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Lord Hooson: The Daily Mail!

Lord Stoddart of Swindon: My Lords, I quoted from that, so I shall pass on if you do not mind. It was a good quote, if I might say so. I want a cost benefit analysis. I want to know, on the basis of a cost benefit analysis, whether we have done better on trade; what have been our monetary contributions; what has been our loss of resources—the common fisheries, for example; the additional costs of food; the cost to industry, private individuals, and the public purse of implementing Euro-decisions such as transport decisions and decisions on water quality and the quality of our beaches. Without such an analysis, we cannot decide where we want to go.

In the Motion we are asked:


I want us to play a positive role. I have always wanted us to play a positive role in Europe, but on my terms, not on the terms that have been forced upon the country by so many people, including the noble Lord, Lord Jenkins of Hillhead.

What do I think the Government should be saying at the IGC? First, they should be saying that the constant attempt by the European Union to grab ever more power is disruptive of our national life, our political system, and our economic performance, and will not help Europe in the long term. Secondly, the conference should be told that the British people believe in a Europe of co-operating nation states, not a centralised, corporatist, bureaucratic superstate, because that is what some people want. Let us make no mistake about it. So the British Government should make clear their position on that.

Thirdly, the Government should say that the existing institutions are expensive, unwieldy, bureaucratic, and not suitable for the sort of Europe Britain has in mind. Fourthly, they should therefore propose that the European Council become the policy initiator, and that the Commission be reduced to the role of a Civil Service with the task of implementing Council decisions—no more, and no less.

The European Parliament, which costs us some £600 million a year at present, should be disbanded. It should revert to an assembly to which national parliaments would send representatives. In that way we should indeed be helping with the democratic deficit. The European Court must cease to be the engine of further legislation, and must be a law court rather than a political court. It must be made crystal clear that the United Kingdom will decide who may and may not cross its borders. I hope that the Minister will give us that assurance tonight.

On qualified majority voting, that must not be extended under any circumstances. The existing system must more accurately reflect the population strengths of member states, and, where expenditure is involved, it should reflect the amount of money that is contributed to or taken from the budget.

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Economic and monetary union, complete with a European currency—that is, over the next 10 years—is an unattainable and dangerous dream that could have nightmarish consequences for this country and for Europe itself. We should say now that Britain rejects the EMU and a single currency, and will not contribute any further to the work that is now going towards achieving that end.

Finally, on foreign affairs and defence, it should be made absolutely clear that Britain will have nothing to do with a European army, and that our foreign policy will always give priority to the national interest. The Motion called for a contribution to the debate. I hope that I have made some contribution.

6.6 p.m.

Lord Blaker: My Lords, the noble Lord, Lord Jenkins of Hillhead, whom I too congratulate on initiating the debate, said that it would be better for those who wished the United Kingdom to pull out of the European Union to say so openly. I should not be speaking on this matter unless some important people had not been saying so openly. I regard the proposal as so astonishing and unrealistic that something should be said about it.

We have to look at the history, and the noble Lord, Lord Roll of Ipsden, did that to great effect. But there was one historical event that he did not mention with which I had a connection at the time. That was the French proposal in 1953 for a European defence community. That proposal was put forward by the French in response to American pressure for German rearmament and as a means of integrating the armed forces of the six to control or contain German rearmament.

The six, especially France, were desperate that Britain should, if not join it, at least associate itself with it. But Anthony Eden would have none of that, and partly for that reason the proposal collapsed.

The next step was to create the Western European Union, which was based, of course, on inter-governmental co-operation. It still exists, and not on the integrated model, but those in the six who believed in European unity were not content with that and the next step was the Messina Conference which prepared the European Economic Community.

The desire among the six for British participation in that conference was every bit as intense as the desire had been over the European defence community. If we had gone in at that time, as the noble Lord, Lord Ezra, said, we could have shaped the European Economic Community very much to suit ourselves, so great was the desire of the other members to have us in. But, again, we refused to take part. We sent an observer for six months, and then withdrew even the observer. Sir Anthony Eden possibly expected that that conference would collapse, as had the proposal for the defence community.

As we all know, that led on to the Treaty of Rome, and a scheme for a European Economic Community, designed by the six, for the six, with features highly inconvenient to the UK. As the French would say, "The

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absent are always wrong". Within a very short time we made our application for membership, but, of course, by that time de Gaulle had come to power in France. He did not want us in, for reasons which the noble Lord, Lord Roll, mentioned. So we were rebuffed in 1962; we were rebuffed again under a Labour Government in 1966; and we eventually got in in 1972—15 years after the creation of the Community. We had to accept the Community largely as it was, and not as we would have designed it.

Given that background, I regard it as astonishing that any responsible politician can suggest that we should now leave the Community. It makes no sense economically when over half our visible exports go to the Union and when we get much more inward investment than any other member country.

Politically it makes no sense when the world looks increasingly to the European Union in foreign policy and not to its individual member countries. The mere talk of withdrawal does no good for our influence in day-to-day negotiations inside the Union. I do not believe that the British people want to pull out. They may be maddened by some of the Commission's sillier schemes—when it involves itself in what the Foreign Secretary has called the nooks and crannies of our national life—but the British people believe that we should stay in and use our influence to secure change.

We should play an active role in every aspect of the preparations for the conference, including preparations for a possible common currency. When considering where to put our main emphasise in the conference, a relevant factor is the likely growth in the number of members of the Community. We are told that within a few years there may be as many as 27 members. We must ask ourselves whether such a large Community is to develop by Community action, Commission initiative and majority voting, or is it to put the future emphasise on inter-governmental negotiations.

I have difficulty with the idea of a Community of 27 members operating in an integrated manner across the board, as my noble friend Lord Cockfield appeared to suggest. I recognise that a looser form of approach may slow down the momentum. I am not calling for the return to a free-trade area, but I believe that, in the long run, a looser approach with such a large number of members will take us further.

At any rate, the looser concept lies behind the second and third pillars of the Maastricht agreement. I hope that at the conference we shall put great emphasise on developing co-operation in foreign policy and security and in Home Office issues such as anti-terrorism steps.

I put in the same category the Prime Minister's welcome proposals for the development of the role of the Western European Union, without infringing NATO's role but drawing on its capabilities and working on an inter-governmental basis. I hope also that we shall put great emphasise on pushing forward the doctrine of subsidiarity.

I also warmly support the Prime Minister's view that we should decide not to take a decision now on membership of a single currency. That view was strongly reinforced by the currency turbulence of the past week. In particular, it is unnecessary for us to take

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a view now because we have the privilege of the opt-out obtained at the Maastricht conference. The question does not now arise and it is nowhere near right for a decision to be made. Other countries are not deciding and every day makes it more likely that a decision must be postponed for a considerable length of time. There are many uncertainties; we do not know the necessary terms and conditions nor how many countries and which countries will join. If the Spaniards, Portuguese, Greeks and Italians were members—and some of them have expressed an interest—it would be a different kind of single currency than if they were not. We do not know the implications for the pound sterling of staying out.

I believe that the words of the Governor of the Bank of England, in a speech on 21st February, are extremely relevant. When commenting on monetary union he said:


    "It is not a decision that can or should be taken now. We all have our work cut out to achieve economic and monetary stability... And we have a great deal still to do in continuing to explore both the economic and technical conditions that would need to be met before any decision could be made. The important thing at this point is that we all carry forward this work patiently and with an open mind".

I believe that those are wise words.

6.14 p.m.

Lord Hooson: My Lords, there is a great danger of our country giving the impression to its mainland partners that we are becoming the Don Quixote of Europe—that is, tilting at windmills, seeing grave dangers where none exists, and seeing friends and recognising them as enemies. Where we see opportunities, we concentrate on the problems attendant upon them and not on the opportunities themselves.

As was said by the noble Lord, Lord Gilmour, the reason for that is the control of the media, the prominence given to the Euro-sceptic view of the media and its resorting to a nationalistic line. I come from Wales and am a Welsh cultural nationalist, but I have always hated political nationalism. I know that the easiest thing to promote in this world in order to stir up people's subconscious anxieties is nationalism. The press have done that, and it is a dangerous trend.

We should look at the reality of Europe. When we consider the state of Europe in 1945 and its state today, 50 years later, we see that the progress has been enormous. The greatest instrument in achieving that progress has been the Treaty of Rome. There is no doubt about that. Even the countries outside are pressing to come in. Sweden, Finland, Austria and our own country having spurned the original offer, wanted to come in.

Surely, at the present time Europe needs sustained, confident progress towards the goal of some future form—probably in the distant future—of a united Europe. This country needs to find its own role within Europe and to be confident and constructive in ensuring that we are fulfilling our role as one of the leaders—not the leader but one of the leaders—of Europe.

I wish to suggest three requirements that should be operating on the minds of our leaders for the 1996 conference. The first requirement is to reassure our fellow Europeans that we are intent on making a success of the European concept. Today that reassurance is

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necessary. A few years ago I would not have thought it necessary but now it is the No. 1 requirement. Furthermore, we should not be about employing tactics to try to defeat the firm objectives of the Treaty of Rome or to try to enlarge the Community in such a way as to change its essential nature and reduce it to a mere free-trade area of disparate development.

Our history on the subject is not reassuring to our European partners. Already we have had a list of the opportunities that have arisen. We as a country have never been at the heart of Europe; we have had opportunities to be so, but we have nearly always rejected them. There was, in particular, the invitation to the Messina Conference. We were so disdainful, patronising and dismissive of the original European Community concept. We set up EFTA as an inadequate and ill-fated rival. We must be aware of the fact that throughout we have seen steady and determined progress towards the goal of an integrated European Community but the leadership and the confidence has not come from us.

Despite our history and our claimed present economic success, we give the impression that we are a country completely uncertain of its future role or of its ability to hold its own in such a role. We have in Europe many friends waiting for a sign of positive leadership and a real and constructive contribution towards progress to a successful European Community. We need friends, and we have them; but we need to reassure them above all that we are not up to the old game of attempting to divide and rule.

The second issue that is important to recognise is the single European currency. It is my belief that those who are really shaping the future of Europe will, unless something totally unforeseen happens, have forged a single European currency by the end of this century—and that is only five years away. The potential political, economic and sociological benefits are obvious; but they are largely long-term benefits. The dangers are also fairly obvious; but they are very much in the shorter term. By and large, the politicians can see the longer term advantages and the bankers see the shorter-term difficulties.

But surely a European currency will be in the premier league of currencies. We shall be competing with the dollar and the yen on an equal basis. Those countries whose economies and performance enable them to accept the single currency will be in the first division of Europe. That is inevitable. Those countries which are unable to achieve the criteria will be in the second division until they are able to do that. The pace setters of Europe will have achieved what they intend to achieve. If one looks at the history of the common market, they have achieved very much what they set out to achieve. If there is to be considerable enlargement, there will be a third division, too. That is a problem to which I shall turn in a moment. All will benefit, although a very strong compensatory regional policy will be necessary, as the noble Lord, Lord Callaghan, indicated, to have an ameliorating effect on the developments which will inevitably take place if there is a single currency.

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Whatever scepticism is stated by the Government at present, as a country, we can never afford not to be in the first division. We should make every effort to be there by the turn of the century. In passing, perhaps I may mention that I agree totally with Sir Edward Heath's demolition of the argument for a referendum on a single currency. One can imagine the enormous benefits for the speculators and those who are able to manipulate the media if there were a sustained campaign as to whether we should have a single European currency within this country. As Sir Edward said:


    "Barings would be child's play compared with what the speculators would do then".—[Official Report, Commons, 1/3/95; col. 1079.]

The third matter that I wish to mention is the common agricultural policy. On that, I disagree to a degree with what my noble friend Lord Jenkins said earlier. It has few friends in this country but it has many in Europe. I remember many years ago an extremely distinguished German politician explaining to me that in his view, parts of Europe have been saved from becoming Communist by the agricultural policy of the common market. One can imagine the depopulation that there would have been without that protection in Europe. People would have flooded into the industrial cities, and industrial and agrarian unrest would have resulted from that. He was giving his opinion to me well over 25 years ago but his opinion was that in France and Italy, there would have been Communist Governments.

I believe that we underestimate the support that there is for the common agricultural policy in Europe. I say that as a warning because whereas it will be possible to modify that policy, it will not be possible to change it basically within the foreseeable future—and I see the noble Lord, Lord Plumb, nodding in agreement. We should be warned that if there is to be a choice between expanding the Community and scrapping the agricultural policy, the majority of opinion within Europe will be for retaining the CAP and not expanding. It may be that that will lead to a discussion at the next summit as to whether associate membership as opposed to full membership of the common market is an appropriate step for the eastern European countries. I say that only in passing.

It is extremely important to recognise that if we are to be at the heart of Europe, what is needed in this country is a change of attitude: to see the enormous opportunities which exist, and not be put off by the problems which undoubtedly arise on the way to realising those opportunities.

6.25 p.m.

The Viscount of Oxfuird: My Lords, I have listened with care to some noble Lords who are normally labelled by the press as "Euro-sceptics" and to others who are labelled as "Euro-enthusiasts", including the noble Lord, Lord Jenkins, himself—and I, too, am grateful to him for giving us an opportunity to debate this important subject.

I have to say that I agree with a lot of what has been said by both camps. So what does that make me? Well, I am certainly not a Euro-agnostic, and for the reasons that I shall try to explain.

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Back in 1975, when we had the referendum, I voted to stay in Europe, and I do not regret that because I think that membership of the European Community has yielded great benefits for the United Kingdom. Walls have come down. There is no doubt, however, that some aspects of the Community's affairs have not been handled well since the noble Lord, Lord Jenkins, stepped down as president in 1981. Under Jacques Delors, the European Commission seems to have created the impression of a sort of unaccountable hydra-headed monster wallowing in its own waste and profligacy and causing deep disquiet among the peoples of the member states.

It seems to me, therefore, that the Government have got it about right with their policy which was so well enunciated by my right honourable friend the Prime Minister in another place last week. Indeed, I would argue that the leadership shown by the British Government within the European corridors of power has lit a slow fuse of awareness of the frailties of some European Union institutions throughout the peoples of the nations of Europe.

It is acknowledged that we are much better off in Europe than out, but the Government are right to have set for themselves an agenda which will attack some of the structural nonsenses that are limiting the benefits that we and the other members are reaping from the Union and which are beginning to cause natural concern not just in this country but in other member states.

There are some who would argue that we should join Switzerland, Norway and Iceland in an EFTA-type free trade affiliation with the main Union as part of a trading block only. I reject that argument. We must remain an integral and dynamic part of the Union if we are to maintain any influence over its affairs. We must retain our positive place at the main negotiating table in order to reject federalism, to reject a system that appears to tolerate fraud and corruption, to fight waste and to keep up the pressure on the nonsenses promulgated by the common agricultural policy.

The Government emerged very well indeed from the last Inter-Governmental Conference in Maastricht with firm opt-outs from the Social Chapter and the monetary union timetable. Speaking in another place only last week, my right honourable friend the Prime Minister made it clear that, in his view, this 1996 Inter-Governmental Conference has followed on too quickly after Maastricht. I think that we would be wrong to regard the 1996 conference as some great momentous milestone event. It is merely part of an ongoing process in which we should play a constructive role.

The Prime Minister summed up the position very well in his speech at Leiden University in September 1994, to which some other noble Lords have referred already. He said:


    "I see two pre-eminent tasks for the period ahead: within the Union, to build a cohesion and confidence which has diminished in the past few years: in external policy, to extend security and prosperity to the countries to our East."

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My own view is that the Union will certainly not be ready for any new initiatives by 1996, but should be looking forward to a period of consolidation—a period of bringing into effect some of the things that we are trying to do already.

It is vital that we do not add to the already overburdened Brussels machinery by initiating at the 1996 Inter-Governmental Conference any more new initiatives before those already on the agenda have been adequately tackled.

Let me say in conclusion how very important I believe it is that we should support the Prime Minister and the Government in the difficult task that lies ahead as they prepare for the next Inter-Governmental Conference. Speaking in 1888 in Caernarvon, the late kinsman of my noble friend the Leader of the House, the Marquess of Salisbury said:


    "We are part of the community of Europe and we must do our duty as such".

That is as true today as it was then, but we must work to build a sensible Europe, a Europe that recognises the importance of Vive la différence!—in short, a Europe that will retain the support of the European people as a whole by encouraging and enjoying the richness of the individual and unique cultures of our continent.

I believe that Her Majesty's Government have their feet very firmly on the ground on the European issue and they have my very strong support in the difficult, but extremely worthwhile task that lies ahead.

6.31 p.m.

Lord Bruce of Donington: My Lords, the response to the demand from the Leader of the Liberal Democrat Party asking for a positive response from the Government and for a positive attitude to be put forward has generally—to me at any rate—been a little disappointing. We have heard a number of statements like, "We must go forward and we must not go back"; "We must not be at the sidelines: we must be at the heart of something or other"; or, "We must avoid variable geometry, going round in concentric circles or adopting triangular attitudes". On the whole, they do not seem to be a frightfully satisfactory contribution to the demand for some positive information as to which way the Government intend to go.

I trust that there will be other occasions upon which I can inflict my more detailed eccentricities in the matter on your Lordships' House. However, I venture to suggest—without, I hope, causing undue alarm—that we are not talking about abstract things, or we ought not be: we should be vitally concerned about people, not concepts or institutions.

Unfortunately, on the Continent of Europe there are vast numbers of our people, millions in fact—and I am talking about our people in the European sense—who are living under disgraceful conditions. Indeed, there are millions of people who are unemployed and that situation shows no sign of abatement. Moreover, within member states themselves, apart from Luxembourg which can be roughly equated with the City of Bristol, there are considerable disparities of income and wealth.

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Housing conditions vary throughout the Community and are certainly very bad in this country. There is a whole series of matters to which responsible politicians ought to be addressing themselves. In view of the uncertainty of the political situation in the United Kingdom, I speak to both the Conservative Party and to my own party because there may be an abrupt transition, without notice, at any time. Therefore, my advice is quite impartial on such matters.

We must decide how we can get the close co-operation which we all want. I speak, unashamedly, as a socialist and have been one since November 1935. It has always been my concept of my party that there should be as much internationalism and far less jingo nationalism than there is. I also extend that to Europe. I am all for the utmost co-operation not only between the peoples of Europe but also between the politicians, whether they be in opposition or government, who represent the people.

How do we reach that stage? I suggest that the role of the Commission as a dynamic force in the European Community passed roughly at the same time as the noble Lord, Lord Cockfield, finished his mission, or almost finished it, on the completion of the single market. Even though it has not yet been quite completed, that essentially marked the end of an era. It marked the end of an era to which limits were originally set by Mr. Edward Heath when he took us into the Common Market. I am all in favour of any measure that enhances the single market throughout Europe.

However, what we have begun to experience is something totally different. We have had a situation where the Commission has been flooding the Council of Ministers with our proposals, with which it is ill equipped to deal by virtue of the time available to individual Ministers. There has been a continuous flow of proposals which has not abated, as I shall show, to a hapless Council of Ministers for which we provide 29 Ministers in accordance with Article 146 of the treaty. They assemble every few weeks or every month to have laid in front of them a draft presidential communiqué prepared for them in advance by the insistence of the Commission and thereafter debate how it should be amended and how much of it should be agreed. Anyone who has attended those conferences will know that I speak the truth; that is exactly what happens.

Surely the time has come, especially in view of Ministers' positions at home in their own countries, for such a situation to be changed. When there is large-scale unemployment and distress, it is the duty of Ministers to think and act constructively in their own countries. When extensions are required in order to promote co-operation in Europe among member states, members of the Council and Ministers should be the initiators of when they want to meet and what they want to discuss with the aim of obtaining the maximum possible agreement. Consequently, it follows from that that the Commission, which under M. Delors boasted that within a number of years 80 per cent. of the legislation of member states would be supplied from the centre, should cease to be and that it should lose its exclusive right to make proposals.

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The Commission can make such proposals when it likes, but the Council should be able to look at them and say, "No, we don't want to look at that just now, thank you". The Commission itself should be unbundled and divided into three parts, with the status of very highly paid and respected civil servants. The first would be a commission of the single market; the second would be the treasury board composed of the nine spending directorates in the Community, plus half of two others; and the third would be the overseas trade commission. But the Treasury section should be made directly responsible to the Council. By these means the Council could then obtain much more effective control of its own space, much more control of its own time and be much more responsible to its own nationals and to its own parliaments.

Those are just a few of the proposals which in due course I hope to elaborate upon to your Lordships in future debates of this kind. But one thing is quite certain, unless integration—by that I mean the utmost co-operation—is accomplished upwards through member states, the idea disappears that it can be inflicted from on top by the Commission itself and can be imposed upon the Council, with the option of the Council to have a debate on it, probably postpone it, and possibly read newspapers while it is being read out to it.

If we are to have a Europe which means anything at all and which may ultimately, and one hopes, culminate in the ultimate world government that will be required to deal with global warming and things of that kind, we have to liberate our own politicians from the virtual dictatorship exercised by pressure which has been enshrined in treaty, and pressure which should be removed. If that is done, perhaps we can find a greater degree of agreement within the House. No one is opposed to greater co-operation among member states. What one must always be opposed to is the endeavour by a bureaucracy to dictate and to bring continuous pressure to bear. We want a free democracy and we want the politicians to be closer to their people.

6.42 p.m.

Lord Shaw of Northstead: My Lords, I, as others, welcome the opportunity of debating the part that we should play in the Inter-Governmental Conference of 1996. The basis on which we must start all such discussions—this was mentioned by the noble Lord, Lord Richard, earlier—is to remind ourselves that we are firmly committed to being in the European Union; and that being in the European Union, our whole history—both political and economic—demands that we make a substantial contribution to its development and success.

I hope that, after the speech of my right honourable friend the Prime Minister last week in particular, we have had an end to manoeuvres that, at best, would blur our position or, at worst, hint at our possible withdrawal. I have always felt that one of the differences that exist between the various members of the Community is that while in the case of most countries the approach to a proposal is too general, with often too great a reluctance to face up to the practical difficulties involved, our approach to any proposal tends to start at the other end. It

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is not that we do not understand the idea; but what we are concerned with is what will be the practical steps that will be involved; and what will be the practical results?

The two approaches to these problems must often lead to disagreements. Probably there are often faults on both sides. But patience, discussion and a steady willingness to negotiate will make sure that the reality of the problem is unavoidably revealed, which then greatly increases the chance of agreement. Being in the European Union was never going to be easy. The original concept of a Community of Six has completely changed with the dramatic increases in numbers that have taken and will take place. The changes inherent in the development and expansion of the Union themselves demand constant scrutiny and, from time to time, changes in the structure and practices of the institutions themselves.

To this end, I welcome the significance of the establishment of the Reflection Group. I am amazed that I am the first speaker this afternoon to have mentioned the existence of the Reflection Group. That has inspired a number of studies that are now being undertaken within the member states—and not least of course here at Westminster. These studies will form an important basis for the recommendations that the Reflection Group will be making to the IGC when it meets next year. In that regard I am grateful—indeed, I think we all should be grateful—to the House of Commons research department for its paper No. 95/27. That paper shows that already certain views are becoming clear in the studies that have already been announced in the various states in Europe. Already it can be seen that now that practical details are having to be discussed rather than general aspirations the UK is in no way isolated in its views. I give three examples. I hope that this is congenial to the noble Lord, Lord Bruce of Donington, and coincides with some of the remarks that he made.

First, the relationship of the Council and the Commission must be examined. I think that the noble Lord was quite right to spend much of his speech dealing with that important matter. I do not blame the Commission. If the Council does not do its job, the Commission has to. If one has a weak board of directors, the management tends to take over and that is not good for the running of a company or indeed of any authority. The Council, in summary, in the past has been too weak, and means have to be found to strengthen it in possibly the way the noble Lord wishes, or certainly in some other way. In my view, that must be a matter for consideration at the conference.

The second point is the increase in the numbers in the European Union. The structure of all the institutions must be examined. As the numbers go up, we cannot continually automatically keep on increasing the numbers working in the institutions because that will blur the effectiveness of the actions that are necessary within those institutions. I am glad that the matter of national parliaments has been raised by several speakers. National parliaments must in some way be more greatly involved. It has always seemed to me, as one who is a nominated Member of the European Parliament, that the connection that we then had with

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our national parliaments is now missing. If that relationship can be restored, I believe that that would be to the benefit of the Community.

Having studied the House of Commons research paper and the helpful information it contains, I am struck by the almost complete absence of one vital ingredient—and that is the need to establish financial discipline. The Reflection Group, when it meets in June, has a mandate to draw up an inventory of what have been called "real problems" as opposed to imaginary problems to be tackled by the IGC next year. But let there be no mistake: whatever size and shape is designed for the European Union; whatever powers and rights it takes to itself; whatever influence it hopes to create within itself, or with the world outside, there has to be established within the European Union the firm basis of a sound and respected financial discipline. There must be established not only financial regularity and value for money systems; there has also to be developed audit controls that are capable of checking the workings of such systems. Above all, there has to be established the acceptance that where wrongdoing is discovered, proper discipline and punishment will follow. When our Minister, Mr. David Davis, goes to the Reflection Group meeting in June, I hope that all aspects of financial control will feature at the top of his list of matters to be discussed.

Finally, I have already said that being in the Union was never going to be easy; and certainly steps taken in the past seem not to have produced the result for which we had hoped. All that we did in 1977—the establishment of the European Court of Auditors, the Budgetary Control Committee in the Parliament, and revision of financial regulations—have not worked in the sense that they have not produced the results for which we had hoped. For me the lesson of where we went wrong in 1977 is now clear. The truth is that we only half did the job. I must admit (I suppose naively) that I had assumed that once the fraud and shortcomings were discovered, something would be done about them. But in fact that was not so.

What should we do to put that matter right? It means that thanks to the Maastricht Treaty, the Court of Auditors now has greater powers to insist on such action. But that alone is not enough. If the economic union is to develop, as it must, high on the inventory of the "real problems" (as the chairman of the Reflection Group calls them) must be the commitment of all the member states to the establishment of successful financial controls.

6.52 p.m.

Viscount Waverley: My Lords, Britain must enter the Inter-Governmental Conference with both a flexible and open mind, reflecting the diversity and complexities of issues relating to Europe. A clarified strategy, however, needs developing from what has been a fractious and hitherto counter-productive debate.

In shaping a constructive IGC we must pay heed to two important factors: first, the need for an informed debate involving the British people, thereby encouraging

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a clearer understanding of key issues; and, secondly, the development of a fixed IGC agenda as agreed by member states.

The quality of debate is hampered by the self-serving interests of party politics. Divisions of opinion over Britain's destiny in Europe will inevitably transcend party allegiances. Main opposition parties serve no practical purpose by feigning unity in the vain pursuit of political point scoring. Arguments appear static because there exist strong tendencies towards over-simplification. Britain's future stand cannot be neatly confined by a commitment either to opting in or opting out.

The Europe of tomorrow should not be seen as a straight choice between federalism and free trade. We must avoid blanket policy making. Every issue must be considered and evaluated according to its individual merits and drawbacks. Choices will have to be made, but the Prime Minister is right to suspend judgment until the appropriate time. Caution, as opposed to haste, should be our guiding watchword.

There is concern over the scale of change that the IGC might bring. The conference cannot satisfy British expectations unless it follows an enlightened national debate encompassing our long-term vision of Europe.

We can exert a strong influence provided that we are not hindered by the federal fear factor. Britain can be at the heart of Europe, shaping policy, without being chained to it.

The IGC should address the institutional challenges posed by enlargement. There must be in place a plurality of streamlined institutions and effective mechanisms ready to deal with problems posed by expansion into eastern Europe. We must steer away, however, from over-centralised bureaucracies. Institutional reforms are necessary in the drive for increased transparency and accountability. The relationship between various existing bodies such as the Council of Ministers and the European Parliament should undergo review as well as the CAP and the current system of qualified majority voting.

Certain institutions can be made to work to the benefit of both the EU and individual nations. The European Parliament can provide a democratic legitimacy to newly developed international political structures that will arise from the pressures of enlargement. Their creation should not be seen as a direct threat to the independent powers of nation states. Britain must view the IGC as a forum for positive debate. There are encouraging signs that she will do so.

A common European defence policy incorporated within the Western European Union has its merits, provided that its objectives are clearly defined and do not duplicate those of NATO.

In justice and home affairs the IGC should encourage inter-governmental co-operation. No single nation appears immune to the spread of internationally organised crime and worldwide drug trafficking.

Monetary union is not scheduled for discussion in 1996, and rightly so. Britain's future is not exclusively linked to prospects for a common currency. Britain's opt-out clause is pragmatic rather than anti-European—

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a point not lost on our stand with the Social Chapter. In years to come we must fashion an economic policy best suited to the interests of our people. The IGC's success, however, not only depends on our own attitude, but also on the attitude of all participating countries. The pre-conference hype must be facilitated by European dialogue examining those issues in need of debate.

The French and Germans have already hinted at pushing for far-reaching constitutional changes while Britain prefers deferment on such questions. The European debate is too often marked by a heightened sense of fear through ignorance. The world's rapid socio-economic transformation warrants increased European adaptability and harmonisation. We should not fear change, provided that it is diligently undertaken within an acceptable timetable.

6.57 p.m.

Lord Beloff: My Lords, debates on Europe in this House are always decorated by the contributions of former commissioners, and this afternoon has been no exception. The one thing that they all have in common is what I can only call a degree of retardation in their understanding of what has happened since they occupied those important posts. Perhaps it is the chocolate that they eat in Brussels which gives them that feeling—it is the only good thing that ever came out of Brussels.

The noble Lord, Lord Cockfield, spoke of a great, powerful core block of European states, with France and Germany to the fore, striving to create a more integrated Europe. That was true; but is he certain that it is true today? It seems to me that there is some unwillingness to look outside this country and therefore too great a willingness to regard the scepticism in this country as unique to Britain.

On French television yesterday evening, M. Giscard d'Estaing said that he did not propose to stand for the French presidency because he found that his accent on Europe as a cause raised no echo in the French electorate. That is a very considerable admission by someone who, as the noble Lord, Lord Cockfield, and others know—indeed, it was mentioned in the course of the debate—played a major part in the development of some of the Community's policies and institutions.

However, even if we say, "All right, we cannot know what goes on abroad, let us concentrate on what goes on in this country", the debate has been heavily weighted on the side of Europhilia—if that is the right word—but I have found no one who has even recognised the main reason, that there is a strong movement of opinion away from the notion of European integration. Even the noble Lord, Lord Gilmour, agreed with that. It is a simple fact that people believe that the laws under which they live should be made by people elected by themselves and interpreted by judges in whose impartiality they have confidence. The feeling is that laws are made externally. I am no animal lover—I prefer the cause of the Welsh farmers to that of animals—but it is striking to me, as it has been striking to people throughout the country, that the Minister of Agriculture could say, "Whatever I should like to do, I cannot do it because I would be breaking European law".

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We are assured that it is a new legal order. All the jurisprudence of the court is based on that. The trouble is that we have got into a legal system in which our own traditional inclination to obey the law, which is not universally accepted in other member states, may conflict with our national interest.

I should like the Minister to comment on this example. Let us take the matter of borders. Is it or is it not the case that Brussels can insist that in future we demand visas from members of friendly Commonwealth countries who fought with us, when the European countries did not? The Australians, the Canadians may all happily obtain visas and no doubt we shall make it easier for them. However, it seems to me that that fact strikes the ordinary citizens of this country as unacceptable. They believe that in many ways, through family ties, language and past history, they are closer to members of the Commonwealth than to people across the Channel.


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