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Lord Dubs: My Lords, I did not argue for a supranational European state. I thank the noble Lord, but that is not what I said.

Lord Vinson: My Lords, I apologise. I am delighted that the noble Lord made that point clear. However, to many people, the fulfilment of their vision is a supranational European state bringing peace in our time. They argue that the nation state is on its way out and will soon be part of yesterday's political framework. They argue that we are on the escalator of commitment and the die is cast. I used to think that way, too, but my vision has been tempered by reality.

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I believe that the nation state is far from dead and that Europe should be built on foundations that acknowledge basic tribal patriotism rather than attempting to eliminate it. One glance at the crowds at international football matches should be enough to alert all politicians to the force of nationalism. Nationalism should be embraced in our arrangements if we wish to give the whole European ideal democratic legitimacy. As the Government ponder on the new EU constitution, now, indeed, is the time to do so.

Interestingly, only last week Joschka Fischer, the German Foreign Minister, said that he had,


    "learnt a lot from the Iraq conflict which split the EU down the middle",

and that,


    "the dispute raised fundamental questions of how close European neighbours with different histories and traditions could agree on vital policies".

He went on:


    "I think all countries have the same interest: a strong Europe. But we have different traditions, different political disputes at home, complicated parliamentary systems—we have to balance that and go forward".

Wise words indeed.

Meanwhile, as every poll on the popularity of the EU shows, the British public are becoming increasingly doubtful about the whole exercise and sceptical as to its benefits. Even the Government's own representative on the Giscard committee, Gisela Stuart, changed her mind after first-hand experience of the realities of the EU, saying in her recent speech:


    "The fabric of the EU is tottering and it needs amending".

If the Government sign up to this constitution, forced on our people without reference by a political elite, it will reinforce the growing alienation from the democratic process. I wish I could remember who said:


    "If you value peace over freedom, you will finish with neither",

but he was dead right. We must have an arrangement with the EU that works with the grain of human nationalism. Another botched deal based on reluctant consent is in no one's interest. What the public need is an assessment of where this country stands, what economic benefits it has reaped from our membership to date and what, if any, alternative arrangements it could have within an enlarged Europe. Change is in the air. We have all read the audit of war; now it is time for an audit of peace.

I cannot for the life of me understand why the suggestion of a cost-benefit analysis is not encouraged and supported by many on the opposite Benches. It could well vindicate their vision and justify their belief in further economic integration. Alternatively, are they terrified of seeing one of their sacred cows, grazing in the verdant pastures of Europe, suddenly slaughtered by a fact?

Others in this debate have spelt out areas and parameters that a cost-benefit analysis should examine. Time is short but I hope that, not least, we can look at the true cost of our 1 per cent GNP contribution to the EU and the dubious benefits and lack of utility of much of the grants returned to us—grants which can be spent only on items which our own

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Government would not have supported in the first place. It is good to see that this week the Treasury is having some thoughts on this financial roundabout and all the waste that goes with it—probably up to 0.25 per cent of our GDP frittered away and well over £2 billion.

I hope that our analysis could also examine the cost of over-regulation and why we gold-plate our regulations and others do not. A perfect example of our attitude and how damaging it is to our economy is in this week's press. A fully HSE-licensed and approved waste paper furnace was used to heat a building—an excellent example of recycling. Out comes a new EU regulation describing it as an "incinerator" and no longer as a "furnace". So the same HSE department takes steps to close it down, albeit previously recognising its intensely useful function. That results in the destruction of a highly commendable recycling operation. Have we gone mad? Whatever happened to subsidiarity in cases such as that? One could repeat that type of example a thousand-fold.

The European Union is making the most significant decisions about its future structure since the Treaty of Rome established the Community in 1957. We need the facts because the Government, whatever their red lines, will be under pressure to sign up. As ever, we shall witness diplomacy by exhaustion and the future legal and financial framework of this country will no doubt be changed irreparably. Deeper embedded will be taxation without adequate representation and regulation without the possibility of rectification because the new constitution gives the EU a legal entity in its own right and its laws will take preference over those of national parliaments.

The constitution of this country has been developed over 1,000 years and has given us, uniquely, remarkable political and economic stability second to none—one which we all too easily take for granted. The British people must know what they are getting in exchange. The EU convention is not just a matter for governments; it is a matter for parliaments and people. The recent vote in Sweden was not only a vote against the euro but a vote against the political establishment that was taking people along a route which was going they did not know where and which, instinctively, they did not like.

The Government must find the resources to establish the facts and then the British people must be allowed to decide on those facts by way of a referendum. If a new EU constitution is imposed upon them without a real effort to explain its desirability, those football crowds will divert their patriotism into strident nationalism, and the dream of a peaceful Europe—a dream we would all like to see come true—will turn into a nightmare.

7.26 p.m.

Lord Stoddart of Swindon: My Lords, I join others in congratulating the noble Lord, Lord Pearson, on putting this item on the agenda today and also on his

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persistence in pursuing this particular view. I also congratulate him on his presentation a few Sundays ago on the Jeremy Vine show. That was certainly well received, and I believe that he has had a great deal of encouragement and correspondence about it.

However, it is beyond my comprehension that, after 32 years' membership of, first, the Common Market and then the European Union, there is a blank refusal by the Government and the main opposition parties to agree to the need for a cost-benefit analysis of our continuing membership. What on earth are they all afraid of? We have had myriad inquiries about virtually everything else; why on earth cannot we have an inquiry about the most important issue to face this country during the rest of this century? We should have such an inquiry and we should have it now.

Surely we want to know what benefits—economic, social and political—we derive from membership, how far the governance of Britain has been handed over to the European Union and what future lies in store for us as an independent, self-governing democracy. Those are huge and important issues and they affect the future of this country. Why on earth cannot we have an inquiry into the matter? If this item is not worthy of an inquiry, what on earth is? Perhaps we should have an inquiry into why there is such resistance to having an inquiry into this most important issue confronting Britain.

Unfortunately, those of us who raise these matters are accused of being little Englanders, extremists, nutters—you name it; we are them—and even worse. But what we are seeking is the truth about the European Union. I should have thought that everyone wanted to know that—not only people such as me who believe, and have always believed, that it is not good for us. Those in favour should welcome such an inquiry. So often, the predictions of people such as myself are scoffed at, as are the outcomes.

All too often we have been proved right. I take, for example, the issue of scrapping the pound and adopting the euro. Those who cautioned against it again were attacked for not wanting to join the "euro express" and were even labelled unpatriotic because they believed in keeping our own currency. Events have proved us right. Even Jacques Delors, the former commissioner, agrees that we were right. A Times report of 17 January 2004 quotes him as saying:


    "The UK was right not to join the flawed euro".

So we have his endorsement.

One important result of an inquiry might be to find out why the Prime Minister was so anxious to get us into the euro post-haste, and led a campaign to achieve that.

One advantage claimed for EU membership is trade. Yet Britain has consistently had an average trade deficit of £5 billion every year since we joined. Think of what that sum means in terms of jobs. So, in fact, the advantage of trade does not lie with this country, it rests with other countries in the European Union.

An inquiry could also establish whether our fishing and agriculture industries have thrived within the EU or whether they would do better outside. It could also

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examine the effect of membership on other great industries, such as shipbuilding and steel, and indeed the effect of the overregulation throughout the whole of the EU and its functions.

Furthermore, an inquiry would examine whether the taxpayer is getting value for money, and the effect of losing our rebate amounting to £3.23 billion each year, which is clearly under threat and is being defended—I am glad to say ably—by the Chancellor of the Exchequer. And, of course, a cost-benefit analysis at this time would be able to examine the new demands by the Commission, of which we have already heard; for example, a huge increase in funding for education. So far as I can understand from what has been said, it wants to take over further education and it wants to spend an extra £1.8 billion on administration alone.

Finally, we are always being told that if we do not further integrate with the EU we will be isolated. Of course we will not be isolated. That is complete nonsense. The noble Lord, Lord Dubs, said that we would be described as a small isolated country if we were outside the European Union. But we are the fourth largest economy in the world and we are respected throughout the world for our experience in diplomacy.

There is a wide, wide world beyond the European Union. What we should consider is our place in that world and whether we should be thriving in it, leading a Commonwealth comprising one quarter of the world's population, rather than rooting ourselves further into the stagnant regulation-ridden backwater of the European Union where we can only—and always do—follow while others lead.

7.34 p.m.

Lord Monson: My Lords, the noble Lord, Lord Stoddart of Swindon, suggested that the Government should welcome an impartial inquiry. I am confident that the Government, and indeed the main Opposition parties, will welcome the quite admirable clarion call of the noble Lord, Lord Pearson.

Why? For this reason: ordinary mortals—among whom of course I number myself—are fully entitled to be swayed as much by emotion and sentiment as by cool calculation when evaluating the pros and cons of membership of organisations such as the EU, but governments, and what the French call la classe politique, are not supposed to allow their hearts to rule their heads. Hard-headed practical considerations, both economic and non-economic, are all that should count.

As Palmerston famously put the matter 156 years ago:


    "We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.

This traditional lack of sentiment—rather dismaying to a layman it must be said—has been all too well illustrated by Britain's treatment of New Zealand. In this country, 55 years ago New Zealand was riding as

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high as possible in public estimation. Together with the Canadians and the Australians, the New Zealanders had rallied to help us in two world wars. New Zealand had suffered—like the Canadians and Australians—disproportionately high casualties in the process. Its people were mostly of British stock, and most of our lamb and butter came from there.

Yet, less than a quarter of a century later New Zealand was politely but firmly cast adrift, to facilitate Britain's entry into the EEC. How strange then, given this Palmerstonian lack of sentimentality—indeed ruthlessness—that there are those in the British establishment who argue that any talk of loosening our formal—I stress "formal"—links with continental countries collectively must be firmly squashed, since it would allegedly "hurt the feelings" of those countries and indeed be deemed a "hostile act", and provoke them into inflicting unspecified Lear-like retaliatory horrors upon us. Such a mixture of emotionalism and panic is inconsistent, to say the least, with traditional British foreign policy.

Emotion and sentiment in the field of foreign relations is fine for individuals, but where governments are concerned they need to be subordinated to practical considerations.

Most Euro-enthusiasts, like the noble Lord, Lord Dubs, will now concede that there are some disadvantages to EU membership while most Euro-sceptics will concede that there are some advantages to EU membership. For example, I willingly admit that, when standing up to American bullying in matters of trade and tariffs, there is a lot to be said for being part of a large, populous negotiating bloc such as the EU.

So, if we can agree to put emotions and sentiment on the back burner for the time being, it is simply a question of whether or not the overall advantages—both economic and non-economic—outweigh the overall disadvantages. What could be wrong with that?

If, at the end of the day, the evidence points overwhelmingly one way, that is probably the end of the argument for most people—not of course for everyone—and a lot of talk, time and money would be saved. If the evidence demonstrates only a small overall benefit in continued EU membership, that is the moment when emotional and sentimental considerations can legitimately come into play in deciding what steps to take.

If, on the other hand, the evidence shows that there is a small overall disadvantage in EU membership, that would give the Government a golden opportunity to pinpoint the most disadvantageous aspects of that membership, with a view to seeing whether it might be possible to initiate a ground swell of public opinion across the Community in favour of rolling back the frontiers of the acquis communautaire in certain areas. One would have to pitch one's arguments directly to the continental electorates; it is no use appealing to the European e«lite, who do not want to relinquish their grip on power—their "benign" grip, as they would argue, unconvincingly.

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The ordinary people of the Continent do not want "obsessive harmonisation" as the noble Lord, Lord Dahrendorf, put it many years ago, or interference in the nooks and crannies of their everyday lives—to quote the noble Lord, Lord Hurd—anymore than we do. So improvements are, although in practice unlikely, theoretically by no means impossible.

The inquiry would have one other great benefit. It would knock on the head two big lies and one smaller lie, or at least fib. Quite disgracefully, too many Euro-enthusiasts have successfully terrified much of the British electorate by claiming that 3 million jobs directly depend on membership of the Community and that, if we left the EU, 3 million people would lose their jobs overnight or before long—something that they know to be untrue. But I exempt the noble Lord, Lord Dubs, from those strictures, because he admitted that 3 million was a grossly exaggerated figure.

The second big lie is slightly less inexcusable, in that some people genuinely seem to believe it—quite amazingly. That lie is that only the existence of the EU and its earlier manifestations has prevented western European nations from going to war with one another once again. Time and again, I have challenged those who make that assertion to set out one plausible scenario in which western European democracies would have gone to war with each other in the past 50 years had the EEC never been created. Unsurprisingly, no one has ever risen to that challenge.

A smaller lie—or perhaps misconception, as it may well have been genuinely believed—was advanced in debate on the Maastricht Treaty some years ago, I think from the Conservative Back Benches. That was that the continued existence of the European Youth Orchestra depended on our signing the treaty. I yield to no one in my admiration of the European Youth Orchestra or any other youth orchestra; they are marvellous, inspiring, usually a joy to see and hear and give one enormous hope for the future of our civilisation. But if the European Commission vanished overnight and the Council of Ministers never reconvened, the European Youth Orchestra could still flourish and go from strength to strength.

It is quite possible that, ultimately, the inquiry proposed by the noble Lord, Lord Pearson, might find continued EU membership to be beneficial to the United Kingdom, on balance. But if it did so, at least the findings could no longer be based on the ridiculous claim that withdrawal would lead to mass unemployment, a third European war and the diminution or cessation of all social, cultural and intellectual contact with the European continent.

7.41 p.m.

Lord Blackwell: My Lords, I join other noble Lords in welcoming the Motion moved by my noble friend. As the noble Lord, Lord Stoddart, said, few more important questions face us at this time. The reason for that is that, week by week and year by year, we face a huge number of decisions on how we participate in Europe, including, later this year, the issue of the

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constitution itself, which other noble Lords have mentioned. It surely cannot be sensible to enter those negotiations and agree outcomes without a clear view of what is at stake and what are the alternatives to proceeding with that option.

As other noble Lords have said, the Government's tactic tends to be to assert that there is simply no alternative to signing up to whatever option is offered from Europe, other than full withdrawal. It is then argued that such a step would be economically and politically disastrous, and that those who question the benefits are therefore extremists whose questions can safely be dismissed. I reject that form of response to an attempt to have an intelligent debate on matters of such crucial importance.

I cast my case for the Motion in the context of current discussion under way in Europe and the reality that there must be a high probability that failure to reach an agreement on the proposed constitution acceptable to all—in particular, if it is vetoed by Britain or other countries—will inevitably drive practical consideration of what has in the past been called a multi-tier Europe. We cannot assume that Europe will from this point on always proceed at a uniform pace or in a uniform way. A multi-tier Europe is a likely outcome—whether now or at some point during the next few years. That is what my noble friend Lord Hurd has previously called variable geometry.

I believe that there is nothing wrong with that; indeed, it is probably highly desirable, because we must recognise that different countries in Europe have different needs and that different outcomes are likely to suit their interests. There may be many in Europe with different situations from that of Britain who would benefit from a higher level of integration than that from which many of us believe that Britain would benefit.

If we are to participate in such discussions, as and when they appear on the agenda—which I believe is likely to be sooner rather than later—we must decide what kind of tiers we want to help shape in a multi-tier Europe and which of those tiers bests suits our interests. That means that we need clarity about what aspects of the current European Union are in our favour; and clarity about which aspects, on balance, we would rather be outside.

I am sure that there is general agreement in the House that many things occur alongside our membership of the European Union that we would want to preserve under any scenario—in particular, the notion of free trade across Europe and as much of the world as we can achieve. That applies similarly to co-operation on aspects of crime, security and other matters that cross national borders. None of those things is in doubt. The question is: how much of the current European Union overheads do we need to deliver those benefits; and what burdens imposed by those overheads do we not need?

Let us take the single market as an example. It is clearly desirable to have as low a level of tariffs across Europe as possible. The truth is that, since the European Union was founded, tariffs have dropped

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across all global trade. Several countries outside the European Union now achieve as favourable terms with our European partners as we do, without being part of the European Union. Yet the costs of the single market are now significant.

Thousands of regulations are imposed every year—many of them introduced into UK law without effective scrutiny. Can the Minister tell us how many regulations originating in European legislation have been passed into UK law during the past 12 months; and whether on that narrow aspect the Government have any estimate of the cost to British business? Despite the fact that we are all in favour of free trade, it is reasonable now to ask what are the benefits of additional trade that we may achieve in Europe through being a member of the single market, versus the loss of trade elsewhere that may arise because of diminished competitiveness due to those regulations.

As other noble Lords have said, we should enter that discussion recognising that the European Union accounts for less than 10 per cent of Britain's GDP and that, as my noble friend Lady Cox pointed out, the European Union will actually be one of the slowest growth areas for trade in the coming years. It will be China, India, Russia and similar countries that will drive world growth during the next 50 years. They are where our future lies.

Germany, by contrast, will have flat or close to flat GDP during the next 20 years, if current forecasts are to be believed. If its productivity continues at no more than 1 per cent a year, or thereabouts, and its population in work declines by 1 per cent a year, simple maths says that it can look forward to little growth in its overall economy during that period. So we must be clear in a hard-headed manner about where our interests lie against the true engines of world and British growth in the years ahead.

As other noble Lords have said, beyond the single market there are huge questions about the benefits that we may achieve from our membership of the common agricultural policy, the common fisheries policy and other common policies. If we were constructing Europe today—and if, as I believe, we have the chance to construct a new Europe now that better suits our needs—would the Government choose to be a member of the common agricultural or fisheries policies? If not, may we see the benefit analysis that justifies that decision; or their arguments why we should continue our membership? It is not a question of dismissing them as part of a "take it or leave it" package; we have the opportunity now to shape a new Europe. Let us shape it around our interests, not around the false argument that we must accept everything or nothing.

The final argument made against the proposal, as the noble Lord, Lord Hannay, said, is that because we cannot estimate something to decimal places, it is not worth doing. In my experience, there are few very important questions to which one cannot get approximate answers and an approximate analysis. This is a case in point: we do not need the answer to decimal places. If the Government set up such an inquiry, it should be able to give a ballpark estimate

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that would at least give direction to the debate. If I am wrong, and such an inquiry could not come up with such an analysis, the Government should admit that neither they nor we know, rather than continuing to assert that the evidence of benefits is so overwhelming. If it cannot be proved, we must all accept that the answer is unknown.

The only conclusion that one can reach is that the Government are afraid of the analysis. Surely, it is almost a dereliction of duty to negotiate the kind of steps being proposed without at least attempting an analysis. I hope, therefore, that the Minister will concede to Parliament the kind of analysis for which my noble friend's Motion calls.

7.51 p.m.

Lord Moran: My Lords, our thanks are due to the noble Lord, Lord Pearson of Rannoch, for giving us the opportunity to debate this important matter. I should like first to say a word about the noble Lord. As he is one of the rare parliamentarians who say without equivocation that we should come out of the European Union, quite a number of Peers seek to disparage him as a lonely eccentric. That is a serious mistake. I have noticed a tendency in this House to be impatient with views that run counter to the general consensus. I remember how Peers made it clear that they regarded the repeated efforts of my noble friend Lady Mar to alert them to the dangers of organophosphates as tiresome and boring. The time came eventually when they recognised that she was right and paid her the respect that she was due.

The noble Lord, Lord Pearson, suffers in much the same way. However, he has built up a great fund of knowledge about the EU and knows more about its workings and its effects on this country than most Members of the House. If we look at opinion outside the House, it is clear that the noble Lord is not part of a negligible crackpot group but puts forward views held by a substantial part of national opinion. MORI polls have recorded that for the past 25 years just under half of all its respondents want us to get out of the European Union. The latest available MORI figure for June last year was 46 per cent. The fact that all three of our main political parties support continued membership seems to have had little effect on the public's views.

The noble Lord, Lord Pearson, complained for a long time that the BBC was biased against those who wanted to leave the EU. He arranged to monitor a large number of programmes and demonstrated that his suspicions were correct. The BBC was somewhat abashed and finally asked him to come on to "The Politics Show" during prime time television. He put the case for leaving the EU and answered questions. At the end, a bemused BBC presenter said that they had received more than 400 e-mails in 20 minutes and that most of them called for the noble Lord, Lord Pearson, to become Prime Minister or whatever. Later the switchboard was jammed for an hour and a half, with 90 per cent of callers in favour of leaving. I cannot think offhand of any other Member of your Lordships' House who could persuade the BBC to give

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him or her a solo slot to put forward a controversial case on Europe and secure such massive support from viewers. I suggest that in future the House would be wise to take the noble Lord's views with the seriousness that they deserve.

I welcome the debate. I had hoped that the House would have been able to discuss our relationship with the EU after I had moved an amendment to the Motion on the Liaison Committee's report on 14 January, but that hope was frustrated. In a vote that evening the House resolved by a large majority that within the next 12 months the slender resources available for an ad hoc committee should be devoted to euthanasia rather than to our relationship with Europe. That seemed an odd choice of priority. Why do we devote relatively little of our time and resources to questions of great concern to the people of this country, such as immigration, crime, MRSA in hospitals, the need to strengthen the family and our relationship with the EU, and instead spend weeks discussing the banning of hunting or a whole series of Bills improving the standing of homosexuals? That does not do much for the standing of this House. I am in no doubt that, if we are to have an early inquiry into the pros and cons of detachment from the EU or of a looser relationship, sadly we cannot look to this House to carry it out. We shall have to make other arrangements.

On 14 January, I said that an inquiry should first bring together, in a readable form, details already in the public domain. On reflection, I concluded that this part of the inquiry would best be carried out by a research organisation rather than a committee. Arrangements have therefore been made for the respected independent research institute Civitas, with which some noble Lords are associated, to collect from impeccable sources and to publish in a clear and easily understood way the costs and benefits arising from our membership of the EU. I hope that it may be available by the summer. It will be interesting to see whether the view expressed before our entry by the head of the Treasury, as recorded on page 225 of Hugo Young's book This Blessed Plot, that the advantages were far outweighed by the costs, now appears to have been correct or not.

7.56 p.m.

Lord Williamson of Horton: My Lords, those who feel strongly about the matters covered by this debate are fully entitled to put their views to the House, and so far have been doing so at full throttle, if I may say so. None the less, I have a certain sense of de«ja¬ vu.

The topic of the debate was the subject of recent exchanges on the report of the Liaison Committee, as some noble Lords have mentioned, when decisions were taken on the appointment of a Select Committee on another matter but not on the cost-benefit analysis of UK membership of the European Union. The merits and demerits of our membership certainly played a major role at the Second Reading of the European Union (Implications of Withdrawal) Bill, which the noble Lord, Lord Pearson of Rannoch,

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moved in March 2000, and which we debated on that occasion for more than four hours. It was also relevant, in one way or another, to the discussion and decision on the Nice Treaty and to the UK Government's support for the convention that led to the draft constitutional treaty, which this House debated for eight hours on 9 September last.

It is highly desirable that we should look at the benefits and disadvantages, not only of individual proposals, but of some sectoral policies as they have developed in the European Union. In the field of environmental protection and consumer affairs, for example, it seems fairly evident that European Union actions directed at the maintenance of high water quality; the reduction of potentially damaging emissions; the protection of certain habitats; or the control or removal of damaging chemicals, all within a European Union context, are of benefit to the United Kingdom and the individual citizen. None the less, it is desirable from time to time to assess the policies to see that they are being applied in the most effective manner, and that from the strictly national perspective we are getting maximum benefit from positive measures.

Similarly, we ought to be attentive to cases where, for example, judgments of the European Court of Justice have given rise to a different interpretation of the law from that which we expected. An example now being examined by the social affairs sub-committee of the Select Committee on the European Union, from which I have come directly to this debate, is the European Court of Justice judgment that, when a junior doctor is on duty in a hospital, the time that he or she spends having a rest break or even sleeping is to be counted as working time. That complicates considerably how some medical services are currently organised in the National Health Service and in some other countries.

Thus, I believe that the proper way to approach policy developments within an established structure, such as our membership of the European Union, is a continual process of assessment. The work of the Select Committee on the European Union is an important contribution, by providing material for Parliament, Government and the private sector to make such assessments. Over the years, a number of reports within the European Union have also sought to quantify the value of certain policies, most notably the Cecchini report on the internal market.

It is a separate question whether we ought to seek today to attempt a complete cost-benefit analysis of UK membership of the European Union. In the light of the detailed attention that is given to all proposals and to the progress or lack of progress on policies in the European Union, there would only need to be a comprehensive examination—which is obviously a mammoth task—of all the elements, quantifiable and non-quantifiable, of our membership of the European Union, if there were some special reason to do that. I do not see it. The situation remains in many ways similar to that prevailing for many years, and in some important ways it is better.

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The budget of the European Union remains capped at 1.24 per cent of gross national income and has often been under spent. It represents less than 2.5 per cent of public expenditure in the European Union, the remaining 97.5 per cent being spent by member states. The single market is in effect, and although there is more to be done, the four freedoms—free movement of goods, services, capital and people—are largely respected. The single market was the biggest single initiative to remove red tape in Europe. Millions upon millions of forms were abolished. All of us who experienced it know what an enormous change that was. It is true that some things are not perfect now, but before the single market they were totally different and markedly worse.

The common agricultural policy has been considerably reformed. It will no doubt be further changed when, as I hope, the current round of international trade negotiations gets under way again. We have had a huge vote of confidence from the 10 countries who will become members of the European Union in May.

It is important and the most useful course for Britain to concentrate our attention more strongly on practices in the European Union that do not correspond to our approach nationally, but where it is realistic to conclude that the EU practices could, over a period of time, be corrected. I have in mind—I give examples, but they are important for the UK—three features of European Union legislation that should concern us as parliamentarians. There are many cases where criticism in the British press of decisions or legislation is mistaken or just plain batty, but it is none the less true that the perception of the British public that the EU is legislating in nooks and crannies has some element of truth. We know that the European Commission is capable of saying, as it did to the Select Committee recently, that it is going to put forward "only" 126 proposals or communications. I pointed out that we do not think like that in this country.

My message is that we can do something about it. Since almost all European Union primary legislation is decided by the Council and the European Parliament, we ought to make sure that the delegated authority to make secondary legislation is limited in the primary legislation to what is strictly necessary. We should use far more sunset clauses, which are not favoured in Brussels, but are a very good idea. The Commission should always present a list of legislation which it proposes to repeal or to let expire at the same time as it puts forward proposals. In this way, we can make practical changes that would be beneficial to us.

I am inclined to the view that a cost-benefit analysis on the scale suggested would be a diversion. We need to make best use of the advantages of EU membership, and to target strongly and in a focused manner areas for improvement, as I have indicated in relation to legislative practice.

8.4 p.m.

Lord Roper: My Lords, it is the custom of the House to thank the noble Lord who has introduced the

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debate. The noble Lord, Lord Pearson of Rannoch, has been fortunate in winning the ballot for today's debate, but he will not be surprised to hear that there is not unanimous agreement on these Benches with all the points that he made in his characteristically vigorous introduction. Nor will your Lordships be surprised when I say that I particularly valued the speeches made by the noble Lords, Lord Dubs, Lord Hannay of Chiswick and Lord Williamson of Horton.

Initially, I shall say one or two words on cost-benefit analysis, a point to which I shall return when I deal with one of the points made by the noble Lord, Lord Monson—before he leaves. I shall deal with the noble Lord's point at this stage. I go back to the wise words used in the debate on 14 January by someone who is one of the most distinguished academic economists in the House and Chairman of the Select Committee on Economic Affairs—the noble Lord, Lord Peston. He put that day's proposal in its place from an academic economist's perspective. He has dealt with cost-benefit analysis for 40 years, and is therefore in a better position to speak on such matters than many of the rest of us. Tonight, the noble Lord, Lord Hannay of Chiswick, made it clear why it was a difficult way of proceeding.

The noble Lord, Lord Dubs, said that there were two very different pictures of Europe drawn by Members of the House. I am one of those who see the European Union and its development during the second half of the 20th century as one of the most remarkable political achievements of that century. One cannot give it credit for all that has changed and all the differences, but I think that it is not unreasonable to claim, when one considers Europe in the first half of the 20th century, that it has been a significant contributory factor.

Perhaps the most significant evidence of that is the extraordinary fact of a new entity that has attracted all its neighbours into wanting to join. Nobody who has argued the case from the same side as the noble Lord, Lord Pearson of Rannoch, has had much to say about enlargement. The Union attracts even those that are not members at this stage. Ten new members will come in on 1 May. Every one had a referendum in order to decide whether to go in: in each case the proposal was carried. That must be very strange and they must have a rather different picture of the European Union from the one we have heard about tonight. I wonder why they have been so misguided. There are another dozen countries that I suspect may become members of the European Union in my lifetime. These include Romania and Bulgaria, with which negotiations continue, and six countries in the western Balkans, including Moldova, and perhaps Turkey. Nor do I exclude the other three European countries—Iceland, Switzerland and Norway—from joining the European Union before 2020.

The noble Lord, Lord Monson, suggested that it would be a lie to say that the European Union had stopped a war. In a sense, he is right. We cannot prove the negative. We cannot prove that if the European Union had not existed there would have been a further conflict in Europe. In the same way, one cannot say

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that NATO deterred the Russians. We do not know that the Russians would not have attacked even if there had not been NATO. But those two institutions have created a culture of co-operation among the countries that belong to them and have been one of the most fundamental confidence-building measures among their participants. They have created something referred to by a Czech political scientist as a "security community"; that is, a group of countries that cannot imagine the use of force to settle disputes among themselves. Of course, that is very different from what we knew in Europe in the first half of the 20th century. That is an outstanding achievement.

The noble Lords, Lord Hannay and Lord Williamson, referred to the creation of a common economic space—the single European market—for which the noble Lord, Lord Cockfield, had an enormous amount of responsibility as a member of the Commission. That freeing up of European trade was not just the removal of tariffs. It was much more than that and much more fundamental.

Here I agree with something said by the noble Lord, Lord Monson. The role of the European Union within the World Trade Organisation enabled us to organise and negotiate collectively. When the noble Lord, Lord Brittan, was commissioner, he did that in a remarkably effective way.

I should like to make a point about cost-benefit analysis. It is impossible to think of any way in which one could evaluate financially the value of the benefit of being in a group like that when negotiating. That is why cost-benefit analysis, which is all right when deciding whether to have a Victoria Line—one of the first decisions where cost-benefit analysis was used—becomes much more difficult with something of this kind.

In conclusion, perhaps I may echo the remarks made by the noble Lord, Lord Astor of Hever, in the earlier debate. I, too, congratulate the Minister on her remarkable stamina. She has not only given a most important Statement on the ways in which this House will play a larger part in future in dealing with European matters, but she is also winding up two of the debates. I look forward to hearing her response.

8.11 p.m.

Lord Howell of Guildford: My Lords, I, too, warmly thank my noble friend Lord Pearson for bringing forward the debate. I salute his determination on this issue, which he has shown again and again in bringing the matter to the attention of your Lordships' House. Like the noble Lord, Lord Roper, I, too, add commiserations—I am not sure that that is quite the right word—or I note with sympathy the fact that the noble Baroness, Lady Symons, when she speaks following me, will have performed three times today at the Dispatch Box on arduous and difficult subjects. I hope that the immense work she puts in is recognised in the right places and that she receives a pay increase, and so forth.

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As I think the noble Lord, Lord Moran, indicated, we have heard voices in this debate which ought to be heeded and, if possible, should be argued against by good robust arguments. They should not just be dismissed, or met with stale facts that may have suited yesterday's debates but are not good enough for the 21st century, nor just met with mere assertions. That is difficult because there are deep feelings on either side on those issues. From time to time, the re-assessment or revisiting of our major international commitment is, in the words of the noble Lord, Lord Beaumont, self-evident.

That must be so in the situation that we face in Europe where, clearly, enlargement, with the prospect of still greater enlargement in a few years' time, and the prospect of Turkey joining the EU after that, means that we are dealing with a completely different entity. We have to reckon with completely different policy considerations from those that drove the original six countries together or, indeed, inspired the commitment of the United Kingdom to the then Common Market. The original European Union has been totally transformed, as have been the original reasons for its creation. As the noble Lord, Lord Beaumont, observed, it is self-evident that one needs to look again at these issues with care in order to find the right arguments to carry public confidence in the policy, otherwise it will simply drain away.

In economic terms, I strongly hold the view that the original Common Market, as we called it, was for the United Kingdom a way forward out of socialist and corporatist stagnation and into free markets and competition, a point touched on by the noble Lord, Lord Williamson, in his contribution. But that was many years ago. Recently there has been a complete reversal. Over the past 10 to 15 years, the UK has gradually emerged as the competitive, free market economy while large parts of the original European Union are now stagnating, weighed down by excessive labour and other kinds of regulation, as well as high taxation. The Chancellor of the Exchequer, Gordon Brown, keeps pointing that out with great vigour, and no doubt he will continue to do so.

There is nothing inevitable about this contemporary and rather unhappy trend, one which is leading to considerable quarrelsomeness. The Commission is litigating against nation states and the Stability Pact has been driven through in a way described by my noble friend Lord Willoughby de Broke. While I may not carry all my noble friends with me on this, the signs are that with enlargement, with the arrival of 10 new countries and more to come, along with the obvious failure in so many areas of the integrationist agenda and the bitterness that that is causing, the European Union is on the point of very great change. That, too, is self-evident. Its citizens and some of the member states want that change.

In my view, this is not the time to think about cutting loose from the European Union, because this is probably the best opportunity during my lifetime, or certainly for the past three decades, for reshaping the European Union in ways that are more comfortable, sensible, democratic, open and flexible; that is, in ways

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that I suspect the vast majority of the people of Europe now want. So this is not the time to break away. Therefore, the wider debate, to which I hope our debate today has contributed—and to which my noble friend Lord Pearson has certainly contributed—should not turn so much on the narrower traditional issue of the UK's precise relations with the rest of the European Union, but on what kind of Union we now want to set our sights on, and what kind of Union can now be achieved in the new conditions constantly appearing around us. How flexible, comfortable for its members, open, convenient, useful and committed to free market principles can it be?

That is plainly not the kind of EU we have now; we have something very different. It is obvious that a Union structured to meet the problems of 30 or 40 years ago cannot meet the needs of the totally different world now emerging. The agonies of some recent treaty-making negotiations such as Nice demonstrate the clash between the past and the present. The Union cannot meet the needs of the newer or smaller member states which are now joining, and it cannot even meet the needs of some of the existing members, as we hear every day.

What is now called the European Union was inspired by great ideals and has great achievements to its credit. But everyone knows that the EU institutions have become hopelessly out of touch with the peoples of Europe. That was the problem the recent convention was meant to address, but did not. It is also hopelessly out of touch with and remote from our democracies. The attempt over recent years to force on Europe, from the top, the priority of deepening integration has been not only deeply unpopular, it has failed Europe and those of us who from the start have fought for and believed in greater unity within Europe. It has also led directly to the serious mishandling of the widening and enlargement of Europe which should have been the Union's greatest aim and highest fulfilment.

We should put all these failures behind us. It is high time that Britain, with all its acknowledged inventiveness and negotiating skills, its great public servants and its passion for democracy, took the lead towards this new and better Europe instead of dancing all the time to the old tunes of others who cling to the past and lack an understanding of changed global conditions.

If the present Government cannot muster the will to do this, then we will take up the baton. If the Prime Minister and the Foreign Secretary are tamely going to return to a warmed-over version of the ill-conceived and centralising constitution, then we will take the lead in showing that there are much better ways forward, both for our own country and for an enlarged Europe.

In reshaping the Union for modern conditions, constant monitoring of the economics is important, but also very difficult. As the noble Lord, Lord Roper, reminded us, cost-benefit analysis is tricky enough for the layman. In the hands of economists, it rapidly slides off into total confusion. However, the British people are not prepared to be fobbed off with the kind of stale arguments which may have worked 20 years ago, but which today look frankly implausible. I would not dare to go on the doorstep and say that the

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reason we must stay in the Union is all the wonderful jobs that are being created. People read the newspapers and see that, just across the water, there are yawning levels of unemployment looming like huge black holes which, luckily, we have avoided here.

The economic issues are bound to be very subjective and difficult to get to grips with. I agree with the noble Lord, Lord Hannay, that they are only part of a broader political case for remaining deeply involved in our region as well as being a global power—an involvement which we would be very unwise to break. We have broken with it once or twice in the past with absolutely disastrous results.

I cannot see that a committee of this House carrying out a cost-benefit analysis will be a terribly useful answer. I do not in any way want to cast doubt on the extraordinarily good reports that come out of our committees, but in this case, as we have heard during the debate, there would be more heat than light. The noble Lord, Lord Dubs, quite freely admitted that he lives on a different planet, or in a different world or different Europe, from those whose voices he has heard. Both of these extremely opposing viewpoints would have to be represented on a balanced committee. Whatever the intentions, I wonder whether we would get anything out of it at all.

As to whether the Government should undertake an analysis, again this is a very subjective issue. The last analysis they carried out was on the euro. That came through as an enormous two-foot high block of paper—I have tried to read most of it—but it reached no conclusions; the economists all argued with each other. The only use I have found for it is as an excellent pedestal for my grandchildren to stand on when they are washing their hands. So I do not see that as a solution. Perhaps the Civitas Group will provide a clearer answer.

As our global involvement becomes more and more intricate and as Asian power rises and there is a huge shift in the centre of gravity of the world economy towards Asia, perhaps we should establish not a Lords cost-benefit analysis committee but a Lords foreign affairs committee. Such a committee would be well placed to look at European and wider policies in the many areas which, as I know from experience, are not covered in another place and which will not be covered, inevitably, by our excellent EU Committee. As the noble Lord, Lord Grenfell, quite rightly said the other day, the EU Committee will be increasingly occupied with scrutiny.

I hope that your Lordships will give that suggestion and the need for a wider and less Euro-centric perspective—which we must bring to our foreign policy and international relations—serious thought in due course.

8.23 p.m.

Baroness Symons of Vernham Dean: My Lords, I have listened with enormous interest to the contributions made by your Lordships today. As the noble Lord, Lord Pearson of Rannoch, said, this is certainly not the first time that we have considered his

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proposal. Once more, as on previous occasions, noble Lords around the House have made eloquent and forceful speeches. I was particularly struck by the heartfelt words of the noble Baroness, Lady Cox, and by the clarity and intellectual precision with which the noble Lord, Lord Hannay of Chiswick, set out his case in his forceful contribution. The forensically argued contribution of the noble Lord, Lord Williamson of Horton, was, as usual, very powerful indeed.

To answer the specific point raised by the noble Lord, Lord Howell of Guildford, I do not dismiss the arguments put by the noble Lord, Lord Pearson of Rannoch. I am here today to make the Government's case and I am prepared, as always, to argue the Government's points. In the time remaining, I shall try to focus on the principal themes raised by your Lordships and, at the same time, to make the Government's position as clear as I can.

The Bill of the noble Lord, Lord Pearson—which was introduced most recently last year—proposed a committee of inquiry to examine the implications of this country withdrawing from the European Union. Again today the noble Lord asks for a cost-benefit analysis of our membership of the European Union. It is, as the noble Lord, Lord Williamson of Horton, said, something of de«ja¬ vu.

I understand that the noble Lord, Lord Pearson of Rannoch, wants to defend our democracy; that the noble Lord wants to defend the sovereignty of this Parliament. Those are noble aims that we in the Government share. The Foreign Secretary set out earlier today in another place—indeed, I repeated his Statement in your Lordships' House—new proposals for achieving greater engagement by Parliament in European Union affairs. These would include an annual White Paper to give Parliament and the public a clear overview of the issues which are coming up in the EU and the Government's priorities in that context. In addition, the Government favour creating a committee to build on the success of the Standing Committees established last year on the convention and the IGC, in which Members of both Houses can participate.

The noble Lord, Lord Pearson of Rannoch, says that in arguing these points, the Government give no facts. He implied that there was no real discussion. The fact is that Ministers and officials have attended 13 sessions of committees; we have responded to 16 Select Committee reports, and we have had more than a dozen debates on EU issues on the Floor of both Houses, as the noble Lord, Lord Williamson, reminded us. Let me assure the noble Lord, Lord Vinson, that gold-plating, as he put it—and as my right honourable friend put it in his Statement—is being tackled. The Statement this afternoon made that very clear.

The fact is that Parliament decided to take this country into the European Union. It has not changed its mind since. In the case of every major treaty amending the terms of our membership under governments of different political persuasions, it has voted to enact those treaties into United Kingdom law.

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I do not think, as the noble Lord believes, that it did so in ignorance. On the contrary—it did so because it saw clearly the arguments in favour of EU membership. If the noble Lord or any of your Lordships disagree, it is for your Lordships to set out the contrary case, as, indeed, many have done so eloquently this evening. But it is also to secure a parliamentary majority in favour of the argument—that is the nature of our democracy.

The noble Lord, Lord Willoughby de Broke, wanted to know why such a cost-benefit analysis would be damaging. The Government's agreeing to the proposal of the noble Lord, Lord Pearson of Rannoch, would send two very misleading messages, the first being that we believe that Parliament is ill-informed on Europe. As we have heard today, even when your Lordships' views are, in our opinion, incorrect, your Lordships are certainly not ill-informed. Those who want to know more about the way in which the European Union works and to influence our approach to its future agenda have in any case more and more opportunities to do so, not least those which the Foreign Secretary proposed in another place today.

The second false message would be that we have even the smallest doubt about our EU membership. We do not. In the time remaining to me, perhaps I can try to explain why. Before I do, I would like to make a third point. Some of your Lordships have suggested or implied that if there were a cost-benefit analysis and if it were proved somehow that the enterprise were not in this country's favour, that would be fine. But it would be equally fine if that were not the case. The idea that such a cost-benefit analysis would be undertaken on a risk-free basis is fanciful. It would involve many risks to us.

Let there be no mistake about the Government's position. We are absolutely convinced that membership of the EU is in the best interests of the United Kingdom. I freely acknowledge the financial contributions that the UK makes to the European Union. Between 1995 and 2002, the EC budget has averaged around £55 billion per annum. The UK contribution before abatement has been in the region of £9.5 billion. Our average receipts have been £4.45 billion and our net contribution, once we have taken into account the abatement, has been around £2.75 billion.

The noble Lord, Lord Willoughby de Broke, the noble Earl, Lord Liverpool, and the noble Lord, Lord Vinson, referred to the Commission proposals on future financing of the EU. The Commission proposals are unrealistic and unacceptable. A budget of no more than 1 per cent of EU gross national income could meet the needs of the enlarged union and be affordable. Incidentally, before the point is raised, we believe that our abatement is fully justified and non-negotiable.

The issue of cost is not the end of the story. There are the benefits of the single market and the unquantifiable benefits—yes—of peace and democracy in Europe. I make no apologies for putting

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forward that argument. However, I was not surprised that the noble Lord, Lord Harris of High Cross, wanted the argument to focus totally on the financial issues. But I hope that the noble Lord remembers that the economic arguments for our membership convinced the British public in 1975 that EU membership was in this country's interests. Those arguments are even stronger today. British jobs and prosperity have increased as a result of our free trade with Europe. There are more than 370 million customers in the single market—38 per cent of world trade. Within a few months, enlargement will increase that number to 450 million—the world's largest single market; bigger than the United States and Japan combined.

I am sorry that the noble Lord, Lord Monson, thinks that we have behaved badly towards New Zealand. I do not believe that, taken in the round, New Zealanders think themselves that badly disadvantaged. However, it is not ruthless but plain common sense to recognise that a market of 450 million is more advantageous than one of 3 million. There are 3 million jobs in the United Kingdom that depend upon that market, and 800,000 British-based companies trade with Europe. We already export three times as much to the EU as to the United States and more to France and Germany than to the whole of the developing world. Nobody argues that all that would be lost. I do not argue that. The noble Lord, Lord Roper, made it very clear that he does not argue that either. However, it would be placed in jeopardy.

Enlargement alone is expected to boost the UK economy by £1.75 billion. Britain receives the largest share of inward investment into the EU because we are a gateway to the European market. Being outside the single market would kill foreign direct investment and devastate our manufacturing industry. We may not be isolated, as the noble Lord, Lord Stoddart, says that the Government argue, but we would be hugely disadvantaged. I was a trade Minister for two years and I know how often investors told me that our position as part of Europe was vital to their decision to invest in this country.

The noble Lord, Lord Blackwell, took an interesting line. He said that we need not buy the whole package and that we could partially disengage. I do not think that the noble Lord can honestly believe that we could cherry pick our way through even the last four treaties—the Single European Act, the Treaty of Maastricht, the Amsterdam Treaty and the Treaty of Nice—with one willing partner in Europe, let alone 15 or 25. He is right; there is China and India and possibly even Russia, which will grow exponentially. So, incidentally, will Mexico and Brazil, in all probability. However, does the noble Lord really think that we would strengthen our negotiating position as a market of 60 million? Or would we be better advantaged as part of a market of 450 million—the strongest and arguably the most attractive market anywhere in the world?

In promoting the benefits of withdrawal from the EU, the noble Lords, Lord Pearson, Lord Harris of High Cross and Lord Willoughby de Broke, fail to

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take account of one crucial fact: even if we were not a member of the EU, we would still have to abide by the EU's standards to be able to trade with Europe. But there would be one fundamental difference—we would have absolutely no influence over setting those standards. The costs of this would be considerable. I quote a member of the noble Lord's own party, Kenneth Clarke—perhaps the noble Lord does not have much time for Ken Clarke. He said:


    "It is hard to see what form a new semi-detached model might take, even if it were possible . . . the Norwegian government has no choice but to accept single market laws and regulations made by the Member States.

If we are to abide by EU rules, it is better to play a part in drawing them up. Under this Government, by engaging positively with European partners, we are able to win the arguments on a range of important policy issues. The EU has signed up to enlargement, to the Lisbon agenda, and to CAP reform. We are confident too of making our case on the EU's future financing, a subject about which many noble Lords are very interested.

The noble Lord, Lord Pearson, says that we can leave the EU and enjoy free trade. I find that a remarkable argument. Does he think that we would be able to escape the tariffs and taxes? Does he think that we would have free movement of capital and product markets? The argument that we can leave the club and still enjoy all the benefits of membership defies sensible analysis.

Let us consider the other benefits. Thousands of British workers have benefited from EU legislation to improve their working conditions. Every member state must apply the principle that men and women should receive equal pay for equal work. As a woman, I can tell your Lordships that that is a very important issue. Under EU law, it is illegal to discriminate on the grounds of sex, race, religion, belief, disability, age or sexual orientation. EU law means that both men and women are entitled to at least three months parental leave.

It is not only the UK workforce that benefits, it is our customers too. The very persuasive contribution from the noble Lord, Lord Williamson of Horton, made that admirably clear. The reality has been that the EU has been championing better consumer safeguards on a range of subjects, including the environment and package holidays. Thanks to the single market, British consumers have access to a greater variety and quality of products at competitive prices. An example is the price of long-distance calls across Europe, which has been almost halved since 1998, thanks to telecoms liberalisation in the EU. The single market has helped to deliver the highest standard of living in European history and has helped to provide greater choice and cheaper prices for consumers.

Let us look at freedom of movement. Being in the single market means that British people now have the right to travel, work, study and live, visa-free, throughout the whole of the European Union. Hundreds of thousands of British people have been able to take advantage of this. UK residents will make

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around 40 million trips to mainland Europe this year alone. One hundred thousand Britons are currently working in other EU member states. Some 234,000 UK pensioners draw their pensions in other EU countries; and more UK students study abroad in the EU than any other country—on average, 10,000 each year.

What is more, the European Union improves our quality of life. Everyone knows that issues such as crime and environmental pollution recognise no borders. Because of their transnational nature, such issues are better tackled on a European basis rather than by individual countries. By working together we can achieve far more than we are able to achieve in isolation. Measures taken within the European Union to protect the environment have made our beaches cleaner, our air cleaner and our countryside greener. I could not help being very surprised by the contribution of the noble Lord, Lord Beaumont of Whitley, whose green credentials are, as we all know, very strong indeed. But action at EU level against crime—another issue—has also helped to ensure that fewer drugs end up on Britain's streets.

I know that the noble Lord, Lord Willoughby de Broke, poked some fun at me over the issue of toy safety. I think that toy safety is something in which most sensible parents of young children are extraordinarily interested. As he made the point, I asked officials to have a look at this issue. I am told that three-quarters of a million accidental injuries a year are caused by unsafe products. That is very serious for those who are injured; it is very serious for the children who are injured. So rocking horses may seem quite fanciful, but there is a serious issue, as the noble Lord knows in his heart of hearts, when he considers how important safe toys really are.


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