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Lord Bruce of Donington: My Lords, I am grateful to the noble Lord for giving way. Is he aware that the abolition of the difference between compulsory and non-compulsory expenditure would need a terrific series of amendments to the financial regulations? I doubt whether he would be prepared to contemplate them not only at this time of night but over a couple of months.
Lord Barnett: My Lords, if we are to look with a fresh eye at such matters, this may be a good area in which to use that fresh eye. Finally, perhaps I may come to the matters which will not be discussed at the IGC, which I have not mentioned and which the committee did not discuss. That is enlargement.
I am not qualified to speak about monetary union. On enlargement, however, if it ought to be at the top of the EU's agenda, then it has to be joined at the head of the list by reform of the CAP. The first depends upon the second, as has been said several times tonight, notably by my noble friend Lord Tebbit.
When my Sub-Committee D reported last year on enlargement to include the central and eastern European countries, we stressed the incompatibility between the common agricultural policy and further integration of CEE agriculture with that of the European Union. We concluded that the target of Community membership by those countries cannot be attained without further CAP reform. In the subsequent debate on our report in this House, my noble friend Lady Chalker agreed, identifying the common agricultural policy in its present form as a major obstacle to progress. She gave a similar reply in answer to a Question in this House two weeks ago.
It may seem paradoxical that the sub-committee of the noble Lord, Lord Tordoff, despite hearing evidence on both enlargement and the common agricultural policy, concluded in the report that those were not within its terms of reference. In paragraph 308 the sub-committee says:
The shadow of common agricultural policy reform as the essential preliminary to enlargement hangs over the report. However, its absence from the report's conclusions is rather like Conan Doyle's curious incident of the dog in the night-time.
The importance to the EU of enlargement to include the CEE states was fully emphasised in evidence to the IGC sub-committee, and that is all reported in paragraph 106 of its report. Mr. Crossick said that the EU had no choice but to enlarge. Mr. Ludlow thought that enlargement should be the leitmotif of the whole conference. Madame Guigou, MEP, warned that enlargement had to be accompanied by significant reforms. Almost all witnesses who discussed enlargement made some reference to the need to reform the CAP.
My noble and learned friend Lord Howe of Aberavon, in his evidence, did not think that the common agricultural policy would be on the IGC agenda, although it would be hovering over it. This opinion was endorsed by Sir John Kerr, who considered that enlargement would require major changes to the two biggest policies of the Community: the CAP and the structural funds. But he pointed out that this did not require treaty changes.
IGCs are about changes to the treaties. Article N.1 of the Maastricht Treaty lays down that the primary function of an IGC is to determine amendments to the treaties on which the Union is founded. One of the tasks, therefore, facing the sub-committee of the noble Lord, Lord Tordoff, was to consider Sir John Kerr's firmly stated view that CAP reform did not need revision of the treaty in the light of evidence in the shape of a paper from the European Parliament's Land Use and Food Policy Intergroup (or LUFPIG for short) which said the opposite. If Sir John was right, then CAP reform, acknowledged to be of crucial importance, could take place under the treaty as it now is and need not be on the IGC agenda. It could therefore fall outside the sub-committee's terms of reference for this particular inquiry. The presence of the dog, though of prime importance, did not require it to bark.
I turn to paragraph 234 and the reference to the work of Sub-Committee D carried out last July at the behest of the noble Lord, Lord Tordoff, and his sub-committee. As the noble Lord said in his opening speech, we were asked to give our opinion on whether CAP reform required alterations to the agriculture articles in the treaty and to consider other matters raised by LUFPIG. That opinion is printed in the form of a letter from me to the noble Lord, Lord Tordoff, in Appendix 5 of his committee's report.
We had considered carefully the LUFPIG paper and were most grateful for the evidence that we received from my right honourable friend Mr. Waldegrave, the then Minister of Agriculture, and my noble friend Lord Plumb, whose knowledge of these matters is profound. Their evidence too is printed in full in the appendix. We concluded that the terms of the treaty articles, though unchanged since the 1950s, do not preclude the kind of changes to the CAP that the UK wants. We considered that it would not be appropriate to amend the key agriculture articles at this time. As stated in paragraph 234, that opinion provided some of the rationale for the view taken by the committee of the noble Lord, Lord Tordoff; namely, that while enlargement should now be the driving force in the EU's forward planning, that and the CAP will not be on the agenda of the IGC.
CAP reform does not need treaty amendment, and enlargement must await CAP reform. That point was made by the noble Lord, Lord Richard. He may be pleased to know that the attention of the European Communities Committee of this House is now likely to be focused on Mr. Fischler's paper on CAP reform in the context of accession by the CEE and other countries. That agricultural strategy paper has been adopted by the Commission and is to be presented at the Heads of State summit this week in Madrid. I hope that my sub-committee will examine its proposals with very great care and report to your Lordships.
As I have so often said in this House, the need for such reform is urgent. I fully recognise the difficulty about unanimity, to which the noble Lord, Lord Bruce, referred, but pressure on our European partners must continue and the IGC committee was right to say so.
Lord Shaw of Northstead: My Lords, once again we are indebted to the Select Committee on the European Communities for a first class report that will be studied widely. Coupled with it, we have the report of the sub-committee chaired by my noble friend Lord Middleton which deals with a very important subject. The discussion of any future of the common market is such that we have to consider changes in the CAP. His committee's contribution to that end is welcomed and we look forward to further contributions in the future.
I should like to make the point that the impression must not go from this place that the Government are isolated in the IGC negotiations. The fact is that at the last meeting of Heads of Government in September, my right honourable friend the Prime Minister had considerable support and backing; and in many cases, so I understand, he was asked to give a lead in encouraging certain points of view. I am bound to say--I have nothing to gain from saying it and have an honest belief in what I am about to say--that we are very fortunate indeed in having our Prime Minister leading us in the discussions. He is an unusually capable negotiator, who makes his points and at the same time remains on friendly terms with those with whom he is negotiating.
As with all such debates, we tend to become swamped by paper and reports. Not only do we have the report that we are discussing today; we also have the sub-committee report. We have a progress report from the Reflection Group and the Reflection Group Report itself. Today, we also receive a report from my right honourable friend, which again helps in our consideration of these matters. In addition, there is the report of the Court of Auditors, which is not irrelevant to our discussions today.
I believe that we should aim at further enlargement of the European Union. However, I am equally convinced that, if such enlargement is to succeed, we must bring about most of the necessary changes in our institutions and practices before enlargement takes place rather than afterwards. The group's progress report rightly says that,
Nowhere, in my view, is it more important to have those changes made than in the CAP itself. I shall not repeat those parts of my noble friend's report that he has so ably explained to us. But the fact is that we cannot continue with the system that was set up, whether relevant or not, for certain circumstances many years ago, but which is completely inapplicable at the present time. Changes may or may not be needed in the articles of the treaty to bring about the situation that we want, but I believe that it would be most unwise for the IGC to reach a final conclusion without changes in the CAP having been brought about or put well on the way.
One of the main objectives is to bring in a number of new people, but how can we possibly ask them to join us in a situation that we believe to be intolerable and which we will change, in any case, as soon as we possibly can? Naturally, they would object because in most cases the old rules would be very beneficial to them. Nonetheless, the fact remains that once they were in on the old system it would be even more difficult to change to a new system.
Incidentally, I understand that there has been a report called for from the Commission on the effects of enlargement on the CAP. I thought I heard my noble friend say that it would be reported to the meeting of Heads of Government on Friday. Incidentally, I was interested to note that my noble friend Lord Plumb, in evidence to the committee, made the point that:
Coming from my noble friend, with his great knowledge and experience of these matters, those words must be considered seriously, and I welcome them. On the other hand, my experience from when I was rapporteur at the time of the 1978 budget was that when the draft budget came to Parliament substantial additions were always made, wherever possible, with an eye to various constituency interests including the CAP. It was the hard task of the rapporteur--that year myself--while seeking to implement the will of Parliament, to restrict such proposed increases to within acceptable limits.
I wish to move to another point, because I do not wish to detain the House too long. This is a matter of vital importance to the long-term success of the European Union. The questions of financial irregularity and fraud must continue to be examined. The new powers given to the Court of Auditors are only just beginning to operate. The new Commission has decided on a reform of its internal management. All that is encouraging. But
It must be open to question as to whether further changes will have to be made to overcome the shortcomings that are now being revealed. If in fact those shortcomings exist now, how much worse will they be if we seek enlargement without them being put right?
He will be independent and will report directly to the European Parliament. The effect of his activities could be dramatic--but he was only appointed on 12th July. There again, it seems to me, there is further cause for delay in determining what changes should be sought by the IGC.
I ask my noble friend two questions. What were the problems that caused the EP to delay the appointment for so long, if the appointment is so important? Secondly, the ombudsman is to examine complaints of maladministration in the activities of the Community institutions. Can my noble friend confirm that those complaints cover any maladministration within the internal workings of the Council, the Commission and the European Parliament? And would the Court of Auditors, where appropriate, then have the right and duty to follow-up any such cases? The ombudsman may well have a dramatic effect on the efficiency and transparency of many of the actions of the institutions.
This is an important report and we should look forward to the meetings of the IGC with hope, but with a certain measure of cynicism. Primarily, we need perseverance. I hope that in persevering we shall, in the end, have a prosperous, happy, efficient and trusted EU for the future of ourselves and those who follow afterwards.
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