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Lord Dykes: My Lords, I shall resist the temptation and leave it to the noble Lord, Lord Kingsland, to deal with some of the odder comments made by Members on the Conservative Benches. At least in the first half of the debate there were some high-quality contributions. It was an extensive and constructive debate.

I am personally grateful to a host of noble Lords for some enlightenment about how the European Union needs now to proceed after the turmoil of recent weeks and the summit last Thursday and Friday. No apology is needed from anybody if they say that bewilderment and confusion can produce constructive results after the necessary subsequent analysis.

I am glad to say that we in this part of the House, despite some bizarre and colourful suggestions to the contrary made by Peers on other Benches, remain committed Europeans, practically and, indeed, without any apologies, emotionally as well.

Why should we not be proud of the astonishing achievements of a united Europe since 1957? I was grateful to the noble Lord, Lord Grenfell, for his suggestion of getting extra parliamentary and public participation in the new ideas of the future. It is good to see, after four years of Trappist silence, my noble friend Lord Roper emerging with some constructive suggestions about how national Parliaments should be involved in these processes, and behind him, the pioneer of the Regional Fund, the first commissioner from the opposition side in those days when the Regional Fund was created. Many benefits have flowed to various member states, including ourselves, from those things.
 
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The Prime Minister is demonstrating impressive leadership in requesting modernisation of the budget system. Its excessive leaning towards agriculture in the past has damaged the Union's reputation for common-sense polices for the modern world.

France, which I believe currently receives roughly a quarter of the total CAP receipts, should definitely be prepared to spend more national resources on the aménagement du territoire and on support for farmers in preserving the countryside, a system that is beginning anyway, as well as receiving a modest and reduced but modern 21st century share of any recast EU CAP structure, which should aim much more to help the 10 new members and, of course, Portugal and Greece, for a residual period of years. That should be the priority. I am sure that more and more people in the Community agree with that.

However, in calling quite rightly for other member countries to see our point of view in what should be a club of reciprocal friendly progress, we in Britain must at long last learn the lessons towards the others. There is still far too much primitive nationalism, indeed even chauvinism and xenophobia sometimes, both in the cruder sections of the British broadsheet press—the tabloids of course are usually too grotesque to consider here with the honourable exception possibly of the Daily Mirror—and among some British politicians in both Houses. The rump of the existing and perhaps rapidly declining Tory party in Parliament contains some legendary figures whose irrational hatred of the European Community knows few proper pragmatic limits.

UK politics has been poisoned deeply by these insalubrious manifestations, with the main parties regularly going anti-European when they go into opposition. That has been our history.

The sheer distaste and, as I said, "hatred"—a word I hate to have to use—for mainly France, but also Germany in the Times—and there are many examples in recent articles—is something that I find greatly disturbing. I am, like other Members of our party here, grateful that the Liberal Democrats have a leadership which will not play to that atavistic gallery on fundamental questions of the importance of Europe to us.

Likewise, when we extol rightly the benefits of the single market, achieved with an accord on majority voting and what it has done for our European comity, we need to acknowledge that other countries have an enthusiasm for other aspects of economic, social and cultural policy formation, which in a club we also need to respect. Just as the budget cries out for modernisation—more and more people appear to accept that—so, too, must we promote together the need for procedures that will ensure the smooth progress and functioning of this Union of, I stress repeatedly, sovereign member states working within democratically agreed, integrated and benevolent structures. To my mind, there is no loss of sovereignty in that process.

Above all, we must continue to assure the public in France and the Netherlands that we respect deeply and follow their verdict on the referenda and the
 
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constitutional treaty. That remains a solemn obligation, even if we know that such referenda included many items of domestic political resentment and a complicated matrix of all kinds of arguments. The existing treaties are perfectly adequate to cover present-day pragmatic working-together in the various councils, and the Commission has the inbuilt authority to continue its work on behalf of the Council and the European Parliament.

The budget system itself can carry on without any operational difficulty. After all, the Commission spends most of its time putting forward suggestions to the various ministerial councils and the European Council, which they then decide upon. So mild has been the content of the new constitutional treaty, enabling—I stress, once again—sovereign member states to operate together in a more streamlined way, that its loss, permanently or temporarily, depending on the other member states, 10 of which have already ratified the constitution, is not a serious blow.

If the member states eventually deem it a good idea to consider a new treaty and then perhaps to put it to the people for support, there will be no need to revive the same long-winded, tedious text that Giscard d'Estaing and the noble Lord, Lord Kerr, constructed after the much more inspirational aspects of the Laeken conference and the launch of the project. A much shorter declaration of broad principles, such as citizens' rights, human rights and justice and home affairs co-operation, coupled with a set of machinery items for collective decision-making, the longer-running presidency and the single foreign minister to take forward any agreed areas of joint foreign policy between sovereign countries, would surely be adequate in any new document if the people of Europe so decided eventually. If they do not, that must be respected.

I repeat: these are all sovereign countries working in the friendly club in the intrinsic sense. They are not the product or decision-making of the fantasy erotic nightmares of a marauding Union violating national virginity that the anti-Europeans, in this country mainly, shriek about continually. If any treaty basis in the past has delimited sovereign freedom of action for practical objectives, that, too, is a sovereign decision freely arrived at under treaty-made legislation. The idea that it is sinister and menacing is ludicrous in the extreme.

I believe that the Government are anxious truly to keep Britain as a leading player in the future. There is a silly minority of officials in the Commission—one thinks sometimes of the social affairs director-general—who feel that the one-stop imposed policy shop is the only way forward. They need to understand at long last that the citizens of the Union mostly do not appear to want too much of this kind of remote diktat.

Any new structures to emerge eventually from the current crisis should surely adhere to the leitmotif: Community legislation should represent only the top layer of agreed international policy within and between member states, with not too many regulations—mainly, traditionally, in finance and treasury policy—and more broad framework
 
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directives that leave member governments with the task of implementing them through tailor-made national legislation that has already been explained properly and, more importantly, scrutinised in the national legislatures. That should be increasingly the way forward, with the Commission remaining as it is: a very small civil service or secretariat, as someone mentioned.

Meanwhile, a modern budget should surely concentrate assistance on the new member states, both in more modern and limited farm support parameters, and structural and cohesion fund injections of public finance investment capital. Indeed, if common agricultural policy outlays in the various compartments were limited to the current areas of approximate figures expressed for the 2007–13 perspective, and redirected towards the new members, with a reduction for existing members, we could easily envisage the ratio of farm spending to the total budget falling finally to very low levels for the longstanding 12 or 15 members.

In Britain, we need to acknowledge, too, that the rebate that we have received since the early 1980s showed the reality, not only of lower farm outputs and greater efficiency, but the stark reality that we import proportionately far more non-farm goods and services than the other member states do from third countries. Indeed, the UK continues to import too much of all kinds of goods and services. That is our problem, not that of Germany, France or Italy, with their normal high output profiles and visible trade surpluses—the German total exports figure is staggering, because there is a massive export boom in Germany at the moment that is never mentioned in the British papers—and higher investment ratios for net domestic capital formation, particularly in Germany and France.

It makes me smile when the Murdoch press describes France and Germany as problem economies and our Anglo-American economy as the only success story. We all learn from each other. The idea that France and Germany do not have ideas and proposals as good suggestions for a dynamic, modern future economic policy is ludicrous. That is repeated all too often in the mass media in Britain. The wasted column inches of those comics that masquerade as newspapers never mention the massive export boom in Germany—mainly—and in France, where exports are strong. They never mention that the whole of euro-land has a substantial visible trade surplus; that Italy remains a major exporter of engineering products and consumer durables; or that we need twice the level of interest rates in Britain to attract enough hot money as an overdraft to cover our excessive import mania. In April, the United States had the largest trade deficit in its history of $57 billion—somewhat more than the cost of the common agricultural policy.

Although it is true that the 12 countries in the euro-zone are experiencing low rates of growth at present, even the IMF praises the decisions taken in recent times that will produce faster, non-inflated growth. So, we can all learn from each other. That is the essence of the community—the club of the European Union. In
 
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the United Kingdom, our more flexible economic approach, which includes people having to accept low pay, a reality of the modern system, has produced good results for individual companies in retailing—although we should wait to see the effects of the retail recession in this country and elsewhere—and many corporate sectors.

That reflects in our employment figures, even if they include part-time workers, who are normally classified as unemployed elsewhere. If you add back substantial numbers of people on long-term sickness and disability benefits, for which the Government plan legislative changes, in the UK our real unemployment figures rise significantly. Can we not deal with real arguments, the real truth, the real situation and not the nonsensical, hysterical propaganda against Europe that we see time and time again in our media—and, to a lesser extent, on radio and television?

At all events, France and Germany remain high output countries, despite their many problems. We have sectoral and individual examples of high productivity and high earnings per man hour, but they remain localised. I am as patriotic as the next person and I wish that we would become a truly high output country. We can do it.

If the new enlarged EU works together with whichever budget arrangement and whichever treaty framework suits the moment from now on, with full participation of the bewildered citizenry, then the Union will come out of this stronger and more equipped to help the third world, emphasising the rise of prosperity as the target in the new states, as well as Bulgaria and Romania, who must be apprehensive about what is happening with the current crisis in the European Union. It should work with a less histrionic United States to promote a just peace and security for all United Nations members, a place in the sun for the Kurds, the Kashmiris and a fully sovereign Palestinian state, among many important geo-strategic examples.

So, there is much for the European Union to do overseas, working together as a friendly and constructive club, not scoring points from each other and being obsessed with only national interests. That also means resolving our budget crisis and getting together to agree the new mechanisms for the future. I sincerely wish all success to the UK presidency.

9.14 pm

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