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Lord Richard: My Lords, before the noble Lord sits down; he was talking about the effect of enlargement on the common agricultural policy. He said that new

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entrants may find it intolerable. Does he not agree that, far from finding it intolerable, they may find it too attractive? The problem with new entrants is that farmers are guaranteed an income; they receive prices for their commodities amounting to more than the cost of production; they are protected from outside competition. All that means that the food mountains will increase. The problem is not that they would not like it; but that they would welcome it with open arms.

Lord Shaw of Northstead: My Lords, I apologise if I gave the wrong impression. I entirely agree with the noble Lord, Lord Richard. What they would find intolerable is the fact that, having joined, they were then asked to change the terms on which they joined.

7.7 p.m.

Lord Elis-Thomas: My Lords, I shall not pursue the debate on the CAP save to note my agreement with the points made by the noble Lord, Lord Richard. I am a self-confessed European federalist. I follow our European debates with a certain sense of dejo vu. I remember a time when I took a different attitude, not towards Europe, but towards the institution of the European Union. That prompts me to suggest that even certain Euro-sceptics in this House may not be beyond grace.

I shall try to introduce some fresh issues into the debate, although one or two points I make will endorse what has already been said by my noble friend Lord Hooson, especially on the issues of subsidiarity. I thank the noble Lord, Lord Tordoff, for producing such a readable document in terms of the final report, particularly in view of the mass of evidence with which the committee had to deal. Therefore, I shall take as my text--which may be an appropriate remark to make on the day of the introduction of a right reverend Prelate to this House--a piece of evidence which has not yet been produced in this debate; namely, that introduced by the UK local authority organisations and the Local Government International Bureau.

In their written submissions they put forward a number of extremely important issues in relation to the development of the IGC process. They looked for a clearer definition of subsidiarity. I am sure that many noble Lords in this House agree with that. They are also looking for a stronger legal basis for the principle of local self-government based on the model already established by the Council of Europe charter on local self-government. They are looking obviously for an increased role for the Committee of the Regions, because that is where they have their representation. And they look also for clarity in the treaty basis of competence for those fields of EU activity which are also fields for local authorities, particularly in the areas of culture, consumer protection, public health, education, environmental, transport and land-use policies.

They are also keen to see the partnership between local and regional government, which de facto occurs in the use of European Community structural funds, recognised as such within the inter-governmental process. I shall turn to those issues in a moment.

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First, I want to endorse what the Reflection Group said on an important issue which is brought to the fore in the present Treaty of Union. I refer to the emphasis on the importance of promoting European common values, which are values of democracy and citizenship. It is important that the new treaty should have clearer statements of fundamental rights, of non-discrimination and in particular of those rights which involve the position of racial and ethnic minorities. I very much endorse what the Tordoff Committee, if I may so call it, says in this area. In paragraph 286 it endorses what was said in its previous report Community Policy on Migration and emphasises that there should be a legal base for binding Council legislation on racism. The committee says:

    "We maintained that the United Kingdom in the light of its own achievements in the field of race relations was well placed to press for legislation which might help to improve standards throughout the Member States".

This is where I am at a loss to understand the position of the United Kingdom Government as set out yet again in the response of the noble Baroness, Lady Chalker. In her statement she reiterates how proud she is of the United Kingdom's achievement in race relations and goes on to make what is an astonishingly difficult statement for me to understand. She says that,

    "since problems of race are different in each Member State, they should in the first place be addressed on the national, not the European level".

I do not understand the rational basis of that argument. Racism is racism. It is discrimination against citizens on the basis of one form of their human appearance. It may have an economic base; it certainly has political consequences; it has personal, tragic consequences. But the nature of racism is similar in whatever society, within Europe and within the international context, it appears. Therefore, I cannot understand that argument. I should like to have a response from the Minister on that issue.

After all, if the Government are proud of their record, why should they go on to say that they will resist a treaty amendment? I want to press the Minister on this matter. How strongly will the Prime Minister or any other UK representatives resist the demand that is clearly coming from the Reflection Group, from the European Parliament and from the White Paper on European social policy, The Way Forward for the Union, produced last September, which specifically committed the Commission to look for legislation against racism. It is set out clearly in the Reflection Group report. I am glad that the noble Baroness, Lady Chalker, has returned to her place. I am attacking her vigorously.

The Reflection Group specifically says:

    "One of us believes that the rights and responsibilities we have as citizens are a matter for our nation states".

That is clearly a reference to the United Kingdom. It does not take a detective in these matters to divine that. I want to put it to the Minister that racism is an international phenomenon and should be dealt with in international legislation. Thanks to our great record in terms of the work of our race relations legislation and

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of the Commission for Racial Equality and its predecessor, the Race Relations Board, if there is any area in Europe where the UK can lift its head up high and say, "We have attempted to deal with this issue in our domestic legislation", this is it. I do not see why the so-called commitment to member state subsidiarity should prevent the Government from seeing the validity of doing that.

I want to introduce one further question in the area of discrimination which is not at the moment covered by the Reflection Group discussion but is covered by the resolution of the European Parliament of 17th May last which was prepared for the Reflection Group. I refer to the issue of other forms of discrimination--of gender, race, religion, disability, age, sexual orientation and also linguistic discrimination. I declare an interest as a paid chair of the Government's Welsh Language Promotion Board.

Lord Richard: Da iawn!

Lord Elis-Thomas: My Lords, the noble Lord, Lord Richard, says "Da iawn". I reply "Diolch yn fawr". I shall help Hansard with that. The position here is that again the United Kingdom has a very strong record, albeit it has not yet signed the relevant Council of Europe charter on minority languages. However, it does more than conform with all aspects of that. It has a record of developing legislation in the area of language equality. It would be useful for the United Kingdom to take a lead in this area as well. Within Article 128 of the Maastricht Treaty there is a clear statement referring to,

    "the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore".

The Bureau of Lesser Used Languages--a designation I do not share: no language is lesser used; every language is equally properly used when being used, but we understand what it means--is keen to ensure that within the revised treaty at the IGC there will be reference not only to the other forms of discrimination that I have mentioned but also to the area of language. Article 126 of the treaty could be strengthened not only to refer to the teaching and dissemination of the languages of the member states but of the languages of all citizens of the Union. It could include the promotion of tolerance of, and respect for, the rich linguistic and cultural diversity of the citizens of the Union. I mention that because the European Parliament, in its resolution for the Reflection Group, referred to Europe's cultural identity and diversity and the value of national and regional cultural and linguistic diversity within the European Union as something which should be "explicitly recognised". That is an area where, again, the United Kingdom Government could be taking a lead positively but because of their attitude on the issue of subsidiarity they are perhaps unable to do so. I know the view expressed by the noble Baroness in the Government's response to various European Union publications in the whole field of language policy. Her view is that these matters are ones for member states.

In reality linguistic policy extends throughout the European Union. The European Union has a linguistic policy--a very expensive linguistic policy, as it

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happens, in terms of the amount of translation that takes place within the Union. About one-third of the Union's administration is involved in translation. I am not knocking that because translation is a noble form of employment. But since the Union has a policy in terms of some official languages, to extend that policy to all the historic and newer languages of the citizens of the Union would be a positive development.

Finally, I come to the issues of subsidiarity as they apply to local authorities and to regional and structural funds. More than 50 per cent. of the activity of the EU impinges directly on local authorities. As service providers, local authorities are clearly involved in all aspects of European policy. It is therefore important that they should be directly consulted and involved in any partnerships. The local authority associations take the view, which I strongly share, that there should be within the treaty revision a process to ensure that structural funds are stipulated as funds which require a genuine partnership. This happens in some European programmes but it does not happen throughout all programmes. There is a strong case for subsidiarity in these matters. The form of government closest to the citizen which deals with the issues should be more actively involved in the process.

The Reflection Group tells us that subsidiarity imposes not only a legal but a behavioural obligation. I wish that the United Kingdom Government would adopt some of that behaviour. I am not going to quote Pope Pius XI again at this late stage of the evening, but the notion of subsidiarity is one of social policy. It is a theological notion in origin, but it is also a very important social principle, which is the equivalent of the federal principle. Although I describe myself as a European federalist, the European Union is not a federal state at the moment. It is a quasi-federal state with federal tendencies. Real subsidiarity works within federations in which powers are shared between levels of different authorities; that is, between the member state level, the central union level, the regions and the localities. That of course is not a system that applies in the United Kingdom. It applies within most of our European partners.

That is where the difficulty that we have about understanding federalism and subsidiarity arises. As we look to the role of local authorities and the Committee of the Regions, it is important that the Government should endorse the activity of the committee. It has proved very successful, not least because its membership includes extremely effective Plaid Cymru representatives, among others.

What the Committee of Regions does, as the Reflection Group says, is foster throughout the whole territory of the European Union a further sense of belonging. In other words, belonging at the European level is not a matter for individuals or for member states alone; it is also a matter of inter-regional co-operation. That is also part of the European construction which we are about. Nowhere is that more clear than in the area of environmental policy where both overall European activity and local activity is absolutely essential. Before

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I sit down I must quickly declare an interest as someone who is a director of an environmental consultancy company.

The environmental aspects of the treaty are very important. I do not believe that the Government have concentrated enough on that. There is an opportunity here to integrate environmental policy and sustainable development objectives more strongly within the treaty and within the aims of the union. After all, we have sustainability documents and the policy. We already have the commitment to environmental policy within the existing Maastricht Treaty and that again could be deepened. In fairness, the Government have a fair record on these matters and they could take a lead. I only wish that the Government could, as it were, shake off their obsession about subsidiarity and take a more positive role in the IGC process.

7.22 p.m.

Baroness Rawlings: My Lords, it was a great privilege to have served on the European Communities IGC Committee. It consisted, as noble Lords would imagine, of many learned and experienced Lords with many diverse views. We are all truly grateful to our extremely patient and inspired chairman, the noble Lord, Lord Tordoff, aided by our superb Clerk, Tom Mohan, and all our specialist advisers for this report and for the fair and wise way he conducted the meetings and hearings.

As important as the content of the report, which is really the end of the beginning, is the context in which the IGC will take place. Our report has been published, as has the one from the other place, and we now have the Reflection Group report, too, all in preparation for the IGC next year. Perhaps this is a good time to reflect before we take another leap forward. If your Lordships will forgive me, rather than just looking at the details with a magnifying glass, as we have been doing for the past six months--and today this has been well covered by many noble Lords in this debate--at this late stage I thought that I would step back and look at the whole picture.

Our European politics need to be assessed in a completely different context since 1989 and the collapse of communism as we knew it. We suddenly lost the familiar parameters within which we had operated for so long. Several generations grew up in this century in the face of the communist threat. The collapse of the Soviet Empire meant a break in the historical continuity for all of them.

Until quite recently the Europe of 12 was nothing more than the eastern extremity of the Atlantic world whose centre lay in the United States of America. Today, however, the European Union is almost hidden from view amid the reaches of a continent which is finally becoming reunited again. Once the eastern corner of the western world, the European Union now finds itself in the western corner of the Eurasian world. Once again it is the geometric point of intersection where America, Asia and Africa meet. Having got used to slumbering in a quiet corner of world history, we wake up to find ourselves in the centre of the world.

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As we approach the millennium it is worth looking at the radical changes that mark the turn of centuries in Europe. Since the end of the 15th century--that is to say, the beginning of what historians call the modern age--we see the fall of Granada in 1492 and the consequent internal consolidation of Spain and its ventures westwards with the discovery of America.

A similar period of crisis occurred at the end of the 16th century, with the defeat of the Armada, which set the seal on the decline of Spain and started the ascendance of England. The conquest of Hungary in 1686 marked the beginning of the retreat of the Ottoman Empire.

The 18th century was subjected to upheaval by the French Revolution. It was not until 1815 that the Vienna Congress succeed in restoring peace to the Continent and establishing a new and lasting order.

But this order lasted only until the end of the 19th century. The fall of Bismarck in 1890 and the ensuing Franco-Russian alliance took France out of its isolation and allowed a rapprochement with England. The resulting mixture blew up in 1914 and a new world order ensued, with America as the new world power.

In all these cases it was a transition spanning well over 30 years. Our own century is falling into much the same pattern. With the fall of the Berlin Wall in 1989, there have been enormous changes to our continent. Alas, there is much uncertainty and instability today and great criticism and disillusionment with many of the political systems. It is in that context that we approach the sixth IGC.

The first Inter-Governmental Conference was the ECSC in 1950 from the Schuman Plan. There was great enthusiasm for peace and jobs. Many people say to me today, "I don't mind Europe, but it's gone too far; it was only meant to be a free trade area". This is a misunderstanding. The Coal and Steel Community, the forerunner of the EEC, was born out of the ashes of two world wars. It was formed so that there would never be a war within the European community again. We then had the Treaty of Rome in 1957.

The second IGC gave birth to the European Economic Community and the Spaak Report. There was enthusiasm again for peace and jobs. Britain joined in 1973, but then Euro-sclerosis ensued and little happened as every vote in council had to be unanimous. So we had the third IGC which produced the Single European Act of the noble Lord, Lord Cockfield. In 1992 there was great enthusiasm for peace and jobs yet again.

With only two new applicants, Spain and Portugal, the enlargement agenda of the Dooge Report was less complex than today. There were the fourth and fifth IGCs at Maastricht in 1990 and 1991 from the Delors Report on economic and monetary union and political union, when all hell broke loose. We should not be too pessimistic. It cannot be all that bad with more and more countries queuing up to join.

We had a sustained debate on this subject in March this year, so I shall not repeat all the points that we have heard again today. However, there are three areas that I

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hope the Minister will address seriously: first, the enlargement of the European Union where Britain has been the driving force; secondly, how to make the European Union function better for the benefit of its citizens--an area where we have all failed dismally; thirdly, work for less harmonisation with more mutual recognition. It is the global market that we should be aiming at through progressive liberalisation both in Britain and throughout the European Union. Restrictions should, we hope, be removed and be replaced with the appropriate machinery of competition law.

Finally, although not actually on the IGC agenda itself--but it cannot be ignored--will be the reform of the common agricultural policy which the noble Lord, Lord Cockfield, advocated so clearly and forcefully in the last debate.

We should not lose sight of the original aims of the Community of peace and prosperity for all its citizens, especially as we look at places in turmoil not far from home such as the former Yugoslavia and Chechnya.

The sixth IGC will take place in Brussels. Perhaps I may finish on a lighter note. I am not sure how many people knew where Maastricht was before the big debate, but it subsequently went down in history and will never be the same again. Nothing too much ever happened there, except that it had been besieged or captured by the Spanish, the Dutch, the French three times, and unsuccessfully by the Belgians and Germans--quite a European history, but it was never a household word. Then it all changed and Maastricht achieved fame like Agincourt, which was transformed by a French herald in Shakespeare's Henry V:

    "What is this castle call'd that stands hard by?

They call it Agincourt".

Waterloo went one better in 1815, when it entered the English language, not just as a battle but as a railway station and even a metaphor, "He met his Waterloo"--something that had previously been achieved only by the River Rubicon.

Gettysburg became a famous address. Fame through battles gave way to religious schisms. The Diet of Worms in 1512 has always had school children sniggering. Then came the 18th century treaties of Vienna, Versailles, and Utrecht--far more famous than the war it ended, that of the Spanish succession. As wars became scarcer, so did treaties, so we had arms control pacts like Reykjavik in 1986 or economic gatherings like Bretton Woods in 1944 and disasters like Chernobyl. Finally, we have had controversial speeches like that in Fulton, Missouri in 1946 and Bruges--perhaps the less said about that one, the better! So Maastricht will never be the same again.

I hope that we have learnt our lesson and that this next Inter-Governmental Conference will not lose sight of the original aims of the Community of peace and prosperity for all its citizens. I commend the report to the House.

7.33 p.m.

Lord Bauer: My Lords, I too wish to thank the Select Committee for its informative report. But, informative

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as it is, it needs to be considerably supplemented in view of recent events and influentially canvassed proposals.

Under Maastricht, Britain has pooled much of its sovereignty with that of other countries, some with a political culture radically different from our own. Thus, in France city mobs, especially those of Paris, have over many centuries coerced governments and legislatures. They were prominent in the persecution of the Huguenots in the 16th and 17th centuries and spearheaded the St. Bartholomew's Night Massacre. During the French Revolution, the Paris sections successfully pressed the Convention to institute the Terror of 1792-93. In 1871 the Communards of Paris provoked large-scale civil war by defying the elected government.

There were no comparable episodes in British history. The Gordon riots and the Chartist movement were on a small scale and on the whole were peaceful. Even the general strike of 1926 and the more recent miners' strikes were relatively mild affairs compared to what we have recently seen happening in France; and those were disputes over pay, not resistance to the policies of elected governments.

The differences in political culture are only one example of the many deep-seated differences between European countries and societies. Supra-national political institutions inevitably endeavour forcibly to remove those differences. Such attempts imply extensive coercion, exacerbated by differences in the readiness of countries to honour international obligations.

Speaking as a European born in Hungary who now identifies with this country's historic political and economic interests, I believe that successive British governments should have been more circumspect in acceding to the supra-national institutions. Since the war these European supra-national institutions have steadily increased in scope and power. They began in the late 1940s with the European Coal and Steel Community, which was a Franco-German cartel. Their persistent growth to the European Union was at times almost surreptitious, as when the EEC, the European Economic Community, quietly became the EC, the European Community.

The proposed European monetary union is a further big step in the same direction. The establishment of a European monetary union, EMU, would have far-reaching, pervasive consequences. It would preclude an independent financial policy. It would also involve the surrender of a major historic component of national sovereignty. The right to issue legal tender money has been a prerogative of sovereign governments for millennia. When classical Athens conquered another country, it always coerced it to use Athenian money.

The arguments in the advocacy of EMU are insubstantial. It is contended that EMU would eliminate wide fluctuations in exchange rates brought about by the activities of investors and speculators. But those market participants can operate successfully only in the face of inappropriate national financial policies. Under EMU, investors and speculators will transfer their activities to domestic financial instruments such as gilt-edged securities, and their prices will fluctuate accordingly.

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Another argument is that EMU would reduce the charges of transferring money. The foreign exchange component of the cost of international transactions is a small fraction of bank charges. The argument is trivial in the context of a far-reaching policy such as EMU which, as I have already said, would preclude independent financial policies.

Currency fluctuations often serve as shock absorbers by mitigating the consequences of external shocks. For instance, an overseas boom would cause an inflationary boom here unless our currency appreciated. If you remove the shock absorber from one wheel of a car, the car will not stabilise if shocks continue. Instead of contemplating EMU, we should think about rolling back the scope and powers of the existing supra-national institutions, as a number of noble Lords have suggested today.

Membership of your Lordships' House is a rare and much coveted privilege. It carries with it the obligation to speak out in a forthright manner even if that is contrary to the policy of one's own party and to widely canvassed arguments, hence the emphatic character of my remarks today.

7.40 p.m.

Lord Willoughby de Broke: My Lords, like all other noble Lords who have spoken, I should like to congratulate the noble Lord, Lord Tordoff, and the members of his sub-committee on the report they have laid before the House. Its conclusions and recommendations are practical and workable--some of them--and ones with which I hope we can all live and which will be a sensible basis for progress at the IGC.

No extension to qualified majority voting: that must be sensible in a voluntary community. Policy changes should surely depend upon support from all member states. Legislation that is unacceptable to a minority, but forced upon it by a majority, will lead to dangerous splits in the Community. Unanimity is surely a better driving force than coercion.

I support strongly the recommendation for greater transparency and accountability in the decision-making process by means of the much earlier release of Council documents to national parliaments. Anyone who believes that parliaments are involved effectively at the moment in scrutinising Commission proposals should read paragraph 307 of the report. I hope that the Government will act upon the specific recommendations which the committee has made.

I believe also that it would be a big step in the right direction for the Government to accept the proposal made by the organisation Justice, which was endorsed by the sub-committee, to require national parliaments to review third pillar instruments before a decision is taken in the Council of Ministers.

I turn now to the Commission. I do not believe that the committee has gone nearly far enough in accepting or recommending changes in the Commission's role. For reasons that I well understand, it has perhaps had to decide not to decide, but the Commission's role is central. On its own admission, it is the indispensable

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engine which drives the Community forward. In my book, I am afraid that that makes it part of the problem, not part of the solution.

A number of witnesses made the point that in the real world outside the plush offices of Brussels, the Commission and its bureaucracy are seen as self-justifying and, as one witness put it, "harmonising for harmonisation's sake". My noble friend Lord Kingsland, who is not in his place at the moment, said that citizens of the Community do not feel oppressed. I part company with him there, because one has only to look at the evidence given by the chairman of the Federation of Small Businesses. He put forward a convincing opinion that the tangles of red tape, directives and regulations are a serious burden to small businesses in this country. I would remind your Lordships that it is small businesses which create the most jobs.

I agree with those witnesses--MEPs among them--who argued that the Commission's role needs a radical rethink. The IGC is an opportunity to do just that. I ask the Government to pursue that. For example, should the Commission maintain its primacy as the sole initiator of legislation? Should it not be the Council that initiates the legislation? After all, it is a body of elected representatives. The Commission should act possibly as a secretariat and no more than that. Should Commission proposals be subject to the so-called sunset clause, whereby its proposals wither and die on the vine automatically if they are not taken up by the Council? As the driving force behind further integration, the Commission is still moving on. It is not doing less, and it is certainly not doing it better.

For instance, where is progress on subsidiarity? I have not had the opportunity to see the 22-page document on subsidiarity about which my noble friend Lord Renton talked. I should dearly love to know whether there is a real example of subsidiarity in action. The Commission's view on subsidiarity is that it cannot be allowed to remain an abstract principle, neither can it be allowed to reduce the Union's powers. After all that, I am not sure where we are left.

What progress has there been in reducing regulations and red tape? None. We have just been decimalised, harmonised and metricated. Absurdly, it is now a criminal offence to sell packaged meat or vegetables in pounds or petrol in gallons. I wonder whether the Commission will now expect the headquarters of the Metropolitan Police to be called "New Scotland Metre".

The Commission is still stifling business and enterprise under its mounds of directives and regulations. Jobs will not be created by a Brussels diktat, or by setting up the so-called high level committees on employment, or by incorporating "social acceptability" clauses into the treaty. Both those suggestions are made in the reflection paper. On the contrary, jobs will be created by deregulation and by encouraging competition. That is the message that should be put across vigorously at the IGC.

The way that the Commission now operates harms progress towards a free and prosperous Europe. It is

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losing support and credibility. Recent opinion polls in two of the newest member states, Sweden and Austria, show considerable doubt about the wisdom of entering the Community. I shall give a brief example of the concerns that exist. It is late, and I shall not detain your Lordships long.

On a hot afternoon in this Chamber in the summer of 1993 we debated Article 8 of the Maastricht Treaty which states:

    "Citizens of the Union shall enjoy the rights conferred by the Treaty, and shall be subject to the duties imposed thereby".

Some of us had the nerve to ask, "What are these duties?". We were told--somewhat patronisingly, I thought--that there were no duties, only new bright shining rights. But, as my noble friend Lord Tebbit said with great prescience, we should beware the offer of a free lunch. Now, two-and-a-half years later, up pops Mr. Williamson and M. Petite of the Commission giving evidence to the sub-committee (paragraph 700), saying:

    "should we not put some flesh to the concept of citizenship?".

The concept concerning duties has been left empty. Having been told by Ministers that no duties are added to the doubtful privileges and rights of citizenship, we now hear that there will be proposals related to the duties of citizenship. Having heard that sort of thing, I concur with my noble friend Lord Renton who asked for a fresh start to be made on the whole thing: let us start all over again from the beginning.

I shall end by encouraging the Government, and our representatives at the IGC, not to be cornered, coerced or made to feel anti-communautaire by being in a minority--even in a minority of one. I shall read a short extract of where I believe we were in a minority. I look forward to hearing this confirmed.

The Reflection Group talks about setting up a high level committee--I have already mentioned that--on employment to ensure permanent supervision and to monitor the impact of Community policies. It states that a considerable majority thinks it urgent to incorporate the social protocol in the treaty. It has also been suggested that a social acceptability clause be inserted in the treaty obliging the Commission to evaluate its proposals in the light of social objectives, but one member rejects that line of argument outright. He thinks that job creation is achieved not by more Community regulation but by less. He feels that the real employment challenge comes from a global economy and that the Community response should be deregulation and emphasis on greater competitiveness. That is fairly sensible. Like the noble Lords, Lord Richard and Lord Hooson, I should like to know whether that member who is making such great sense is indeed our representative. I hope that when she replies my noble friend the Minister will confirm that, because he is talking total sense. He is the only person there who has any sense.

I hope that the Government's pragmatic approach, as evidenced there, will make Europe more acceptable to its citizens. We should remind ourselves that we cannot

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be accused of being bad Europeans, as some noble Lords and some press articles make out. I do not believe that we can be. After all, we are the second biggest contributor to the EU budget.

I happened to look at an Answer to a Question given in another place on 4th December. It shows that in the next four years our contribution to EC funds will be nearly £30 billion. That is a tidy sum to roll around one's tongue and I would have thought that it is a European sum too. Ours is the European army which contributes most to international peace-keeping, ours are the democratic institutions which are most copied and the commercial editions most envied.

Having listened to the speeches tonight, I believe that the Government have been given a strong hand to play at the Inter-Governmental Conference and to press forcefully the case for the Community to do much less but to do it very much better.

7.50 p.m.

Lord Thomson of Monifieth: My Lords, I join the noble Lord, Lord Willoughby de Broke, and other noble Lords in congratulating the Select Committee and its sub-committee on the report. The fact that it is a unanimous report is no mean achievement. Unlike most of the sub-committees of the Select Committee which deal with specific subjects and get down to some kind of objective assessment of the facts, the subject matter of this sub-committee was potentially highly divisive. The fact that the report is unanimous owes a great deal to my noble friend Lord Tordoff. I am sure that he chaired it with his customary patience and courtesy, with which we on these Benches have long been familiar. I began to believe that if the warring factions in the former Yugoslavia caused future trouble he would be the ideal mediator to send out there!

It would be untrue to say that the debate in your Lordships' House has had the same degree of unanimity. Nevertheless, there has been more unanimity than usual. I even found myself agreeing with something that the noble Lord, Lord Tebbit, said--that by far the most immediate help we could give to eastern and central Europe would be to allow their agricultural imports into the European Union. I do not know whether the noble Lord read the examples given in another place the other day by his right honourable friend the Foreign Minister. He gave some astonishing statistics--that at present Bulgaria can send only four lorryloads of strawberry jam to the European Union each year. The Commission proposed that by the end of the century it should be able to send an extra two lorryloads, but that was opposed. There are a number of other interesting facts in the same genre. I hope that the noble Lord, Lord Tebbit, will make the most of our moment of unanimity on these issues.

There has been a surprising amount of common ground on the report's conclusions. All noble Lords have agreed on the need for national parliaments to receive Commission proposals in their final form, not in draft form, in time to exercise effective influence on the Ministers in the Council of Ministers. Everyone has agreed on the need for more effective budget discipline

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and for more effective action against the scandal of Community fraud. I hope that the noble Lord, Lord Hunt of Tanworth, is perhaps unduly pessimistic in his belief that our hopes of dramatic progress in these fields will not prove well founded. It is important to press on in both those respects.

Furthermore, everyone has agreed on the urgency of making the Union more credible to its citizens and making its legislation more easy to understand. However, my heart sank to my boots when I saw 10 paragraphs of the report headed "The Hierarchy of Norms and Comitology". We have some way yet to go before we know how to communicate in plain English instead of in Brussels jargon. Much of the trouble that arose in respect of the Maastricht Treaty was as a result of its failure to use the kind of language that can win the hearts and minds of ordinary people.

There is also general agreement with the report's statement that two years' experience of the operation of the Maastricht Treaty is far too little to contemplate any drastic revision of the Treaty of Union. There is a lot to be said for the view expressed by Jacques Santer, President of the European Commission, in a speech at Guildhall a few months ago that the immediate challenge for the Union was less action but better action.

The noble Lord, Lord Willoughby de Broke, questioned whether there had been much progress in that direction. Again, I refer him to what was said recently in another place by the Foreign Secretary. He produced figures which showed that in 1990, only five years ago, the Commission proposed 185 pieces of primary legislation. By 1993 that figure was down to 75 and in 1995 it is down further to 43. The Commission estimates that next year it will be down to 21. No doubt that partly reflects the fact that the single market is now virtually achieved. Nevertheless, there is a serious drive to do less but to do it more effectively.

In my view, the European Union has always done itself harm by interfering too much in the idiosyncrasies of national habits. Therefore, making an effective role of subsidiarity is of great importance. I was greatly encouraged to see in the Minister's response to the report that instead of joining in what has been the attack on the European Court of Justice from some quarters, she emphasised the importance of taking steps to make subsidiarity justiciable within the European Court of Justice. I believe that subsidiarity must be made more than words; it must be effectively implemented.

In order for the Union to achieve its benefits for a future generation it is the few big issues which matter rather than the European Commission, the Union, getting itself concerned about excessive harmonisation. That was mentioned by the noble Lord, Lord Willoughby de Broke. Those big, essential issues are, above all, the achievement of European and monetary union and a single currency, the enlargement of the Union and the reform of the CAP.

The report, in the first sentence of its conclusions, draws attention to the fact that those issues are not on the agenda of the IGC. However, they are inextricably linked to each other and linked to issues such as

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qualified majority voting, which were the subject matter of this report and which will be difficult issues for discussion at the IGC.

We on these Benches have a clear view about a single currency and economic and monetary union. We do not believe that the single market can survive without a single currency and, indeed, without being within a single law, as was mentioned by the noble Lord, Lord Kingsland, in what was an eloquent and knowledgeable speech about the European Parliament. If we fail, a free market area with separate currencies will not last. There will be competitive devaluations and economic warfare within Europe. At best, a great opportunity will have been lost for Europe to compete effectively within a global economy with the rest of the world. At worst there will be a return to all the dangers of the 1930s.

Despite the present difficulties in France, which have been mentioned by more than one noble Lord, I do not believe that the Union will fail. I listened with interest to what was said by the noble Lord, Lord Pearson of Rannoch. He apologised for being unable to be in his place for the reply tonight. I sometimes believe that the noble Lord and others who share his views forget that as regards the single currency the European Union has taken its decision. The decision to have a single currency has been taken; the criteria have been agreed; and the timetable has been set up. The Government are a committed party to that agreement, along with their opt-out to decide whether they want to go in finally when the timetable is completed.

I very much agree with what I thought was an extremely thoughtful speech by the noble Lord, Lord Bridges, who also explained that he could not be here tonight. He said that he thought that those who tried to make too much of the current problems in France were mistaken; that the underlying strength of the French economy is very considerable. He said--and he cheered me up immensely--that he thought that it was possible to see a new EMU timetable emerging which is acceptable to Her Majesty's Government. The noble Lord, Lord Bridges, is an experienced diplomat. He weighs his words very carefully, as I have every reason to know, and I gained some hope from that.

There is strong agreement in your Lordships' House, as expressed in this debate, about the importance of enlargement. But for enlargement to succeed, the European Union needs a strong core of a single currency. It cannot work without radical reform of the CAP, as has been mentioned by a number of noble Lords. The noble Lord, Lord Middleton, made that point a few minutes ago. Reform of the CAP is of major British interest within the European Union.

The European Union cannot bring about a reform of the CAP without a readiness to take up a change in qualified majority voting both in terms of numbers and, equally important, in terms of population weighting. I tend to agree with paragraph 244 of the report which points out that the habit of the European Union, very deep in its patterns of behaviour, is always to try to seek unanimity. In those areas where there is already qualified majority voting, it is relatively rare that it is ever employed. Unanimity is usually achieved. But if

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one needs to have radical reform of a central policy like the CAP, I hope that it will be possible, after painstaking diplomatic efforts, to achieve unanimity. But I believe profoundly that that will be achieved only if there is the knowledge that if unanimity is not achieved, a qualified majority vote may be used.

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