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Lord Hannay of Chiswick : My Lords, I thank the noble Lord for giving way. Would he be in favour of allowing local governments to subsidise illegally airlines that wish to come to their airports? Would that be a good use of taxpayers' money? Does he favour a single market in which such practices are common and allowed?

Lord Willoughby de Broke : My Lords, I favour an open and competitive policy. It was open to other airlines to do the same as Ryanair; they were just too slow to do it. The Commission should recognise competition for what it is, not what it thinks it is.

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I was talking about the various directives that have flowed our way—working time, parental leave, pregnant workers, part-time workers and an uncountable thicket of health and safety regulations. Also our horses must have expensive and unnecessary passports in case they get eaten by our Belgian or French friends; farmers are criminals if they bury a dead ewe on their own land; and any trader is a criminal if he sells goods in pounds rather than kilos.

But I do not wish to be too negative. When she wound up our debate on this subject in June last year the Minister pointed out that thanks to the EU we in Britain have safer toys. She is quite right. Thanks to the EU rocking horse directive, we now have a new "free height of fall" standard which will ban all rocking horses that are over two feet high. Just as we are deemed too spavined to clean up our own beaches and provide clean drinking water for ourselves, we can now sleep easy in the knowledge that killer rocking horses will longer damage our kiddies. That makes it all worthwhile.

The politicians and Euro-crats who have charted our progress into the European morass are fond of the image of vehicular progress to instil the necessary urgency in us laggards. We must not miss the boat, train or bus; we must keep pedalling the Euro-bike in case it loses momentum and we all fall off. The Euro-limo is looking more like a Euro-banger day by day. After the findings of massive fraud in Eurostat, the smell over the Commission's own accounts, the ignominious collapse of the stability pact and a collision with Poles on the way to the constitution, the wheels have come off the Euro-limo in a big way. It is now parked hissing and creaking in a lay-by, waiting for the rescue service.

The rescue service comes in the shape of the President of the European Commission. His solution is a whacking 25 per cent increase in the European budget. In broad-brush terms that would bring Britain's annual contribution up to 13.25 billion. Would the Minister say whether the Government are in favour of such an increase? And if not, could she explain why the Government believe that 13.25 billion is not right, but that 11 billion is. We would like to know. If the Government are so confident of their case, they should be able to make it in the study for which we are asking.

7.08 p.m.

The Earl of Liverpool : My Lords, I rise to support my noble friend for initiating this debate and to congratulate him on the vigorous and sincere way that he deployed his arguments. I also congratulate him on his good timing—I shall return to that matter.

His request for a cost-benefit analysis is reasonable by any standards. I would have thought that europhobes and europhiles alike would be seized of the wisdom of being in possession of as many facts as possible before taking the next and possibly irrevocable step. If nothing else, the Iraq war has taught us that. I have heard it said by noble Lords who are on the europhile side of the argument that there is

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no point in carrying out the sort of exercise that my noble friend is requesting, because the benefits of remaining within the EU are so obvious. I can only say that I, and increasing members of the British public, find that argument is wearing thin.

There is another argument that is deployed by the europhiles, which is that a cost-benefit analysis would be so complex—the noble Lord, Lord Hannay, referred to that—that it would be difficult to carry out and it would be time consuming and expensive. It may be all of those things, but I do not believe that that absolves us from carrying out the work.

This is one of the most important and long-lasting decisions that we have to make in our lifetime. And assembling all the facts which would then enable us to do our "due diligence" has to be the right way forward. Indeed, to do anything less would be—to use a City expression—an abrogation of our fiduciary duty.

I mentioned earlier the good timing of my noble friend Lord Pearson in getting his Motion on to the Order Paper today. As we all know, the EU spending budget is very much in the news at the moment. A 25 per cent increase in contributions is being proposed, with, very possibly, a demand in 2006 that we forfeit our annual rebate of nearly 3 billion euros. To read some comments in the press, one would think that this was a bolt from the blue. But after enlargement it was ever going to be thus. Of course the richer countries were going to have to increase their contributions because the poorer countries joining were always going to be the net beneficiaries. As the noble Lord, Lord Dubs, said, that is why so many Europeans think that the EU is a brilliant wheeze. It benefits them, it is right that it should and it is right that we should help them. It goes some way towards answering the question posed by the noble Lord, Lord Dubs.

Many of us warned that this would happen and so I found it somewhat extraordinary to read yesterday in the Evening Standard that our Chancellor, Gordon Brown, will label the proposals for increased EU spending as,

    "unacceptable and unrealistic, wasteful, inefficient and unfair".

I found that most interesting and I want to focus on two of his words; wasteful and inefficient. For me, they summarise so much of what is wrong with the EU.

At present, our net contribution is running at about 4.5 billion per annum. My noble friend Lord Willoughby de Broke says that the gross figure is some 11 billion and my noble friend Lord Pearson came up with 25 billion. By any standards, it is a large contribution. Among other places, it going is down a black hole of fraud, as referred to by my noble friend Lord Willoughby.

The EU auditors have been unable to sign off the accounts for the past nine years because they cannot account for the whereabouts of what they acknowledge to be about 3 billion to 4 billion. It is of course more than likely to be even greater than that.

If that is the case, it becomes apparent that our entire net annual contribution of about 4.5 billion is being lost to fraud of one kind or another. One talks

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nowadays in billions without capturing in a real sense the amount of money we are talking about. Let us say that our contribution is 4.5 billion; that is 4,500 million. It is a great deal of money and all of it is coming from the long-suffering British taxpayers' pocket. To what extent are British taxpayers aware that an amount equivalent to almost all our net contribution is being lost down a black hole of fraud in the European Community? I do not suspect that many are but people should know.

I may be exaggerating the figures, but I fear that I am not. In any case, the only way to find out is to carry out a cost-benefit analysis of the kind my noble friend Lord Pearson is advocating. I live in the hope that the Government may be persuaded that this is the only wise and sensible way forward.

7.15 p.m.

Lord Beaumont of Whitley: My Lords, this is a debate which should not be needed. But it is and all your Lordships should be grateful—although I am sorry to discover that some are not—to the noble Lord, Lord Pearson of Rannoch, for his tireless efforts to achieve it.

It is self-evident that any country which is a member of an organisation which involves money should have a cost-benefit analysis both economic and political. I am sure that the Government will say that they have one. Possibly they have, but it is my contention that if they have, it is out of date and extremely tendentious.

And therefore, it is probably advisable that those of us who support the Motion should make it clear where we come from. In so far as I speak for the Green Party on this matter, I have to say that the party's policy is in favour of Britain being part of the EU but would like to see it reformed. That, I think, is a triumph of hope over experience. No one looking at the EU as it is at the moment can hold out much hope of it reforming itself in the direction we want; that is to say, becoming less bossy and less economics oriented.

As for myself, I have abandoned hope of reform and I will campaign for our speedy exit. I was not always thus. Soon after our accession, the British office of the EU gave a small dinner party for those of us who had campaigned for it before what were then the "big parties" decided to. My wife and I had helped to organise, under Lord Gladwyn and Mark Bonham-Carter, a small conference in 1963 called "Europe—after Britain joins" and so we were counted among the good, if not the great, and were rewarded accordingly with a nice dinner party.

But my devotion to Europe, which is as strong now as it was then, was to a Europe des Patries, as De Gaulle would have called it, and was deeply rooted in the concept of Christendom, the basis of which the noble Baroness, Lady Cox, pointed out is disappearing down the plug hole. I failed to notice for far too long a time that such ideas were being swamped by economic factors. Far from a reversion to Christendom, we were heading inexorably into the jaws of Mammon.

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I must point out that I have spoken for more than the nought minutes, which is shown on the clock. I welcome what it is doing to me and I promise not to over-run, but I think I should point that out.

I am an unrepentant reader of the Daily Telegraph and the Sunday Telegraph on the basis that together with the Financial Times they have by far the highest standards of British journalism. Therefore, your Lordships will not be surprised that I could not bombard you with the endless instances of the dictatorial record of Brussels, which Christopher Booker and his colleagues provide. But tonight is not the time for that. That time will be when we set up a body, as envisaged in the Motion, to draw up the balance sheet. I am sure that sooner or later we will.

In the mean time, I will continue to fight to maintain British independence against a take-over by the Brussels Commission's United Europe, as I saw done when I was a boy against Hitler's United Europe and as our ancestors did against Napoleon's United Europe. Now that the opinion polls tells us that the majority of all members of the EU are opposed to that body—the noble Lord, Lord Dubs, asked us to consider why so many people want to get in but I would ask him to consider why so many people want to get out—I see some hope as long as doughty fighters such as the noble Lords, Lord Pearson and Lord Stoddart, stick to their guns.

In 1940, after the fall of France, the Times printed a poem by my beloved Dorothy L Sayers called "The English War". It had the courage to rejoice in those dark days that we stood alone and contained the stanza:

    "This is the war that we have known

    And fought in every hundred years,

    Our sword upon the last, steep path

    Forged by the hammer of our wrath

    On the anvil of our fears".

So, stirred by that clarion cry, let us at the very least press for a cost-benefit analysis!

7.19 p.m.

Lord Vinson: My Lords, we are, yet again, indebted to the noble Lord, Lord Pearson, for instigating this topical debate. Ever closer union with Europe is to many people, such as the noble Lord, Lord Dubs, indeed, the fulfilment of their vision of a supranational European state bringing—

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