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Lord Lea of Crondall: My Lords, I am grateful to the noble Baroness for giving way, but does she think that in a typical African country there should be 15

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different EU aid programmes or a country strategy paper for each country, drawn up collectively by the EU, on governance and all the matters, judiciary and so on, that need to be co-ordinated through the EU?

Baroness Cox: My Lords, this is a timed debate and so I shall respond very quickly. I spend much of my time working in Africa. I should like to see British aid of maximum effectiveness being allocated to any African country and a cost-benefit analysis of its effectiveness being carried out.

The concerns that I mentioned fit directly into the case for a cost-benefit analysis made by my noble friend and amplified by the remarks made on the opposite side of the Chamber. There is obviously a need for assessment of the most effective use of resources given by the UK for aid and development, for accountability to our taxpayers and to the people suffering so acutely in many parts of the world from natural and man-made disasters and/or economic underdevelopment.

My second anxiety about ways in which our membership of the EU is damaging our ability to help the developing world as effectively as possible relates to the common agricultural policy, to which my noble friend Lord Pearson and the noble Lord, Lord Dubs, referred. I understand that we pay about £8 billion a year towards the CAP's £30 billion annual budget. Therefore, not entirely irrelevant are estimates by Oxfam that while each European cow enjoys two US dollars a day in support from the CAP, 1.2 billion people around the world live on just one dollar a day, and millions starve every year.

Before I conclude, I wish to deal with a different subject. I was disappointed in our debate on 27 June to receive no reply to my concern about the lack of any Christian or spiritual content in the proposed new constitution for Europe. I quote again from a speech made by the right reverend Prelate the Bishop of St Albans in your Lordships' House on 7 January last year:

    "To want to be at the heart of Europe and yet, at the same time, to ignore the soul of Europe would be to make a profound mistake".—[Official Report, 7/1/03; col. 920.]

That is my view and it is shared by millions of people across Europe. Poland was particularly disappointed not to get some reference to our religious heritage included in the proposed EU constitution. Such an omission may leave a dangerous vacuum that could be filled by ideologies incompatible with the values of liberal democracy which were born and enshrined in Europe's spiritual and cultural heritage.

I conclude by saying that I hope the Minister will appreciate that these are not in any way party political or parochial concerns but attempts to enable and ensure adequate research to assess the implications of the complex realities involved so that decisions will be made which are based on truthful, honest policies grounded in as much evidence as can be adduced relating to past experience, the current situation and assessment of future trends. The Government owe the

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people of this nation that reassurance and I trust that the Minister will be able to give us that promise tonight.

6.45 p.m.

Lord Hannay of Chiswick: My Lords, I would be risking a charge of hypocrisy if I were to say that I welcomed this debate or that I regarded it as timely or desirable. I voted against the attempt to overturn the Liaison Committee's recommendation not to set up a Select Committee to inquire into the costs and benefits of our EU membership. I voted against it not least, but not only, because it was a fairly transparent device to prepare the ground for our withdrawal from the European Union, as the original title of the Select Committee proposal revealed and as a number of those who participated in the brief debate we had before voting, and a number of those who have already spoken today, have also revealed. What I do welcome, however, is the opportunity today to explain why I opposed such a Select Committee and why I believe that the present debate is neither timely nor particularly useful—a view in which I have been fortified by the customary moderation with which the noble Lord, Lord Pearson of Rannoch, introduced the debate.

The clear implication of the inquiry that was proposed and of the title of our debate today is that our EU membership is a simple matter of readily quantifiable cost-benefit analysis. But it is surely not like that. It is not only the case that many aspects of the fundamental strategic decision we took when Parliament endorsed the terms of our accession in 1971, and when that view was confirmed by a two-thirds majority in the referendum of 1975, are simply not susceptible of accurate quantification, although that consideration should obviously weigh in the balance. There is also the question: how can one quantify the consequences of a decision that has fundamentally influenced every aspect of our economic policy, our business life, our trade policy and many other policy areas in the past 30 years? And how can one quantify the implications of a different set of circumstances, with Britain outside the European Union, when such a calculation requires a series of heroic and unsubstantiable assertions about the conditions under which we would have found ourselves living? One might as well try to quantify the costs and benefits of our membership of NATO, or of the United Nations, or for that matter of the Union of Scotland, Wales, England and Northern Ireland. I have not noticed any great rush to set up such futile and counter-productive exercises.

But even those aspects of our EU membership that give a possibly misleading impression of being readily quantifiable—budgetary costs, the trade balance, inward investment and so on—are not in fact susceptible of a clear cut presentation. Back in the 1980s the noble Lord, Lord Cockfield, whose achievement in building the single market must not be forgotten, commissioned a report on the cost of Europe's innumerable non-tariff trade barriers and of the benefits of removing them. The Cecchini report, as

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it was called after its author, laboured mightily and used all the econometric tools available. The kindest thing one can say about it, with the benefit of hindsight, is that the sign in front of the figures was correct—it was, indeed, a plus—but the figures were far from correct. That is surely a warning for those who wish to achieve precision and certainty in this field, where none is available.

The Cecchini report was in any case a relatively simple set of calculations compared with what would be needed if one was to put the whole of Britain's membership under the microscope. It had a firm basis in fact in the shape of the current situation and the barriers that existed and had been catalogued by the Commission. It had a reasonably firm basis for the other end of the bridge because it could posit the removal of these barriers and the sort of EU regulatory apparatus which would, in some but not all cases, be needed to take their place. The case of Britain's membership would be far more complex. What would, for example, be the effect on inward investment if we were not a member of the European Union? What kind of agricultural policy would we operate if the CAP no longer applied in this country? Where would we stand so far as concerns trade policy both vis-a¬-vis our biggest trading partners, the other European countries, and vis-a¬-vis the rest of the world? To what extent will we be compelled simply to replicate what the EU did without having any chance to influence it—the situation in which Norway and Switzerland find themselves?

Even if a reliable, credible and comprehensive cost-benefit analysis was readily available without too much delay and without too many resources being lavished on it, which I argue that it is not, I would still question the desirability of conducting such an exercise. If the United States, for example, were to undertake publicly and officially a cost-benefit analysis of its membership of NATO—or if one of the permanent members of the Security Council were to do the same with the United Nations, or if a nationalist party were to insist on an assessment of the value of the Union—we would be mightily alarmed and would argue that it was a retrograde step that would undermine both the credibility of the organisation in question and the commitment to and influence in it of the country that undertook the assessment. We would be right to do so.

What then makes us think that we could embark on such an exercise with respect to the European Union in this House and not have a damaging effect on ourselves and our interests? Naturally, our partners in the European Union would be dismayed and would no doubt be made all the more so by the vigorous efforts of those who do want us to withdraw from the European Union, to ensure that the assessment was negative. Until that exercise was concluded, there would be a question mark over our continued membership, and that during a period when we need to be influencing the formulation of EU policies effectively—over the implementation of enlargement,

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the economic reform agenda, the world trade negotiations, the budget and foreign policy—and not sidelining ourselves in the debates.

Do those arguments against a cost-benefit analysis weaken the case for our membership? Are they based on a fear that such an analysis would be negative? I would say "No" to both points. There is nothing extraordinary or indefensible about arguing that the long-term strategic decisions of a country or a group of countries can and should not be based purely and simply on a narrow assessment of "nicely calculated, more or less". When the original six European countries came together in 1952, they were not so based—and who would say now, more than 50 years later, that they have not justified their decisions?

Our own decision in 1971 was quite clearly based on a similar, wider political analysis. I will quote only one statement made at the time, and that not by a politician caught up in the parliamentary debate but by Sir Con O'Neill, who was the senior official in charge of the accession negotiating team. He said:

    "The true purpose of the Community is security as well as prosperity; and gradually, by the consent of its members, to extend the advantages of working together into new spheres. Its objectives, whatever the forms through which they first expressed and still express themselves, are not usually economic".

And, when the countries of central and eastern Europe, recently freed from the crippling political and economic stranglehold of the Soviet Union, decided to join the European Union, was that a decision based purely on a narrow cost-benefit analysis? Of course it was not. So there is no need to be ashamed, or the slightest bit defensive, about arguing against the wisdom and the usefulness of our now carrying out such an analysis.

I would like to end on a positive note. I hope that this debate will help to clear the air. All the main political parties are committed by their leaderships to Britain's continuing membership. Let us then turn to the massive agenda which faces Europe in the years ahead and concentrate on ensuring that decisions are taken that are in both Britain's and the European Union's best interests.

6.53 p.m.

Lord Harris of High Cross: My Lords, I fear that I am about to demonstrate that independents are people who cannot be depended on, as I stand at approximately the opposite pole from my noble friend Lord Hannay. Indeed, I start by repeating from the Cross Benches my thanks to the noble Lord, Lord Pearson, for his brave persistence on the issue, which I regard as second only to national defence against terrorism. The powerful study that he quoted, The Great Deception, shrewdly defined the threat to our country from Brussels as a "slow motion coup d'etat". No doubt many noble Lords, including some present, regard the noble Lord, Lord Pearson, as a very great bore—and so he is. So was Churchill in the 1930s, in his repeated calls to arms against an enemy.

For me I am afraid, the noble Lord, Lord Pearson, has proved a truer guide to significant developments in the European Union than our Select Committee

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reports, however admirably presented, which have largely concentrated on the minutiae of the latest directions from our would-be masters. After much reflection, however, I have concluded that he would do better to confine his call to an economic cost benefit. Economic costs are more tangible and susceptible to some kind of accurate assessment than any vague benefits.

After all, why do people support the European Union? Very few do from an economic standpoint. For some, a psychic or emotional satisfaction is a sufficient reason. For others, broad political considerations predominate. For better connected e«lites, some of which are represented sometimes in this House, support may turn on notions of loyalty, personal friendship or—perish the thought—personal ambition and self-interest, including safeguarding pensions.

The problem for the noble Lord's cost-benefit analysis is that what the late Lord Robbins called, in another context altogether,

    "the mystic joys of tribal unity"

are subjective. However real they may be to Euro-philes, they cannot be measured. The merit of concentrating on the economic costs is that they are tangible and quantifiable. My challenge is that it simply will not do to commend support for the EU "irregardless", as the late Lord George-Brown would have said, of its costs. Can it be such a fine thing that any cost would be justified? Would even the Liberal Democrats dare to commend the EU without showing the least regard for the cost?

Because we cannot measure everything, as my noble friend Lord Hannay said, should we not try to measure anything? That is an absurd proposition on which I hope noble Lords will reflect. Must this large issue of policy turn entirely on a mixture of emotion, hopes or fears, ignorance or rival propaganda? Nor will it wash to dismiss the patient call for information from the noble Lord, Lord Pearson, on lofty, pseudo-technical grounds, as I have heard in this House, that cost-benefit methodology has no bearing on such complicated issues. That altogether underrates the sophistication of specialists in that line of business, especially if they are offered a fee.

It is difficult to suppress the dark thought that opposition to measurement conceals a preference for sweeping claims of disaster if we dare to contemplate withdrawal, and absurdly exaggerated claims about the EU as the guarantee of peace in Europe and the world. For both Euro-sceptics and Euro-philes, economic benefits may not even be the most important part of the equation. However, for all rational beings, the measurable economic burden is relevant as indicating the opportunity costs of our membership—that is, the sacrifice of alternative uses of the resources.

In an earlier debate, I ventured to offer some broad orders of magnitude of the opportunity costs that might be saved by British withdrawal. The figures were admittedly derivative, but a retired economist can hardly be expected to undergo the fatigue of original

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research in such a matter. Anyway, I suspect that hordes of experts in the Treasury could produce much of the data for which we are looking from their word processors in their lunch hour.

My first approximation differs a little from that of the noble Lord, Lord Pearson. I start from a gross payment to the EU and its institutions shown in the Pink Book at almost £12 billion, from which might be deducted up to £7 billion, including the Thatcher rebate, which of course the French and Germans would like to snatch back. Then there are estimates of the total cost of the CAP, which range from £5 billion to £9 billion. Is it about right to put at £5 billion the higher priced imports that follow from the EU's dubious anti-dumping duties? Such outside "guestimates" would suggest that annual costs might range from £15 million to £25 million—a little short of the estimate made by the noble Lord, Lord Pearson. They are huge figures to set against the arguable political and psychological advantages of membership.

Rather than retreat into her usual charming evasions, would the noble Baroness, the Minister, at least acknowledge the desirability of a more accurate assessment than I have been able to offer? The stakes are high. The Minister might even avoid further re-runs of our unending debates.

7 p.m.

Lord Willoughby de Broke : My Lords, I am grateful to my noble friend Lord Pearson for initiating the debate and I congratulate him on his excellent speech. It admirably set the scene.

For reasons that defeat me, all the Front Benches are to a greater or lesser extent in favour of the EU; some want more, some want less and some want the unattainable. So it is usually left to Back-Benchers to question the whole relationship; to question whether it is a good idea for Britain to be in the EU at all; and to examine the costs. But when we dare to ask those questions we are slapped down as "Euro-phobes"—a convenient catch-all label which means that we are so far beyond the pale that it is not even worth having the debate. An example of that occurred last month in a Liaison Committee debate when one of our opponents—the noble Lord, Lord Peston, I think—called it "damaging" to have such a debate on our membership of the European Union and its costs. I do not see how it can be "damaging" to ask for an open debate about the fundamentals of the EU—called the "bottom line" by the noble Lord, Lord Harris.

Our gross annual contribution to the EU budget is £11 billion—I prefer to deal with the gross, rather than the net, figures. The British taxpayer is handing over £30 million every day of the year to an organisation in Brussels and that is a byword for—how shall I put it—financial irregularity. It is an organisation whose accounts have failed to be signed by the European Court of Auditors for nine consecutive years. But the poor old taxpayers are never asked whether they think that is a good idea or told how their money is being spent. I suppose it would be "damaging" to do that. When it comes to the EU, honesty is definitely not the best policy.

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So what happens to that £30 million a day? Where does it all go? As we have heard, most of it goes on the Common Agricultural Policy. Although there is talk of reform, I shall tell the noble Lord, Lord Dubs, that the bill has not come down and does not look like coming down. We are still paying the same amount, it just goes into a different pocket. That reform will not be particularly promising. The EU has also been lucky enough to be able to contribute towards modernising the Spanish fishing fleet so that it may operate with full efficiency in what used to be our North Sea waters, while the British fishing fleet is laid up. I am sure that we would all like to pause and thank Sir Edward Heath for making such self-evident benefits possible.

What do we get back? After careful study of replies in House of Lords Hansard, the Government's case appears to rest on two positives: first, our membership of the single market. I do not propose to deal with the claims about jobs as they have already been dealt with and subsequent speakers may also wish to touch on that point. All I shall do is to remind the House that a Government Written Answer on 30 March, 1999 stated:

    "There are no meaningful figures on the effect of European single market legislation upon net UK job creation between 1993 and 1997".[Official Report, 30/3/99; col. WA 32.]

The second alleged positive is that within the EU we are able to shape the way it develops; to make it, in the Minister's words,

    "more democratic, more effective and of course more efficient".

If only that were true, but it is patently not. Britain has been hit by a tidal wave of EU directives, regulations and red tape that damage rather than help British competitiveness. An absolute classic of that kind is the Commission's recent ruling that Ryanair's deals with Charleroi airport are illegal. Now, instead of paying say £10 or even less for a flight to Brussels, would-be travellers—those outside the EU and government salariat who do not have to count the cost—will have to pay enormous sums. They will be back in the hands of the grisly gang of "state champions"—Air France, Aer Lingus, and Alitalia—and will probably have to take out a second mortgage to afford a ticket to Brussels. I am afraid that the Commission would not recognise competition if it fell over it.

EU red tape has now become an avalanche. It flows into every corner of our life, with directives on working time, parental leave—

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