to obey the law, as a matter of course because we tend to do that here, and France, Italy and Spain obey it when it suits them. We let them get away with it. Now why? It puzzles me considerably that a government who have to say, "We cannot spend another £5 million on the health service; we cannot afford to have anything other than cash limits for home care; we cannot afford to build more new classrooms or provide new books because we do not have the money", should go through all these contortions, court all this unpopularity in so doing, and agree supinely with those states which seek to take advantage of us, with, incidentally the apparent silent assent of the president of the Commission who is usually more voluble than reticent on such matters.

Why is that? Why does it happen? I ask the Government to address themselves to that question. This expenditure which, incidentally, in the next six years will involve a further £18 billion of taxpayers' money--I should like to emphasise that point, because all expenditure of which the Government do not approve or which has to be dragged out of them, is taxpayers' money--is said of course to be a trivial percentage of the total GDP of Europe. The next six years--£18 billion! That is as much as in the past 15 years. How will the Government defend that?

We all try to be reasonable. I know that there is nothing sinister about it so far as concerns individual Ministers, but sometimes I wonder--my wonderment does not extend only to the Government but to other organisations of Parliament as well--whether they have given up thinking for themselves and have left it all to their advisers and researchers. That is not entirely unprecedented. I hope for the life of all in this country that it will soon stop.

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