§ Mr. Speaker
Before the debate begins, I must inform the House that so far the number of hon. and right hon. Members who wish to speak is 61. If there is to be a fully representative expression of the thinking of the House on this important matter, it is essential that those who catch Mr. Speaker's eye speak reasonably briefly.
§ Sir Harmar Nicholls (Peterborough)
On a point of order. It is common knowledge that the Prime Minister will wind up the debate. I should have thought that on a matter such as this the House should have the benefit of his view before the conclusion of the debate. My right hon. Friend the Leader of the Opposition will be giving the official Opposition view. I should have thought that, rather than wind up the debate tomorrow when all the views will have been expressed, the Prime Minister should speak at an earlier stage.
§ Mr. Speaker
That is not a matter for Mr. Speaker. Since I see a gleam in the eye of the hon. and gallant Member for Wembley, North (Sir E. Bullus), I should point out that I have not selected the Amendments in the names of the hon. and gallant Member for Wembley, North in line 2, at end add:'and having studied carefully the White Paper and all the many adverse implications of entry into the Community decides to withdraw Britain's application forthwith'—and the hon. Member for Ilford, North (Mr. Iremonger).
§ Wing Commander Sir Eric Bullus (Wembley, North)
I thank you for your courtesy, Mr. Speaker, in giving early notice of your intentions on the Amendments, but may I ask whether you would be prepared to reconsider your decision if 50 or 100 names were put to my Amendment overnight?
§ Mr. T. L. Iremonger (Ilford, North)
On a point of order. May I be assured that your decision refers to both of my Amendments, Mr. Speaker?
§ Mr. Speaker
It applies to the Amendment on the first page of the Order Paper, in line 1, leave out "takes" and 997 insert "declines to take", and the Amendment on the second page, in line 2, at end add:on the grounds that it says in twenty thousand words what is better said in twenty, namely, that any economic assessment of the effect of a contract made before negotiating that contract's precise terms is mere mischievous fantasy and, further, that the White Paper is transparently calculated to provide the Prime Minister with an excuse for prematurely abandoning negotiations with the object of gaining electoral advantage; and, finally, that it envisages no provision for enabling the nation as a whole to participate in the ultimate decision on Europe by way of a referendum".I believe that the Amendments are linked.
§ 3.54 p.m.
§ The Secretary of State for Foreign and Comonwealth Affairs (Mr. Michael Stewart)
I beg to move,That this House takes note of the White Paper on Britain and the European Communities (Command Paper No. 4289).Her Majesty's Government's policy towards the European Economic Community has been steadily based since 1967: we have made our application, it stands, we press it, we desire that negotiations should be opened, and we are anxious that they should succeed.
While Her Majesty's Government's policy has remained unchanged, the situation in Europe has changed considerably. Comparing the present situation with 1967, there are different Governments in France and in Germany. There have been changes in the parity of the currencies in France, in Germany and in this country. There has been a transformation, very much for the better, of the economic situation and economic strength of this country.
Last December, in The Hague, there was a meeting of the countries of the Community at which they announced their intention to proceed with the completion, strengthening and enlargement of the Community. More recently, the countries of the Community have made a settlement of financial arrangements for the common agricultural policy which leaves the way clear for the opening of negotiations, probably about the middle of this year. This is a substantial change, a substantial improvement for the success of Her Majesty's Government's policy which, I understand, has the support of the Opposition, the Liberal Party and the great majority of this House.
998 I think it right to say that it is fortunate that Her Majesty's Government did not follow advice which we received from certain quarters to pursue alternatives to entry to the Common Market. It was suggested at one time that we should consider some kind of trade arrangement, not as a prelude, hut as an alternative, to entry to the Community. We set that aside. At one time it was suggested, not wholly without support on the benches opposite, that we should seek a particular arrangement with one member of the Community without regard to the future of the Community itself.
We rejected both these temptations, and I believe that in the event it has been shown that we were right to take the view that if one wants to enter the Community the right way to do it is through the front door, through an agreement negotiated under the relevant Article of the Treaty of Rome. This is the view to which the Government have stuck throughout and which we are now able to approach with much more confidence and hope than two years ago. In 1967, our policy, which had the massive support of the House, was to open negotiations. It clearly would be wrong to change that policy now that the conditions are so much more favourable.
The White Paper, of which we are asked to take note, reaffirms the policy of opening negotiations. It does not make pronouncements on policy. It reaffirms, rightly, that item of policy; it goes n3 further. It is not a statement of policy, but a response to the repeated and indeed justifiable requests for an economic assessment, so far as that was possible, of the consequences to this country of entering the Community. That is what the White Paper is, as its title states—an economic assessment, and necessarily an assessment of economic results in the short term. If one were to look ahead to the long period that will be affected by the decision one way or another whether this country enters the Community that would defy economic analysis.
The attempt of the White Paper, therefore, is to make an economic assessment for such period of time ahead as it is reasonable to try to assess the facts at all. Even so, such an assessment is subject to certain limitations. First, to make such an assessment one has to 999 make a wide range of assumptions. For example, what assumptions can one make about the movement of food prices both within the countries of the European Economic Community and without and the movement of world food prices? It is possible to make a number of assumptions about that and any assessment of the cost must be influenced by the assumptions that one makes.
Second, while it is quite clear that entry into the Community would have an effect on what one might call firsthand food prices, one cannot make a certain judgment as to what would be the effect of those changes in first-hand food prices on retail prices. That would depend on the reaction of the retail market and the efficiency of the distribution of food in this country. Here again, one can only make assumptions.
Third, one has to make certain assumptions as to what would be the response by United Kingdom suppliers and by foreign suppliers to changes in tariffs and to changes in costs. There is an attempt—and as far as I can judge as good an attempt as could be made—in the White Paper to deal with these assumptions on the basis of varying elasticities, but everyone must accept that one is here basing one's judgment on a series of possible assumptions.
I think, therefore, that the judgment of the Financial Times was probably right when it pointed out that if one attempts to be precise and to try to measure to the last £1 million or £5 million what the cost will be, the more precise one attempts to be the further one will depart from the truth. The more one attempts to give a truthful picture the less precise necessarily one must be.—[HON. MEMBERS: "Oh."]—Hon. Members who are opposed to this can try to spell out the answer today if they can.
It would clearly have been a deception on the part of the White Paper to pretend that any estimate of the cost could have been made with a precision which the facts do not allow, but those who criticise the White Paper must try to show that their more hostile estimates have some solid basis in fact and they will find some difficulty in doing so.
Further, if we are to make any real estimates we have not merely to compare the position in this country now with its 1000 position if, in the comparatively near future, we enter the E.E.C. We have to try to answer this question. What will be the comparison in five or 10 years' time between the position of this country inside the Community and the position if it still stayed out? I shall refer to this later. Further, the White Paper did not take account, and could not take account, of such changes in the situation as may be achieved in the course of the negotiations themselves.
One further qualification which one must make to the calculations in the White Paper is the immensely complex nature of the calculations involved and the immense quantities that were involved. For example, if any one were to try to assess the balance of trade of this country for next year and were to make an error of 1 per cent. that would be an error of at least £150 million. That is why it is no valid criticism of the White Paper to say that the limits it sets are very wide.
§ Mr. John Mendelson (Penistone)
If my right hon. Friend is so anxious to impress upon the House the large area of uncertainty about any assumptions, how, during the negotiations, will he insist on minimum conditions to safeguard the interests of the people of this country?
§ Mr. Stewart
I do not think that that is a logical argument. What I am saying is that if the White Paper is criticised as imprecise—and this debate is concerned with taking note of the White Paper—there are, for the reasons I have given, very valid answers. When we come to negotiations, it is equally true that nobody could nail down to the last degree what exactly the results would be. In the event, and I think that everybody who has studied this matter knows it, this must be a qualitative judgment.
Certainly, in the process of negotiations there will be certain important questions—the question, for example, of the cost of financing the common agricultural policy—about which we should know a great deal more than it was possible for the authors of the White Paper to know when they wrote it. My hon. Friend the Member for Penistone (Mr. John Mendelson) can, therefore, be sure that while there can be no positive answers to all the questions we shall be substantially nearer to the answers to the vital 1001 questions at the end of negotiations than at the beginning.
§ Mr. Stewart
If my hon. Friend thinks that that is a platitude, I must point out that that is exactly the question he was asking me. It is vital matters such as the financing of the common agricultural policy that one can establish during negotiations. What one cannot establish is the positive answer to the question of how well off Britain will be, in or out, 10 years' hence. In the end, a qualitative judgment must be made on that.
I have noticed the wide range of critics of the White Paper. I have been impressed by the eminence of their economic credentials, their massive confidence in their own assertions and the immense variety of their conclusions. If, for example, we compare the judgment of Professor Johnson, of the London School of Economics, with those of Professor Kaldor, or a writer in The Times, one may be excused for feeling that, while they all have their criticisms of the White Paper for lack of precision, it is unlikely that, if they had been brought together to produce a similar paper, they would have produced more precise results.
I must at this stage answer the criticism that the White Paper, by spelling out, firmly and plainly, what might, at worst, be the cost to this country, was suggesting any vacillation on the part of the Government in our resolve to enter negotiations in good faith and in good hope. There have been suggestions in some organs of the Press here that this was so, that Her Majesty's Government, with great Machiavellian skill, had produced the White Paper so as to disguise the intention to retreat on their policy.
But, after all, we need not be too innocent about this. We are all politicians here and we know perfectly well that, at present, certain organs of the Press will put an unfavourable construction on any action of Her Majesty's Government and that we need not worry too much about that.
What would be more serious is if observers abroad, countries with which we shall be negotiating, took the view that the White Paper covered any vacillation in the desire to negotiate in good faith and good hope. I have been at some pains to study the reactions of 1002 informed continental observers, and I find that only very few, nearly all of whom have picked up their cue from anti-Government commentators in London, have made this suggestion, whereas the overwhelming majority judgment of informed continental opinion is that the White Paper shows that Her Majesty's Government persist in their policy of desiring to negotiate in good faith and good hope, and that, quite properly, we are setting out, very plainly, for our own people and for those with whom we shall have to negotiate, what the costs might be and what are the matters that we shall have to have special regard to in the negotiations.
They understand, also, that if, in some aspects, the White Paper seems to have set out a rather severe estimate of what the cost might be, it is legitimate for us, entering the negotiations, to do this so that those with whom we negotiate will understand what our anxieties are.
We believe, with good reason, that the Six want to see us enter the E.E.C. We desire them to understand what our anxieties are, what the costs might be, where we shall need their help and their understanding—and this, to judge from the informed continental comment, is the result that the White Paper has managed to achieve.
Perhaps I should refer to the much discussed paragraph 101 of the White Paper, which points out that, if one takes all the fields in which there can he an estimate of gain or loss—agriculture, Community finance, trade and industry, capital and invisibles—one can, if one likes, carry out the mere arithmetical exercise of adding up, on the one hand, all the most favourable estimates, and, on the other, all the most unfavourable estimates. But what the White Paper says, quite explicitly, is that the total effect cannot be assessed in this manner.
The White Paper also states, as a mere matter of arithmetic, that, so far as can be judged, if there were a conjuncture of all the most favourable factors, it might run to £100 million, or, of all the most unfavourable, to £1,100 million. But it states explicitly that this, although a piece of arithmetic, is not a realistic calculation and that those comments that have proceeded on the basis that it is are a denial of what the White Paper says in paragraph 101.
1003 It is not my intention to go through all the successive chapters of the White Paper, but there is one section with which, in view of public anxiety, I should deal in particular, and that is the section on food prices. The well-known Table 7 sets out the retail prices of food in the United Kingdom and in the E.E.C. But no one who reads the White Paper for what is there, and not for what he hoped would be there, can argue that this means that the day after we entered the Community, the price of steak would leap to 15s. a lb. or of pork to 10s. 6d. per lb. What, in fact, does the table bring out? It brings out for example, that in Europe the price of pork at the moment ranges from 6s. to 10s. 6d., while the average price in this country is 6s. 3d., with a range of from 5s. 6d. to 7s. One of the morals to be drawn from this is that a great deal will depend on the efficiency of our own food distribution system.
Further, some of the comments that have been made seem to assume that there would be no transitional period at all. This, quite plainly, is rubbish. It is now fully understood that there will be a transitional period, possibly a considerable transitional period, but this is exactly one of the points on which one cannot speak with precision before the negotiations. There is no question of a sudden jump up to the present maximum prices in the E.E.C. I do not deny that there would be an increase, but it would be spread over a period of years, and to set it in proportion let us notice what has been happening with food prices. I take a period of eight years, from 1960 to 1968. I take that period deliberately because it covers four years of rule by the Conservatives and four years of rule by Labour, so that it shall not be regarded as a party question.
During those eight years, food prices rose in the E.E.C. They also rose in this country. They rose rather more, indeed, in this country. Probably the best estimate one can get is a rise of 33 per cent. in this country compared with a rise of 30 per cent. in the E.E.C. It would clearly be wrong, therefore, to suppose that entry into the E.E.C. means a massive, sudden rise in the price of food far beyond that to which we have been accustomed.
§ Mr. John Lee (Reading)
Surely the point here is that there is in any case a secular tendency in favour of rising prices, and that the further rise in the transitional period which my right hon. Friend is unable to specify as one acceptable to the Government would be an additional rise over that which we could normally expect.
§ Mr. Stewart
I am coming at once to that point.
If one takes that into account, one must look not only at the cost of living but at the standard of living; and the White Paper makes it clear that such rise in the cost of food as there might be would amount to a rise in the total cost of living—not only food—of between 4 and 5 per cent. Clearly, what matters to the working man and the professional man—anyone who lives by work—is, "How much do I get, in return for an hour's work, in necessities, comforts, luxuries and leisure?" That is what really matters to him.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
Before the right hon. Gentleman goes on with his comparison, is he not guilty of a fallacy in comparing a general inflationary rise in prices in one country over a period of years with a difference between absolute prices between one country and another?
§ Mr. Stewart
I am sorry, but I have never really been able to get up to the right hon. Gentleman's intellectual level and, frankly, I do not think that that remark makes sense.
§ Mr. Powell
With the right hon. Gentleman's permission, for which I am grateful, I will put it again. He is looking at a comparison between costs here now and costs in other countries of the Common Market, and the rise in prices which would result from the approximation of one to the other. He has sought to argue that this was not as great as might otherwise appear because it was not dissimilar to the general inflationary rise which had taken place in this country. I am submitting to him that that comparison is a fallacy. He is comparing unlike with unlike.
§ Mr. Stewart
Here, with respect, I believe that the right hon. Gentleman 1005 has got it wrong and is making the mistake he so often does of trying to be intellectually precise about questions of actual human life which are far more confused than he supposes, and for this reason: prices rise in any country, for a great variety of reasons, partly from inflationary tendencies, partly from a rise in real costs and partly, as in the case of the Common Market to some extent, through deliberate policy.
The point I am making is that the attempt to be as precise as this and to distinguish how much is due to deliberate policy of the Common Market, how much to rising costs and how much to inflationary tendencies, is an attempt to apply a rigid intellectual analysis to the actual facts of human life which defy that analysis. That is the mistake the right hon. Gentleman so often makes.
The point I am making, therefore, is that if one is alarmed about stories of rises in prices in the Community one has to look—and this is the real point and why I believe the right hon. Gentleman is wrong—at what is likely to happen in the next five or 10 years to prices in the Community and prices here. I am saying no more than if we try to answer that question we cannot reach the terrifying answer which the opponents of the Market try to reach by using the figures in the White Paper.
Further, one must reinforce this, as I am saying in answer to my hon. Friend, by looking not only at the cost of living but at the standard of living. Let us spell it out here.
§ Mr. Raphael Tuck (Watford) rose—
§ Mr. Stewart
I have given way several times. This is to be a long debate and I do not want to take up too much time.
In this country from 1960 to 1968, if one wants to be pedantic, prices have risen by 32.7 per cent. What has happened there? In Italy, by a little more; in France and the Netherlands, by almost exactly the same; in Germany, the most populous country of the Community, and in Belgium and Luxembourg, by substantially less.
Against that one must set this: average hourly earnings during that same period have risen here by 61.8 per cent. The lowest record among the countries of the Community is Luxembourg, with 1006 63 per cent. There is Germany, with an 82 per cent. rise in average hourly earnings, and the Netherlands, 106 per cent. It is worth while quoting in this connection an article in the 1970 issue of Labour, the monthly broadsheet produced by the Trades Union Congress, which says:Despite the higher food prices it would seem in general that living standards in the Community have risen sharply and are now at least equal to that in Britain and in some cases higher".It does not seem to me that anyone trying to weigh up the pros and cons can really dodge these facts. I would not argue that the increases in money and the substantial increases in real income are solely due to membership of the Community. I believe that this was the point my right hon. Friend was about to make.
§ Mr. Richard Marsh (Greenwich)
I thank my right hon. Friend for giving way. This is an important point. What he is doing is comparing the position in Britain with that of the countries of the Six and, by implication, arguing that their better standard of living is because of their membership of the Six. But if he were to compare the British rate of growth over the last eight years with that of many countries in E.F.T.A. he would surely find that they have done better than we have. It is an illogical argument.
§ Mr. Stewart
That is exactly the point I was coming to. I am not arguing that this growth is solely due to membership of the Community, but I believe that anyone who has studied the history of the Community will have noticed the extent to which willingness to invest, so vital a factor in growth today, was bound up with the knowledge of the investor of this large guaranteed market. I do not think one can escape the conclusion that there would not have been this growth in money or in real incomes without the formation of the Community.
I will put this more plainly, on a more polemical basis. Some of the opponents of the Market have tried to argue like this: they have taken food prices here and food prices today in the dearest parts of the Common Market and published articles saying, "Madam, this is your bill," as if this is what would happen on the day we enter. If one says 1007 this then one ought, in common fairness, to address not only the housewife, but the wage-earner, also, and say, "Sir, this is the increase in your wage packet". I am making no more than that point, but it is important that if we weigh up the increases in the cost of living we must also weight up increases in the standard of living.
This brings me to the question: what are the important industrial advantages? The Confederation of British Industry has endeavoured to make an assessment of this and, as my right hon. Friend the Prime Minister pointed out, it is for those who will have to undertake the task of using the opportunities which entry into the Community will give to decide how great those opportunities are. But it is interesting to notice that the survey of possibilities and costs made by the Confederation of British Industry, although made independently of the Government, although made on different assumptions, leads to remarkably similar conclusions. It has been a commonplace of this argument that the costs and problems of entering the Market are easier to measure than the advantages; but it does not follow that because a thing is more difficult to measure it is less real. I do not believe that anyone can dispute the vast and growing importance to us of the market which the European Economic Community presents.
Over the last 10 years our trade with those countries has multiplied by two and a half times; but the potential open to those who are members of the Community is brought out by the fact that during that same time intra-Community trade has multiplied by four times. Then we have to look at the way in which modern industry is growing, the need for rationalisation, the need for massive investment which cannot be secured unless there is a long and assured view of the future, and the need for technical development. All of these require a large market.
Furthermore, if we are to be able to compete with the industries of the United State of America, particularly in industries of high technological content, we have European concerns which are comparable in size with their United States' counterparts. It is very difficult to see how this can be achieved if we remain outside the Community.
§ Sir Harmar Nicholls
The right hon. Gentleman is ignoring the fact that our situation is different. When we sign the Treaty of Rome it means that we have to end trading relations with other parts of the world, particularly the Commonweath, which would more than outweigh what we are likely to gain from entry.
§ Mr. Stewart
I would refer to the Commonwealth, but I am sure that the hon. Gentleman's judgment, that this would more than counterpoise any advantages, cannot be sustained.
We cannot merely compare our situation now with our situation in a few months' time, or in a year's time, when we may be in the Market. We have to weigh up what will be the situation some time ahead, if we are in or if we are out. Part of the answer is provided by a study of the communique issued at The Hague which was concerned with the increasing harmonisation of legal, fiscal and financial policies.
If we remain out all this harmonisaation will go on without us. In future, British industry will find itself with a limited home market, operating in a world in which increasingly all the rules of commercial conduct have been determined by great groupings to none of which we shall belong.
It is true that entry to the Community must in time mean the end of Commonwealth preferences, although it was made clear in our 1967 application that we would insist, in negotiations, on proper treatment for certain Commonwealth matters. New Zealand is one, the Commonwealth Sugar Agreement is another. That condition still stands. I would ask the House to notice what is already happening in the Commonwealth. Some Commonwealth countries are already making their arrangements with the Community. The East African countries doing that are, as a result, depriving us of reverse preferences that we enjoyed. We do not like that, but we cannot complain. This is the way the world is going and they are entitled to do this.
Where we shall make a mistake is if we imagine that if we stay out of the Community our present relations with the Commonwealth will remain unchanged. We are much more likely to find that one part of the Commonwealth after another 1009 comes to its own terms with the Community. We will find the same thing with our E.F.T.A. partners. We will be making a great mistake if we imagine that we can simply stand on our partnership with E.F.T.A. If we decide not to enter, every country in E.F.T.A. would have to reconsider its position. We make a mistake if we think that the world will stand still because we want it to stand still.
§ Mr. F. A. Burden (Gillingham)
Is the right hon. Gentleman not really saying that whatever the terms we must go into the Common Market? If so, is that not making an absolute nonsense of what the Prime Minister said about studying the terms?
§ Mr. Stewart
I am pointing out that there are great advantages to this country if the negotiations prove successful and very serious problems if they do not. I would affirm that if in the negotiations we found we could not attain what anyone would regard as reasonable terms, then we should have to stand out. We would face the consequences, we could face the consequences, but it would be to the injury of us and of Europe. That I would have thought was sufficiently clear.
Since the hon. Gentleman has, to that extent, been partisan, I would raise this one point at which we may be at variance with the party opposite. I think that everyone understands the policy of right hon. and hon. Gentlemen opposite, which is to make certain changes in the methods of agricultural support, of a kind that would cause high prices for the housewife. It is also their policy to go in for a value-added tax, which would have an adverse effect on the cost of living. I understand quite well that if we enter the Community we will have to introduce things of this nature, but we would only do it if, as part of the whole negotiating conclusion, it appeared to be advantageous to us.
What I cannot understand, and I doubt whether anyone can, is why the party opposite proposes to have these things, whether or not we get into the Community. This has nothing to do with negotiating a position. As I understand it, the party opposite, even if we never entered into negotiations, would take those steps. I defer to the intellectual 1010 judgment of the right hon. Member for Wolverhampton, South-West (Mr. Powell), the right hon. Member for Bexley (Mr. Heath) and the right hon. Member for Barnet (Mr. Maudling), but that seems to be daft.
§ Mr. Edward Heath (Bexley)
At this stage, two matters are involved. First, there is what the Prime Minister on Saturday described as a negotiating posture and, secondly, the question of substance about our internal conditions. My right hon. Friend the Member for Barnet (Mr. Maudling) and I will deal fully with this in the debate.
§ Mr. Stewart
I am delighted to hear it, because I am always anxious to learn. The position of the party opposite is a little bewildering. I would not have pursued that partisan point if the hon. Member for Gillingham (Mr. Burden) had not intervened.
The White Paper refers only briefly to political arguments, that is not its concern. It would be a little unrealistic if I said nothing at all about this. Here again, we must not suppose that if we decide to stay out the world will stand still. There is a great desire among the countries of Western Europe to get increasing agreement about their policies on world affairs. If we enter into negotiations in good faith and good hope, and fail, this will be Europe's loss and ours. But if we decided that we will not even negotiate, Western Europe would then have to say, "Very well, we must take counsel with ourselves. We cannot be concerned with Britain's position."
This would mean that Western Europe would proceed, economically, legally, commercially and politically to make itself a more compact unit and this country would find itself in a world where there was the Soviet Union, the United States, China and the 200 million of the E.E.C.—none of them greatly concerned about the part which this country, with its 50 million or 60 million, might play in the world. We would be the loser in extremity. If no reasonable terms could be obtained this country would stand by itself, as it has done before. Neither Britain nor Western Europe would benefit from that.
It is sometimes suggested that entry into the Community would be a deliberate sacrifice of our independence. What we must weigh up is this. Any nation that 1011 enters into any treaty or obligation with other nations, by that act surrenders some degree of independence, but what matters at the end of the day is how much real freedom that nation has. If it were known that Britain had deliberately decided not even to attempt to enter the Community, we could not expect the other groupings of the world to be greatly interested in our position, and, whatever our nominal and legal freedom might be, we should find that our real power of choice to do this or that politically or economically would be greatly reduced.
§ Sir Derek Walker-Smith (Hertfordshire, East) rose——
§ Mr. John Biggs-Davison (Chigwell) rose——
§ Mr. Stewart
I have given way many times. I shall be sitting down in a couple of minutes, when right hon. and hon. Gentlemen will have further opportunities to address the House.
If things go ill, we could stand alone, but we must take into account how much could be gained both in the prosperity and in the strength of Europe if we were to succeed—and not only Western Europe. One of the objectives of foreign policy which I have very much in mind is the relaxation of tension between Eastern and Western Europe, but I am deeply convinced that, if the great power grouping in Eastern Europe believes that it has only to wait and the West will disintegrate, then we shall get no helpful move from it.
I believe that a Western Europe firmly united so that it is understood in the East that we act and think together will enable Eastern Europe to realise that there is no easy solution for it in the mere dissolution of the West, but that it must come to terms and consider what is the reasonable price to pay for that relaxation of tension between East and West on which so many of the hopes of mankind depend.
It has sometimes been suggested that in pursuing this line the Government and Parliament are acting in defiance of public opinion. I have never taken the view that public policy, either of the Government or of Opposition parties, should be determined by immediately following public opinion polls. I have noticed, on one important poll——
§ Mr. Stewart
My right hon. Friend, before he has heard it, says that the argument is ridiculous; perhaps he will listen.
I do not burke this question. I take the poll in which the result of the question, "Are you in favour of joining the Common Market?", was 72 per cent. "No" and 18 per cent. "Yes". I notice that in that same poll the same people, when asked, "Do you think that the Government should or should not negotiate with the Common Market to see what terms we can get?", answered, "Yes" 67 per cent., "No" 28 per cent. and "Don't know" 5 per cent. That, at the moment, is the Government's policy.
When those same people were asked a further and more complex question, "If it becomes clear that we would be better off in the Common Market in the end, but that the cost would be high at first, would you then be in favour of joining?" 49 per cent. answered "Yes", 38 per cent. answered "No" and 13 per cent. "Don't know". The majority of those canvassed, with becoming modesty, said that they were either not very well or not at all acquainted with the arguments one way or the other. That degree of candour adds some weight to their conclusions.
The White Paper states no more than that we believe it right to enter into negotiations. The White Paper also underlines the very considerable cost that might be involved for this country, the desirability in the negotiations of giving full account to this, the resolution, if necessary and if fair terms could not be obtained, to stay out, but the recognition that staying out would be a loss for us and for Europe. I believe, therefore, that informed opinion, the judgment of the White Paper and the judgment of popular opinion that I have just quoted all support that statement of policy which was voiced by my right hon. Friend the Prime Minister when he made the statement introducing the White Paper as follows:The Government will enter into negotiations resolutely, in good faith, mindful both of British interests and of the advantages of success in the negotiations to all the members of an enlarged community."—[OFFICIAL REPORT, 10th February, 1970; Vol. 795, c. 1083.]
§ 4.46 p.m.
§ Mr. Reginald Maudling (Barnet)
The Motion asks the House to take note of the White Paper. It is a fairly anodyne Motion, I think probably wisely, which has been put down at this stage by the Government. If the Government had asked us to approve the White Paper, that would have been much more difficult because, as a document, the White Paper is a very disappointing performance. It could fairly be said that it provides plenty of ammunition to everyone, but no satisfaction to anyone. That is the position in which it leaves us today.
In May, 1967, this House took the historic decision, by a 426 vote majority, that the Government should be supported in the application to join the Common Market. Looking back over that debate, over my own speech and my own vote in favour, I would not wish in any way to change the arguments which I used then. I have been involved in European problems for quite a long time and have always held the simple view that it is in Britain's interests to be part of a united European economic system, on the right terms. At one time I was regarded as a dangerous radical for wanting to dash into Europe and at another time as an old fuddy-duddy for wanting to stay out of Europe.
Britain in the Common Market would mean greater prosperity for Britain and for Europe. But Britain outside the Common Market could prosper and thrive, not as well as she could inside; but this is not a question of entry, on the one hand, or disaster, on the other. It is a question for us and Europe whether we shall progress at one pace or at the faster pace which could be achieved as the result of successful negotiation, but only as the result of successful negotiation.
May I look at the developments since that debate in 1967 to see whether there are any changes that should cause us to change our minds from three points of view: first, the world political scene, to which the Foreign Secretary referred; secondly, the economic consequences of joining the Common Market, both short-term and long-term, with special reference to the White Paper; thirdly, and extremely important—perhaps the Foreign Secretary a little played this down—the change that has un- 1014 doubtedly taken place in British public opinion in the last two or three years. All these are matters which we, as the House of Commons, should take fully into account.
Looking at the world political scene, I believe the case for European unity has not in any way diminished in the last three years; if anything, it has strengthened. There are two main factors. First, to prevent the recurrence of another struggle between the European Powers themselves which twice in this century has cost us so dear. We must not forget the importance of the Common Market concept on that particular facet of European unity. The second argument is that if we join the Common Market we shall be better placed to enhance the influence of Europe as a whole in the councils of the world.
One has to make a judgment. Is it better for Britain to speak independently from her own strength or to speak in concert with partners in a combined strength? It is not an easy decision. With respect, the Foreign Secretary very much under-estimated what Britain could still mean in the world outside the Common Market. One must not think that the argument is a matter of black and white and a simple decision. Either we decide on a European concert, with all the power that means in the modern world of super Powers, or, regretfully to my mind, if we have to remain outside we would not have quite the same influence. But let us not pretend that we should have no influence at all. Certain developments in the United States and in Russia, and the advent of new weapons in China, have emphasised the dangers of the situation.
In the 1967 debate I tried to emphasise the dangers to the Western world of any division between the United States and Western Europe. I believe that this danger has been growing. I believe that the inward-looking policies among the Common Market countries have had a big influence in the United States. This Government's wrong decision to withdraw from east of Suez has had a further effect on the outlook of the United States. There is a real danger that the Americans might say, "If Europe wants to run its own affairs, and to concentrate its attention entirely inside Europe, let them do so and we will turn our gaze across the 1015 Pacific, where our own real mounting danger lies." This is a real danger. I welcome the recent statement by the President of the United States, rejecting this concept, but the danger is there.
Therefore, it is of the utmost importance that we in Europe should be prepared together to play a far bigger part in our own defence and in the whole foreign policy aspects of the North Atlantic Alliance than we have done until the present moment. Surely trends in America show clearly that the unity of Western Europe in political and defence terms becomes more rather than less important.
I turn to the economic consequences, and particularly to the White Paper. The theme now, as it was three years ago, is the simple one that the long-term advantages cannot be quantified and that the short-term disadvantages can. The White Paper has added nothing at all to clarity or the opportunity of decision in these matters. The basic problem remains the same. The trouble with the White Paper, as the Foreign Secretary seemed to be hinting, is that by trying to put down figures that appear to be accurate it is creating a bogus impression of accuracy which merely deludes people who read it.
Let us look at some of the figures, including the figure as to the increase in the cost of food—going up by 18 per cent. to 26 per cent. I felt that the Foreign Secretary did not entirely follow the intervention of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). The point is that food prices can be pushed up by general inflation, or they can be fixed at a high level arbitrarily by Government action.
The important point is the relationship in future between food prices in the Community and world prices and British prices. I cannot help feeling that the White Paper is too pessimistic from that point of view. Surely the gap is likely to close, partly because Community prices will come in for increasing pressure from the taxpayer and the consumer in the Community and partly because world and British food prices are under considerable upward pressure at present. I think that the calculations of food price increases are based on inadequate premises.
1016 Then there is the calculation of the cost of our contribution to the agricultural fund, which is put at a range of £150 to £670 million, a colossal sum across the exchanges. But these figures are not meaningful, because the Community itself has since agreed to a limit by percentage contribution, which means that the figures in the White Paper are now wrong. [Interruption.] It is all very well for the Prime Minister to say, "Hear, hear", but why does not the Foreign Secretary give the figures to the House? This is an example of how the calculations in the White Paper are not calculations upon which one can really base a confident judgment.
Let us take the stimulus to United Kingdom production. We have a figure of 3 to 10 per cent. over seven years. This may well be a great under-estimate. We have the most efficient agriculture in the whole of Europe and probably in the whole of the world. We have seen what price increases can do to production. I remember Lord Butler, when Chancellor of the Exchequer, saying that he shuddered every time he saw a pig or a house, because he knew what it cost the Treasury. When remembering the elasticity of demand, it should be possible to make a better assessment of what British farmers can do if they are given the chance to do it.
To sum up, the White Paper on the whole cost of the agricultural policy, says, in paragraph 44:… in the crucial area of our financial contribution to the Fund, there is just not a sufficient basis, in advance of negotiations, for making reliable assumptions either about its cost or our share of it.Why not put that on the front of the White Paper and leave out all the figures? It is not possible, as paragraph 44 rightly says, to make accurate assumptions.
Then we come to the effect on the balance of payments on trade in other items. The White Paper assumes an "impact effect" of £125 to £275 million. The arguments put forward are complicated, but they are not sustained by any reasoned argument. It is nonsense to pretend that one can achieve accuracy of this kind in these sorts of forward estimates. Again, in the words of the White Paper, the estimates relate to a total flow of United Kingdom trade, 1017 which by the middle of the decade are expected to be about £18 billion in 1968 prices. How can one calculate within a range of £100 million or £150 million five years ahead on a total of £18 billion? The White Paper concludes by saying that the calculations may be positively misleading. I prefer the phrase used by the Economist, "unadulterated rubbish".
§ Mr. Maudling
It is difficult, when one is pointing out that accurate figures cannot be achieved in these circumstances, to be met by the brilliant riposte, "Give us the right figures".
§ Mr. Stanley Henig (Lancaster)
May we be quite clear about what the right hon. Gentleman is saying? The Government have produced a White Paper giving estimates of possible costs by making certain assumptions. The right hon. Gentleman is now saying that the estimates are vague. Is he saying that the Government should not have produced a White Paper at all?
§ Mr. Maudling
What I am saying is that they should not have produced this White Paper, except for the sentence I quoted from paragraph 44, which makes it clear that reliable estimates could only be produced as a result of negotiations.
§ The Prime Minister (Mr. Harold Wilson)
Would the right hon. Gentleman allow me to intervene? If he is saying that the White Paper does not answer the questions—and we are all conscious of the difficulties of forecasts—and if he is saying that he could not have produced an answer either, is he saying that we should not have attempted to produce a White Paper? If that is what he is saying, will he refer to statements made by his right hon. Friend the Leader of the Opposition demanding that this information should be given?
§ Mr. Maudling
I am saying nothing of the sort. [HON. MEMBERS: "Oh!"] The Government are right to try to work out the figures. But when they found that it could not be done they should have said so. In fact, paragraph 44 shows that is what they did say. That is my summing up of the White Paper.
Let me turn back to the economic assessment, which must be in broad 1018 terms. The Foreign Secretary mentioned qualitative terms. The decision whether or not it is right to go into the Common Market must be based not on exact calculations, but on judgment and a faith in Britain's ability to achieve and exploit the opportunities that a wider market would give.
I will not run over in detail the various arguments to which the right hon. Gentleman referred. The C.B.I. analysis was an excellent one. We are all aware of the fact that, as modern industry develops, so the importance of a large market becomes greater. On any study of the engineering, plastics or electronics industries, there can be no doubt that those who have access to a large market can have large units between which there is competition. Unfortunately, in a small community with a large unit there can be no domestic competition. There cannot be research and development on anything like the scale which the United States can achieve. There cannot be concerted technology on a European basis adequate to match American competition, and one cannot expect the volume and certainty of long-term industrial investment which only the opportunities of a large market can give.
That does not mean that there is no benefit for small industrial units. The small specialist firm in, say, engineering will equally feel the benefit of a wider market and more intense competition. It is true that smaller countries like Sweden and Switzerland can prosper alongside bigger neighbours, but they find it more difficult as modern industry expands. Size is not the only criterion, but it is a very important one.
Let us consider the alternative. If we are outside the Common Market, we shall face across the Channel an industrial competitor with a home base which is the size of the United States but which has average wage rates which are more akin to our own than to America's, which are three or four times ours. We shall face an industrial competitor with growth rates substantially ahead of our own, and an industrial competitor whose power in international negotiation will be much greater than ours, as we have seen already in the G.A.T.T. negotiations and in negotiations with individual Commonwealth countries. The dangers of staying outside the Common Market must be taken into 1019 account as much as the advantages of going in.
Finally on this theme, let me emphasise the fact that the speed of technological advance gathers all the time. Of all the scientists who have ever lived in the world, more than 90 per cent. are alive today. We must not look at this historic decision solely on the basis of the next two or three years, but on the basis of the next five, ten or fifteen years and what is likely to be the pattern of industrial development here and in the rest of the world.
I turn to my third point, which concerns public opinion. I expect that the Prime Minister will also be interested here. There is no doubt that there has been a marked change in public opinion on this matter. It is not only to be seen in public opinion polls. They can be misleading. I argued this in a public speech the other day and received a lot of rude letters as a result. The fact remains that, in the last two or three years, no one has argued the case for going into the Common Market, for the simple reason that no one thought that we had a chance of getting in. A friend of mine in the whisky distilling business told me during the war when I asked why he did not advertise his products like other people did, "My boy, you will find as you get older that it is very unwise to advertise a product that you cannot supply." That has been a good rule in the last two or three years and, therefore, the anti-Common Market arguments have held the field almost completely.
For that reason, the public opinion polls do not accurately reflect instructed opinion in this country. Nevertheless, there is no doubt that there has been a strong and definite move of public opinion against the Common Market as people understand the issues at the present time. We who believe in the importance of this country entering the Common Market have an enormous task in persuading people to see the realities and to let them know the real arguments. We in this House, if it is to be a democracy, cannot disregard the views of our constituents and of the public at large.
This question of the change in public mood brings me to some matters where 1020 the Prime Minister is concerned and which the Foreign Secretary raised this afternoon. As public opinion appears to turn against the Common Market, it must be clear to any astute party politician that there is a temptation to cash in on the public mood. Many believe that the Prime Minister, whose motto is that a week is a long time in politics, may be shaping his tactics in the case of the Common Market with an election in mind. Some people say that it would be rather convenient if, having made an application to join the Common Market, the right hon. Gentleman could garner public support by rejecting whatever terms he was offered. I have no doubt that nothing could be further from the Prime Minister's mind, but his speech on Saturday confirmed those suspicions and must give rise to suspicions overseas.
I will explain why. I take first his attack on us, which was taken by the Press as bringing the Common Market issue into the centre of party politics. His words were that the Opposition… were willing to pay the entry fee in any case.That is wholly untrue. We have made it clear on many occasions that we are not prepared to pay the entry fee unless it is a reasonable one. That has been said on many occasions. I will go further and say that the extreme price set out in the White Paper certainly would not be regarded as a reasonable one, nor could it be accepted in any case. It is not true and never has been that we have taken that attitude to the Common Market.
One can see why the Prime Minister said that and what he was getting at. He was trying to hang the 18 to 26 per cent. increase in the cost of food estimated in his White Paper on our policies.
§ The Prime Minister
Can the right hon. Gentleman quote any part of my speech where I tried to hang the 18 to 26 per cent. on the Opposition? The trouble was that the right hon. Gentleman, because his right hon. Friend for once did not feel able to issue an instant reply, made his own statement containing certain allegations about my speech, and even the most sycophantic Tory newspapers, when they read my speech, said that his assertion did not stick. Will he now quote the part of my speech to justify his allegation?
§ Mr. Maudling
I have already quoted the Prime Minister's words. He said that we are prepared to pay the entry fee in any case. I say that that is not true. But I am glad that the Prime Minister has now put it clearly on record that there is no connection between the increase in food costs contained in the White Paper and Tory Party policy. It is useful to have that on record.
The question at issue in the Common Market negotiations about which the Prime Minister was talking—and I have studied both his speech and the transcript of his broadcast with great care—is not the system of agricultural levies which the Government have accepted as part of the negotiation——
§ Mr. Maudling
The problem is the level of food prices in the Common Market and the level of the British contribution to the common agricultural policy.
When we talk of the Conservative policy to which the Foreign Secretary referred, let me make it clear again that, when we move over to a levy system, there will be an increase in the price of food. It will be no more than a fraction or less than a quarter of the figure appearing in the White Paper. The great difference between our proposals and what the Prime Minister is talking about is that the money saved thereby will not be paid to Brussels but to the British taxpayer. The money saved by our proposals will be available to reduce taxes and to increase social benefits. Incidentally, we shall cancel the only tax on food at present—the S.E.T. But, by these gyrations, the Prime Minister has done serious damage to his own negotiating position. He may think that it is funny, but I think that it is rather important. The European politicians are not fools. They can read polls and by-elections. They know, to put it no higher, that there is a very good chance that if the Prime Minister starts the negotiations it will be my right hon. Friend who concludes them.
The Prime Minister has said that he will be the tough man who stands up for terms for Britain but that my right hon. Friend will chuck them all away; he will make no conditions; he will accept them in any case.
§ The Prime Minister
I know how rattled the Tories are by what they have admitted at Selsdon Park. The right hon. Gentleman has just said seriously in the House of Commons certain phrases and words which he attributes to me. Will he now quote them from my speech? I have not said that, and the right hon. Gentleman knows it.
§ Mr. Maudling
The words on which I rest my argument are that we will accept the entry fee in any case.
What will the European Governments do if they believe the Prime Minister? They will not negotiate with him, good heavens no. They will do nothing until after the Election to see whether they have an easy chance, if they believe the Prime Minister, with my right hon. Friend. Fortunately, European Governments do not take the Prime Minister seriously. If the Prime Minister wants to be taken seriously in these matters he had better desist from these weekend excursions into the mythical basis of his own policy.
The Foreign Secretary has done his best to sort things out this afternoon. He did not get involved in this kind of electioneering argument, save for his brief reference to our agricultural policy. But the Prime Minister is the head of the Government. When he has ceased laughing and giggling and comes to make his speech tomorrow, perhaps he will extricate himself from the deplorable situation in which he is now placed.
§ 5.12 p.m.
§ Mr. Douglas Jay (Battersea, North)
I am particularly glad to follow the right hon. Member for Barnet (Mr. Maudling), because it was an admirable speech of his in this House in February 1959 that converted me to the views which I have held ever since on this topic, and which have been proved right by events. But if the right hon. Gentleman's argument now is that it is quite impossible to calculate the consequences of entering the E.E.C., would it not be better to withdraw the application until we know what the consequences would be?
On the other hand, I cannot support the right hon. Gentleman's attack on my right hon. Friend the Prime Minister. I welcome the fact that today the Prime 1023 Minister is ready, as he was not a year ago, to take no for an answer in this controversy.
It seems crucially important that the House and the country should realise the full significance of the main facts in the White Paper. Several vital conclusions follow from it which have not clearly been grasped. The middle figure given in the White Paper for the prospective extra load on the U.K. balance of payments, if we were to join the E.E.C. in its present form and with its present policies, is £600 million a year. Having said in this House on 2nd November. 1967, that the lowest reasonable estimate would be £600 million a year, I must, in all fairness, congratulate the Government today on having caught up with my estimate, even though two and a half years late. This is, at any rate, some progress. Let us, therefore, now make further progress.
The probability is that the true figure today would be nearer the Government's higher limit, for two reasons. First, the new and far-reaching decisions made by the Six Ministers at The Hague in December; and, secondly, the prospect of world food prices—here I differ from the right hon. Gentleman—being lower in the years ahead as a result of the transformation of the world rice and wheat situation in the last few years.
First, let us grasp the simple reason why, whatever the figures may be, joining the E.E.C. with its present policies must be permanently damaging to a trading nation like the United Kingdom. If any country at any time, which imports 20 per cent. of its gross national product, decides to buy its main imports from parts of the world which produce them less cheaply and efficiently, forces up the cost of its exporting industries, and throws away free entry rights in large export markets, its population must be worse off indefinitely thereafter in real terms, whatever the figures may be. It is no surprise that the figures turn out to show what they must show.
Even so, the evidence is unfortunately overwhelming that the true balance of payments burden must be nearer to the Government's higher figure of £1,100 million a year. I accept the reasonable estimate in the White Paper—I know that 1024 we cannot get exact accuracy—and, indeed, by the C.B.I., on the probable rise in food prices and the cost of living. Incidentally, the two are similar. However, according to the C.B.I., if we also had to accept the value-added tax, the total rise in the cost of living would be nearer 6 per cent. than the 4 or 5 per cent. in the White Paper.
The distinguished French expert, M. Pisani, who was commissioned by M. Monnet's United Europe Committee last year, taking a lower estimate of the food price gap than the one in the White Paper, and writing before the December decisions, estimated the total extra burden which would fall on Britain from higher food import prices and payments to the Brussels Fund at between £500 million and £600 million a year. With a wider food price gap, and after the December decisions, which would force us to pay Customs duty and purchase tax or V.A.T. revenue in addition to the levy revenue to the Brussels Fund, this part of the burden on us cannot possibly be lower than about £600 milllion in 1970 values. The White Paper's middle figure is about £500 million, though the Foreign Secretary did not tell us this afternoon that that is on the Government's assumption that food consumption and the standard of living in this country would be forced down by the higher prices.
What is a genuinely realistic estimate of the loss of exports that we should suffer as a result of higher labour costs following the higher cost of living? The White Paper coyly gives no separate figure; and the C.B.I. adopts the simple device of pronouncing this loss of exports to be unquantifiable, and therefore assuming that it does not exist. But the C.B.I., in another paragraph and rather more candidly, admits that a steep rise in food prices might have an even sharper effect in pushing up labour costs than just the rise in the cost of living. Most recent studies of the problem, without my going deeply into the details, suggest that a 5 or 6 per cent. rise in labour costs on our total exports to the world outside the E.E.C., now of about £6,000 million a year, would mean a loss of exports which could hardly be less than £250 million a year. Indeed, if we judge by the response of British exports to devaluation, it would be a good deal higher.
1025 How great in turn would be the loss of exports to the present preference area throughout the world and to the E.F.T.A. non-candidate countries? Here, again, the White Paper gives no separate figure. But the C.B.I. makes a striking and valuable calculation, which has not been widely noticed, that the loss of exports in the preference area, not counting part of E.F.T.A., would be about equal to the gain in exports in the E.E.C.
§ Mr. Robert Sheldon (Ashton-under-Lyne)
When talking about the loss of exports from the preference area, would my right hon. Friend also consider Table 11, which shows that exports to the Common Market declined from 38 per cent. to 23 per cent. over the ten-year period?
§ Mr. Jay
I am coming to that point, although I think it irrelevent, and I shall take a shorter time without questions. I am trying to follow the estimate of the C.B.I. of what would happen to exports. At present, 50 or 60 per cent. of British exports have free entry into the preference area and 100 per cent. into the E.F.T.A. countries; and to those two groups together we now export £2,000 million a year. I do not see how the total cancellation of free entry and preference rights on exports worth £2,000 million a year could possibly leave us with a loss of less than £200 million. It would probably be much more.
This, indeed, is implied in the C.B.I. calculation that the loss in the preference area would about correspond with the gain in the E.E.C. If that is so, taking very moderate figures, the total loss of exports outside the E.E.C. must be at least £450 million a year—much exceeding the gain within the E.E.C. But since, in trade with the E.E.C. itself, as a result of entry, the rise in our imports is bound to exceed the rise in our exports, because of the rise in labour costs which we should suffer, it follows that the total net burden on the U.K. balance of payments must be about £1,000 million a year in 1970 values, and this without allowing for the drain on capital account, which here the White Paper frankly admits would be "sizeable".
Even at £1,000 million a year, which I personally regard as an under-estimate—[Interruption.] I regard it as an underestimate: the right hon. Gentleman can make his own assessment. But even at 1026 that figure, it would be five times the balance of payments cost of our forces east of Suez which we have so often been told we cannot afford—very often by the same people who want us to assume this burden instead.
Even at £600 million, the middle figure in the White Paper, it would be three times as great as the cost of our Forces east of Suez. I have seldom heard the argument used about our Forces overseas or, indeed, about overseas aid, that they represent only a quarter of one per cent. of our gross national product and that therefore they do not matter very much, and we can afford them easily. The E.E.C. cost on the balance of payment: is of course just as much a burden as the cost of overseas aid or defence or debt repayment. The only difference is that it is about five times as great.
Nor is it really taking this problem seriously—the right hon. Member for Barnet came near this today—to say that there is some mysterious "cost of staying out" to be measured against the real burden. The burden, whether of £1,000 million or of £600 million, can lust as justly be described as the advantage to Britain of staying out as of the cost of going in, because what it does is measure the difference between the situation of the United Kingdom if we do join this group and our situation if we do not.
§ Mr. Arthur Woodburn (Clackmannan and East Stirlingshire)
My right hon. Friend is mentioning a figure of £1,000 million, which is to cross the financial frontier. How will this get across the financial frontier unless the Community buys the goods from us?
§ Mr. Jay
The answer is that I am afraid that they will not, that this will involve us in a deficit and therefore in all the experiences of the last 25 years. There are some who try to escape this conclusion by suggesting that, somehow, if we stay out of the E.E.C., the free entry rights which we now enjoy in E.F.T.A. and Commonwealth countries will be withdrawn. There is not the slightest evidence that this will happen. None of the E.F.T.A countries and none of the Commonwealth countries who really matter to us as markets have shown the slightest sign of withdrawing them. Indeed, most of the E.F.T.A. countries—my right hon. Friend the Chancellor of 1027 the Duchy knows this, because he has been to E.F.T.A. Council meetings, as I have—would prefer to strengthen E.F.T.A. rather than to break it up, as the Government now intend to do.
Nor is there any substance to the argument advanced by my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) that, because the percentage spread of our exports has changed in the post war years, that change is necessarily likely to continue. That change—a higher percentage from countries like Japan and Russia and so on—has largely been due to the end of restrictions on non-sterling imports in the 1950s and the abolition of the United Kingdom quotas on manufactured imports in 1958 and 1959, and has probably now worked itself out.
It is also said, as the right hon. Gentleman seemed to say today—this rather surprised me—that the gap between world food prices and E.E.C. food prices will narrow in any case. Just the reverse is probable, in my opinion. The green revolution of the last few years makes it far more likely that world food prices outside the E.E.C. closed shop will fall relative to other prices in the world. Second, the whole record of the E.E.C. shows that internal food prices repeatedly rise and hardly ever go down. That is why, incidentally,—again contrary to what the Foreign Secretary said today—real wages in this country are still higher than they are in any country of the Six, with the possible exception of Germany.
The E.E.C. experience with food prices in the last few weeks shows that every effort to secure a cut in even one foodstuff has again been deadlocked, and the whole political force of agricultural protection is formidably arrayed against it. No step whatsoever has yet been taken towards adopting the famour Mansholt Plan. Let us not forget that the largest political parties in France, Germany and Italy are still largely based on agricultural votes.
It would, therefore be wholly imprudent to expect anything other than a permanent extra burden, as I say, of about £1,000 million a year, rising of course, thereafter, year by year, in proportion to our trade and national income. But that means for this country not merely the political weakness involved in 1028 becoming again a borrower and a debtor, which, Heaven knows, we should have learned by now, but also freezes and squeezes, slow growth and stagnation.
We all know that it is the chronic balance of payments deficit of the last 20 years which has imposed slow growth on this country. We all know that Governments have, from 1947 to 1961 to 1966, imposed credit squeezes and deflations, not because they liked them, but because they were compelled to correct a payments deficit.
By far the greatest piece of nonsense so far in the whole of this controversy has been the attempt to argue that the Rome Treaty contains some magic secret of economic growth hitherto unknown to science; and that, if we joined the E.E.C., we should somehow contract this virus. This is either a piece of ignorance or a naive deception of the public, for the following reasons. First, when the Treaty of Rome was signed, the six countries did not have to suffer the adoption of agricultural protection because they were already suffering from it, whereas we should; so the effects on them were entirely different from what the effects would be on us.
Second, the economic growth of the Six was greater in the years before the Treaty was signed than it has been since. From 1955 to 1960, the average rate of increase of the G.N.P. of the Six was 5.3 per cent. Between 1960 and 1968, after the signing of the Treaty, it has been 4.8 per cent. Thirdly, between 1960 and 1968—that is, since the signing of the Treaty—while the growth rate of the Six was 4.8 per cent., the growth rate of the O.E.C.D. countries other than the Six was 5.1 per cent.
The truth, as the record makes perfectly clear, is that the Treaty of Rome has had little or nothing to do with growth rates one way or the other, but that the United Kingdom has suffered an exceptionally low growth rate because of exceptional balance of payment deficits. By quoting growth rates one could prove that we should join any country, from Japan to Venezuela; or from China to Peru, to be less up to date.
The serious practical moral of this story is that Britain must avoid future payments deficits if we are to break out 1029 of slow growth. On all the evidence, our joining the Community would certainly involve us in a heavy chronic deficit.
Both the C.B.I. Report and the White Paper, however, establish inescapably another conclusion which has apparently been realised by few, but which I wish to emphasise particularly to the House. This is that on the E.E.C.'s present policies, joining the Community would, in the long-term, narrow, and not widen, the total world market open to British industry—[Interruption.] We would gain exports in the E.E.C. but lose exports in the preference area and in a large part of E.F.T.A., and in addition lose them everywhere as a result of higher labour costs here.
On this point the C.B.I. makes a valuable calculation and finds that the loss in exports in the preference area would probably just about cancel out the gain in the E.E.C.—this without counting in the loss in E.F.T.A. or the loss throughout the world due to higher labour costs. Thus, on all the evidence—I would have thought that this was obvious, anyway—a substantial and lasting net long-term loss in terms of exports would follow.
In addition, however—this is not often realised, either—competitive manufactured imports into the United Kingdom would rise substantially, obviously from the E.E.C. but also from the rest of the world, because of our higher costs. Total sales of British industry therefore, as any serious analysis must show, would be substantially lower as a result of entry than they otherwise would have been. The White Paper comes to exactly the same conclusion in a valuable table on page 28, which purports to show the result of all the changes in non-food trade, and finds that it would be a minus, between £125 million and £275 million.
I believe that the true figure would be nearly £500 million. But the important point to note is that both the White Paper and the C.B.I. agree that the figure would be a substantial minus, which means not merely that the visible trade balance would worsen permanently, in addition to the agricultural burden, as a result of entry; but that total sales of British industry would be lower as a result of a net fall in exports and an increase in manufactured imports.
§ Mr. Henig
Is my right hon. Friend aware that the table to which he referred, which is table 12 in the White Paper, appears to refer only to price elasticity for exports and imports. The C.B.I. Report, on the other hand, to which my right hon. Friend has made some very partial references, also refers to incomes elasticity for imports and exports. Has my right hon. Friend taken into account income elasticity and the accumulative positive effects of that compared with the static calculations which he has been putting forward?
§ Mr. Jay
The White Paper does not describe the method by which its conclusions were reached. The important point, however, is that it reaches the same conclusions as the C.B.I. Report, if by different methods. I have taken all these elasticities, so far as they appear to be relevant, into account.
Both the White Paper and the C.B.I. Report reveal that all this propaganda about a wider market is not just a fiction and an illusion but is the reverse of the truth. One cannot say whether the market would be wider or narrower until one has done the sum; and both the White Paper and the C.B.I., having done the sum, say that it would be narrower, even though the authors of the final passages in the White Paper, about a market of 300 millions, do not seem to understand the conclusions of their own statisticians.
We have been constantly told—and this is the crucial point—that the now admitted balance of payments burden would be offset by long-term dynamic advantages of a wider market and economies of scale. But these dynamic long-term advantages are, as I say, not merely a fiction but the reverse of the truth. The total market would be narrower; economies of scale would be lost; and the long-term economic damage would be at least as great as, if not greater than, the immediate balance of payments burden.
In these circumstances, what do the Government think they will negotiate about? When one looks at the facts, it seems that there is remarkably little room left for negotiation. The financial regulations governing payments into the E.E.C. Agricultural Fund were fixed at the December meeting in The Hague. 1031 The French have pronounced them to be "fixed and irreversible", and when I put this to the Prime Minister at Question Time the week before last, he did not deny that that was so. Indeed, no negotiations at all can start until these regulations, which would impose a huge burden on the British budget and on our balance of payments, have been already fully ratified by all the Parliaments of the Six.
The length of the so-called transitional period may perhaps be negotiable, but this is trivial. It matters little to our long-term future whether we assume these crippling burdens over three, five or seven years. The only major issue which, theoretically, is negotiable is the level of food prices. But, as a matter of political reality, we know that this is not substantially negotiable either. As I pointed out, only last week all attempts in the Community to reduce the price of a single commodity again failed.
Cuts of 5 per cent., 10 per cent. or even 12 per cent. would be of no value to us, even if they occurred. For the prices of foods that really matter to us, such as grain, meat, dairy produce and sugar, are 50 per cent. or 100 per cent.—in some cases even more than that—above our levels.
If we negotiate now there is little room for serious argument on any of the real issues which affect Britain's long-term interests. If I am wrong about this, and if the food policies of the Six are going to be quickly and dramatically altered, then the time to enter is after, and not before, they have been.
I have always believed that if only we had the patience and wisdom, the best solution in the end would be some larger and looser association of which both the E.E.C. and E.F.T.A. would be members. That, I believe, would be genuine European unity. I therefore ask hon. Members who have not wholly committed themselves to reflect on the real facts because, after all, the long-term interests of both this country and this House are at stake.
Apart from the economic controversy, we are being asked to sacrifice sovereignty and Parliamentary control in a way that this Parliament has never done before. I could imagine a case being made—as Mr. Harold Macmillan tried to make it in 1962—for surrendering our political free- 1032 dom for the sake of economic gain, though I would not accept it.
I can imagine a case being made for paying an economic price to preserve our political freedom. But we are now being asked to pay a huge and lasting economic price to have the privilege of irrevocably giving away, without consulting the electorate, a large measure of our political freedom. Before we do that, it is surely not too much to ask the advocates of this extraordinary and irrevocable course at least to think again.
§ 5.40 p.m.
§ Mr. Jeremy Thorpe (Devon, North)
I hope that the right hon. Member for Battersea, North (Mr. Jay) will not think me discourteous if I make only three comments on his speech.
§ Mr. Thorpe
If the hon. Gentleman will allow me to make my own speech, both of us might be more satisfied with the result.
The first point is that no one can accuse the right hon. Gentleman of inconsistency. He has been wholly consistent throughout. Indeed, he is taking the view which was held in his own party before 1967 and was held in the Conservative Party before 1961.
Second, I profoundly disagree with the right hon. Gentleman's figures on the cost of £1,000 million. I suspect that it will not be the first time that figures of the right hon. Gentleman will be proved to be in need of amendment.
Third, I take the view that there are very many issues to be negotiated and discussed during the negotiations. That is why the suggestion that because the figures in the White Paper were inconclusive we should withdraw the application is an exercise in illogicality.
There are other points the right hon. Gentleman made which I hope to answer during my speech.
I always welcome a debate on the Common Market, particularly when I remember the coyness of successive Governments in the past in staging them. What I remember as the most interesting occasions were the times when my colleagues and I divided the House and 1033 notably on 25th July, 1960, when the Prime Minister went into the Lobby in support of the Conservative Government. But those days have changed.
I am less enthusiastic about the background against which the debate is staged on two grounds—first, the White Paper, and second, the tactical position which the Prime Minister might be seeking to adopt. The White Paper makes the Delphic Oracle appear decisive. The Economist suggested that it was compiled by civil servants, half of whom were pro-Marketeers and half of whom were anti-Marketeers, and that they then met to find what were the necessary concessions each side needed to make to secure agreement. When a White Paper says that our food import bill might be reduced by £85 million or might be increased by £255 million, and that our overall balance of payments costs could be as much as £100 million or £1,100 million, I would have thought that those who were pro- and those who were anti-Common Market would at least wish to present a convincing case other than on the basis of the White Paper.
When one considers the changes in the Common Market since 1967, and the changes which have occurred between the Six during the past three months, surely one can make the generalisation that unless one is irretrievably prejudiced one way or the other one cannot pass a final judgment until there have been negotiations which have produced the likely terms.
In answer to the point the Prime Minister made to the right hon. Member for Barnet (Mr. Maudling), I have always been opposed to the publication of the White Paper, and have said so in the House. I will say why—[Interruption.]—and I do not need a lesson in democracy from the hon. Member for Penistone (Mr. John Mendelson), who talked out the Bill on moving writs for by-elections. I always believed that the figures would be meaningless. I always believed that unless we could know what the level of food prices would be in the Six, and what the agricultural picture was, the figures would be meaningless. This has been borne out by the White Paper, which the Prime Minister announced at the Labour Party Conference he would introduce, and which 1034 the Leader of the Opposition pressed him time and again to publish.
§ Several Hon. Members rose——
§ Mr. John Mendelson
Would not it be more consistent and more frank to say that the right hon. Gentleman is opposed to the publication of the White Paper because he has always known that the only way in which the country could be persuaded to enter the Common Market would be by party leaders in secret conclave conducting negotiations without anybody being let into the secrets? If there is to be no proper public debate in time, is not the merit of the White Paper that it shows the opening position of at least some members of the Six and points out for the first time some of the real difficulties our negotiators will face?
§ Mr. Thorpe
I hope that the hon. Gentleman will think that he has now made his speech, so that he will not take up further time. There has been no secret conclave or discussion between the three party leaders in the House. The only occasion I remember was at the Guildhall, which I understand was seen by one or two people on television as well.
I am quite clear on the record with regard to the second matter, and at least I have been consistent on the Common Market right from the moment I entered the House 10 years ago. When I welcomed the conversion of Mr. Harold Macmillan and his Government to the Common Market, and their application to join, I said that since that Government had got into power on the basis that they opposed going into the Common Market, as I knew from the campaign in my constituency, they would have to have an election before they could go in. Of course, the people of this country must be consulted. The hon. Gentleman need not be as suspicious as he is.
The White Paper is sufficiently self-critical. Paragraph 10 says:… a comprehensive, reliable and quantified assessment of the economic effects of membership, starting say in the early 1970s and building up during that decade, is quite impracticable.1035 It is equally self-critical in paragraph 34, which says, talking about agricultural prices:… it is possible that the gap between their prices and ours would narrow. It is also possible, although much less likely, that the price gap would widen.The only point the authors have omitted was that it is also possible, but even less likely, that they would remain level. That seems to be the only omission in the White Paper. There are also equally self critical references to the Agricultural Fund, which the right hon. Member for Barnet mentioned.
Therefore, I would say that the only value of the White Paper is as a historical record of the evolution of the Common Market, and in so far as it itemises the imponderables. If there should be a vote against the White Paper, it would be just as easy and just as logical for a pro-Marketeer to vote against it as for an anti-Marketeer. If there is such a vote, it will only cloud the issue still more, for which reason I hope that there will not be a vote.
I thank heaven that the unity of the different kingdoms which now compose the United Kingdom were not preceded by the publication of economic White Papers such as this.
§ Sir Harmar Nicholls
The right hon. Gentleman should be listened to on this matter, because he has been consistent, but would not he admit that he is exaggerating when he calls the White Paper meaningless? Even looking at the White Paper through his eyes, and having regard to the views that we know he holds, is it not a fact that the White Paper clearly said that, whilst the authors cannot give the margin, economically there would be a disadvantage in signing the Treaty of Rome?
§ Mr. Thorpe
I was trying to be fair and not to pray in aid bits and pieces of the White Paper. But my overall impression is precisely the reverse—that there would be an economic advantage to this country by going in. But I am trying to be fair, and do not necessarily think that the White Paper is an adequate basis for a protagonist on one side or the other. That is why we cannot have a fair picture in the House and 1036 therefore a fair picture to put to the electorate, until we have negotiated. That is why I welcome the fact that the Government are negotiating.
I turn to my second reservation about the background to this debate, and that is the Prime Minister's speech at Camden, and his subsequent broadcast in The World This Weekend, both of which I have studied very carefully. On the face of it, the Prime Minister is attacking the Conservative Party for its advocacy of the levy system in agriculture and the value-added tax, although on page 6 of the hand-out we were told:The Conservative position, calculated, considered, carefully thought out, is to pay the entrance fee in any case.I believe that nothing could be more damaging to progress in the negotiations—and I speak as one who wants to see successful negotiations—if it was thought in Europe that one Government in their approach would be radically different from another.
I was constantly asked in Paris before Christmas, "Is there a great fundamental issue between the parties in Britain? Is it going to be an Election issue?" I said that there was certainly controversy within the parties, and that this would manifest itself in the differing views which individual candidates would hold, but that as far as the parties, their leadership, and the likely Ministers who would be taking office, whatever the outcome of the Election, were concerned, I did not think that there was a difference of that nature.
I hope that the Prime Minister will go out of his way to say that that is his interpretation, too, because there would be nothing more debasing at the next Election than if the two major parties decided that they would divide between themselves the exploitable prejudices; if the Tories, espousing the cry of law and order, said, "We shall bash the criminals and demonstrators more than Labour" and if the Labour Party, as the great defenders of the Daily Express readership, said, "We shall be tougher with the Europeans than the Tories". Nothing would make it more likely that neither issue would be settled rationally and in the best interests of this country.—[Interruption.] I think that the hon. Member for Penistone, to whom I shall not give way again, has sufficient respect for the intelligence of the electorate to 1037 want to give them, not only an opportunity of deciding, but a White Paper which is meaningful. If the hon. Gentleman is satisfied with a variation between £100 million and £1,100 million, he is more slipshod in his thinking than I thought.
If there is a suspicion that the Prime Minister is manoeuvring himself into the position—and I hope that he will go out of his way to deny it tomorrow night—that when things go right he will take credit, but if things go wrong he will also take credit by drawing back, he will hold up real progress in the negotiations until after the General Election, and there will be nothing worse than for him to be thought to have cast himself in the role of Mr. Facing-Both-Ways.
Obviously there is a price which is too high to pay. If the figure of £1,000 million referred to by the right hon. Member for Battersea, North is correct, I agree that that would be too high a price. [Interruption.]—The hon. Gentleman ought to remember that some of us have been consistent on this question. He may find that difficult to believe because that has not been the experience of the two Front Benches, but I have been consistent. I have always wanted to apply, and I have always said what sort of transitional period we needed for agriculture, what sort of transitional period we needed for or adopting external tariffs, and what price we could pay. On 9th May, 1967 I said at col. 1327 that because we were late entrants we had only a 50–50 chance of getting in. That was, in retrospect, unduly pessimistic, but it proves the rapidity with which situations change in Europe, and therefore how unwise it is to base a final decision either on the situation as it is now, or on the White Paper.
I hope we can accept that on the basis of negotiations there is not a dramatic difference between the Tory and Labour Parties. It is rather ironic, because the Tories are getting their own medicine back. They used to say about my right hon. Friends and myself that we would sign without any negotiations. That critcism is as unfair of the Opposition today as was the Opposition's attack on us on the same basis then.
§ Mr. Shinwell
I am listening carefully to the right hon. Gentleman. A few 1038 moments ago he said that there might be too high a price to pay, and I was waiting for him to be specific and give us an illustration of what he meant. What does he mean?
§ Mr. Thorpe
I thought I said that if the figure of £1,000 million quoted by the right hon. Member for Battersea, North proved to be the case, obviously that would be too high a price to pay, and I doubt whether anyone in the House would pay that price.
§ Mr. Thorpe
I do not think that one can conduct these matters like a Dutch auction. It depends on the period of transition for agriculture. It depends on the period in which we fully accept the external tariffs. It depends upon the European Agricultural Fund, and upon a whole host of things. One cannot say that we should wait to see whether it is £600 million, £500 million, or £400 million. One cannot consider the future of a country on the basis of a Dutch, or even E.F.T.A., auction.
I want to refer briefly to the problem of food prices, and to two omissions in the White Paper, which the White Paper admits. They are the advantages to British industry, which can be calculated, and the political importance of Europe, which I do not think we should overlook.
With regard to food, there is no doubt in my mind that one industry which would benefit from membership of the Community, and which would see as expansion and an improvement in its income, is British agriculture. I was thought a lunatic in 1955 when I fought an agricultral constituency on the basis that we should apply to join the Common Market on the basis that it was in the interests of agriculture to do so. Indeed, a substantial uplift in the general level of agricultural support in this country is long overdue, and if there was a proper Price Review next month this, at the stroke of a pen, would reduce our prospective liability for levies, so there is another imponderable.
I think that the trend will be that Europe will have to lower her level of agricultural prices, and that whether we are in or out we shall have to increase the level of farm prices in this country. 1039 There is no question of that. But suppose the suggested increase for retail index for food within the E.E.C. is right, and that prices will go up by between 18 per cent. and 26 per cent. Do hon. Members know what the comparable increase in the retail price of food was between May, 1950, and 1969 here? It was 45 per cent., without the advantage of a large industrial market, and without the advantage of a flourishing farming community whose incomes have lagged behind.
I do not even accept that the proportion of wholesale margins will be the same even if costs go up, but what surely is important—and this is the point made by the Foreign Secretary with which I agree—is not the cost of living, but the standard of living. It was once said that no one minds paying more for rice or for bread than an Indian peasant, provided that he has a larger income out of which to spend. The people of every country in Europe, barring Italy, have a higher standard of living than we have, and if our gross national product improves, how much greater will be the possibility of getting a minimum wage in this country, and of getting adequate social security benefits for those who would have to cope with the increased cost of living?
I do not believe that the price of food is one of the great fears about going into Europe, but this will be determined partly by our growth in the industrial sphere. If Mr. Kingsley Lewis and Mr. Wise are right, it will need less than a 1 per cent. increase a year in g.n.p. to offset the most likely cost of going in, and I want to suggest three short examples to the House to indicate the calculated benefits to this country.
If one considers the aircraft industry, one realises that to produce economies of size it is necessary to co-operate with other countries. Concorde would have cost Britain 600 million to £700 million if we had gone it alone, but, because two Governments, four companies, and two production lines were involved, admittedly the cost increased to £800 million, our share was 50 per cent.
Suppose that there had been a European company comparable to Boeing, with possibly Sud and B.A.C. making a major contribution. The estimates are that the overhead research and co- 1040 operation would probably amount to about £700 million, of which Britain would have borne between £250 and £350 million. These are the economies in size which are possible. By 1980 the market for the European civilian aircraft will be about £10,000 million. At the moment we are unlikely to get more than one-third of that market because we simply do not have large enough production units. The rest will go to America. But if we had a strong European base I am informed that it is possible that we could provide up to two-thirds of that market and break into the American market as well, with a possible gain of between £3,000 and £5,000 million.
§ Mr. Thorpe
I concede that point. We have done so in the case of Concorde. What I am saying is that if we are within an economic community so that as a community we can attract investment and co-operation and there is the possibility of economic planning on a community scale, this sort of production line and initiative is far more likely to happen. This has been Europe's experience.
When everyone continues being individually nationalist, we go on duplicating. Perhaps the right hon. Member for Battersea, North will consider what is happening with nuclear reactors. Britain, France, Germany and Italy are to spend, or have spent, £600 million on three to four sodium fast breeder reactor prototypes. Three of them triplicate. Five years ago, if we had had one policy, we could have saved £300 million and we could probably have had a second type gas fast breeder which would have given us a second line of technology. If there had been common purchasing and development of computers we could save £170 million by 1975.
I believe that if we go into Europe we shall achieve growth which will more than compensate for the initial teething troubles. We can well take the increase in the cost of food in our stride. It will be of the order of increases in the cost 1041 of food which we have sustained under this Government.
But there are political reasons for joining the Community. It was announced today that the finance Ministers of the Six have been discussing the possibility of economic and financial harmony and of a common European reserve currency, and, indeed, a common European currency, by 1980. I should like Britain to participate in such discussions. I should like the appalling strain taken off sterling and to see this country stop trying to maintain the sort of virility symbol of having our own reserve currency. These are the sort of political developments in which we can be strong.
However, I am not ashamed of saying that I want to see a united Europe which disunited has plunged the world into war twice this century. I want to see the political genius of this country coalesce with the industry and perseverance of Germany, with the civilised traditions of France, with the tolerance of the Low Countries and with the artistic genius of Italy. This can be done. But nothing can be decided on the basis of this White Paper. It has been decided that we will negotiate and that we shall get the best terms possible for this country. I accept that the matter should be put to the electorate of this country. That is absolutely right.
I hope that, whatever party is in power —and I trust that this is the Prime Minister's view—the Government will be successful in the negotiations. Our membership has been long-delayed owing to the short-sightedness, the myopia, of post-war Tory and Labour Governments. Fortunately, I think, those days have gone. Not only are we part of Europe and have a contribution to make, but it is in the interest of Europe and of the world that we should succeed in joining the Community.
§ 6.5 p.m.
§ Mr. Michael Foot (Ebbw Vale)
I will come at the end of my remarks to the comments on the political prospects of our entry into Europe with which the right hon. Member for Devon, North (Mr. Thorpe) concluding his speech. I wish to begin by referring to the figures and estimates in the White Paper.
1042 There seems to be an agreement of some sort between my right hon. Friend the Foreign Secretary and the right hon. Member for Barnet (Mr. Maudling), who spoke for the official Opposition, and the Leader of the Liberal Party, however much he may disown any consensus on these matters. It would have helped and would have greatly clarified our debate if all three of them, instead of speaking to a Motion to take note of the White Paper, had spoken to a Motion refusing to take note of the White Paper. That would have summarised the situation more succinctly.
The right hon. Member for Devon, North began by saying that he would not spend a great deal of time on answering the speech of my right hon. Friend the Member for Battersea, North (Mr. Jay). We can all agree with him about that. The right hon. Gentleman certainly did not answer one of the most formidable speeches I have heard delivered in the House. We have heard reference to figures of £1,000 million, £900 million and £800 million. Although the right hon. Gentleman was willing to say that £1,000 million would be too high a price to pay, he was not prepared to say how low a figure he was willing to see this country pay.
By the end of the right hon. Gentleman's speech the matter had been reduced to what he called initial teething troubles. A figure of £500 or £600 million permanently on the balance of payments cannot be dismissed as "initial teething troubles". In view of our experience in the past, I should have thought that no one in the House or in the country would treat so lightly the possibility of such a permanent fresh burden on our balance of payments.
If Sisyphus, having succeeded in pushing the boulder up to the top of the mountain, had kicked it to the bottom again, he would have been considered distinctly careless. That would be our position if, after all the mighty exertions, in overcoming our balance of payments difficulties as I hope we have done, we were then eagerly to undertake this huge extra burden on our balance of payments.
§ Mr. Foot
The White Paper describes it. My right hon. Friend the Member for Battersea, North has underlined it.
The unanimity with which the longterm sponsors and backers of British entry into the Common Market have dismissed the White Paper is indicative of their feelings. They seem to resent the presentation to the House and country of these "wicked" statistics in the White Paper which somehow, apparently, crept into the White Paper when Sir Con O'Neill's back was turned. Is it said that all the energy displayed in producing these figures should be dismissed, and that we should take no account of them at all? The right hon. Member for Barnet went so far as to say that it is shocking that the Government did not come forward with a simple statement to the effect that we would go ahead with our negotiations for entry without considering any figures at all.
It reminds me of nothing so much as the story told by Stendahl of Madamoiselle de Sommery, who was caught in flagrante, as they say, by one of her lovers. When she tried to persuade him or her innocence, he was unconvinced, and she turned on him and said, "That proves that you do not love me. You prefer to accept the evidence of your own eyes rather than what I tell you". That is the position of those who want to get us into the Community at all costs. They say that we must believe what they say, but that we must not examine the figures.
One of the reasons—not the only reason, but one of the reasons—why there has been a change of opinion in the country is that the figures which were given before by my right hon. Friend the Member for Battersea, North have penetrated. Previously, we had to make do with the cautious and conservative estimate by my right hon. Friend. Now he is able to marvel at his moderation, like Robert Clive, when he sees what is produced by the Government themselves and I dare to prophesy that just as the House must now admit that the figures which my right hon. Friend presented to the House two years ago have been vindicated, so it should listen very carefully to the estimates he makes now.
But all of us must agree—and I certainly agree—with the right hon. Member for Devon, North that the case cannot 1044 rest solely on the figures. I agree that the major case of those who wish to get us into the Common Market is a political case and I would be the last to suggest that that case is not a serious one which has to be argued seriously.
The case has its attractions. The main argument presented by the right hon. Gentleman in the latter part of his speech and presented by the advocates of our entry—is that we must participate in the great decisions that will be made in Europe in the next 5, 10, 15 or 20 years —great decisions affecting our economy and Europe's economy; great decisions affecting the production of defence equipment or defence matters; great decisions affecting democracy and, perhaps, war and peace.
The argument, therefore, is that Britain must be there in the institutions which are to make those decisions. That is the great case presented for British entry. The question which many of us who have criticised entry all along, and have received even flimsier answers officially than we have had with the production of the White Paper is, "Who will make these great decisions? Where will they be made?" Where are the great decisions about war and peace, and all the economic questions which the right hon. Gentleman referred to about how we are to achieve these great advantages of size, to be made?
If we ask those in favour of Britain going into the Community we receive a whole series of different answers. We receive two different answers at the least, or on the most charitable estimate, from both Front Benches. We get one from the Foreign Secretary, who appears to be more of a supranationalist than the Prime Minister, although that is not saying much—and a different answer from right hon. Members opposite and different answers from the Liberal Party.
Some advocates of entry are Federalists and I respect them more than the others, because at least they say what they mean. If one is to have any form of democratic Europe, that is, an executive body responsible to a Parliament, then it must be a Federal Parliament. The right hon. Gentleman the Member for Devon, North nods, and there he puts himself immediately out of court with the most prominent and vocal member of his party on this subject, Lord Gladwyn, who constantly tells us that we must distinguish 1045 between a Federal and a supranational system. Therefore, we have exposed differences on the Liberal benches.
I say this seriously. Which institutions and what sort of institutions will make these great decisions about Europe's future and the world's future? We have no clear answer. If I am told that the decisions are to be made on the recommendations of the Commission to the Council of Ministers, where a binding majority may decide them, I say that is not satisfactory from a democratic point of view. I am not prepared to accept that at all, particularly when I see how it works now in Europe. Certainly, nobody will persuade me that that is the way on which decisions about war and peace should be decided. Therefore, I believe that we should have a White Paper, whatever people may think of this document——
§ Mr. Foot
—as my right hon. Friend the Member for Easington (Mr. Shinwell) says, on the political question—describing exactly to us which will be the institutions which are to decide these great matters so that the people may be able to judge whether those decisions will be made democratically or not.
§ Mr. Thorpe
May we not take it that if such a White Paper is to be produced on the political future it will not find favour with the hon. Gentleman because he is not in favour of entering the Community on any terms?
§ Mr. Foot
I quite understand that. I am not in favour of going in precisely for those reasons. I have been as consistent as the right hon. Gentleman the Member for Devon, North in the matter. I am against entry precisely because I do not believe that it is either the intention or the possibility that truly democratic institutions can be worked out in Europe to make these great decisions.
The reason I partly reached that judgment is because I pay respect to what is said by members of the right hon. Gentleman's party, even though the Liberal Party has deserted the cause of cheap food and free trade and even though the right hon. Gentleman is now becoming the most fervent advocate of severe protectionism. He was advocating dearer 1046 food in the House today, and what Richard Cobden would have to say about that heaven only knows. Even so, I have great respect for what the right hon. Gentleman and members of his party, including Lord Gladwyn, in another place, say about these matters, because they have studied them very carefully.
What Lord Gladwyn says, in effect, is, "We know that democratic institutions will not be in being for some time yet and that there will be a transitional period with different arrangements." In other words, all these great decisions during the transitional period which will affect our future will be made during a period when the institutions in Europe will not be democratic institutions and in which our people will not be able to exert the influence which they ought to.
§ Mr. Heffer
Would my hon. Friend develop this argument? Why is it possible for us to have a democratic system in Britain but for the European people collectively not to have a democratic system? Are we exceptional people? Is democracy different in Europe?
§ Mr. Foot
I must not take up too much time now with that point, although I agree it is important. That is why I am pleading for the fullest possible discussion about what those institutions will be, because in my opinion—and my hon. Friend the Member for Liverpool, Walton may disagree—the Brussels Commission is not a democratic institution but a bureaucratic institution. It is devised for that purpose and makes reports to a Council of Ministers and is not responsible to a Parliament as a Federal Government would be.
Therefore, I think that these issues, affecting our own Parliament and how it is to be effective in the future, are certainly as important as the economic questions. We should certainly have from the Government their view on the whole question of how they want these institutions to develop and how soon they believe that democratic decisions there will be possible. These are matters on which we should not surrender our parliamentary and democratic rights unless these matters are made much clearer than they are now.
It is a classic argument in many respects —the argument about whether we should 1047 go into the Community—and I am not dismissing the argument on the other side of the House. I am trying to treat it seriously. It is as classic an argument as that between Alexander Hamilton and Thomas Jefferson had in the early history of the United States, when there was a clash between those who wanted to build a larger organisation and those who feared that the building of a larger organisation could undermine and destroy democratic rights.
That is what I fear. I especially fear it at a time when, in this country, for example, and quite rightly, people are wishing to participate more in decisions made about their affairs, when they wish to have access to the levers of power. They therefore do not wish to see those levers removed further away from them. I believe that, if we go into the E.E.C., we shall seriously interfere with the democratic and parliamentary rights that we have in this country.
It would be particularly objectionable and absurd, almost politically obscene, to use the word which Mr. Aneurin Bevan sometimes used in these circumstances, if the people were to be called upon to surrender part of their democratic and parliamentary rights in the vaguest possible way at a time when, at a General Election, they were not able to bring influence upon such a decision. It would be an obscenity.
And how is that to be done when the leaders of all three parties have genuinely and honestly reached the conclusion that Britain should enter the Community if she can? I think that the only way in which we can solve the matter is for hon. Members individually to make their position clear to the electorate; and I intend to make mine absolutely clear at the next election.
The decision will obviously not be taken before the General Election, but after it. The people are sophisticated and they know that perfectly well. Every candidate at the election must be called upon to explain his attitude with the utmost clarity, and I intend to do so whatever may be the position of my leaders on the subject. Of course, I have the satisfaction that I shall know that I am voicing the views of the Labour Party conference, which has always come much nearer to my view of the matter than the views of 1048 my right hon. Friends who want to go helter-skelter into the Community.
I ask the Government seriously to consider this democratic question and to produce a White Paper which will describe exactly what are the political institutions which would make all these great decisions. If we do not get that matter clear, we shall have to resort to other methods to discover what is going on. Perhaps the best way would be to send my right hon. Friend the Member for Belper (Mr. George Brown) on one of his mystery tours. May be that would be the way to discover what is really happening. But the Government should produce such a White Paper, and in good time for us to be able to debate it here and to have it widely debated in the country. Certainly, let them take note, if they will not take the obvious note of this White Paper, of the intention of what I believe will be the majority of Labour candidates at the next election—that they are not prepared to go into the Common Market on anything like the terms which seem available.
We should all declare our views clearly and openly at the election, despite the agreement between the two Front Benches. Incidentally, that agreement seems to have frayed a little during the last few weeks or days. I do not know how they will try to patch it up. Perhaps they will think that they can allow it to fray before the election and patch it up afterwards. But that will not do, either. It would be a trick on the people. Let them understand that a large number of candidates at the election will be presenting the general case put by my hon. Friend the Member for Battersea, North, so that people will be able to vote for or against candidates who have declared themselves openly on this question. I believe that. by that method, we will again be able to have a proper vote in this House—a better vote than we had with a six-line Whip before—to try to decide this matter.
If there is any simple guarantee of a course that is likely to lead the country to disaster, it is one that is conclusively agreed by the two Front Benches. Some of us are determined to break that consensus. It will be done. The issue will be a major issue at the election, and let the Government take note of that even if they will not take note of the White Paper.
§ 6.25 p.m.
§ Mr. Duncan Sandys (Streatham)
Like others who have spoken, I, too, can claim to have been consistent over the years on this issue. I agree with the hon. Member for Ebbw Vale (Mr. Michael Foot) that it is most unlikely that the negotiations could reach their final stage before the General Election and that all the candidates will have to declare clearly where they stand. I have made my position quite clear at every election and I shall, of course, do so again.
I welcome the Foreign Secretary's unequivocal reaffirmation of the Government's desire successfully to negotiate Britain's entry into the Common Market. I hope that his remarks will do something to dispel some of the anxieties caused by the Prime Minister's speech over the week-end. As my right hon. Friend the Member for Barnet (Mr. Maudling) said, the case for joining the Common Market has not altered since we made our first application eight years ago. In many respects, it has been strengthened by the experience of subsequent events. But, as everyone knows —and it is well for those who are advocating entry to recognise it—there is much public anxiety about the effects it may have on the family budget and in particular on food prices.
As the Foreign Secretary explained, the cost of food represents only a part of the cost of living; and the cost of living is only one half of the calculations which determine living standards, the other half being the level of wages which, on average, are considerably higher on the Continent. Alarmist figures have been quoted about the effects on our balance of payments but, as the White Paper—which has perhaps created more confusion than light on the issue—says, there is as yet no firm basis for any calculation on this point.
Moreover, in considering the adverse effect on our balance of payments, we should also weigh the benefits which we may expect in the monetary sector, to which the right hon. Member for Devon, North (Mr. Thorpe) referred. After the devaluation of the French franc and the revaluation of the German mark, the Six decided to strengthen their system of mutual support in times of monetary crisis, which, in certain circumstances, could be a great help to us. Their ultimate objective is to create a common 1050 European currency; and it is worth mentioning that many experts on the Continent believe that, if Britain became a member of the Community, this new European currency might well be based on sterling.
Since the Common Market was formed, the living standards of its people have risen much more rapidly than the living standards in Britain. Our gross national product per head has increased about 60 per cent. compared with a rise of about 100 per cent. in the Community. A decade ago, Britain's productivity per head was, with the exception of Luxembourg, higher than that of any of the members of the Community. Now we have dropped to fifth place. There is no reason to suppose that this trend will not continue. Those who say that we cannot afford the cost of going in must consider the cost of staying out.
The point is often made that we are successfully expanding our trade with Europe without being a member of the Community. That is quite true. But, as the Foreign Secretary said today, we are not increasing our trade with the Six nearly as fast as the Six are increasing their trade with one another. If we do not join the Common Market, we shall, naturally, not collapse. As my right hon. Friend the Member for Barnet (Mr. Maudling) said, it will not be a disaster. But we shall find it more and more difficult to compete on level terms with the much larger concentrations of industrial and financial power which are growing up around us.
The wealth of the United States is eight times greater than that of Britain and is expanding much faster. American companies have already bought up a number of important British industries, and others will follow. The Russians will before long be major exporters of advanced products of all kinds. They are already beginning with aircraft and electronics. A new giant is now arising across the Channel. Whether we go in or not, the European Community will forge ahead and will become one of the economic powers of the world. We are being invited to be a leading partner in this great enterprise. Assuming that the conditions are reasonable, it would be an historic act of folly to refuse.
It has been said this afternoon that joining the Common Market means giving 1051 up our independence. It means giving up our growing economic isolation. A European partnership—and here I refer to the speech by the hon. Member for Ebbw Vale—naturally involves taking joint decisions. As in all partnerships, it involves a certain amount of give and take. One cannot expect the benefits without the obligations and the discipline.
Happily, we hear much less now about imaginary alternatives, like the North Atlantic Free Trade Area. The only alternative to going into Europe is not to go in. We have to make up our minds one way or the other. This is not an issue on which we can play a game of wait and see.
We are warned that joining the Common Market would be an irrevocable step, but to withdraw our application would be equally irrevocable, since the opportunity, once rejected, is unlikely to occur again. Let us make no mistake about it, a decision to stay out is every bit as momentous and fateful as a decision to go in.
The hon. Member for Ebbw Vale spoke about the issue of political union. That is not the subject of this debate, but we are right to consider it in the context of entering the Common Market. The White Paper is concerned exclusively with the economic aspects of this question but I agree with the hon. Member for Ebbw Vale, although taking a different view about it, that we should not lose sight of the equally important political potentialities of European unity.
At present, the course of world events is largely determined by the attitude of the two super powers, the United States of America and Russia, to which before long China will be added. Since the dissolution of the British Empire, Britain is no longer a world Power of the first order; and in consequence we no longer have much say in great international decisions. We have to adjust ourselves to this new situation. We could take the line that the days of Britain's greatness are over, that it was a good show while it lasted, but that the time has come to retire gracefully, to opt out of the responsibilities of world leadership, and make way for younger and more vigorous nations.
1052 But that is not the mood of the British people. They believe that Britain can and should continue to play a significant part in world affairs. Since Britain can no longer, on her own, claim a seat at the top table, the only way to regain effective influence is to join with our European neighbours and together create a new group of world stature, which can speak on level terms with the United States and Russia.
We are told that if we go into the Common Market we shall be committed in due course to join a political federation, that the British Parliament will be abolished and that we shall lose our Queen. That is, of course, a lot of nonsense. The European Economic Community, as its name implies, is confined to the sphere of economic affairs. Any decision to create a political association in whatever form would require the positive approval of all and Britain could not be incorporated in it without her consent.
§ Mr. Raphael Tuck
I am grateful to the right hon. Gentleman for his courtesy in giving way. Is he aware that Dr. Luns and Herr Strauss have both stated publicly that unless Great Britain gives a firm commitment to join a Federal Europe they are not interested in our application?
§ Mr. Sandys
I was not referring to what those two distinguished gentlemen have said. The fact is that none of the governments or parliaments of the Six has given any undertaking about their readiness or otherwise to establish political institutions; and I believe it is inconceivable that in the negotiations which are to take place they would ask us to undertake commitments which they themselves have not accepted. Political union will not be brought about through some clever constitutional formula. It must be the genuine expression of a European consciousness, which is not as yet fully developed, based upon common material interests and common moral values. Political unity cannot be created. It must grow. It will be a gradual process and will have to be approached by successive stages: first, consultation, then co-operation, and, finally, integration.
§ Mr. Sandys
I do not think so. The hon. Gentleman has already made quite a long speech.
It is impossible to predict whether the final stage of integration will eventually be reached and if so in what form. But there should be no hesitation in taking the first step which consists in establishing the practice of regular and genuine consultation on current international issues. If, as I believe it will, the process of consultation results in the gradual development of a common European approach to world problems, then we may wish to consider some more formal arrangements for co-ordinating our foreign policies. But we certainly have not yet reached that point and when the time comes we shall be entirely free to decide whether or not we should take this further step. As I have said, membership of the European Economic Community does not carry with it any obligation, contractural or moral, to create political institutions.
One cannot, of course, divorce foreign affairs from defence. European unity is equally essential from the standpoint of military security. As everyone can see, there is growing pressure in the United States to reduce commitments overseas. President Nixon has declared his intention to "Vietnamise" the defence of South Vietnam. The next step will be to try to "Europeanise" the defence of Europe. I am sure that the United States recognise that, for some time to come, it will be essential to maintain a substantial American military presence on this side of the Atlantic. But it is clear that they intend soon to begin to reduce their forces in Germany.
The nations of Western Europe must, therefore, face the fact that they will have to assume a progressively larger share of responsibility for their own defence. If we are to do this efficiently and economically, we and our European partners in N.A.T.O. will have to work much more closely together. This applies not only to strategic policy but also to the organisation of our forces and, above all, to arms procurement. With a common weapons policy and an integrated system of research, development and production, much of the equipment now being bought 1054 in America could be produced here in Europe and very large sums saved.
But we are not yet asked to decide whether or not——
§ Mr. John Mendelson rose——
§ Mr. Sandys
The hon. Member is just a nuisance.
Returning to the Common Market, we are not yet asked to decide whether or not we should join, leaving aside the issues of political union and union in the sphere of defence. It is only after negotiations have taken place that we shall be able to judge whether the terms offered us are fair and acceptable. I associate myself with the Leader of the Liberal Party and my right hon. Friend the Member for Barnet in saying that there is, of course, a limit to the price, which we can pay——
§ Mr. Sandys
Of course there is. But, since all the Six, including France, now genuinely want Britain as a partner in the Community, there is no reason to suppose that they will insist on conditions which will make this impossible——
§ Mr. Sandys
But even when the outcome of the negotiations is known, there will inevitably remain an appreciable element of uncertainty. As the White Paper explains, we cannot assess in advance how our manufacturers will react to the stimulus of competition and the possibilities of expansion in a larger market. When the Economic Community was formed, each of the Six was faced with this same uncertainty. They all had the courage to take the risk. None has regretted it. By joining together, all have benefited. All are better off.
Why should we fare less well than they? Are the British people less capable, less inventive, less enterprising or less industrious than the peoples of 1055 France, Germany, Italy and Benelux? Are we afraid that we shall not be able to hold our own with them in free and fair competition? Do we doubt the ability of British industry to respond with vigour and initiative to the new and exciting opportunities which a wider European horizon will open up? Success cannot be guaranteed. It is a matter of confidence. In the end, it will turn on the simple question: have we or have we not faith in ourselves?
§ 6.45 p.m.
§ Mr. Michael Barnes (Brentford and Chiswick)
I welcome the White Paper because it was obviously right that an estimate should be prepared from the point of view both of the people of this country and of our entering these negotiations. We should be poor bargainers if we did not make as clear a statement as possible to the Six, at the time that they are preparing their negotiating position, on the problems which we will have to face. But I believe that we must go further than just saying, "If the costs are reasonable, we will go in, and if they are not, we will stay out". This is the too simple message which has got across at the moment to people of this country.
This might be all right if it made no difference whether we went in or stayed out. Indeed, the New Statesman the other week had a leading article which ended with this conclusion:If we work harder we will get richer and, by and large, it does not make much difference whether we do this inside the Common Market or outside.If that is right, it is, of course, also all right to say, "If the costs are reasonable, and we will go in, and if they are not, we will stay out". But if the New Statesman is wrong in its conclusion, and if this is a very big decision, if it is, as some have said, the biggest decision which this country will take this century, I believe that the costs must immediately assume a position of subsidiary importance.
The opponents of our entry are making a great deal of the cost. My right hon. Friend the Member for Battersea, North (Mr. Jay) said confidently that the costs would be at the upper end of the bracket given by the Government in the White Paper, or even beyond. But even though 1056 the opponents say that, I think that, in reality they, too, take the view that costs are a subsidiary issue. Even if the costs were only at the bottom end of the bracket, £100 million on the balance of payments, I still do not believe that my right hon. Friend and many other opponents of going in would want to go in, because they do not want to go into the kind of Europe which they think an enlarged Common Market would be. They see it as essentially an inward-looking Europe, as a "rich man's club" —these are the phrases which are used —as a Europe stuck in obsolete, cold-war attitudes.
Similarly, those of us who favour going in would accept considerable costs, I believe, for the kind of Europe which we think that an enlarged Common Market could become. We see it as a Europe, as many hon. Members, including the right hon. Member for Streatham (Mr. Sandys) have said, which could be independent both of the United States and of Russia, a Europe which gets away from old, cold war attitudes in the way that Herr Brandt in West Germany is getting away from outdated attitudes in his approach to Eastern Europe.
We think that it could be also a Europe secure in its growing prosperity, offering us more prosperity than if we stayed out, and yet at the same time outward-looking towards the developing world—[An HON. MEMBER: "Hardly."] It is worth noting that some Common Market members have a better record towards the developing world than we have. It could also be a Europe which is big enough and powerful enough to support its own space programme and hold its own in any area of competing interest between the big Powers in future. This is surely what the debate should be about. It should be about which of these two views of what an enlarged Common Market could be is the correct one.
Even if the view which I hope is the right one, it could still be that the costs for Britain are too high, but presumably we would not have come as far as we have done if we did not believe that the Europe we are applying to join could be very important for Britain in future and could be capable of realising the sort of future that I have described.
If we believe this, I urge the Government to balance these estimates of the 1057 costs with an unequivocable statement —a more positive statement than we have had recently—of our belief that, if the costs are reasonable, we see the best future for Britain in an enlarged Common Market.
I do not think that such an attitude is incompatible with adopting a tough negotiating position. Indeed, it should be part of it. There is at present a widespread desire in Europe to see Britain go into the Common Market. There is also some speculation as to what kind of a member we might be when we got in. If it is thought that Britain will examine every issue from the standpoint of immediate short-term national self-interest, we could lose a lot of good will in the negotiations which we need to make the price a reasonable one; a lot of this good will could disappear.
The reason for this is that Europe can only go forward. It cannot stand still. If Europe is to develop, it must go forward to greater economic co-operation. It must go forward to a measure of political and monetary union. It can do this only if the member countries have a firm belief in what an enlarged Europe could become and if they want to play a part in it.
The second reason why I think that the Government should make a positive statement about their belief is that they have a responsibility for the way that the British public regard policies which the Government have already embarked upon. There is no doubt—I would not pretend otherwise—that support in Britain for our entering the Common Market has considerably eroded since the second rebuff we received in recent years and because of all the uncertainty that there has been during the last two years. It has eroded particularly because there has not been a sufficiently positive lead.
If what is to happen is that the Common Market issue is to become a sort of General Election football, and if still no positive lead is given, this support will go on eroding, and it could present the Government after the election with an embarrassing credibility gap which could do considerable harm to our negotiating position, which would be perhaps in a very delicate stage at that time.
1058 I therefore hope that the Common Market will not become a "phoney" controversy between the two major parties at the next election. It will be a matter of controversy—and so it should be. It should be an issue. I want the Common Market to be an issue at the next election, and I am sure it will be. As my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said, there will be candidates of all parties all over the country taking different attitudes about it. It will be a big issue, with people asking many questions and wanting the right answers.
But if hon. Members who voted in May, 1967, that we should apply to join the Common Market and try to get into it are now, or at the next General Election, just going to answer all these questions in terms of the costs, they will be doing a disservice to the policies which have brought us so far. I repeat that if we did not believe that our approach to Europe was right, we should not have got so far. We cannot stand aside now from the implications of our previous policy decisions. We may still be kept out by the costs, but, if we are still serious about our application, that Government should leave the British people in no doubt as to why we believe that a reasonable cost is worth paying.
I therefore urge the Government to balance the kind of estimates of costs which are given in the White Paper by deliberately trying to start up again in the country the sort of debate which the right hon. Member for Barnet (Mr. Maudling) said had not been taking place during the last two years, during this period of uncertainty. I urge the Government to start up again in the country the debate about whether at this point in our history we should or should not seek a new role in an enlarged European Community.
§ 6.55 p.m.
§ Sir Derek Walker-Smith (Hertfordshire, East)
This is a Motion to take note, surely a strangely modest form of words in the context. After all, this is a paper presented by the Prime Minister. Whatever his predilection for devaluing the currency, he has not the reputation of someone who undervalues his own contribution. The House is not invited to 1059 approve the White Paper, not even to give a word of welcome to it.
It may be a poor thing, but, after all, it is not like Dr. Johnson's roast mutton —as bad as bad can be. It is a poor thing, but, nevertheless, the Prime Minister's own. Therefore, may 1, however inadequately, try to make up just a little for this unnatural neglect of the child of his begetting, so unexpected in a gentleman of the Prime Minister's open and generous character, by adding at any rate a qualified welcome of my own.
My welcome is not warm, but it is sincere. I do not welcome the White Paper for its content, which is skimpy and imprecise, nor for its professional quality, which has invited wholesale criticism. But I give it a welcome for two reasons: first, because it has managed to appear at all; and, secondly, because, through all the glosses and evasions, the real message comes through clear and unmistakable that, whereas the benefits are speculative and abstract, the detriments are solid and certain.
I must not give any impression of exaggerated enthusiasm for the White Paper, because I am bound in all honesty to say that if this is the best the Government can do to evaluate this great issue it is a poor best.
Let me take a topical example. It so happens that simultaneously with having to make this great decision the Government have to make another decision— on the subject of the third London airport. Both decisions involve the same techniques, the compilation of cost-benefit analyses, and the striking of a balance amid varied and complex factors.
But the two decisions are not of the same scale of magnitude. The third London airport, important as it is, is not in the same class as this great and historic decision about the Common Market, fraught as it is with grave and irrevocable consequences for the British people.
Let us compare, then, the amount of documentation and research which the Government think necessary, on the one hand to inform the mind of the Roskill Commission which is considering the site of London's third airport, the lesser matter, and, on the other, to inform the mind of Parliament and the people on this great matter.
1060 I have made the comparison, not by words—that would be too great a task—but both by weight and price. The documentation for the Roskill Commission weighs about 35 lbs. The four White Papers on the Common Market weigh 4¾ ozs. The charge at the Stationery Office for the documentation for the Commission is £52 10s. The charge for the documentation on the Common Market is 10s. 3d. It is a ratio of 100–1, but in favour of the lesser issue.
Comparisons are notoriously odious, and this is one of which the Chancellor of the Duchy of Lancaster should be ashamed. He and his colleagues should be ashamed of the whole conduct of this application since its initiation—of their lack of research in depth, of their lack of evaluation, of their lack of communication. The whole constitutes a sad lapse from the standards we should expect in the relations between Government and Parliament and Government and people. The Government deserve, in my view, the censure which the White Paper has attracted, and they cannot be surprised that their motivation has been called in question.
But still, at least and at last, we have the White Paper. I am not sure whether more credit is due to the pressures of Parliament or of the Labour Party conference. Certain it is that at all stages information has had to be wrung out of Ministers on this matter. Their conduct resembles the sorry sequence sometimes seen in the witness box—evasive reluctance followed by embarrassing candour. Now, at any rate, the cat is out of the bag, and as far as I can see, it is probably among the pigeons, too.
The document which was to prove the Government's case has boomeranged. I am reminded of the case in which the judge said to the prisoner, "Before I heard your learned counsel speaking in your favour I was minded to put you on probation, but now I have no alternative but to send you to prison." Everything that the Government say weakens their case. The White Paper fully confirms what I said on the initiation of the application, when I used these words:… the economic advantages tend to be speculative and contingent, the economic disadvantages are certain and inescapable."—[OFFICIAL REPORT, 10th May, 1967; Vol. 746, c. 1613.]1061 My right hon. Friend the Member for Streatham (Mr. Sandys) spoke of consistency. I have never taken the view that consistency is invariably a political virtue, because circumstances may change. Still less do I wish on this or any other matter to savour the melancholy satisfaction of "I told you so". But the factual content of the White Paper fully confirms the assessments which we made in the debate in 1967.
The Foreign Secretary referred to paragraph 101 of the White Paper and its range of possible adverse effect extending from £100 million to £1,100 million. The first point the House should note is that it is now universally admitted that the so-called impact effects, the only measurable effects, will be adverse, and the only question now is: how much will they be adverse? The second point to note is that the adverse effect will be much greater than was anticipated in 1967.
The House must, therefore, try to see whether the cost of each of these four items is likely to be in the higher or the lower ranges set out in the White Paper. The White Paper, speaking of the cost of food imports and the payment into the fund, the first two items, says, in paragraph 44, that the net cost is now likely to be greater than the 1967 estimate of £175 million to £250 million. I will say it is. The figures and assumptions in Table 8 make this crystal clear.
There is only one way in which the heavy additional cost of food imports can be avoided, and that is by a combination of the maximum production response in British agriculture with what the White Paper delicately calls a large change in consumption which, in plain English, means that the people eat less. The Government are on the horns of this dilemma: either they contemplate high import costs, or a fall in living standards because of diminished consumption, neither of which is a very good election winner when they write their manifesto.
I am of a charitable disposition, as the House knows, and I assume that the Government do not want to see a reduction in food consumption. I take, therefore, from the White Paper the smaller change in consumption with the middle production response, which gives us, as we see from the tables, a cost of £175 1062 million for item I alone. In other words, the figure for item I alone is the same as one quoted in the table for both items 1 and 2, food imports and the levy, in the 1967 estimate.
What, then, is the position of the levy today? The White Paper put our payment into the fund at £150 million to £670 million annually. To think of £150 million is, of course, wholly unrealistic. It would depend on our having to pay only the lowest possible estimate of the levy and nothing at all for the other matters—the Customs duties or the 1 per cent. of the V.A.T. The upper limit is not necessarily unrealistic. The £670 million is the estimate of the payment under the three heads without any adjustment for a percentage share agreement, which, of course, does not exist for us at present.
It is said in the White Paper that this is a matter for negotiation. Of course it is—the main matter, perhaps the sole matter for negotiation, but it will not change things very much. After all, the Six with infinite trouble and difficulty, have worked out their own percentages. They are not likely to alter them very much in these negotiations. Indeed we have ringing in our ears M. Schumann's ominous reminder that Article 237 of the Treaty does not contain any reference to negotiation. Surely it would be very unwise to assume that the Six, having reached this agreement with such difficulty, will now temper the wind to the British lamb.
What do the Government think about this figure? What will they do if they cannot get the figure at least into the lower range specified in the White Paper? What is the breaking point in the Government's calculation? What is the maximum that they are prepared to pay into the fund? These are questions to which the House and the people are entitled to know the answers.
Paragraph 76 of the White Paper gives the third item, the visible trade, at £125 million to £275 million. As that figure represents both the loss of preferences over a wide area and the handicap to our exports because of increased prices over a worldwide area, it follows that it is far more likely to be the higher figure, if, indeed, it is not even more than that.
1063 It is curious that the way to this much-vaunted promised land, this supranational Eldorado, should lie through increased prices, export losses and balance of payments difficulties.
The White Paper tries to gloss over these unpalatable facts and blunt the sharp point of truth. Paragraph 54 tells us that the Index of Retail Prices will rise by 4 to 5 per cent. Then, apparently for our comfort, a little footnote at the bottom of page 26 coyly observes that the index has risen by 34 per cent. between January, 1962, and December, 1969. What comfort is there in that? The comfort, I suppose, (that having already been flogged so hard why make a fuss about another dozen or so lashes? Have the Government never heard of the camel's back?—and this is no straw. It would need a back of preternatural strength and hardihood, grievously laden as it already is, to bear these additional burdens.
The fourth item is capital losses. I am not qualified to quantify this matter, but perhaps I need not apologise for that, because, on reading the White Paper, I see that the Government experts are not qualified either. But one thing we know is that it will be adverse and substantial. Taking all these items together, no doubt it is true that we cannot have a precise total of the actual items, but we can see quite clearly that they will be nearer the top of the range, and may well even exceed it. This much surely is certain, the figure will be large and it will be adverse.
The question we must ask is whether, in the balance of payments race, in which we are pressed so hard and for which we have already sacrificed so much, we can afford voluntarily to weight our saddles with this gigantic handicap. And all for what? For the so-called dynamic effects. Do these matters stand up to analysis? All that we would get in return for these losses is the removal of the Community's tariff barrier, a barrier which is already diminished by the Kennedy Round. All the rest is speculation and surmise.
Paragraph 53 of the White Paper speaks of the stimulus of competition, but Professor Kaldor has just reminded us that it can work both ways. More com- 1064 petition might mean less trade if prices go up, as they will. The very next paragraph of the White Paper, paragraph 54, admits that the rise in prices due to entry would adversely affect our competitive position. This, then, is the splendid new weapon in our economic armoury. The one slight drawback is that it may well be pointed at ourselves.
The prospect of a larger market is the other great will-o'-the-wisp. Of course, it is a larger market if one looks only at the addition of a duty-free Community area, but it is not a larger market if one subtracts the still larger preferential areas. Yet these and these alone are the claimed advantages—remote, hypothetical, unproven, speculative and suspect—for which we are asked not only to incur certain losses, but to make substantial sacrifices of our sovereignty and our law, of our tradition and our friends.
Paragraph 105 of the White Paper calls in aid as a decisive factor the political advantages. It has to call for some additional reinforcements, having regard to the weakness of the economic arguments. But what are these political advantages? What is meant by the current term "European unity" which is now in vogue—imprecise, ambiguous and undefined as it is? Does it mean, or include, the initial steps to federation, because this is what it may mean in the Community? There is a widespread feeling in the Six that British entry must involve acceptance of political unity, not only in the sense of supranational institutions, but of a commitment to membership of a federation.
Do the Government share this view? This is what the people want to know. So far, the Government have taken an ambivalent posture, speaking with two voices. Abroad, they suggest possible participation at home, they allay apprehensions. But the people are entitled to clarity and candour on this great matter, and so are the member nations of the Six when they entertain our application.
This is not a debate on the political implications, so I shall end by saying this. We want co-operation with Western Europe, but we now have, and can have, co-operation without the rigidities of the Treaty of Rome and without going into the framework of political federation. I 1065 urge no negative or insular position. I never have. [An HON. MEMBER: "Oh."] The hon. Gentleman does his intelligence less than justice. It is an entirely false syllogism to say that, because somebody does not want to see us imprisoned in an inward-looking, limited Community, therefore he is taking an insular view. I repudiate now, and always have, the charge of insularity on this matter. If that charge were to be made, it belongs more to those who advocate limiting our position.
The message I suggest the Government take to the Six is that Britain wants the maximum co-operation with them economically and politically, but as a free and independent nation or together with the other members of E.F.T.A. The cooperation that we seek cannot be achieved within the rigidities of an unrevised Treaty of Rome. That is a framework that does not fit Britain. It does not fit her historic role, her present position or indeed her future potential. Britain has a part to play on a wider stage, with a contribution to make in a wider role—things which cannot be put in pledge.
The Government should take that message to the Six, not as petitioners or penitents in the outer courtyards of the Community, but as friends and equals, heirs to a great tradition and representatives of a great people.
§ 7.15 p.m.
§ Mr. Robert Sheldon (Ashton-under-Lyne)
The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) used economic arguments against going into the Common Market, whereas it became clear from his speech, from the speeches of my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) and my hon. Friend the Member for Battersea, North (Mr. Jay), that their main argument against was political—[HON. MEMBERS: "No."] I shall be referring to this matter and I submit that they were mainly political. My arguments are mainly economic. Because I am interested in the economic arguments, I see certain fallacies in arguments advanced on this basis, particularly in those of my right hon. Friend the Member for Battersea, North, with which I disagree.
My hon. Friend the Member for Ebbw Vale made his usual splendid speech, but I disagreed with almost all of it. He spoke of the "most formidable" speech 1066 of my right hon. Friend the Member for Battersea, North, one of whose main arguments was that by going into the Common Market our markets would be narrower. He referred to what we would be giving up and mentioned the relinquishing of the advantages of the preference area.
I will give my hon. Friend some important news. The preference area and the advantages we gain from it have largely been dissipated over the years. If one looks at the situation it becomes crystal-clear. The figures quoted in Table 11 show that in 1958 38 per cent. of our exports went to the Commonwealth whereas in 1968, 10 years later, the figure had fallen to 23 per cent. By using a different basis, I could have pointed to far greater differences than those. I could have shown that in the 'fifties as a whole the figure was nearly 45 per cent. and that last year it had fallen even further to below 22 per cent. There has been a disastrous decline in exports to the Commonwealth. This fundamentally caused the great imbalance of trade experienced by this country in the 'sixties and later.
§ Mr. Jay
The fallacies into which my hon. Friend falls are two. First, he assumes that what happened in previous years will necessarily go on happening in the future, which is quite unsound. Secondly, he looks only at the period from the 'fifties to the 'sixties. If he chooses to look at the whole period from the beginning of the war, he will find a great swing in favour of the Commonwealth. During wartime there were of course restrictions, but since then there has been a swing in favour. Therefore, the figures he has quoted are no evidence whatever as to what is likely to happen in future.
§ Mr. Sheldon
If my right hon. Friend has to cite the peculiar circumstances of the war, then he is on very weak ground indeed. If one takes the inter-war years to get the matter in perspective—I did not want to get involved in the statistical argument, but my right hon. Friend forces me to do so—from 1920 to 1938, inclusive, one sees that over 40 per cent. of our exports went to Commonwealth countries. The figure has been declining year by year. The figure in 1961 was proportionately less than that in 1960, in 1962 it was less than that in 1961, and in 1963 it was less than that in 1962. This drove me to a decision that we should 1067 withdraw east of Suez. That was the whole basis of my argument.
As we were obtaining less and less benefit from the Commonwealth, the cost of defending it was rising increasingly and catastrophically. The argument was on the basis of benefits against expenses, and it became clear that they were going in opposite directions. If my right hon. Friend fails to see how this was happening year by year, he has failed to understand one of the most important effects on the country's economy in the post-war years.
My right hon. Friend has to look at more than statistics, though they amply bear out my argument. He has to look at the reasoning behind it. The reasoning is that we obtained from the Commonwealth far more benefits than we gave in return. We used to argue about the advantages to the Commonwealth of a stable country like Britain buying its raw materials, but the benefits largely accrued to us.
§ Mr. R. H. Turton (Thirsk and Malton)
One changing factor is that certain countries included amongst the Commonwealth countries in the first set of figures are included amongst the rest of the world in the second set. One of them is South Africa.
§ Mr. Sheldon
I am sure that the right hon. Member will do me the courtesy of assuming that I recognised that. All the figures that I have given have been on the same basis, and they bear out my argument.
In this changing situation, Britain's role had to change. It became clear that we were no longer a leader of world trade on the basis of the Commonwealth. We had to look at other sources of trade if we wished to continue to enjoy the high standard of living that we had had for so long. It became clear that, although the Common Market countries might be one such area of trade, there might be others which we should consider. My right hon. Friend referred to the possibility of some absurd arrangement with Japan or Venezuela, but if we are to join with any bloc, there is no other realistic one available to us than the E.E.C. That is what we must understand and accept.
1068 Our trade changed fundamentally when our links with the Commonwealth weakened, and it suffered as a consequence. We used to say that if Commonwealth countries sent us their raw materials, we could produce any of the goods that they required. Our economy and those of the Commonwealth countries were largely complementary. That state of affairs came to an end when the Commonwealth countries became independent. We had no control over their tariffs or trade arrangements. They started producing goods for their own demands and began questioning why the arrangement which had been so profitable for us should continue.
An important feature of this trade was the way in which it distorted our industries in the late nineteenth century and earlier of this one. We supplied a vast range of goods to the Commonwealth. One has only to look at an old G.E.C. catalogue to see pages and pages giving details of hundreds of different lamps designed for use in Borneo, Singapore, Kenya, Uganda, and so on. We produced a whole range of articles which those countries could have bought from any specialist manufacturer. They bought them from us, because we had control of the trading arrangements.
The situation came to an end when they could buy the goods that they wanted from specialists and could pick and choose. So we had to change the pattern of our trade from one where we wanted a complementary trade to one where we needed to become specialists. The Common Market countries are moving towards a system where they will obtain advantages from specialisation. The great danger to our position was that we were not specialists.
This is the whole point of the I.R.C. It is no use our making hundreds of thousands of different products when there are people who can specialise. We have to find a framework of industry which can specialise in such products as jet engines, computers and nuclear energy, leaving other countries to specialise in different products. We do not need the range of manufacture which is available to us today. We need to become supremely good in certain aspects of manufacturing, which is what my right hon. Friend the Prime Minister means by "restructuring" industry. That is what 1069 it is all about. It is no use our producing vast ranges of goods for tied Commonwealth countries which do not exist any more. If we are to maintain the high standard of living that we have enjoyed for so long, we have to find ourselves a new role in the industrial world.
Like other hon. Members, however, I am not happy about the looseness of the £100 million to £1,100 million, though not because it does not help my argument. What is bad about these figures is not only that they are meaningless but that they are not the kind of approach which Governments normally take to these matters. In the Financial Statement presented each year by my right hon. Friend the Chancellor of the Exchequer, he comes up with a figure which is estimated to £1 million. But everyone knows that he cannot predict with anything like the spurious accuracy involved in these matters. He makes the best estimate that he can of various kinds of operation, adds them together, and comes up with a figure. It may be hundreds of millions out, but that is the way in which the calculation is done.
When people look at the £100 million to £1,100 million, they assume that it is arrived at on the basis of a great many uncertainties. When Chancellors give us their figures, there is no great accuracy there, either. Accuracy is not possible in these matters. We are all human beings subject to many flaws.
§ Mr. Shinwell
I have great regard and affection for my hon. Friend, but since he has destroyed the White Paper and its estimates, and since he has destroyed my right hon. Friend the Member for Battersea, North (Mr. Jay), why does he not produce a White Paper on his own?
§ Mr. Sheldon
I have no objection to doing that, but it would require certain assistance which only Government Departments can produce, and I do not have one at my disposal.
Once negotiations are completed and a decision is taken, the forecast should be capable of greater accuracy. But it does no service to the cause of those who want the Government to be more open to attack the estimate in the White Paper so viciously. I disagree with the estimate, but I would not attack the Government so strongly for it.
1070 I can see an argument for not including the estimate. It could be argued that, if we gave a precise figure, we might enable the Common Market negotiators to toughen their attitude. I would not accept that too readily. I understand that the Common Market countries will have a sophisticated team inquiring into these matters, and there is not a great deal which can be produced in an estimate in Whitehall which cannot be equally well produced by the Common Market countries. It may turn out that we have frightened public opinion unncessarily by giving the impression that the range of figures is wider and the uncertainty greater, while gaining no advantage from keeping it secret from the Common Market negotiators. In other words, we may have fallen between two stools.
My argument about the balance of payments is that we are conducting this debate in the shadow of balance of payments crises. There has never been a period in Britain when we have been so much inundated with thought and discussion about balance of payments situations. But there will come a time—I say this with certainty because all countries must get to this eventually, and it has probably come now—when the balance of payments argument will be less important than in the past, and people will accept more readily changing exchange rates, extending transitionary periods, and so on.
The condition that we should be arguing when we discuss these matters with the Common Market countries is not exclusively the cash label to be attached to entry. There are wider issues involved which can be discussed in the context of changing exchange rates which are adjusted automatically. If some of the institutions in the Common Market need to be altered to accommodate these matters, then altered they will have to be—[HON. MEMBERS: "Oh".] The situation in France and in Germany shows it and the situation in future will equally have to show it.
My most important reason for wanting to join the Common Market, despite many disadvantages which I can foresee, is the kind of approach that we undertook with the Industrial Reorganisation Corporation. We need an international restructuring of industry. This will happen whether we say it or not. The only 1071 difference is that if we say that we are interested we may be able to control it.
When international companies conduct their operations themselves and nations are not in unity on these matters the control of them will not be by the Governments concerned. We must understand that when these international companies start offering to build large plants in certain countries we will get countries bidding for them in competition as we have seen in certain instances.
We must note that industrialisation is becoming increasingly political. Pure industrial competition is a thing of the past. We must not assume that we will for ever be able to sell jet engines, computers and nuclear power stations to all the countries in the world. For political reasons, many of those countries—the Six as well as the United States and elsewhere —will start wanting to build certain things, reserving to themselves the manufacture of certain things that we would like to sell to them.
It is no argument to say that the Kennedy Round is reducing tariff barriers. Once specialisation gets under way—it is under way now and is bound to continue whether we like it or not—these countries will insist that they have certain industries. We have found this in the United States where we are unable to sell, not because of tariff barriers, but because of political decisions by the United States Government. If we want to control our industrialisation and the companies that operate internationally so that we get our fair share of the industrialisation that is going on we must join a block which can so control them.
§ Mr. Sheldon
They are obviously in their infancy—[Interruption.] What institutions have we in this country—[Interruption.]
§ Mr. Sheldon
There is nothing at present time, but there is no hint of any control by this country alone. How can we control I.B.M.? How can we control these vast international organisations which may become of extreme import- 1072 ance to us? Our only chance is by cooperating with other Governments to make sure that these industries do not play off one country against another.
We have heard many people speaking on various aspects. I have noticed that some of these starry-eyed dreams have gone. So perhaps now is the best time to make realistic approaches. Because of that, I am prepared to take note of the White Paper.
§ 7.35 p.m.
§ Sir Harmar Nicholls (Peterborough)
The hon. Member for Ashton-under-Lyne (Mr. Sheldon) was enthusiastic and vigorous, but not very convincing. He has caused me to put on one side the speech I was to make. This is a debating Chamber. If important points are raised, then I think that we should forget our preconceived ideas and overnight preparations and get down to debate. The hon. Member for Ashton-under-Lyne was wrong when he said that we would be better off if eventually we got certain conditions and joined Europe.
I am against signing the Treaty of Rome. I am against becoming the Seventh. I think that in the short and the long term it would be disastrous for this country.
The first test that I put is the test of the businessman. The proportions of our exports at the moment are something like this. To the Commonwealth countries and the preferential areas, roughly 30 to 31 per cent.; to E.F.T.A., roughly 18 to 19 per cent.; to the rest of the world, not including the Six, because we are a maritime Power and are in a position to service it, our percentage of exports is brought up to roughly 80 per cent. I have never known a businessman worth his salt who was prepared to put 80 per cent. of established business at risk in the hope that he might improve on 20 per cent. It just is not on. The margin is too great. If it was 60 to 40 per cent., with the trends about which the hon. Member for Ashton-under-Lyne has spoken, there may have been some argument for thinking in terms of looking to future trends and changing.
But why have we got some of those trends? The hon. Gentleman said that the percentage of business that we had with the preference countries had fallen from about 42 per cent. to 23 or 24 per 1073 cent. I do not think that his percentages are right. But I know that in instances where the percentage of the proportions may have fallen, the actual amount exported in value and quantity has gone up.
Australia is a good example. When Australia did not need because of size the imports and the business that it now gets, our percentage, although it was higher, meant that the amount we sent in in terms of value was less. The percentage now may be lower, but the amount of our exports to Australia is very much higher.
I will give one of the big reasons for the falling away of the trend over the last seven or eight years. It is because since 1961 the whole of our propaganda from both Front Benches and the whole of our efforts have been to tell these people that we intend to leave them and to join the Common Market. We have told them that they may as well look after themselves and think differently. We have said that we are prepared to join the Common Market countries, despite the fact that only 20 per cent. of our business was done with them.
What have the Commonwealth countries done? They have said, "If it is your decision to join the Common Market and we must lose our preferences and our traditional trade is to be altered, we must set about looking after ourselves ". We have virtually whipped them into moving their business from us to Japan, America and around the world. Therefore, if we are to talk about the reasons for the falling off in the trend we must take that into account.
If one-tenth of the effort that has been put into trying to propaganda this country into the Common Market had been put into building up an alternative with trade with the Commonwealth, E.F.T.A. and the rest of the world, the downward trend about which the hon. Member for Ashton-under-Lyne spoke would not be there.
I will instance another practical reason why, on the economic side, it would be to our grave disadvantage to join the Six. I hope that the Chancellor of the Duchy of Lancaster, who has to do the negotiating, will bear this in mind. Even if there is some merit in signing the Treaty of Rome and joining the Six, geography 1074 is against us. As a small businessman perhaps I may give this piece of advice. If a man is going to join any market in the hope of doing extra business in it, he should take my advice and put his warehouses in the middle of the market that he wants to exploit, not on the perimeter. It so happens, unfortunately for those who want to join this new Common Market with its 300 million potential customers, that we are not only on the perimeter, but there is also a great big ditch between us. It is also a fact——
§ Sir Harmar Nicholls
The hon. Gentleman has pinched my punch line. Next to the wage costs are transport costs. One must pay for the transport of raw materials to one's works, carry out manufacture, then transport back again to one's customer's market. Therefore, when we join, we will have the keen competition of the industrialists in Germany, Italy and France who are newly equipped with all the advantages of losing the last war, but who are also in the middle of the Market.
If, in addition to these disadvantages, we have the extra disadvantage of transport costs on top of our prices, far from joining this bigger market and our getting the bigger share, the likelihood is that they will get a bigger share of our market. I am worried that the supporters of entry seem to take it for granted that all we have to do is have a douche of this cold water which invigorates them to get more of their business. The chances are that once we have lost our established market, as we assuredly would if we signed the Treaty of Rome under anything like the terms which I can see anyone obtaining, it would mean that our market, because we were a small section of the whole, would be more likely to go to them.
§ Mr. Henig
I am following the hon. Gentleman's argument carefully. He seems to be saying that the country at the perimeter of a bloc will find it increasingly difficult to trade with the others. Would it not follow logically that, in future, we would find it even more difficult to trade with far-flung Commonwealth countries which are developing their own industries, and is it not the logic of this argument that we will eventually be totally ruined?
§ Sir Harmar Nicholls
That shows what a "townie" that hon. Gentleman is. The reason that we can command a world market which European countries cannot is that we are a maritime power. The whole of our tradition and past business has given us those markets which they would like to take away and share.
I have had some experience of the businessman's mind. I am a great believer in free enterprise and the businessman. I applaud profits, which cannot be made unless one produces something which people want at a price they want to pay. If people do not want it, or if the price is so high that they do not want to pay it, one will go bankrupt. The measure of one's profit is the measure of the satisfaction which one gives.
I believe that the extra costs of transport, and of wages, flowing from the extra food costs, would make us noncompetitive and that, remaining on the perimeter, we should lose our market. Our industrialists are great and able men. It is just possible that entry would be better for the individual companies concerned but disastrous for the country. They would not continue with the disadvantage of being on the perimeter with all these extra transport costs. Our alert businessmen would extend their factories in the middle of the market and instead of their being European subsidiaries they would become the main ones. They may keep their head offices here and pay some tax here, but we would be denuded as an industrial country.
Precisely the same thing would happen to this country as happened to Scotland or Ulster because they are on the perimeter. That is why, when the Foreign Secretary asks what will happen to us 10 years from now, my answer is that, if we join, certainly 25 years from now we would cease to be a leading industrial power. British firms may well be prosperous, with good balance-sheets, but the nation, no longer being their base, would suffer.
The first concern of the British Parliament must be the interests of the United Kingdom, and there is nothing insular in that. If we cease to be a significant Power, if we become poor instead of wealthy, the influence which we can have on the world will be that much smaller.
§ Mrs. Ann Kerr (Rochester and Chatham)
Would the hon. Gentleman not agree that, were our efforts to enter the Common Market to be a move towards a real world system of government, that would be good, but were our menial efforts to obtain entry to be as feeble as I understand them to be——
§ Sir Harmar Nicholls
I do not think that world government is mentioned in the White Paper, although it covers a wide prospect.
§ Mrs. Winifred Ewing (Hamilton)
Since the hon. Member referred to the perimeter and to Scotland, his argument is all the stronger in relation to Scotland, which is on the perimeter of the perimeter. Is he aware of the recent report by the Scottish Council, "Oceanspan", which shows that, provided that Scotland works out its own destiny, it is right in the middle of world trading routes, with deep water on either side, and very well placed for competitive trade?
§ Sir Harmar Nicholls
The best of luck to Scotland! I hope that what the hon. Lady envisages works out for Scotland.
The economic problems mentioned in the White Paper I have tried to underline from the viewpoint of merely running a business. The suggestion that the political influence outweighs all this does not hold water. There is no suggestion that, if we do not join the Common Market, we will cut ourselves off from Europe. We have proved that we can have our consortia and can pool our brains. We have proved that all the co-operation and bigger research units can be brought about without signing the Treaty of Rome. If we are a significant wealthy country, if we retain our present position, I am certain that nothing on the political side in Europe will prevent our being taken into account as we have been in the past. We can still make our voices 1077 heard. We have always proved that we are a good ally, and I am certain that the Six and Europe will not cut us off because we do not sign the Treaty of Rome. Indeed, our own market and the contribution which we can make to the industrial and military strength of Europe means that they will have to take us into account.
Having given very clear indications that the economic consequences would be bad, the White Paper tries to cover up with the general overall statement that all we need to cover this is a 1 per cent. increase in the gross national product. That is special pleading. It does not sound very much, but the White Paper says that the maximum increase in the G.N.P. which we can expect is 3 per cent., so the 1 per cent. would be a 33⅓ per cent. increase on top of what is already down as the maximum. This 1 per cent. increase to balance all the disadvantages is a misleading figure, and I hope that, when we take the next steps in our negotiations, they will be taken into account.
As for the internal politics, so many hon. Members opposite say that it is right to have this great debate, that people should put their points of view and that that is the way to work out real democratic processes. But what does that amount to if the two main parties are committed? What does the individual contribution of Members or citizens matter if whichever side is returned, on matters no doubt unconnected with the Common Market, we still sign the Rome Treaty.
If the two Front Benches are of the same mind on this issue, we must find another way to ensure that the voice of the people comes through. Indeed, we may be forced to have a referendum, a device which I am normally against because it cuts across our party and Parliamentary system by which the Government of the day has responsibility for what happens. However, on this issue if, irrespective of the issues which decide the next election, the two Front Benches are of the same mind, a way must be found for the views of ordinary people to be taken into account.
In this instance Parliament does not represent the voice of the people—[Interruption]—and if 72 per cent. is anything like the right proportion, then we do not have that expression of view in 1078 this House. I wish that we had. If we want to maintain our Parliamentary system, we must overcome this dilemma.
I hope that when the discussions eventually take place—there must be discussions; Parliament has given approval for them to occur—they will be speedy and that, in the process of working out the next White Paper, the Government will find a way to ensure that the voice of the people can be heard, irrespective of the considered views of the two Front Benches.
§ 7.52 p.m.
§ Mr. Edward Milne (Blyth)
My hon. Friend the Member for Ebbw Vale (Mr. Foot) suggested that when we last debated the Common Market there was a six-line Whip on hon. Members. I suggest that it was really a nine-line Whip. The economic assessment which appears in the White Paper is, in some ways, a follow-up to what occurred on that occasion.
This is a useful Motion to be debating, because it enables us to analyse the trends of trade in the Common Market countries, the Commonwealth and throughout the world over the past decade. I do not know how many hon. Members have fully appreciated that during the period analysed in the White Paper we have made two unsuccessful applications to join the E.E.C. Had either been successful, the costs forecast in the economic assessment would now be borne by this country. After all, there is no point in our debating the ranges of figures given in the White Paper if we are not prepared to accept their implications.
My right hon. Friend the Foreign Secretary admitted frankly the implications of Britain's entry in the economic sense. However, he went on to counter them by saying that wages in Britain had increased to an extent that would have considerably offset the cost of entry. While the actual cost is important, the implications of the assessment are greater.
My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) spoke of the decline in Commonwealth trade. I agree with the hon. Member for Peterborough (Sir Harmar Nicholls) that it is not surprising that Commonwealth trade has declined in the last 10 years. After all, while our application to join the E.E.C. has been on the table, we have 1079 kept underlining the fact that the Commonwealth is no longer a potent economic factor to us.
My hon. Friend the Member for Ashton-under-Lyne spoke of the reasons for this decline, of specialisation and of our traditional markets in the Commonwealth having declined with the passage of time. He also said that we were moving into a new industrial era. That is no, but why has not this industrial development in Britain been geared to recapture the Commonwealth markets which we previously had? If we enter the E.E.C. those markets will be more or less closed to us, remembering that the barriers which we have not had to climb in those markets have been of great advantage to us.
When we speak of seeking vast new markets in which to operate in the so-called industrial revolution which is now taking place in Britain—I agree that in some respects it is taking place—we should keep the Commonwealth in mind, and I trust that the Government will give careful thought to this matter. Thus, instead of writing off the Commonwealth as a larger potential customer, and instead of putting all our eggs in the European basket, we should look more closely into developing Commonwealth trade, with all that that means for us and for the raw materials which our industrial expansion demands.
The problems that we are now discussing would be largely solved if we could expand Commonwealth trade in this way. Indeed. I believe that not only would it be easier for us to develop larger Commonwealth markets and not only would it be traditional for us to do so, but in the process we would not be closing doors on anybody. Europe and the rest of the world would be open to us.
It is a myth to argue that because we are outside the Common Market we are not in Europe. Our trade with the E.E.C. has increased by about 167 per cent. and our trade with E.F.T.A. countries has gone up by a similar amount. We are not only in Europe, we have been in Europe for a long time; we have increased our trade with Europe and we have been holding our own. In addition to being in Europe for the last 10 years, we have kept close links with our 1080 European free trade colleagues on this matter.
Table 14 in the White Paper refers to the gross national product per head of the population in European countries. I understand that it rather incorrectly gives the average for E.F.T.A. countries as only 3 per cent. Though mathematics has never been my best subject, I suggest that the average is 3.7 per cent., while if one takes the continental E.F.T.A. average, excluding the United Kingdom, the actual G.N.P. rose 4.8 per cent. in the period under review, compared with 4 per cent. in the E.E.C.
We are told that entry means raising living standards in Britain. My right hon. Friend the Foreign and Commonwealth Secretary said that the E.E.C. is an example to the rest of Europe and the world. But if we are looking for countries in Europe which have raised their standard of living we must put Sweden and Switzerland at the top of the list, and they are members not of the E.E.C. but of E.F.T.A.
Those of us who believe in European unity think that entering the Common Market would close the doors on that unity rather than expand the frontiers. When we have taken our stand in opposing our being tied to the E.D.C. many of us have been described as little Englanders, who would continue to live in an offshore island of Europe. We have many connections with Europe. My home town of Aberdeen is about 200 miles nearer Bergen than London. Access to Europe is not only an economic but a geographical factor. As a Scot representing a north-east constituency of England, I remind hon. Members from south of the border that the old alliance between France and Scotland kept alive European culture and economic contacts at a time when it could be argued—I am not the one to argue it—that England was sliding back into barbarism.
I inject those two points into the debate because we have talked too often in the past about our uniting Europe by moving into the E.E.C., and saying that we would balance the two great Powers, Russia and America, by such a central bloc in Europe. Has anyone taken the trouble to look at the economic and geographical aspects? The danger of joining the E.E.C. is that instead of uniting 1081 Europe we divide it. We fail to consider the question of the E.F.T.A. group and of the Eastern European countries. We may close the doors on those countries for more than a generation if we take this step now.
§ Mr. Milne
It is all right for my hon. Friend to say that it is the very opposite, but at least it is logical to argue, if the E.E.C. has twice failed to accept Britain's application for entry, that if our application is accepted this time we have lowered our terms and been less harsh in our demands. It is a myth to suggest that we are building up a power bloc in Europe that may be a counter balance. If anyone believes that by joining the E.E.C. we are building a third force in the world, he is very much mistaken.
I return to my original points. If, as we rightly argue, industrial expansion and economic development in Britain need larger markets in the rest of the world, we should analyse and understand where those markets lie. They certainly lie in Europe, but not through the gateway of Brussels but through a much wider European unity. If we are looking for larger markets, which is the economic purpose, let us hear much more about the efforts the Government are making to develop Commonwealth trade and give us the large and developing markets which we are told lie before us in Europe. The White Paper will take on real meaning only if we argue the point not only within the House but reach a wide public outside and the wider Labour movement, to see that internationalism means not tying ourselves to the Six but looking at the world as a whole and developing in that direction.
§ 8.5 p.m.
§ Mrs. Winifred Ewing (Hamilton)
In the "Euro" mania to get into Europe that has afflicted the Front Benches of the three so-called major parties, who is speaking up for Scotland, with the exception of the hon. Member for Blyth (Mr. Milne)? Not even the Leader of the Liberal Party had a word to say about Scotland and the need to protect it on the perimeter, even though the Liberals have 13 members five of whom have Scottish seats. We know that there is a sizeable 1082 opinion in both the other major parties totally against Europe. That is obvious from this excellent debate, which I have sat through.
Shortly before and after I became a Member of Parliament about 100 hon. Members signed Motions against the proposition to enter the E.E.C. and, I think, even voted against it. In reply to the argument of the hon. Member for Ebbw Vale (Mr. Michael Foot), is it not strange that 100 or more Labour candidates will say during the next General Election campaign that they are against Europe? Is it not strange that two years ago a third or more of hon. Members opposite were against entering the E.E.C., and that the Government Front Bench has not deviated even a little from its determination to take us into the Common Market, and drag with it the ancient nation of Scotland. Scotland is the first country in the world to make the boldest of international experiments? She entered a treaty which set up a partnership—[Laughter.] The hon. Member for Norwich, South (Mr. Norwood), who is laughing, has perhaps not read it. If he had, he would recognise that it was meant to be a treaty made by two equals.
Both made a bold experiment and in theory merged their sovereignty in one another's. We have had a Ruling from a predecessor of Mr. Speaker that this Parliament was the English Parliament continuing. I do not object to that Ruling because, let us face it, that is the way Scotland is treated by this House.
I make no apology for standing up for my country, because it is on the perimeter of the perimeter. All the disadvantages that have been mentioned as being certain and knowable are that bit more certain and knowable for a country with lower wages, higher prices, fewer jobs and longer emigration queues. In that situation, any disadvantages that affect the United Kingdom will affect us in Scotland that bit worse. Any disadvantages which come from a free movement of labour to a country which is a bit behind in the technological race as compared with the European Communities—Britain as a whole—are that bit worse in Scotland. We could be ahead in the technological race because of the brains we produce as our best export, as we always have done. We were first in the Industrial Revolution, before a central Government put 1083 their greedy hands on every one of our activities without carrying out promises to devolve power to where it belongs, which is where the people are and live.
Even England, for which I have a sneaking sympathy—[An HON. MEMBER: "Oh."] The hon. Gentleman might not have noticed it before—but England when she goes to the polls, with three parties to choose from, all committed to the principle of entry, has no choice. As for the argument of the hon. Member for Ebbw Vale——
§ Mr. Arthur Lewis (West Ham, North)
The hon. Lady inadvertently made a mistake. She said that all the parties are committed. The Labour Party is not committed. It is just that a few of its leaders are going against the Labour Party.
§ Mrs. Ewing
I agree with the hon. Gentleman. The fact that the Government Front Bench is unrepresentative and gets away with it makes things all the worse for the Labour Party. It makes things worse if the Labour Party cannot impose its will on its own Front Bench.
I make no apology for my position because, as has been said, the European Community does not represent a united Europe. It is not made up of all the countries of Europe. It does not represent Europe as the Scots used to regard it. It consists of some parts of Europe, and it is not, therefore, an advance towards internationalism. Our going into the Community will be divisive. It will extend the curtain, and I do not have any love for curtains in any part of the world. I am an internationalist, which means that I believe in a relationship between nations. I speak for one nation, and I do not find it amusing that I am the only one in this House to do so. I want a good bit of that relationship. I do not want a relationship with some of them, while I am cut off from the others.
What will be the economic advantages of Scotland of going into the Common Market? To the eternal shame of the Government—and their Tory predecessors —they have not published any statistics, but the Scottish Council, the only body to do so, has attempted to produce statistics of where our exports go, and this is something for which Scottish 1084 industrialists are grateful. We know that 16 per cent. of Scotland's exports go to the Common Market.
What, therefore, is the advantage of joining the Common Market? We apparently have the ability to trade with every market in the world, and we should like to go on doing that. What great advantage will we derive from a market of 300 million people? We are already dealing with such a market. People will not stop drinking Scotch whisky if we do not go into the Common Market or stop buying our computers, and so on. The trading argument does not hold water.
What advantage will there be to Scottish agriculture? Scotland has the same amount of the best arable land as Denmark has. The House is not accustomed to thinking of Scotland as a great agricultural country, as well as an industrial one but we have a special position in agriculture which Britain as a whole does not possess. We can support ourselves to a great extent, we can supply most basic food and we could do more if we wanted, whereas England is condemned to importing food for her survival. If we go into the Common Market, what advantage will we derive from the higher levies which Britain will have to pay for importing food outside the market?
The Government pay lip-service to regional policies, an insulting term, and to helping people in the Highlands. What will happen to the hill farmers if we go into the Common Market? Will someone please tell us, so that Scotland knows.
§ Mr. John Wells (Maidstone)
The hon. Lady asked what would happen to the hill farmers. The short answer is that they represent the one section of agriculture which might reasonably expect to gain something from the guidance section of the common fund.
§ Mrs. Ewing
I do not accept that argument, and I notice that a hill farmer sitting not far from me is shaking his head in disagreement. I think that he knows a little more about this subject than does the interventionist. I cannot see what advantages Scotland will gain from an industrial or an agricultural point of view if we go into the Common Market.
Who speaks for Scotland? May we feel that the Chancellor of the Duchy of 1085 Lancaster speaks for Scotland? Perhaps might refer to one or two Questions to which I received most unsatisfactory Answers because they illustrate what we are up against in Scotland when it comes to seeking information. I asked the Secretary of State for Scotland when he would publish information about the effects of Britain's entry into the Common Market on Scottish unemployment, prices, and the cost-of-living index, which he keeps a secret. In answer, he reminded me that a detailed analysis of parts of the United Kingdom was not available.
I asked what special safeguards there were for the legal system which was guaranteed by the Treaty of Union for all time. I was told that there was no fundamental factor of a legal or constitutional nature. I asked what were the constitutional implications of the Treaty of Rome on the Treaty of Union. Leading Scottish judges have expressed grave disquiet about these constitutional implications, but from the Secretary of State's point of view there are none.
I asked the Minister of Agriculture what special protections he had in mind, and what investigations he was making to protect the special position of Scottish agriculture. He said that he did not wish to disclose the precise way in which he is negotiating his agriculture policy. I asked what the minimum number of votes would be to enable the United Kingdom to insist on protecting the interests of the United Kingdom as a whole, and I was told that the weight of votes which Britain would have as a member of the European Community was a matter to be agreed in the negotiations.
Everything is shrouded in mystery. Will Scotland have any votes in any of the institutions about which we have no information? From where will we receive our representation?
§ Mr. Alex Eadie (Midlothian)
The hon. lady has changed her mind, too. In 1967, she was in favour of entering the Common Market. Does she honestly believe that an independent Scotland could stay out of the Common Market if England was determined to go in? If she does, she had better consult her hon. Friend the Member for Carmarthen (Mr. Gwynfor Evans), who said that if England decided to go in Scotland would be forced to enter the Community.
§ Mrs. Ewing
I think that the hon. Gentleman has made a fair point, and perhaps I might deal with it.
§ Mr. Norwood rose——
§ Mrs. Ewing
It will be easier if I deal with one intervention at a time.
I have not changed my mind. The hon. Member for Midlothian (Mr. Eadie) has misread it. I have always held the view that if England went in it would he very difficult for Scotland not to do so. England represents a large slice of Scotland's market, but it must be remembered that Scotland represents a large slice of England's market. This is something which seems to be forgotten, but it strengthens my determination to speak up for Scotland. I am a Member of the United Kingdom Parliament, and it is up to me to use whatever arguments I have, albeit that I am basing them fundamentally on my sphere of interest, against the proposition as a whole, and many of my arguments are directed to that end. I am a democrat, and in this House we work in a democratic forum. I am trying to get to a House in Scotland, but, as I am here, I must use this forum. It is strange if the hon. Member for Midlothian objects to that.
I cannot understand the advantage to Britain as a whole of going into the Common Market. It is clearly an undemocratic community. It is a community of nations, but it will be controlled by bureaucrats. I cannot see that this is a good exchange for this House, because with all its faults, it is a democratic forum. It is constantly trying to be democratic. Fancy giving that up for an unknown arrangement. Even one of its admirers had to admit that the institutions of the Six were in their infancy. They do not even have a name for some of them. We do not know how they will be made accountable, and we do not think that they will be accountable to us.
Luxembourg, with half—[Interruption.] I am finding it extremely difficult to make myself heard——
§ Mr. Deputy Speaker (Mr. Harry Gourlay)
Order. The Chair would like to hear what the hon. Lady is saying.
§ Mrs. Ewing
As I was saying, Luxembourg, with half the population of Edinburgh, is to have its own place, its own votes, and its own position. To whatever 1087 extent England has sovereignty in the Community, Luxembourg is to have its place. It is ironic that those who speak of our sovereignty and are so worried at losing it cannot see the oddity that if we go into the Common Market Luxembourg will have more sovereignty than the ancient nation of Scotland which has contributed more than any other nation to the thinking of mankind.
It seems extraordinary that the House should accept that situation. All the arguments which have been advanced against going in because of the loss of sovereignty are the arguments which those who opposed the Treaty of Union with England could just as easily have used. I cannot see these advantages. I cannot see from where the mandate of the people of the whole of the United Kingdom will come.
I need not go on about the lack of consistency, but it is well known that the Prime Minister ridiculed the shadow Prime Minister about the terms on which the Conservative Party applied for entry. Now that he is in power he is doing the same. As the election draws nearer, perhaps we shall have a hint that he has changed his mind again. Surely there is a limit to the credulity of the electors and they will notice these fantastic inconsistencies. When we remember Mr. Gaitskell's speeches and look round at the array of Ministers, even members of the inner inner Cabinet, who were totally opposed to Europe, it is extraordinary that there is only one who is consistent in his view, the former Minister of Agriculture.
It is very hard for any logically-minded person to understand these matters. Is political expediency the object? Even so, it is hard for me to understand the reasons for the political expediency or from where the mandate will come. The only way in which it is possible to have a mandate is by referendum. We have a situation in which the people of England will be denied the opportunity to vote for a specific party with that point of view. Are we going into a political federation or simply entering a trading bargain? The Government must make that clear.
Any hon. Member as well as myself could quote the contradictory statements which have been made. In February, 1969, the Prime Minister said: 1088It is certainly not the Government's policy to take the U.K. into any sort of federal state, whether in Europe or elsewhere.But that was at odds with the speech of the Under-Secretary of State at the Foreign Office at Dortmund, on 29th May, on the need to change the E.E.C. into a federal union.
That famous Scottish Member James Maxton, when accused of riding two horses at once, said:If you cannot ride two bloody horses at once"—I hope that hon. Members will excuse the language, but I want to get the quotation accurate—you should not be in the circus".The Prime Minister is riding two horses at once. May we be told on which horse he aims to complete the circus act? The people of Scotland want to know.
As I go round Scotland making political speeches to, on the whole, large audiences, I do not find anybody, even among my hecklers, in favour of Britain joining the Common Market. I do not know where the support for the Common Market lies. When we took a poll in Lanarkshire, over 90 per cent. of the people who took part in it were against the Common Market. The result or the poll which the Foreign Secretary quoted seemed to suggest that the electorate were against this step in the dark. May we be told on what mandate this or the next Government will take the people into the Common Market? It is time that that question was answered.
We suffer from centralisation of power in Scotland. The Scottish Council has published a report on this theme, with which the right hon. Gentleman must be familiar. It is said that the decision-makers must be where the people live, or a valuable part of the enjoyment of life to the full is lost. According to that report, only one in 10 of the decision-makers making the important decisions affecting Scotland lives in Scotland. The others live in other parts of the United Kingdom. On my calculation, if we go into the Common Market the ratio will be 1 in 50. Will this add to the fullness of life in which it is admitted that people want to participate more and more?
I have said that Scotland has no assurance of votes and seats. Was the 1089 Secretary of State for Scotland taken around the European capitals during the early stages of the discussions? Who is advancing the special position of Scotland in relation to agriculture, for example? Who is speaking for Scotland in the negotiations? I should be grateful if the Government would answer that question. The so-called regional development policies may well spell disaster for Scotland in many respects.
How will the free movement of labour help Scotland? Over 90,000 people are unemployed in Scotland. Scotland's rate of unemployment is always higher than that of England. Scottish people do not want to leave their country to get a job. Most of the Scots who go do not want to go. Perhaps the vast emigration from Scotland is seen by successive Governments at Westminster as a way of keeping unemployment down. If it were not for emigration, the unemployment figure would be even more catastrophic.
I have mentioned the levy which we shall have to pay for a non-advantage in food. The advantages are all the more doubtful for Scotland and the disadvantages all the more clear. Scotland does not want to be cut off from the world. It wants to trade with Eastern Europe, with the Commonwealth countries, with America and South America. It wants to think that those aspects of trade will develop. It wants to trade with Scandinavia, with which it has very special links.
I end by quoting part of a speech made in connection with the discussions which preceded the Treaty of Union—and it will do the House good if it listens to this most carefully:Show me a true patriot and I will show you a lover, not merely of his own country but of all mankind. Show me a spurious patriot or a bombastic fire-eater and I will show you a rascal. Show me a man who loves other countries equally with his own and I will show you a man entirely deficient in a sense of proportion. But show me a man who respects the rights of all nations while ready to defend the rights of his own against them all, and I will show you a man who is both a nationalist and an internationalist.The world recognises that the Scots are very good internationalists. We do not think that entry to the Common Market by the United Kingdom will advance that cause in any respect whatsoever.
§ 8.26 p.m.
§ Mr. S. C. Silkin (Dulwich)
it is not surprising that in a debate of this kind the speeches should be very sharply divided. However, it is encouraging that many of the speakers on both sides of this issue have expressed support for the general concept of the creation of European unity.
I have been described as a dedicated European. I accept that if it means what I think some right hon. and hon. Members who are anti-Marketeers accept—that is, that I wish to see an expanding community of European nations with growing common interests, becoming a growing influence for peace in the world, rather than, as now, unable to exercise its full potential of influence as the result of disunity. In this wide sense, I believe that the majority of our fellow citizens, would accept a European philosophy.
I do not suggest that the enlargement of the Six is the only means of achieving that objective. It is possible to envisage a looser community, whether based on the Council of Europe or on the kind of loose association suggested by General de Gaulle a year or so ago. Many hon. Members, colleagues of mine on the Assembly of the Council of Europe, have devoted a great part of their energies to trying to build up a greater European co-operation through that institution in many different fields. I do not doubt that European unity could be achieved through that organisation, but the process has inevitably been slow. It lacks a common economic direction and the means and machinery to make rapid progress.
When we ask ourselves why that should be so, I believe that the answer is because of the very existence of the European Economic Communities and their growth and success which have preempted the will of Governments to invest heavily in the Council of Europe. So long as the Communities remain a nucleus of expansion, it seems to me to be quite unrealistic to expect the European Governments to be willing to risk duplication of machinery and financial investment by building up the machinery elsewhere than in the Communities.
That is not surprising, because the expansion of the Six is undoubtedly the most direct route to the realisation of 1091 a community of European nations. The reason for that is that the European Communities have a common economic direction and a common economic interest. The reason is not solely economic. The closer the interest and the clearer the direction the more surely it will develop a common political approach and a greater political influence in the world.
There are some who fear the effect of the common political approach. Such fears have been expressed today by some hon. Members who do not want to surrender part of our sovereignty to some European institution. I confess that I always find it surprising to hear such views coming from confirmed internationalists among our members. What form the common political approach will take and what machinery will be developed cannot be foreseen today. Inside the Community, this country, with its long history of parliamentary democracy and its practical approach to the problems of government, will be able to guide that development. Inside we can guide that development, but outside our experience will carry no influence upon it.
§ Mr. Arthur Lewis
My hon. and learned Friend was speaking about the political development and said that we could guide it. Would we be able to guide it along a democratic road in the same way as we have guided the Council of Europe? When did we last elect a delegate to the Council of Europe?
§ Mr. Silkin
That is not really a question which arises out of what I am saying. My hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) has put Questions on that to the Prime Minister and no doubt he will be putting down more in due course.
This debate will no doubt be concerned—and it has been mainly concerned—with the gains and losses to this country involved in entry into the E.E.C. Not unnaturally the White Paper concentrates upon these. I think that despite its first rather suspicious reception, it has now been recognised as a frank and honest document—it may seem to some people perhaps too frank and too honest—but at least it is a docu- 1092 ment which says where assessment is possible and makes judgments where only judgments can be made.
What the White Paper makes clear is that we have to assess not merely the increase in the cost of living, but, much more important, the gains which may be achieved in the standard of living. We have to balance what are called the impact effects of entry spread obviously over a reasonable transitional period, against the permanent benefits of a home market. That home market would be a highly industrialised home market—and this seems to me to be the answer to points made by some hon. Members—of 300 million people. It is a market into which our trade has, for a decade now, been expanding. The most striking figures are those which show this expansion against the diminishing percentage of our trade with the Commonwealth. In that context, we must bear in mind that we are not the only applicants. With us are three other applicants for full membership, including two members of E.F.T.A., while others are applying for association. If all these applications succeed, it becomes nonsense to make a comparison between our potential trade with the E.E.C. and our trade with E.F.T.A. because, to a large extent, the two will be combined.
In the end, the White Paper concludes —and it seems to me the only possible conclusion—that it is only by negotiations that we can decide whether the transitional period we are offered and the balance of payments price of entry make our entry worthwhile. It would be pointless to disguise the fact—it has been rubbed in enough by the national Press —that the impact effects of entry, uncertain though their extent may be, will in the end have to be borne.
There will be, or may be, a cost of living increase of 4 to 5 per cent. and, of course, that produces natural reactions of alarm. It was only to be expected. If the whole of that increase were applied in one year, for that year alone it would add an equal increase to the average increase in our cost of living year by year over the last eight years. No one for a moment suggests that this would be tolerable or that we would in the negotiations accept such a rise over a single year. There will have to be a substantial period of spreadover.
1093 The impact effect on the balance of payments is clearly more uncertain in advance of the negotiations. Part of it is, of course, simply the effect of increased incomes cancelling out the cost of living increase, but the major part, our contribution to the Community budget, is another negotiable item both in total and for the transitional period. Against the impact effect, we have the dynamic effects of entry, the advantages to us and to Europe of an industrial home market comparable in size with the United States. It is no criticism of those dynamic effects or the White Paper that they are very much a matter of judgment.
The White Paper does not and cannot quantify them. They depend on the ability of our industry to take advantage of the removal of the common external tariff and adapt itself to the Community pattern. I believe that the history of the last few years, in particular the brilliant recent achievements of our exports, give the greatest ground for hope. If our exports have built up in the Community even against the common external tariff, it seems to me that they can, with accelerated drive, build up even further when the tariff wall is down.
The White Paper sets out these considerations as clearly as is possible in the circumstances. What it does not do, but what it is vital in the context of negotiations to do, is to examine in depth the benefit to the E.E.C. and to Europe as a whole of the enlargement of the communities. The gains and losses to the Six are just as vital an element in the negotiations as the gains and losses to us.
If the Six believe that the benefits to them are negligible, then, of course, the price they will demand will be high, but if they believe them to be substantial the price will be correspondingly reduced—for two reasons, both because the Six will want us in and because they will not want to take on a new partner and, at the same time, present it with crippling balance of payments burdens. The wide range of potential balance of payments burdens described in the White Paper, therefore, means no disadvantage in the negotiations.
It makes clear to all, and not least to the Six, the extent of the problem which 1094 entry would or could impose; and, in particular, the considerable degree to which the problems could be mitigated by sensible and reasonable negotiations, or increased by a tough and inflexible approach. Now, in my judgment, is the right time to place these facts on record, since it is now that the Six are beginning the task of reaching a common negotiating position. For the same reason this is not the right time for us even to suggest discarding any part of our bargaining position.
There has been criticism in the House today of the speech of the Prime Minister last Saturday—probably I am one of the few Members of the House who actually heard it—drawing attention to the differences between the Government and the Opposition. I believe that the criticism is misdirected. The differences exist. The Opposition's policies have created those differences. It is they who have said to the Six, in effect, "Wait until after the election. If we are returned to power we will, in any event, do some of the things which the present Government will only do as part of the price of entry."
§ Mr. Antony Lambton (Berwick-upon-Tweed)
Will the hon. and learned Gentleman say whether he thinks the Prime Minister's speech helped our negotiating position?
§ Mr. Silkin
I certainly think that the Prime Minister's speech as a whole helped our negotiating position. If the hon. Gentleman is referring to this particular part of it, I do not think that it helped or hindered. The Prime Minister was making a comment on the position of the Opposition. In my view, it is not a fair criticism of the Prime Minister that he has explained, so that the Six and the nation can be left in no doubt, that the Government are not prepared to throw away any part of our bargaining position.
The question remains: what value do the Six place upon the enlargement of the Communities and, in particular on adherence by ourselves? I have no doubt about the views of the Five. I am confident that they share the view held by leaders of all political parties in this country, that the enlargement of the Communities is the quickest and surest way for the growth of European political influence; and the best if not the only way of developing the machinery which 1095 the developing political Europe will require.
I do not doubt, also, that they value the economic advantages of enlargement not only because the political gains will follow the growth of a common economic interest, but also for their own sake. To them, as to us, it is apparent—and the White Paper underlines the point —that trade and tourism are already bringing the nations of Europe, including our own, closer and closer together; and it is only the artificial barriers between the two great trading blocs, E.E.C. and E.F.T.A. which impede the full development of a vast European industrial home market. They can see as clearly as we can that there is no other way by which the industries and technologies of Europe can become powerful enough to resist American control whilst welcoming American investment.
The more clear these things are to the Five, the more stubbornly they will fight to provide an incentive for us as a new partner rather than a barrier to that expansion which they regard as vital. But the Five are not the Six. The veto has gone. Many of the old arguments against enlargement are no longer heard, or are heard only faintly. We know that powerful interests in the Government of France can see today what was perhaps less clear to them before the rape of Czechoslovakia.
France has said, and we must believe it, that enlargement is now a French objective, so there remains but one uncertainty. That is whether parochial interests or lack of will to make concessions will still outweigh the historic design which the nations of Europe recognise as a design essential to Europe's future, and to ours as part of Europe. I am confident that our own Government will enter negotiations determined, in the fullest sense of the word, to make them successful if the possibility of success exists.
For my part, I believe that this time the same spirit will invigorate our future partners. What is clear is that only the negotiations can show, however, whether there exists the good will for success. If it does not exist, even the most dedicated Europeans among us will be forced to accept that there is a limit to the burden which we can ask the nation to accept 1096 and that the Community of Europe must be approached by a different and, it may be, longer road. If, as I hope and believe, that good will exists I am confident that our fellow citizens will support us in joining with our European neighbours in the fulfilment of our European history.
§ 8.45 p.m.
§ Mr. Michael Jopling (Westmorland)
I am very glad to follow the hon. and learned Member for Dulwich (Mr. S. C. Silkin). He and I have attended conferences in Europe together and I agree with a great deal of what he has said. I must take issue with him over his reference to Conservative proposals to bring in variable levies, which is a system of agricultural support similar to the common agricultural policy. This is the well-known policy of my party. I would remind the hon. and learned Gentleman that it is an open secret, it has been reported in the Press, that his own Government and his own Minister of Agriculture have recently been carrying on conversations with a view to imposing a levy on beef imports.
The hon. and learned Gentleman said that he thought that the White Paper was as clear as possible in the circumstances. I sympathise with the Government over the position in which they found themselves when drafting this document. They were in the position of being a two-way loser. If they tried to be more specific and give a figure for the balance of payments costs, or the rise in the cost of living or food prices, the figure, if very high, would have lost them support as a result of incensed public opinion. If the figure turned out to be low they would have lost something in their bargaining position, when the negotiations begin.
I want to concentrate on the agricultural problems. The White Paper discusses the problems of the agricultural industry and it is time someone referred to them. There has recently been great disquiet in the industry because of the much publicised surpluses within the Six. These were particularly bad in grain, sugar and dairy products. The only way that the countries of Europe will get out of this surplus situation is by reducing prices. My experience in Brussels is that the officers of the Commission are reluctant to do this, but they will have to do so in the end. It may take some years.
1097 They have made good progress in dealing with the butter surplus which is now around 300,000 tons, almost exactly the same as a year ago. Surplus production of 200,000 tons in the last year has been disposed of through subsidised sales.
I do not believe that the surplus position poses a great threat to the British agricultural market. If we were to join the Community, and if any of the surpluses were to move into our market, they could do so only at Community prices; and these would not necessarily knock the bottom out of the British market to the detriment of British producers.
I turn to the question of the effects on British agriculture of our joining the Community. Many farmers admit that they find it all very difficult to understand, but in general they are worried. I am not worried, because for certain sectors of British agriculture the statement at the end of paragraph 33 of the White Paper sums up the situation fairly:Farmers' net income would nevertheless be higher than it would otherwise have been, although its distribution, and so the gains and losses, would differ greatly between commodities, types of farm and areas of the country.In 1967 the Select Committee on Agriculture studied the implications to British agriculture of the common agricultural policy. We were told by the Government that farm incomes would probably rise but, again, there would be the differential between various types of production. As the White Paper rightly says, devaluation has shifted the balance of gain very much in favour of British farmers.
I shall not waste time talking about the sectors of British agriculture which would stand to gain considerably—the grain producing industry and the beef producing industry. I shall talk about some of the ones which would probably find life more difficult. I will not dwell on horticulture, which would find life most difficult. My hon. Friend the Member for Maidstone (Mr. John Wells) tried to catch your eye a few minutes ago, Mr. Deputy Speaker, and if he succeeds in catching the eye of the Chair later, he will doubtless wish to go into the horticultural situation. I shall concentrate on the problems of the hill and 1098 marginal areas where so much stock is reared.
It has been widely but wrongly said that if we were to join the Community hill subsidies would have to go. I am not convinced of this. It can be argued that our hill subsidies would be completely compatible with Article 92 of the Treaty, paragraph 2(a) of which says that aid having a social character is compatible with the Treaty and paragraph 3(a) of which says thataid intended to promote the economic development of regions where the standard of living is abnormally low or where there is serious under-employment … may be deemed to be compatible with the Common Market.Those two instances apply to many of our hill areas.
Even if hill subsidies, or a large proportion of them, had to disappear, there is another aspect of agriculture in the Community which has been overlooked to a considerable extent. There exist considerable State aids to agriculture which do not go through the Brussels exchequer, as it were, but which are devoted to agriculture by each of the national governments. It is the most impossible of tasks to discover the details of these State aids. I am told that they total 1.9 billion dollars which, as I work it out, equal about £800 million. There are registered in Brussels about 500 of these different State aids to agriculture which the Commission has insisted on knowing about but about which it is extremely secretive.
I have tried without success to get the details. The French Government provide cheap credit to farmers, and the budget for this subsidy in 1969 was £78 million. I am surprised that the provision of cheap credit to farmers is not regarded as a distortion of trade and therefore incompatible with Article 92 of the Treaty. If aids to agriculture of this magnitude are allowed, it is not beyond our ingenuity to do a great deal to help the sectors of British agriculture most likely to be hit.
To turn to the balance of payments problems of joining the Community, the estimates are extremely vague, between £100 and £1,100 million. My right hon. Friend the Member for Barnet (Mr. Maudling) spoke of the possibility of a massive expansion in British agricultural production, which would make us less reliant on imported foodstuffs and so 1099 improve the balance of payments position. From what I have learned in the last few weeks in Brussels, the members of the Commission expect that the British Government, if they have their wits about them, will instigate a massive expansion in home agricultural production.
Paragraph 33 of the White Paper suggests that production might rise by between 3 and 10 per cent. as a result of joining the Community. I am sure that the country is capable of increasing agricultural production by very much more than this. The Government, by using all the State aids to which I have referred could help the agricultural industry to make a significant inroad into the balance of payments drain. The Government should start now to try to bring about this large expansion through the price review which is being negotiated. The industry is technically capable of a massive expansion.
M. Pisani, in his report to the Commission, recognised that the possibility of a large drain on Britain's balance of payments position would be manifestly unfair and impracticable. The officials in Brussels are trying to find a method by which the balance would be heavily in favour of Britain. They suggested that the Community might take over Britain's responsibility for aid to developing countries. That responsibility is not very large; many European countries spend very much more on such aid than we do.
Another suggestion was that the Community might take responsibility for regional aid to the underdeveloped parts of this country, which need massive injections of capital, for instance, the Scottish industrial belt and the industrial area in the north of England, or for financing research and development, in which Britain has a large share of the European effort. The officials in Brussels are keen to find a way of stopping the drain on our balance of payments, and I hope that the Government will explore this thoroughly.
I believe that Britain's future is in Europe. I want us to join if it is at all possible. If we do not join, that will not be disastrous, but we will find it difficult to stop ourselves tumbling down the league table of prosperity and influence by going it alone. But we may 1100 be asked to pay too high a price. The Financial Times recently estimated the drain on our balance of payments as around £750 million. I should need a great deal of convincing that we could afford to go in with a drain as high as that. But we must negotiate. Most of the Community's rules are negotiable. We saw clearly, when the French devalued the franc and the Germans revalued the mark, that the common agricultural policy was capable of tremendous changes to make up.
I hope that the Government will be sincere in their negotiations. The Prime Minister is capable of any juggling to preserve his position over the negotiations, but I hope that those hon. Members opposite who are responsible and who put the interests of the country first will do their utmost to control him if he starts this sort of juggling in the months ahead. There is nothing to be lost by talking at this time, but there is nothing to be gained by deciding now that we should stay out and not even open negotiations.
§ 9.1 p.m.
§ Mr. Joel Barnett (Heywood and Royton)
I am sure that the House was interested to hear the hon. Member for Westmorland (Mr. Jopling), with his great knowledge of agriculture, tell us what he expects to be the advantage in increased home production. He will not have pleased the anti-Marketeers in todays debate, who think that the White Paper figures are worthwhile only at the highest possible level of disadvantage to this country.
For me, there is a price worth paying, and it is a question of what is the price and by comparison with what. Many hon. Members have tried to deal with this question to see whether there could be a realistic comparison of what the price would be inside the Market and out. This is very difficult, because the comparison is with a situation which is anything but static.
On the agricultural system inside and out, the comparison is not, as it is often suggested, between cheap and dear food: the argument should really be about the cost of production. Prices in different countries will vary considerably and it would be a very foolish person who worked on the assumption that, if we 1101 were outside the Community, our agricultural prices would remain exactly as they are, or that world food prices would.
We have a cheaper price for food than the Common Market, but that is not necessarily because the cost of production is cheaper, although we are more efficient. It is because of what we call a farmer subsidy, but which is really a consumer subsidy to maintain the cheap price of food. I want to see that continued, but one would be very foolish to assume that it will continue for all time. That is what I meant by saying that we do not have and are not likely to have a static system inside or outside.
Inside, all the worst assumptions are made by those who oppose entry or even negotiations. It is absurd to imagine that, inside an enlarged Community of ten members, the agricultural policy would continue in exactly the same way as it has during the last ten years. They are already changing, without us in it. So with us and another three countries in, it is foolish to assume that the agricultural system in that wider Common Market would be precisely the same as it has been in the past. Equally, given the opportunity of getting more money for their production, it would be very surprising if our farmers, who are highly efficient when compared with Common Market farmers, did not increase their production.
Then again, as I have said, the world price of food will not remain static, and we can call in evidence what has happened in recent years. Earlier today, my right hon. Friend the Foreign Secretary made the point to the right hon. Member for Wolverhampton, South-West (Mr. Powell) that, over the past seven years, there had been an increase of about 34 per cent. in our food prices, anyway. It was then argued that this would be an increase over and above the 18 to 26 per cent. which, according to the White Paper, we would have to bear if we went into the Common Market. But it does not follow that it would be a total, overall increase. That presupposes that there would be no increases in world prices and in our prices at home outside the Common Market.
That is the intellectual fallacy of the argument of the right hon. Gentleman. It is only to the extent that price increases on our going into the Common Market 1102 are in excess of how our prices and world prices would go if we were not in that there is a difference. In other words, if we remained outside the Common Market, it would not be 34 per cent. plus the 18 to 26 per cent.
Neither are we living in a static world system in terms of trade. We cannot imagine that, if we remained outside the Common Market, we could live in glorious isolation. We would have to cope with a rapidly changing pattern of world trade. We would not have a situation in which everything went on as peacefully as before, allowing us to continue as if nothing was happening anywhere. We cannot expect that kind of situation.
The anti-Marketeers take from the White Paper the greatest disadvantages if we were in the Common Market and assume an enormous loss of trade as a result of a rise in our costs. Of course, costs would rise, just as we were told recently in the course of the prices and incomes argument. However, this again takes only one side. It ignores the fact that the rest of the world would have cost increases. It presupposes that only Britain would have them, and that therefore we would be at an enormous disadvantage and thus suffer a loss of world trade. Whether we are in or out of the Common Market, the White Paper makes clear that it is pure speculation to say what would be the effect on our trade in, say, 10 years' time. It is impossible to assess.
I come now to the other argument of the anti-Marketeers on the value-added tax. In my opinion, this tax is an administrative monstrosity. I have never liked it. I believe that the Report of the Richardson Committee was right. We do not need it, and there are no advantages in it. But we should get it in perspective. It does not have to be a replacement for corporation tax and selective employment tax. It could be used to reduce income tax by increasing personal allowances and so helping the lower income groups. It could be used to increase social expenditure. In the initial stages, it could be used to help counter some of the increases in the cost of living that there would be. This is not therefore a price of entry. Whilst some hon. Gentlemen opposite agree that we should have a value added tax, whether in or out of the Common Market—I do not want 1103 to make this a political point—I do not want it in our tax system. But it is not necessarily the real price that we have to pay. It would be an internal adjustment of our tax system which, in the right hands, could be used to our advantage.
When all the exaggerated assumptions in the White Paper have been eliminated, there are two real clear prices that we would have to pay. One would be the net contribution to the Agricultural Fund and the other would be on the balance of payments.
The contribution to the Agricultural Fund is shown in the White Paper as likely to be between £150 million and £670 million, less receipts of between £50 million and £100 million, increased food production possibly of £85 million or reduced food production of £255 million, leaving a net total cost of either plus £35 million or minus £875 million.
Again, the anti-marketeers take the worst possible assumptions. They assume that it would cost us the maximum price. The result is likely to be somewhere down the middle, and this would probably be spread over five to seven years.
I hope that in the negotiations a maximum limit will be put on that price. But we must bear in mind that there would be an inevitable process of reduction of that cost by the evolving nature of the Common Market and by our own and world food price changes.
If this were the only price, it would be worth paying. But the balance of payments price is more serious, because our balance of payments in recent years —indeed, for many years—has been the main stultifying effect on growth in this country. In common with my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), I should like to think that we have got away from this obsession with the balance of payments. I hope that we have. But it does not strike me that there is yet abroad in the world or in this country the idea that we can no longer have that obsession with the balance of payments. So if we had an additional burden anything remotely like the amount in the White Paper, it could lead once more to further stagnation and yet lower economic growth than in the past. Therefore, I want to examine what might be the true effect on the balance of payments.
1104 On visible trade, as paragraph 60 of the White Paper makes clear, it is impossible to make more than an "informed guess". On invisible trade, I do not think that anyone doubts that there would be a real and positive gain to this country in insurance, banking and so on.
In the past I have pressed my right hon. Friend the Chancellor of the Exchequer not to allow capital outflow at the rate that it is now going. But I have never argued that we could or should continue this policy for all time. That policy could only result in our having a larger take-over of British industry than in the past. So, in the longer term, the answer must be what the Chancellor has been trying to achieve, namely, a balance on capital outflow. I recognise, as does the White Paper, that it could result in a large, or at least some, capital outflow in the earlier years. However, it is absurd to think that inside the Common Market we would not be able to utilise the rights the French utilised in recent years; that is, being able to say, "This is the situation. We must, therefore, reserve right to restrict the rate of outflow of the sort that could exist in the initial years." Therefore, I do not believe the capital outflow position need be anything like as bad as has been suggested. The overall effect on balance of payments could well be somewhere between the figures of £100 and £1,100 million suggested by the White Paper.
On the one hand, those figures are meaningless, but on the other hand they are ridiculous. If I were negotiating to buy something, the last thing I would do is to say to the other side "The price I am prepared to pay is between £100 and £1,100 million", with the obvious implication that I am prepared to pay something like the middle price. The right hon. and learned Gentleman the Member for Hertfordshire, East (Sir D. Walker-Smith) went further, he suggested that the Government should specify the exact price. It may be that a price of £500 million on the balance of payments position would be too high, and I would regard it as too high, but I do not believe that we need to pay that price or anything like it. If the Common Market countries want to have Britain and the other three countries in, as I believe they now do and they are negotiating with good will, I see no reason why we should be 1105 expected to build up such a large balance of payments deficit to give it to the other parties. I believe that we could easily negotiate without any real substantial cost to the balance of payments.
It has been argued that if it is only one per cent. of our gross national product we can afford it since if we are in the Common Market we shall achieve a one per cent. increase in our economic growth. It is a fallacy that if we had been in the Common Market pursuing the balance of payments policies and economic management policies which we have pursued since the war we would have a rate of growth similar to the other Common Market countries. The figures in the White Paper do not bear that out. It can be argued that the E.F.T.A. figures show that, excluding the United Kingdom, the growth is as fast as that in the Common Market. But again it is a false argument since is depends where one puts the United Kingdom! The United Kingdom figures are so bad that when one puts them with the Common Market countries, on average one could say that the E.F.T.A. countries are growing fast and vice versa. Therefore, one cannot draw conclusions from the figures about the level of economic growth that we could have expected had we been in the Common Market. Nevertheless, one can draw conclusions from the substantial home market of £300 million, but there are plenty of people who are not prepared to see any kind of advantages in a large home market.
If the cost is negotiated on the lines I have suggested in real terms and in terms of balance of payments, then it will be more than offset by the economic advantages. But ultimately, as has been said earlier, it is not the economic arguments that go into the balance because the anti-Marketeers, at least the honest ones, have been prepared to concede that, if there was no cost at all, they would still not be prepared to go in. It is almost an emotional argument against the "damned foreigners"——
§ Mr. Barnett
Perhaps my hon. Friend does not like what I have said, but the reason that I say it is an emotional argument is that I have an emotional reaction which makes me want to stay outside the Common Market.
§ Mr. Barnett
I would not mind my hon. Friend the Member for Rochester and Chatham (Mrs. Kerr) living in splendid isolation from time to time. We must see the world as it is and not as we like it to be. [Interruption.]
§ Mr. Barnett
I am delighted to have your protection, Mr. Speaker, from my two hon. Lady Friends.
Whether we are in or out of the Common Market there will inevitably be a process of closer association in, for example, defence, disarmament, trade and air transport, and recent events have emphasised this fact. If we do not have this sort of association we may not have a world in which to live.
My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) wondered where the decisions would be made in the Common Market. He might have asked where the decisions will be made if we are not in, in which case they will be made without us having any say in the matter.
Whether or not we like it, we live geographically in Europe, and we must therefore play a part in it. The alternatives are not just about the price of food but about the dismal prospect of an isolationist rôle compared with the grand prospect of a rôle designed to build a united Europe, with all that that could mean to mankind.
§ 9.21 p.m.
§ Mr. Ian Lloyd (Portsmouth, Langstone)
I hope that the hon. Lady the Member for Hamilton (Mrs. Ewing) will not take it amiss if, in her absence, I say that I am glad that she is not in her place. When she is defending the rights of Scotland in this Parliament I almost find my Christian names glowing like neon tubes.
The hon. Member for Ebbw Vale (Mr. Michael Foot) inevitably comes right to 1107 the central and dominating issues when we debate matters such as this. He entertained us with an amusing description of the character in Stendhal who was asked to believe the statement of his friend rather than the evidence of his eyes. In our case we have more difficulty because we are not concerned with a figure of dramatic beauty but just with figures.
Indeed, one might say that we are concerned with the Seven Veils or what one might describe as a harem of statistics surrounding Europe; statistics which are the apparatus of the Board of Trade, the Central Statistical Office, the C.B.I. and the T.U.C. These organisations hedge about them and provide us with a phenomenon which we must attempt to discuss. It is, therefore, more difficult for us to see and accept the evidence of our senses.
The hon. Member for Ebbw Vale then spoke of the most fundamental question of the representation of the United Kingdom in the government of European institutions. The concern which he demonstrated—about democratic institutions controlling the machinery of Europe—is a concern which is not the exclusive prerogative of this Parliament, whether or not we are in the Common Market. It is widely shared by many Members of the European Parliament and of Parliaments in Europe which are not yet, and which for some time are not likely to be, members of the European Parliament.
This debate began with what might be described as a spectacular series of generalisations. They were launched one after the other like a series of strikes by intercontinental missiles, each triggering off an answering spasm of rhetoric, and each was launched in the belief that it had a devastating annihilation capability.
That is where my analogy breaks down, for either the silos of our minds have been hardened to the point where even ideas of thermo-nuclear force cannot penetrate, or the warheads turn nut to be duds on impact.
I will not call down the wrath of hon. Members by attempting to label the duds, of which we have had some on each side, and I shall doubtless add my contribution. We need to illuminate 1108 the vast and complex landscape of this issue with a few star-shells of the type fired by the hon. Member for Ebbw Vale. It is clear that if each hon. Member fires at least one such star-shell we shall each have rendered a public service.
It may seem strange that any body would choose to illuminate such an issue with analogies of war, but it is well to remind ourselves that war has devastated the course of European history as frequently as reason has enabled men to repair the damage and inch slowly forward.
The third act of this play may well be Britannia and the Market, but the play is set in a darkened theatre. The real theme is the unity of Europe after 1,000 years of catastrophic nationalism. We forget too easily that Europe was more united under the Roman Empire and even in the Middle Ages than it has been since.
The price paid over the centuries for nationalism, independence, and sovereignty cannot really be measured. By comparison the cost of joining the Common Market, whatever it may be, can only be described as a pittance. The whole economic argument may tip the scales of measurement which have been used in the White Paper one way or another. Those scales, with all the issues they measure, must be weighed against the lifeblood of Europe and the youth of countless generations past, present and future. The real issues are much more profound than the standard of living.
We declare our interest in the subject of a debate. Sometimes we would be wiser to declare our competence to speak. That would produce formidable difficulties on some occasions, sometimes even for the Front Bench. I do not believe that any one of us is quite competent to comprehend more than a fraction of the knowledge embraced by the phrase "joining the Common Market". Which of us has a clear vision of the alternatives, even over a limited range, of some of the more complicated issues? Which of us looking back, even with the hind-sight of ten years, could disentangle the consequences of either joining or not joining from the consequences of the vast array of social, economic and environmental changes which will have taken place in that period?
1109 Which of us could isolate the effect of a determination to make the venture succeed or equally, a reluctant acceptance based on public disillusionment, left undispelled by political leadership? These are the qualitative characteristics immensely difficult to weigh in any scale. If the nation should choose to obstruct these processes we shall fail to profit by joining Europe, whatever the price of entry.
§ Mr. Speaker
Order. The hon. Lady the Member for Rochester and Chatham (Mrs. Anne Kerr) must control herself.
§ Mr. Lloyd
If the nation rises to the challenge and the opportunity with commensurate imagination and enthusiasm the calculations in the White Paper will assume their proper insignificance.
I do not believe that the White Paper makes a profound contribution to the debate. This is not because the figures are necessarily inaccurate or its arguments biased but simply because the weight of its analysis and conclusions is out of all proportion to the premises. That alone would condemn it.
I turn to the point made by the my right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), who said that the four documents on Europe cost 10s. 3d. and weighed a few ounces whereas those on London Airport cost £50 and weighed Heaven knows what. I do not think that this is a valid argument. My own brief documentation on the Common Market would certainly cover the whole of this bench and the information in the Library in Brussels or the House of Commons would probably swamp this Chamber. To argue that there is no knowledge on the Common Market and that the analysis, however brief, represents no fundamental thinking or widespread research such as that which has gone into the third London airport inquiry is a gross miscalculation of reality.
I further condemn the White Paper for the same reason that no man will 1110 decide to get married on the basis of an I.Q. test or a bank manager's report. What we have done in publishing this document is equivalent to reprinting the I.O. test and the credit report and inviting every member of the family to participate in a referendum on the bride.
The distinction I seek to draw is between important considerations in the White Paper and deciding fundamentals. Let me state the basis of my point of view and endeavour to build with some humility some arguments on the basis of my knowledge and experience. In company with many hon. Members of this House, I have visited practically every country in Western Europe since the war —every capital, virtually every major port. Since I have been on the Council of Europe I have had the unique opportunity of studying European science policy, a somewhat depressing experience. More recently, I have been involved in dealing with the European computer industry. My brief conclusions are based on this experience.
First, I must state what I believe to be a fundamental premise. We must first distinguish between two distinct problems or options. The first is whether we join the Common Market and the terms on which we join, though the precision of the latter is to some extent illusory—yet another triumph of the macro-economic illusion. The second, and much more important, is whether Britain shall hasten or retard the processes of European unity. Here we face the sandblast of history. Our choice is the choice of Canute. The first choice may still fairly be presented with some realism as "whether". The second can only be presented in terms of "how soon how completely".
We are now wholly engaged in the processes of European economic, technical, and political integration. The option is, therefore, profoundly limited. It is not an option of direction, but an option of pace. It is an option of the vigour with which we seize opportunity, or offset what some of us believe to be serious disadvantages. What we do not have is a real option to withdraw. For if we were to withdraw from Europe now, in the sense that we withdrew in 1914 or 1939, through force majeure the results would at least be damaging, if not disastrous, both for Britain and for Europe.
1111 The Six have recognised this. France has now recognised it, and the U.S.S.R. has recognised it. For the converse is equally true. The processes of integration which have been set under way are vital to the prosperity and vitality of this country and to the prosperity of Europe. If the U.S.S.R. seeks to impede them it does so for its own reasons, but whether we seek to attribute such opposition to ideology, idiocy, or idiosyncracy, we have the right to be suspicious on all three counts.
May I give some examples. In the control of European airspace, it has been demonstrated beyond question at the Eurocontrol Centre at Bretigny that trans-Atlantic and trans-European aircraft traffic must be handled on a European basis. Any other method is simply not feasible, and might prove disastrous within the next decade.
Take another sphere. In telecommunications, if it is not already too late in the sense that a world-scale operation is required and justified, the minimum effective structure of a satellite telecommunications system is, at the least, European in scale. The determinants are technological and economic. Small projects can be undertaken, but at a price which will perpetuate high European costs and inadequate standards and low capacities.
In computers, which were mentioned by the right hon. Member for Devon, North (Mr. Thorpe), it is not so much a question whether we are able to compete in the production of hardware with I.B.M. or other American giants. The key issue is the efficiency with which Europe uses its computers, wherever they are made, and already the time-sharing networks are crossing frontiers and establishing a European-wide basis of operations. The only way in which Europe can stay on the frontiers of nuclear physics is by maintaining at C.E.R.N. an accelerator which no European country or the United Kingdom alone can afford. It is one area of European science which has demonstrated a conspicuous capacity to retain the highest grade of European scientific talent.
In transport, the container has forced a high degree of standardisation throughout Europe, including the United King- 1112 dom. Managers either plan port systems together, or they find that they cannot plan at all. There has already been a high degree of rationalisation in the distribution of bulk commodities such as grain, petroleum products and chemicals. In all this the pattern of the nation state may still be clearly discerned, like the walls of a medieval city from an aerial photograph, but the rationale and structure are European in concept and in scale, for both are a response to new concepts of marketing, technology, and transport.
I can see that some hon. Members are about to interrupt me and ask, "If this be so, if these integrative processes are already operating so successfully, what need have we to join the Common Market? Why not have the best of both worlds?". The answer is simple. We can keep or we can discard the straitjacket. The price will be paid by Britain and by Europe if we do keep it. Throughout Europe—this includes this island—there is one common complaint among those who are heavily involved in industrial and scientific development—that the political structure of Europe is at least 10 years behind the requirements of the times.
We lack a European currency, a European company law and common European standards in technical matters. National monopoly law as we understand it in this House is now almost an irrelevance because the problem of scale has eliminated the criteria which we employ nationally. While the United States, Japan and Russia race ahead, Europe waits for its Parliaments to ratify, to approve and to legislate. Separately, slowly and painfully, we follow in the technological wake of the United States. Much of the managerial and economic integration already achieved in Europe has been brought back across the Atlantic by American management.
The contrast is nowhere clearer than in pollution. Suddenly Europe awakes to the damage which our industrial system is inflicting on our environment. The first thing that we realise is that pollution has no frontiers, that the effluent from the Thames and the Rhine kills the fish in the North Sea with equal indiscrimination. We organise a con- 1113 ference at Strasbourg, and, according to a recent comment:The only positive outcome … was the suggestion, which might still come to nothing, that a European convention be written to set certain minimum standards of pollution control. But such a convention would require the approval of national parliaments, a process which would take several years and would make the treaty unlikely to escape with any but the broadest and least effective principles intact. This disappointmentsaid the Economist—was in sharp constrast to President Nixon's message to Congress this week spelling out in detail how the massive 10,000 million dollars"——
§ Mr. Speaker
Order. If the hon. Lady the Member for Rochester and Chatham (Mrs. Anne Kerr) cannot contain herself, I must ask her to leave the Chamber.
§ Mr. Lloyd
tight control of industrial water effluent and research into pollution-free engines are to be started at once.And the journal concludes that Europe could follow this lead.
I wonder whether it could. As things are at the moment, we could neither agree to spend a tenth of that sum nor devise the machinery in Western Europe to spend it effectively. This is the heart of our problem. But why should Europe always follow such a lead. Why should we always have to wait for Parliament to ratify conventions? Is this the best that we can do?
§ Mrs. Anne Kerr
Mr. Speaker, would you be interested to know that I believe that this man is a disgrace to the United Kingdom?
§ Mr. Speaker
Order. The hon. Lady is not behaving in a way fit either for a lady or for a Member of Parliament.
§ Mr. Lloyd
I am sorry if my speech is causing the hon. Lady such concern.
The truth is that Europe has no policy in these spheres, and this is one main reason why we must seek to move in this 1114 direction. Britain would not have a scientific policy or a defence policy, or a trading policy if the "policies" of the four separate Governments of England, Scotland, Ireland and Wales had to be co-ordinated in the way in which the policies of Western Europe now have to be co-ordinated.
Policy exists only when need, resources, decisions and techniques are all brought into balance and alignment. The scale of the initiative and the scale of the response must not be generally and continuously smaller than the scale of the problem. There has been more than one classic example of this in Britain since the war, but I will remind the House of only one. When Rotterdam was already using 80,000-tonners to bring grain to Europe, and Amsterdam was planning to use 200,000-tonners we took great pride not more than three or four years ago, and the Minister substantiated this, that we were building a terminal at Tilbury for only 35,000-tonners. That was a classic case of planning on the wrong scale, and as a result most of our grain will almost certainly reach us by transshipment from Europe. We have, I now understand, made a similar mistake in steel.
The scale of our thinking is wrong because the scale of our market is too small. Sir William Lithgow recently reminded us that, when we think on the proper scale, we can imagine great opportunities for this country. Though these developments will continue whether or not we are successful what is profoundly certain is that a Britain which insists on maintaining a separate economic identity, a separate tariff, a separate currency, a separate company law and a separate technology will be a country which has voluntarily chosen the second best solution.
§ 9.41 p.m.
§ Mr. Raphael Tuck (Watford)
It is said of a legislature of one of the Common Market countries, which I shall not name, that the chief object of speaking in that legislature is to say nothing in the most impressive language. That, to me, is what the White Paper attempts to do.
In paragraph 11, on page 6, the White Paper says:Any assessment of the economic effects of membership must therefore be in large 1115 measure qualitative. Nevertheless, in so large an issue, it is necessary to make such quantitative estimates as can be made and to set these in the perspective of a general assessment of the likely effects of membership on the economy as a whole.If you can explain that passage to me, Mr. Speaker, you are a better man than I am, Gunga Din.
Again, in paragraph 44 on page 21, the White Paper says:It is clear that a very wide range of estimates is possible, although the extreme assumptions at either end of the spectrum could not be regarded as realistic since they would depend on all factors operating in the same direction. In practice it is much more likely that the outcome would result from a combination of factors some more favourable than others.What exactly does this mean? A lot of flowery inconsequences.
The White Paper is really very white, because it really says nothing at all. It states one thing and that is that it gives an estimate of £100 millon to about £1,100 million burden of deficit on our balance of payments. If we enter the Common Market. I would ask the Prime Minister, if he were here, whether, if he was giving a job to a builder, and the builder came up with an estimate to do that job and said that it would cost anything between £1,000 and £11,000, the Prime Minister would give him the job.
What will be the economic effects of joining the Common Market? The White Paper has told us that prices will rise from 18 to 26 per cent. Butter will be 10s. a lb.; beef will be 12s. to 15s. a lb.; cheese 7s. to 12s. a lb. and sugar 5d. a lb. What do our housewives think of that? I know what some of them think because they lobbied me in the House yesterday and told me.
We have also been told today that many housewives come from France because they are able to afford the fare over and back to buy British goods cheaply and that it pays them to do that rather than buy those goods in France at present. This is the kind of economy we shall be entering into.
§ Mr. Tuck
They come not only for weekends, but some of them come permanently.
1116 A German told me last week that he came over here to live permanently because he likes a country where he can eat better—whereas he could afford butter only once a week in Germany he got butter every day here. If we enter E.E.C. it will be hard on pensioners and others with fixed incomes. I wonder whether the Prime Minister would give them something in the nature of a cost-of-living bonus if we did go into the Common Market.
In my view, the advantages which have been dangled before our eyes are illusory because, as has been said, wages would be pushed up fast, followed by an increase in the cost of living. There would be a rise in the cost of exports. Britain's competitive power abroad would be decreased. While Britain would have access to markets abroad, it would be easier for these countries to compete with us in our home market here. We would lose our Commonwealth and E.F.T.A. preferences and the advantages of increased exports would be offset by the disadvantages to the tune of £250 million. We have already heard that the agricultural arrangements would mean a burden of £500 million on our balance of payments. We would be merely subsidising inefficient French farmers while penalising ourselves and countries like New Zealand and other members of the Commonwealth.
It is no use some people talking about transitional provisions and of easing our way into the Common Market. France has said definitely in recent weeks that Britain must bear the full burden of entering the E.E.C. So there is no necessity to talk about easing our way in. The millstone of the Treaty of Rome will be around our necks immediately. The loss to our balance of payments might be about £1,100 million, so we are told. After all we have gone through, after the squeeze, after devaluation and after all the efforts which have enabled us to build up a surplus of £500 million, we are to throw the whole thing away, and for what? What is the advantage? The White Paper does not know, for it states, on page 21:…in the crucial area of our financial contribution to the Fund, there is just not a sufficient basis, in advance of negotiations, for making reliable assumptions either about its cost or our share of it.Could anything be more inconclusive? As my right hon. Friend the Member for 1117 Battersea, North (Mr. Jay) has said, "the disadvantages and the sacrifices are immediate, certain and heavy, while the alleged advantages are distant, remote and unintelligible".
I do not want it to appear that I am an anti-European. I remind those in favour of entering the Common Market that Europe consists of more than six countries. I do not want to join an inward looking Community with a wall around it against everyone else. I want an outward-looking Community which other countries can join as and when they wish. Here, I again canvass the possibility of a Community embracing Great Britain and certain countries of the Commonwealth which would wish to join and possibly the United States, E.F.T.A. and those countries of the Common Market also which would wish to join. That was the original idea of the North Atlantic Free Trade Area, of which I am an advocate.
In relation to federalism, I asked a question of the right hon. Member for Streatham (Mr. Sandys) when I quoted what Dr. Lunz and Herr Strauss have said. Apparently, according to them, we would have to go into a federal union. The Treaty of Rome implies it even though it does not mention it in terms. Our parliamentary democracy would disappear and we would be subordinate to the Six. The laws passed by the Commission would apply to us and it is estimated that 2,000 of our own laws and regulations would have to be changed.
My right hon. Friend the Foreign Secretary, although he has no authority for it, is a member of the Monnet Committee for the United States of Europe. We have to ask ourselves this question: do we wish to retain democracy as we know it, or do we throw it to the winds for a nebulous advantage which is not plain to anyone, not even Her Majesty's Government? I remind the House that, if we go in, we shall not be in a situation like that of N.A.T.O., which we can leave. This would be permanent. There would be no getting out. Hon. Members should recall the experience of Ireland, which came into the Union in 1801 and could not get out without a subsequent bloody history. We, too, would be biting off more than we could chew if we joined the Common Market.
1118 The Treaty of Rome is irrevocable and it is a straitjacket. Do we intend to put ourselves into that straitjacket? It is said on page 45 of the White Paper:In the words of the statement published in the White Paper of 2nd May, 1967 (Cmnd. 3269): 'On the economic arguments each hon. Member wil make his own judgment of the effect on exports and imports, on industrial productivity and investment. Equally, every hon. Member must make his own judgment of the economic consequences of not going into the Community and, in an age of wider economic groupings, of seeking to achieve and maintain viability outside.'I repeat the words "every hon. Member must make his own judgment." The White Paper goes on:On this basis Parliament approved, by an overwhelming majority, Her Majesty's Government's decision to negotiate for membership.In my submission, that is absolute claptrap. Parliament did not approve by an overwhelming majority. Each hon. Member was not allowed to make his own judgment. Hon. Members were whipped into the Lobbies. The Government ought to have given hon. Members a free vote to test the real feelings of the House. I believe that most people in the country would be opposed to this move. Parliament has not decided and I doubt whether Parliament now can decide. As this is the greatest step that the country possibly has ever taken, even greater than the Reform Bill of 1832, and as it involves such dire consequences for the whole of our country, I urge my right hon. Friend the Prime Minister—although I am not generally in favour of a referendum—before he goes in, to test the opinion of the country by a referendum.
§ 9.45 p.m.
§ Mr. Michael Clark Hutchison (Edinburgh, South)
The White Paper in itself is welcome because it provides a basis for discussion. It also sets out quite clearly that if we join the European Economic Community there will be a considerable rise in the cost of food and, of course, in the cost of living. But otherwise, the White Paper is riddled with assumptions, as paragraph 60 indicates. We are continually asked to accept informed guesses and to have faith in rough estimates.
What the Prime Minister proposes to make of the document is another matter. I for one do not see him as a Nathaniel 1119 in whom there is no guile. This weekend he was stressing that all negotiation could safely be left in his hands. But, as hon. Members will remember, the Prime Minister's negotiations have not always been very successful, either in Rhodesia or "In place of Strife".
In this debate, however, I am more concerned with some detailed points. First, paragraph 56 of the White Paper makes it quite clear that if we join the E.E.C. trade relations with the Commonwealth preference area would be affected to our disadvantage. They would also be affected to our disadvantage as regards E.F.T.A. The common external tariff of the Community would have to be accepted and would operate against—I repeat, would operate against—Commonwealth countries.
I ask a number of questions here. What effects will this reverse process have? No calculations have been given. I have no special information, but it seems, from Australian sources, for example, that the loss to Australia's trade with us will be £80 million a year, and the loss to our trade with them will be £160 million. That is only one country, what about New Zealand, Canada and other areas in the Commonwealth, not to speak of South Africa which has special preferences with us? The Government are much at fault in not stressing and spelling out those figures.
I should also like to know on what political principle the Government are operating to bring about a situation whereby Her Majesty's subjects for many decades, and our friends, are to be treated worse economically by us than we treat foreigners. This is a strange way of going about things in a troubled and difficult world.
Do the words of my right hon. Friend the Member for Barnet (Mr. Maudling) still hold good with the Government and my Front Bench? He has said:I cannot conceive of any Government of this country putting forward a proposition which would involve the abandonment of Commonwealth free entry. It would be wrong for us and wrong for the whole free world.I heartily agree. What we want to know is why we are not sticking to that excellent principle.
There seems to be one vital omission from the White Paper. If food prices 1120 rise—and we are told that they will by up to 26 per cent.—what exactly is the position on subsequent wage claims, and consequently on the cost of our goods? There are no figures here. Why not? Why cannot the Government say what they imagine the position would be? I agree with what the hon. Member for Watford (Mr. Raphael Tuck) said about retired people. What will be the position of the pensioner and those on fixed incomes? What arrangements are the Government making to help them? What portion of the national resources will have to be devoted to their welfare? What changes will there be? There is not a word about this.
I am much concerned about the real aims of the Government. We are told by the Prime Minister that there is no question of federation, but the Foreign and Commonwealth Secretary seems to be saying something different. It is not good enough. It borders on the dishonest. The Government must have ultimate ideas and intentions. Surely they can calculate what they are and let us know? I have no doubt that federation is the basic aim of many in Europe. We might do well to remember the words of Dr. Lunz, who said that federation is the music of the future. The people deserve to know, and are entitled to know, what exactly the Government forecast or want in this political direction.
The question of law worries me very deeply. It is briefly touched on in paragraph 51. There is no doubt that joining the E.E.C. would affect Britain's international legal position. It would restrict our international dealings, particularly our treaty-making powers. It would lessen our freedom of negotiation and our present arrangements with, and commitments to, member countries of the Commonwealth. We should be required to pass legislation on Customs duties, agriculture, transport, labour, services, and capital movements, not to speak of restrictive practices, and regulations concerning coal, steel, nuclear energy and many other things. The list is unending. We should not be masters in our own house, and the loss of sovereignty would be vast. I do not know what all other hon. Members think. I must make it clear that I was not elected to support these policies, nor is there any mandate for them from the country.
1121 Why have not the Government been more forthcoming on some of these fundamental issues? As regards the Common Market as a whole, too many things are unquantifiable, full of conjecture, and mere pious hopes. It is a very poor prospectus. I would not invest in this venture.
§ 10.0 p.m.
§ Mr. Stanley Henig (Lancaster)
I welcome the publication of the White Paper, because by and large it is a good thing that the public and the House be as informed as possible on great issues such as the Common Market so that there may be the widest possible discussion.
It simply is not correct to argue that, because the White Paper is necessarily short, therefore there is a shortage of documentation on the subject. I could personally offer to the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), who suggested this, a great mass of material—some of it good, some of it bad, some of it indifferent—which might or might not help to illuminate him.
§ Sir D. Walker-Smith rose——
§ Sir D. Walker-Smith
Have not the economists and others who have commented on the professional quality or lack of professional quality of the White Paper been virtually universal in their condemnation of it as a professional document?
§ Mr. Henig
I thought that the right hon. and learned Gentleman would anticipate remarks that I shall be making later. At present I am talking about the volume of material that is available. I was going on to say that the advantage of having the White Paper is that we have a point of view from the Government which has a kind of official stamp and, therefore, forms a locus for our debates. Having said that, I had intended to go on to make certain criticisms of the way in which certain matters in the White Paper have been arrived at.
§ Mr. Henig
Towards the bottom of page 15 it is stated that the price of food is likely to rise by between 18 per cent. and 26 per cent. This statement has been seized on by the Press. I notice with interest that most of the Press have taken the figure towards the higher end of the scale. What interests me, too, is that the range of 18–26 per cent. is rather higher than similar ranges which have been published elsewhere.
A similar comment applies to the forecast 4–5 per cent. increase in the cost of living. The figures for the likely rise in the cost of living given in the Report of the Monnet Committee, in the Report of the Commission of the European Committees, and in the C.B.I. Report, is 3½–3¾ per cent. Why is there this difference?
Paragraph 28 contains a vital phrase—18–26 per cent. higher than it would otherwise have been".What does "otherwise" mean? "Otherwise" is in this context rather important. Whether or not we join the Common Market, the world will not stand still in the next five or six years; nor, I suspect, will prices in Britain. I should like to think that prices would be stable or even go down, but experience over the past 10, 15 or 20 years makes me think that that is unlikely.
My next specific criticism arises on the reference at the top of page 21 to the sums of money we might be paying over to the common agricultural policy. There is this phrase:90 per cent. of United Kingdom Customs duties might by thenthat is, by the late 1970s—be about £240 million".How has this calculation been arrived at? Does it take into account the fact that, as goods from the Common Market will be entering Britain duty free and there will be more of those goods and relatively fewer from other countries, customs duties will be relatively lower than they would be if we were not in the Common Market? This is an important point which affects the later calculation in the White Paper.
Table 12 deals with the summary of impact effects on the balance of trade in items other than food. I find this a most disappointing section because it is so thinly argued and has no apparent 1123 economic reasoning behind it. It appears that only the price elasticities of imports and exports have been considered. The interesting report of the C.B.I., although I do not agree with many of its approaches and conclusions, talks about income elasticities as well. This is most important. If the income of the Common Market of which we were a member continued to rise in the future as fast as it has in the past, the propensity of the Common Market to import from us is likely to rise considerably. There ought to be some attempt to quantify this effect.
To turn to paragraph 101, on which virtually every speaker has commented, the estimate of from £100 million to £1100 million is quite meaningless. At the one end it has regard to all the most favourable factors and on the other to all the most unfavourable ones. Either contingency is totally improbable. However, it is particularly unfortunate that the impression is given that the figure in the middle might be acceptable to us. Of course it would not be acceptable for Britain, on going into the Common Market, to incur a deficit of £600 million on the balance of payments, because we simply could not afford to pay such a price. If we could afford it, I would be willing to pay it, but we cannot.
Some hon. Members have spoken as if the White Paper lays down what will happen and we can take or leave the White Paper as if we were taking or leaving the Common Market. This is not true. There will be negotiations, and nobody has ever suggested that this Government or any other would go to the Common Market and ask to sign a treaty which was designed just for Six. This would cause grave difficulties.
The feeling in Brussels, in the Commission and in the European communities is that (a) they want Britain in, (b) they are prepared to do anything they reasonably can to help us, and (c) they recognise the problems outlined in the White Paper. If the Government go into these negotiations and talk with the Governments of the Six and with the Commission, they will find a real political will to seek ways and means of dealing with the problems. When the Government bring before the House the next White Paper on the results of their negotiations, it will 1124 show how they have been successful in reducing the short-term cost of entry into the Market to acceptable terms. I am speaking here of short-term costs. The arguments put forward by anti-Marketeers in this debate in no way influence the long-term gains, either economic or political, of membership of the Common Market.
Although the cost of living is important, the standard of living is much more important. The rate of growth of the gross national product has been higher in the Six than in Britain. Although it cannot be proved that simply by joining the Six we would share in this higher rate of growth, it is distinctly possible that, given the extra opportunities for trade, our rate of growth would at least edge up, and a rise in the rate of economic growth is cumulative. It is not a static, once-for-all, effect. In other words, these positive effects build up over a period of years and this is most important.
It has been suggested that somehow Britain, by joining the Common Market, will be choosing to trade with Europe rather than with the rest of the world. That is nonsense. As a trading country we have to trade with everybody we can, but what is important is that by having a bigger home market, which the Common Market would offer, we would have a better base from which to develop the large scale industry that is needed to compete most effectively in the world as a whole.
One of the biggest problems that has hindered our rate of growth in the past has been financial rather than economic and has involved the international rôle of sterling and speculation. I believe that European countries are moving closer and closer towards the kind of monetary co-operation which means that when one country faces such problems the others are prepared to assist in their own self-interest. In other words, part of the package deal of negotiation must involve certain monetary arrangements which can be a major safeguard for the future.
Some people have suggested that the Government in presenting the White Paper in this form have run away from the political issues. This is untrue. The Government were asked, indeed challenged, by the Opposition front bench to 1125 produce some kind of economic assessment. It has done its best. I do not think it is necessarily the last word, but it is a good effort.
The political questions are of a different magnitude, but once again we must start from the point that the world does not stand still. There will be changes in the Western world whether or not we join the Common Market. What is most important is that we in Europe must recognise that sooner or later the relationship between the United States and Western Europe will change. In the next decade there will be increasing pressures inside the United States for bringing home many of its forces on the European mainland. We will have to have some kind of policy for dealing with the problems that will cause.
Some people put forward one kind of policy, other people put forward another, but Britain alone cannot plan for this contingency, nor can Germany alone, nor can France alone. I feel that there is a danger that if Britain does not play her full part in Europe, then Western Germany inevitably, because of its economic size, will begin to take over the major rôle in defence. This would be highly dangerous to Western Germany, to ourselves and to the whole context of East-West relations. This again is a problem that must be faced. It seems to me that Western Europe must organise itself so that when the time comes it can talk on relatively equal terms, both with the United States and the Soviet Union.
Those of us who want Britain to go into the Common Market are not shutting our eyes to developments in other European countries. There is a saying that all roads lead to Rome. That might not be a particularly apt analogy in this instance, but it is certainly true that the Common Market has come to be a pole for all kinds of European activities. It may be that some of the E.F.T.A. countries would prefer to stick to E.F.T.A. and not join the Common Market. However, we know that Austria wants to join whether or not we join and Denmark very much wants us to join so that it can enter the Community on the day afterwards or indeed, on the same day.
It is true to say that we are only likely to go into the Common Market in a general arrangement containing special 1126 provisions for all the other E.F.T.A. countries. There will come to be one general economic and political bloc for Western Europe.
What about Eastern Europe? Sometimes this is held up to us as an alternative? I very much regret that our policy towards Eastern Europe is less progressive and far-sighted than has been practised for some years by the French Government and now by the Social Democrats under our good friend Willy Brandt. It seems to me to be quite appropriate to look to a future in which a united Western Europe can think in terms of reviving contacts with the Eastern part of the Continent. This is essential. But once more it is not a task to be tackled by European countries individually. We must do it together.
The history of the last 10 or 15 years has shown that a country of the size of Britain despite its past, is unable on her own account to play an effective rôle in world affairs. We have a choice. The choice is whether we will shut ourselves off and be a little Britain, a little England, or, indeed, a little Scotland or a little Wales. [HON. MEMBERS: "No."]—or whether we wish to play some kind of rôle in world affairs, through our association with the continent, of which we are a part.
I would remind some of my hon. Friends that however desirable it might be thought to be we are not part of the North American continent or of the African continent or of the Asian continent, but we are part of the European continent.
§ Mr. Henig
If we are to join with any other countries, it has to be with those European countries. There are short-term prices which will have to be paid. We shall not always get our own way. But, generally, we shall have a basis from which to play a more significant part in world affairs. How the policies will be worked out, the future will determine.
My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), whose speeches both delight and frighten those of us who disagree with him, specified the point about political and democratic control in a Western European community. I 1127 believe that everyone who is in favour of the Common Market will agree with him. We want to see further progress towards the tightening up of parliamentary control in the enlarged Western European community. That is essential. I am sure that my hon. Friend will help us in this fight when we are members of the Common Market. If it can be done, we shall have the framework and the procedures for arguing about important policies which will be really meaningful and make it possible for Western Europe to play a rôle in the rest of the world.
It has been suggested that it would be inward-looking to join Western Europe. I cannot agree with that. Only one thing is inward-looking, and that is to remain on our own and pretend that we can have a world outlook. We cannot do that. The country has to choose between remaining in unsplendid isolation and continuing to play an important rôle in world affairs with our Western European partners. It is the latter choice that I commend to the House.
§ 10.17 p.m.
§ Mr. Douglas Dodds-Parker (Cheltenham)
I am sure that every hon. Member on the back benches will agree with the last remarks of the hon. Member for Lancaster (Mr. Henig) about wanting to see the parliamentary control of the Executive tightened.
Those of us who have followed the debate, especially the last two or three hours of it, will agree that there have been some extremely useful contributions. When the negotiations get going, I hope that the hon. Member for Heywood and Royton (Mr. Barnett) and the hon. Member for Ashton-under-Lyne (Mr. Sheldon) will be attached to our delegation, with their obvious expert knowledge of how to look at some of the figures which Ministers appear to find difficulty in interpreting. In due course, as negotiations proceed, it may be that my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) and my hon. Friend the Member for Westmorland (Mr. Jopling) will join the delegation, with their expert knowledge of some of the matters which will need negotiating.
I am glad to have an opportunity to intervene in the debate, because, when we 1128 last had a major debate on the subject about three years ago, I was abroad at a Commonwealth Conference with a right hon. Member on the benches opposite. We did not get back for the debate. If we had, the majority would have been increased by two, as we both supported the majority view of the House in May, 1967—[Interruption.] Mr. Deputy Speaker, I am not sure whether I would be in order in moving that breathalysers be now brought. If I am not allowed to proceed with my speech, I will return to that suggestion.
On that occasion, the House decided that we should make application under Article 237 of the Treaty of Rome for membership of the European Economic Community. I am delighted that our application remains on the table, and that this White Paper has been published so that we might try and discover what some of the figures involved mean.
With the hon. and learned Member for Dulwich (Mr. S. C. Silkin), I was in Strasbourg three years ago when the Prime Minister announced that the Government had decided to make application for membership of the Community. Everybody present on that occasion admired the restraint of my right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) when giving full support to the Prime Minister on behalf of the Opposition in view of what had happened previously.
Today we take another step when the House is asked to take note of the White Paper in which the basic economic factors to be considered in the negotiations are put forward, in however doubtful a way. Many hon. Members will have noted that the White Paper does not include defence, the political or the technological side, which are vitally important and, as far as I am concerned, the decisive factors in our application to join the Community.
I realise that public apprehension about our application has grown and, as has been noted by my right hon. Friend the Member for Barnet (Mr. Maudling), for three years, when there was no chance of us joining the Community, the case for joining has not been put forward as strongly as the case against.
The White Paper purports to be a negotiating document. Hon. Members—particularly those from the trades unions 1129 —know that before one goes into a negotiation one does not disclose one's whole hand. I think that most hon. Members will agree that the hand disclosed by the White Paper does not appear to be a good one. To some of us it does not appear to be a hand at all. Yet, at the same time, I believe that the Government have made an effort to produce a balance between disclosing too much on the one side which would be favourable to us when the negotiations are opened and, on the other side, giving too gloomy a future outlook for those interested at home who might be too depressed. But the result seems to be a muddled conclusion which has not got much approbation on either side.
I do not believe that if a bargain is favourable to one side it is necessarily unfavourable to the other. Since 1945 I have had no doubt that closer association with the countries of Europe in economic, defence and political affairs would be to the advantage of us all. We are discussing now how this should be carried out.
One eastern European said to me recently that had the Community existed at the time, as it exists today, we might have avoided at least one of the last two world wars. I am sure that every hon. Member in this House feels that there may be some substance in that suggestion and would back it if that were so. This is one of the imponderables that we are trying to discuss over and above the economic situation in the White Paper. I assure the House—and hon. Members on both sides I am sure will agree—that many in Europe feel the same about it.
I believe that it is a mistake to imply that a number of individuals either in the Commission or in the National Governments of the Six are dedicated to doing this country down. I believe that the opposite is true, as the hon and learned Member for Dulwich (Mr. S. C. Silkin) said. We have many friends in Europe to whom the appeal of Britain joining is more than material. I believe that there is also an appeal in a wider association to the young in Western Europe as in this country.
Those of us who had the privilege of serving at the Council of Europe and the Western European Union Assembly and watched their growth, the Council in Joint Sessions with the European Par- 1130 liament, will see how these institutions are growing. I was sorry when one hon. Gentleman took exception to the idea that these institutions are in their infancy. The changes which have taken place in this House, certainly since the war, are very great. The House of Commons is in itself a growth industry, and certainly the Parliamentary institutions in Europe are in a state of growth. But it is encouraging to all of us at the Council of Europe and these other assemblies to see how individuals of all parties and countries work together in the wider interest. They are more than receptive to ideas from this country. It would be invidious to name any, but hon. Members of all parties have made major contributions to that work, especially the work of the Committees.
One might go further and mention that the civil servants from this country who have done so much to establish and run the Eupropean institutions—the O.E.C.D., N.A.T.O., the International Monetary Fund, Western European Union and so on. I find a very warm regard throughout Western Europe for the part played by our countrymen.
At the same time, the other negotiators will have their national responsibilities to get the best arrangements for their electors, just as we have. But there is now, at last, a political will to allow the United Kingdom to join which did not exist before. The White Paper says that the Six are now unanimous in favour of our entry. This political will did not exist when the present Leader of the Opposition tried to negotiate our entry eight years ago.
Today, the point is not the lack of political will but the terms of the negotiations. Bargaining will clearly be hard and there are complexities between us as within the developing Community itself. My hon. Friend the Member for Westmorland (Mr. Jopling) mentioned agriculture. This was so in 1961 and 1962. Whatever view individuals took of those negotiations, I have heard no criticism of the capacity of my right hon. Friend in leading them. It was admired by all parties and all countries, even if individuals did not fully agree with his objectives.
It is ridiculous to say that he would "sign blind". He could have done so in 1961 or 1962 rather than go through the 1131 prolonged and detailed negotiations about "kangaroo tails", with great respect to our friends Down Under, which reached a degree of detail which tended to make the negotiations ridiculous. My right hon. Friend's aim then, as it is now, was to get the best for the United Kingdom and the Commonwealth.
In 1970, what we must first ask the Government is for an assessment of the cost, because, as my right hon. Friend was first to say last year, there is a price which would be too high. There are sadly few left in the House who worked in the post-war decade—the right hon. Member for Leyton (Mr. Gordon Walker) who will speak tomorrow, I think was one—to make the Commonwealth work to the best advantage. It was never a closed economic, political or defence association——
§ Mr. Dodds-Parker
Many of these independent Commonwealth countries have found that it suited their needs to make agreements outside the Commonwealth. There are examples in East and West Africa. They have reached agreements of association with the E.E.C. which give them some advantage. Australia's new relationship with Japan has only developed fast in the last two or three years, indeed, since the previous negotiations.
I regret that future Commonwealth relationships are unlikely to develop in the way that many of us tried to develop them in the post-war period. We must, therefore, find a substitute for the economic, defence and political advantages some of which we sought there and which we are now seeking in an ever closer association with Europe.
I have always tried, by inclination and training, to discuss major issues in terms 1132 of policy and not in terms of personalities. I always believed, with Ernest Bevin, that overseas policy should, wherever possible, be national and not party; and this question of associating with Europe has been all-party aim since the war, just as opposition to it has been found within all the parties.
When I started to get involved in political affairs in the 'thirties I found that diplomats, businessmen and journalists knew what was going on in Europe while, regrettably, Westminster appeared to be badly informed. But since 1945, thanks to the assemblies to which I have referred, there has been a high degree of knowledge in this House about what is going on in Europe, and that has been demonstrated today.
For this reason I regretted what the Prime Minister said last weekend. I ventured to warn him that if I were fortunate enough to be called to speak I would answer some of the points he appeared to make, but my right hon. Friend the Member for Barnet (Mr. Maudling)—my right hon. Friend the Leader of the Opposition will doubtless do the same when he speaks tomorrow—demonstrated that my right hon. Friends are well able to answer for themselves, I will not deal with that matter.
I believe that this is an interim debate. We have been told that, if necessary, we can stand alone. I am sure that, if that were necessary, we could, as we stood alone in 1940 and 1941. But standing alone was not and is not particularly comfortable. How much better, safer and more prosperous it is to stand with others. I therefore look forward to the negotiations proceeding along the lines set out in the White Paper.
I trust that the price to be paid by the United Kingdom will prove acceptable when, after the General Election, the matter comes before the House again. I hope that future generations will be able to applaud an all-party decision to work towards an ever more closely united Europe, always within the Atlantic Alliance.
§ 10.33 p.m.
§ Mrs. Renée Short (Wolverhampton, North-East)
The hon. Member for Cheltenham (Mr. Dodds-Parker) implied that the alternative to going into the E.E.C. would be for us to stand alone. That sounded tremendously dramatic, and it reminded one of the embattled situation which we faced during the war.
I remind the hon. Gentleman that we would not, and do not, stand alone. We are part of one-third of Europe, we are a member of E.F.T.A. and, despite the remarks of my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), we are still part of the Commonwealth.
We have had some extraordinary speeches today, from the frustrated Tory imperialism of the right hon. Member for Streatham (Mr. Sandys)—who, I am glad to say, went a little further than merely saying that the whole question of entry depended on the price of butter—to the extraordinary comments of my hon. Friend the Member for Ashton-under-Lyne, who tried to wish away the great proportion of our trade that is done with the Commonwealth and deny the figures presented in the White Paper.
Between 1958 and 1968 our export trade with the Commonwealth increased by 14 per cent., representing an actual increase of from £1,239 million to £1,408 million. This is a percentage increase. It is an actual cash increase. It represents 23 per cent. of our export trade. For right hon. and hon. Members to pretend that it is a negligible proportion and not important to us is nonsense.
§ Mr. Barnett
My hon. Friend must not misquote what my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said. She has overlooked the slight fact of inflation in terms of prices, in terms of the percentage of our total exports, I am sure that she would not deny, looking at the figures, that, as my hon. Friend said, there has been an enormous decline in the total percentage.
§ Mrs. Short
I am sure that my hon. Friend the Member for Ashton-under-Lyne will be very grateful that my hon. Friend leaps in to defend him.
Decline or no decline, it is still 23 per cent. of our export trade. It is a very 1134 large proportion, and over the past 10 years it shows a 14 per cent. increase. These are figures one cannot dismiss.
I am glad that we have the opportunity of this debate. My hon. Friend the Member for Lancaster (Mr. Henig), in whose speech I found a great deal with which to agree—I do not want to frighten him either—said that the Opposition have been pressing for an opportunity to debate the matter and have a White Paper. It was not only the Opposition. There has been pressure from this side of the House. It is not all that long ago that my right hon. Friend the Foreign and Commonwealth Secretary told the House that it was not in the general interest that we should have a White Paper and the figures. I am glad that he has changed his mind and that we have the White Paper. It gives the country an opportunity to consider the case and the figures.
There is no doubt that the ground has shifted a good deal since we last debated the Common Market in the House and had what many hon. Members have referred to as the six-line Whip. It has now shifted from the economic ground, which was supposed to present us with such a marvellous opportunity, to the political grounds which are unquantifiable. It is very difficult to see how they will develop and what the benefits will be. There has been a shift of emphasis on the part of my right hon. Friends on the Treasury Bench.
Outside the House there will be a great deal of debate. It is right that people should understand, because the decision will be revolutionary and of fundamental importance, whether or not we go in. The White Paper leaves no doubt that the short-term costs of entering the Common Market will be very serious. There is no argument about this. The White Paper reaffirms what my right hon. Friend the Member for Battersea, North (Mr. Jay) and many right hon. and hon. Members on both sides have said ever since the days when the Leader of the Opposition was in charge of the negotiations. On the whole I think that we have been proved right.
The White Paper also confirms and reaffirms the doubts expressed at the Labour Party conference last October about entry into the Common Market and the need 1135 to make sure that British interests are safeguarded. We are glad that my right hon. Friend the Prime Minister has reiterated on many occasions that unless the price is right, unless our interests are safeguarded, he is not prepared to take us in. The White Paper puts the cost of entry at anything between £100 million and £1,100 million; so, hedging one's bets, it is bound to be right I suppose, unless the figure is very much worse than £1,100 million suggested.
The consequence to Britain of switching to Europe from our traditional source of food supplies is put at between £125 million and £275 million per annum—not just once—during the transitional period. Many of us believe that that is too low a figure. The French certainly take the view that the figure will be nearer £800 million.
One of the main question marks which hangs over the whole issue, and one which will bear heavily on housewives, is the cost of our food import bill if we go in. Housewives will have to pay something approaching the continental prices for food if we have to adopt the common agricultural policy. We have always ass amed that farm production in this country would show a considerable rise if we went into the Common Market and we had to rearrange our method of financing agriculture. But the E.E.C., because of its inefficient agricultural industry and over-production in so many areas, is having to curtail farm production, not increase it. This means that our farmers will have to curtail their production. It will mean that some farmers will go out of business. It will mean that import substitution will have to be thrown overboard, and that tariffs will have to be raised, not only against food imports from E.F.T.A. countries but from the Commonwealth, new and old, which are our traditional sources. At the same time, we shall be expected to import more food from Common Market countries.
§ Mr. James Scott-Hopkins (Derbyshire, West)
I am sure that the hon. Lady does not want to misled the House. She has the agricultural argument wrong. If we change over to a different system of agricultural support, there is enormous capacity which our farmers can take up. 1136 We are producing less than 70 per cent. of many of the commodities that we require. Given the incentive, we are capable of increasing our production. This is the opposite of the argument which the hon. Lady is using. I ask her to look at the relevant paragraphs in the White Paper and to reconsider her argument, because it is false.
§ Mrs. Short
I think that the hon. Gentleman has misunderstood what I am saying. I am not saying that our farmers are not capable of producing more. I have argued before in the House that they should be encouraged to produce more and to carry out import substitution. What I am saying now is that if we go into the Common Market they will not be able to do that.
§ Mrs. Short
I have explained that there is over-production in the Common Market, and that they will expect us to buy more of their over-produced goods, and therefore there will not be the opportunity for British farmers to produce more. I am sorry that I cannot persuade everybody in the House to accept my view. I do my best. I think that the French understand the situation, because Mr. Schumann, who was recently interviewed in Paris, asked whether Britain understood that part of the price that she would have to pay was to import more food from the Common Market countries. I doubt whether many people here understand this. Certainly all hon. Members do not.
The Prime Minister is anxious about the length of the transitional period which will be negotiated. He wants the transitional period for agriculture to be as long as possible so that we can get over this business of rising prices and cushion the effect on the cost of living. I suppose that he wants a short transitional period for industry, but the likelihood is that the Six will insist on a short transitional period for both agriculture and industry. They will take us into the Common Market only if it is in their interests to do so, not if it is in our interests. In spite of what many of my hon. Friends have said about idealism, and how anxious the Common Market bureaucrats are for us to go in, the fact is that they will allow us in only if it is in their 1137 interest to do so, and if it works out on the right side of their debit and credit balance.
Overall, the additional cost will be a considerable shock to the people here. There is no doubt what effect this rise in the cost of living will have on our export markets. If our export prices rise by as much as 4 per cent., as well they may, the effect on the £500 million worth of export trade that we do outside the Common Market will be very serious.
Many hon. Members have referred to the preferential treatment our exports received in E.F.T.A. and the Commonwealth. This would vanish altogether. We should lose about £450 million a year—a considerable amount. Our goods all over the world would suddenly become more expensive and therefore less attractive. That would be so in the Common Market countries as well. Our labour costs would be likely to rise dramatically while theirs would probably rise at a slower rate. Our goods would thus suddenly become more expensive to them as well.
We are constantly told of the great advantages of being part of a large unit with a huge home market at our disposal. But our own domestic market would be overwhelmed not only by food imports but by industrial imports. The West Midlands is a highly concentrated industrial area, producing engineering and electrical goods of all kinds. It would be in considerable difficulties.
§ Mr. Charles Fletcher-Cooke (Darwen) rose——
§ Mrs. Short
No. I have given way often enough. Interventions only prolong speeches. I want to get on.
Over the years, there have been complaints about imports of food which could well be produced by our own farmers, and I have supported those complaints. We have also complained about the import of cheap textiles from Italy and about the import of cheap hosiery and footwear—all things that we can produce ourselves. We have made representations many times to Ministers because we are concerned in many parts of the country about the threat to the livelihoods of our constituents. In the West Midlands we are concerned about the rise in the imports of foreign cars and the effect upon 1138 the British motor car industry, and the same applies to heavy electrical manufacturing.
Indeed, members of the Common Market are also concerned about foreign dominance in some parts of their industries. There are only ten major heavy electrical equipment manufacturers in the Six. There is virtual monopoly and little competition between them. Officials of the Community want that number reduced to three major international firms, which means that seven of them will have to be swallowed up.
The French are particularly concerned about foreign investment in their industry. About 15 per cent. of French industry is controlled by foreign interests, and a large number of small and medium-sized firms have gone to the wall since France signed the Treaty of Rome. I wonder what would happen to our own heavy electrical manufacturing industry in similar circumstances. It is clear that it could not possibly compete and would thus go the way of many of our car firms and be taken over by foreign interests.
My right hon. Friend the Minister of Technology referred in the debate on the motor car industry on 11th February to the problems that we cannot blink at, arising from the fact that three of our major car firms are American companies which are increasingly planning their operations on a worldwide basis. The car industry, so much of which is based in the West Midlands, has done marvellously well as a major exporter, and its home market would probably contract in competition with European firms. It would become less and less independent as monopolies developed still further than they have already.
Our car industry would be at risk in the Six and in the rest of the world because people in the Six would probably continue to buy their Mercedes-Benz, Fiats and Citroens. They would not buy our Austins and Rovers. We would find that more foreign cars would come into our market, rather than the other way round.
§ Mrs. Short
Already foreign cars form 10 per cent. of the total figure of cars in Britain. We have seen work trans-referred to the Continent, meaning fewer jobs for men and women here. There are factories that have been established in Europe with capital exported from this country. My hon. Friend the Member for Heywood and Royton (Mr. Barnett) said that no Government has been willing to stop the export of capital abroad. These factories find work for the Belgians, Dutch, Germans and French, but none for our people. If we were in the Common Market we would find it impossible to control the export of capital to the Six.
The emphasis has shifted from the economic arguments of the ardent pro-Common Marketeers to the nebulous, unquantifiable political advantages. What are they? Are we to enter the Community to help France balance West Germany, politically and economically? What of the problem of East-West relations? What about the problem of normalising relations between the two Germanys, which is the crux of the problem of a reduction in East-West tension and peace and security in Europe? Unfortunately, we have not followed the lead set by the West German Chancellor. We have been very timid. The Foreign Office has not changed its tune since the 1930s, and it is time that it brought itself up to date.
What shall we do if we go into the Six? On whose side shall we be, because we have to be on someone's side when there is this cleavage of political opinion? Have we given any thought to what will happen to our E.F.T.A. partners, or those left—the rump of E.F.T.A.? Have we thought about the developing countries of the Commonwealth and the more prosperous members of the Commonwealth? What would happen to them, particularly to those with whom we have long-term agreements and who rely on our market to raise their standard of living? It would be better to forget this application.
I would like to see us start afresh, to try to negotiate a free trade agreement with trading contacts between E.F.T.A. and the Six, without any political strings at all, without any of the unpleasant, objectionable aspects of the Treaty of Rome, to which we shall inevitably be 1140 tied if we enter the Community. Membership of the Six would bring defence commitments. Hon. Members have mentioned the pressure on President Nixon to withdraw troops from Western Europe. Does that mean that we are supposed to fill that gap, to take up the slack? This will have an effect on our economic situation, and the balance of payments. Since 1964 we have tried to reduce our defence expenditure. We have succeeded to some extent, but if we enter the Six our defence commitments will rise, bringing an additional burden on our balance of payments. I again remind my right hon. Friends that last October the Labour Party Conference set its face firmly against a nuclear-armed federal Europe with Britain as part of it. We cannot for ever set our faces against public opinion whilst expressing ourselves to be in favour of public opinion in our party.
We all know the tremendous effort we have made during the last five years in getting the balance of payments right. How can we contemplate another 5, 10 or 15 years of similar effort, or perhaps even greater effort and denial of the rise in the standard of living that the people have the right to expect, to achieve solvency if we enter the Common Market?
§ 10.55 p.m.
§ Mr. W. H. K. Baker (Banff)
The hon. Lady the Member for Hamilton (Mrs. Ewing), who I regret to say is not here, made some odd statements. I was previously of the opinion that the Scottish National Party was in favour of total separation from the rest of the United Kingdom. I gather since that fundamental pronouncement was made that it has somewhat changed its mind and that total separation is not now one of the tenets of its faith. I gained the impression earlier that the hon. Lady was speaking as she would like to say, for an already independent Scotland. As Scotland is still, and will long remain, a part of the United Kingdom, any benefits that may accrue to the United Kingdom from membership of an enlarged E.E.C. will equally accrue to Scotland. The hon. Lady spoke as though she was defending an already separated Scotland.
I shall address the burden of my remarks to the centre of the triumvirate of 1141 agriculture, fisheries and food. I am delighted to see the right hon. Member for Edinburgh, Leith (Mr. Hoy) on the Front Bench. I know that as Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food he has considerable interest in the fishing industry and will take note of what I say.
When the Prime Minister introduced the White Paper on 10th February I asked him about fishing. He said that fishing was referred to in the White Paper. After having read Cmnd. 4289 with great care, the only reference in it to fishing that I can find is this statement on page 19, paragraph 37:Direct exports of certain agricultural commodities and of fish could be stimulated"—that is, if we joined the Common Market. I regard that as an honourable mention. It is not enough.
I have asked the Prime Minister if he will give us more specific information about the fishing industry and the impact on the balance of payments, on the cost of living, and all the other aspects dealt with in Chapter II of the White Paper. I have done this, first, because of the basic economic importance of fishing to our economy and, secondly, because of the amount of fish consumed per capita in the United Kingdom. This has a direct bearing on the cost of foodstuffs, and hence on the cost of living.
The White Paper's detailed comparison of the relative prices of certain foodstuffs makes no mention of fish. The White Paper details the rôle of agriculture in terms of the E.E.C.'s common agricultural policy. There is no attempt to quantify the position of the fishing industry.
The fishing industry plays a considerable part in the economy of my constituency, and that is the basis of my anxiety. With some small exceptions, the United Kingdom market for fish imports is liberal. Fish and fish products come in completely free from the Commonwealth, South Africa and Eire, and in this respect the United Kingdom market is extremely large. It is easy of access. Only the United States of America is a larger market for fish and fish products. The E.E.C. is the third largest market, but that has an 18 per cent. tariff barrier over which we have to jump.
1142 Futhermore, the rights of establishment of a basis for fishing and fish products even now are denied to us in E.F.T.A., and I understand that many of the E.F.T.A. countries would want that to continue. Certainly we are denied the rights of establishment in the E.E.C., and many E.E.C. countries deny landing rights. They certainly impose quotas. West Germany being the exception.
British vessels are denied certain territorial waters; for instance, Iceland. Admittedly, the E.E.C. rules and proscriptions have not yet been ratified, but those rules and proscriptions and the Treaty of Rome itself specifically state that all waters of signatory members are to be free to fishermen of all member countries.
In 1964, in its wisdom, the House fixed fishing limits, and those limits have been of enormous benefit to the inshore fleet. Now we face the prospect of those fishing limits being again removed so that fishing vessels from Northern Europe can return to the prohibited areas such as the Minch and Moray Firth, areas of vital importance to the inshore fleet. The abandonment of such areas to general fishing by all nations of Western Europe, including the Scandinavian countries, will be important to constituencies bordering mine; namely, Moray and Nairn, East Aberdeenshire and North Angus and Mearns.
Another economic disadvantage for the fishing industry of British entry into the E.E.C. would be that grants and loans for boats and subsidies—all in the interests of keeping down fish prices, I emphasise—would be done away with. That brings me back to the second of my points. The Digest of Statistics for January, 1970, under the heading "Estimated Household Food Expenditure and Consumption in Great Britain", shows that for the four quarters ending September, 1969, the consumption of home caught and imported fish per household per week in the United Kingdom was 5.49 ounces. Under the heading for carcase meat, the amount consumed per head is 15.90 ounces per week.
Therefore, for all households in Great Britain the consumption of fish is nearly one-third of the consumption of meat, and fish is thus a considerable portion of the nation's food. As I have said many times before, fish, weight for 1143 weight, is the highest source of protein known to man, and it is something which we cannot do away with except at our peril.
Under the rules and prescriptions of the Common Market fisheries policy there will be harmonisation of prices, financial assistance, security, safety and welfare and, of course, harmonisation of trade. This E.E.C. policy is an integral part of what the fishing industry will have to face, and I fear that harmonisation will be to the detriment of the fishermen of Great Britain at large and, more particularly, of the inshore fleet.
The Trawler Federation, in giving evidence to the Select Committee on Agriculture, had this to say about the level of fish prices in the E.E.C.:The general level of fish prices in E.E.C. would probably be lowered by British entry and this effect would be reinforced if Britain were accompanied by Scandinavian entrants. Nevertheless, fish prices in Britain would undoubtedly be higher if the United Kingdom were inside instead of outside the E.E.C.I reiterate what I said at the commencement. The White Paper contains no information on the Government's view of the result of our going into the Common Market. This is a grave omission which is not fair to the fishing industry. I hope that my representations to the Prime Minister and to the Ministers on the Treasury Bench tonight will bear fruit, and that we may be told a great deal more. A large number of the fishermen of this country, and many other people, are extremely suspicious, and I do not see why they should be kept in the dark about what is likely to be the overall economic effect of our joining the Common Market.
§ 11.8 p.m.
§ Mr. E. L. Mallalieu (Brigg)
The hon. Member for Banff (Mr. W. H. K. Baker), quite rightly, has been dealing with economic questions and, in particular, with the industry which is so much connected with his own constituency. Indeed, many speeches have dealt with economic questions, as do many speeches in debates on many subjects. The White Paper also has to do with economic questions. People are divided between those who think they are extremely good economists and those who know jolly well they are not. Those who know jolly well they are not divide again 1144 down the middle into those who have the courage to talk about matchboxes and those who remain mum rather than give the show away too obviously and too quickly.
In spite of the obvious importance of economics in the wide question of the Common Market, from our point of view in this House economic questions have been more or less swept from under our feet. The Government have said that we are not hell-bent on going into the Common Market in any event. The Leader of the Opposition has said the same about his party. It is, therefore, a question of trying to secure the best possible bargain, and I have no doubt that whoever is in charge of the negotiations will do just that. Apart from the points which the hon. Member for Banff and others wish to urge upon those who will be arguing the case, the economics of the main question whether to go in or not, whether to apply to go in, or whether to negotiate about going in, have been taken from us, and I for one am not the least bit sorry.
Although there are those who say that this is not so, I believe that many of the hon. Members who are against any sort of negotiations to try to enter the Common Market on good terms are taking an insular view. What I can say to their credit is that some of them rose to object when this was said earlier. That may, perhaps, be a sign of grace. In my belief, it is insular to try to go against a trend unless one can show definitely that the trend is bad, which they have markedly failed to do.
That there is this trend no one can have the slightest doubt. There is a clear trend towards bigger units—the individual, the family, the tribe, the nation, and so on. It is unmistakable, and it has taken place in the history of man largely because of his desire to find some sort of security.
Today, in this nuclear age, the trend towards security takes the form of federation, going beyond the nation State. This aspect of the matter has not been stressed, but I regard it as, perhaps, the most important of all in regard to the Common Market. I have no hesitation in saying that any Government who go in with a view to trying to secure any form of federation which would be the least step towards the world federation which I 1145 believe to be essential would have my wholehearted support.
§ Sir Harmar Nicholls
How can the hon. and learned Gentleman say that there is a world trend towards bigger units? The advance of nationalism and the breakdown of federations is the one factor which is bringing problems to the world.
§ Mr. Mallalieu
There has been no such thing as a breakdown of federations in general. Certain Tory-created federations have broken down, and rightly so. On the contrary, it is obvious that we are tending towards a greater unity in Europe, a movement which I welcome because I believe that it will help us towards the unity of the world which I so much wish to see, for without it I see little chance of our having the security which we all want.
§ Mr. Mallalieu
South America, too, as my right hon. Friend reminds me, wants its own common market. It will be a good thing if it comes about, and I have no doubt that in due time even that part of the world will have a federation of its own.
We have not much time for the movement towards world federation. This is the main reason why I welcome the movement towards unity in Europe, which has been the cradle of so many world wars. I want it to lead as soon as possible in the direction of the federation of Europe which I hope will come about. In the nuclear age, the whole concept of sovereignty is a nullity, or should be.
The chances of bringing this unity to Europe have been missed on several occasions since the war. The result has not been happy, although we have been protected from the direst consequences of the absence of unity in Europe by the balance of terror under which we have all lived. Both parties in this country have made their errors in this regard, and by no means has only Britain made its errors. The latest example was France.
The real danger of the immediate past history of our relations with France and the rebuffs which we have experienced with regard to the Common Market from 1146 France is that our people feel that they have been rebuffed not by France but by the French people, which is a totally different thing. Before a certain anachronism was swept away in France, we used to hear a great deal about what France wanted, what France thought, and so on. It was what de Gaulle himself wanted or thought. That, thank heaven, has now gone. Therefore, we should all make great efforts to ensure that the British people do not remain under the illusion that the French people have been against our entry.
Many hon. Members had the great pleasure of attending conferences under the auspices of the Franco-British Parliamentary Committee. At the last conference we had with French Members of Parliament, 100 per cent. of them wanted us to go into the Common Market. But almost the same percentage were prepared to tell us privately "Yes, but we shall vote for de Gaulle all the same" because they were afraid of what would happen if de Gaulle went. Yet mercifully de Gaulle has gone and the French people have begun to show that they mean to change.
We came back from the last conference in the firm conviction that the change in the opinion of the French Government towards our entry would come the moment de Gaulle was out of the way. I feel that perhaps there is not now a real danger that the British people will feel they have been rebuffed by the French people.
I am very pleased that in the White Paper the Government have taken the bull by the horns. It is always a good plan in arguing a case to set out the difficulties plainly in deciding how they can be overcome. The Government have done just this. I hope that the process will continue and that tremendous efforts will be made to overcome the difficulties set out starkly in the White Paper. It was courageous of the Government to set out all the difficulties.
I believe the British people want to go into the Common Market [HON. MEMBERS: "No."] Well, I see no evidence to the contrary [HON. MEMBERS: "Nonsense!"] There may have been slight movements of opinion here and there. An odd part of the vulgar Press may show this. [Interruption.] Indeed, the odd Member of Parliament will 1147 reflect this because Members of Parliament are reflectors of the electorate, and properly so. This may be reflected by some of them, but it is nothing serious.
I hope that the Government will press on. When they succeed in their negotiations to get in, I hope it will be regarded as only the first step to the wider unity of Europe which can lead to the wider unity of the world. Unless we achieve that wider unity of the world we shall never achieve disarmament, without which there is not the remotest chance of the human race surviving for more than a very few years from now. I wish them good luck in their efforts to try to get in, but do not let the effort stop there.
§ 11.18 p.m.
§ Mr. Martin Maddan (Hove)
The hon. and learned Member for Brigg (Mr. E. L. Mallalieu) will not need to be told that he has my wholehearted support in the objectives which he has expressed. But I should like to take up what he said towards the end of his speech about the support given by hon. Members some three years ago to the Government's application.
Some of my hon. Friends and some hon. Members opposite who are opposed to the application question the bona fides of those who went in with their parties. I want to register a mild protest. Those who did not go in with their parties should not imagine that they have some particular unique brand of political courage not possessed by their colleagues who went in with their parties. I hope, therefore, that we may not hear too much more of that.
The hon. and learned Member for Brigg said that the White Paper was perhaps an irrelevance or not a fundamental factor. I think that it was a disservice, because it does not focus attention upon the major issue, but it may dispose of a great deal of the economic argument. The fact that we are having this debate today and tomorrow may get out of our systems a lot of the misunderstandings on which opposition to joining the Common Market seems to be based.
I will not follow into the maze of statistics that we have been discussing for a great deal of the time. The adverse effect—the impact effect as it is called—however big, will be spread over 1148 the transitional period, and during that transitional period the dynamic effects, the benefits to our exports and so on, will become apparent and will all the time offset the impact effect. So, taking it year by year in the transitional period, it may be that the overall effect on our economy and balance of payments will be quite small.
§ Mr. Maddan
My hon. Friend the Member for Peterborough (Sir Harmar Nicholls) says that we cannot guarantee it. But this is another point that I want to make. How many decisions in politics can he guarantee the results of? Politics cannot be run like an arithmetic book, adding it all up and looking at the answer on the back page.
§ Sir Harmar Nicholls
If my hon. Friend had said that it "may" happen, I would not have intervened. But he was saying that it "will" happen; that by dynamic effects we shall automatically find the extra business which will cover the cost. My hon. Friend was being categoric without any proof.
§ Mr. Maddan
I was saying that the dynamic effects will come and that it may be that the effect on our balance of payments will be quite small. I did not attempt to quantify the quantifiable.
I want to make two detailed points to hon. Gentlemen opposite, and indeed to my own Front Bench, with regard to policy, and I do so as an unashamed supporter of entry into the Common Market.
We talk about food prices. We know that they are likely to go up. We have talked a little about cushioning their effect on the poorest sections of our community through the social security system. I want to put in a particular plea for those whose incomes keep them outside the social security network, but who nevertheless live in pretty pinched circumstances. It may be that through income tax reliefs, old-age allowance increases and so on, cushioning can be provided for them. The Chancellor of the Exchequer naturally must keep an impassive face, but I hope that he is listening with a sympathetic ear to this point, because it is important.
1149 The Foreign Secretary mentioned special arrangements for New Zealand produce and Commonwealth sugar. I hope that we shall not forget Asian textiles. The Asian textile-producing countries have standards of living far below not only New Zealand but the Commonwealth sugar-producing countries. I do not dismiss the importance of the Commonwealth connection, and we cannot and should not forget Asian textiles.
There has been talk about the tactics of the Prime Minister in bringing forward this White Paper. I do not think he would consider it an insult for me to repeat what was said by one of my hon. Friends; namely, that he is not like Nathaniel, a man without guile. There is nothing wrong with that in a politician. But I put a great deal of trust in the fact that there are in the Cabinet and Government many right hon. Gentlemen who, I believe, are absolutely committed to the European cause. I therefore trust absolutely that they will not in any way allow the Government to use the Common Market negotiations to produce a sudden surprise electoral opening for the Labour Party. I say that quite solemnly, in the belief that the health of the British political system is sufficiently good to prevent any such fears from eventuating.
I turn from the economic points to the wider political points. We hear much of political unity in Europe. It is perfectly true that the commitment to the Treaty of Rome carries with it no key to a door through which we must inevitably march to some sort of constitutional federation, but it carries with it all sorts of implications that for the good government of the European economy there will be developments in the political institutions of Europe, and that those will extend also to matters of foreign and defence policy.
I believe that Britain inside Europe, to use the shorthand phrase, as it were, will prove to be a very good European. That will happen because of our respect for law; because of our practice of democracy; because of our insistence on bureaucracy being brought under democratic control. Our following through with British traditions inside Europe will help to ensure that Europe is the sort of Europe we want—a democratic 1150 Europe. In the process, that will also help the unity of the Continent.
A good deal has been said about defence, but we have had no mention of statistics. The only statistic that I want to quote is that there are some 200,000 American troops stationed in Europe, which is a greater number than we have in the whole British Army worldwide. Therefore, when we see how deficient we are in providing for our own defence in Europe, it behoves us to take very serious and perhaps radical steps.
I here declare my position as an undoubted supporter of the Atlantic Community. I do not want to see a Third Force Europe, but I do want to see a Europe taking its full and proper share of the Atlantic Community's defence burden, and in Europe in particular. To do that we must have political organisations within the continent to take the right decisions. Defence policy requires common objectives. Those objectives must be not only continental but worldwide in scale. We cannot isolate ourselves from the world, and Europe cannot isolate itself from the world. We must develop mechanisms that will reach the common defence and foreign policy decisions of the Community.
§ Mr. Gilbert Longden (Hertfordshire, South-West)
Will my hon. Friend please make it absolutely clear that no step towards political unity can be taken without unanimity amongst the Six, the Seven or the Ten, whoever they may be; in other words, that everyone will have the veto?
§ Mr. Maddan
I certainly make the point that everyone will have a veto when I refer to the form of what will happen, but I would be dodging the issue if I did not say that in my opinion the implications of developments in Europe, never mind whether we are in or out, will be on progress being made along these lines. The exact form it takes will be a matter of negotiation, and for the agreement of all the countries concerned.
It is only by going into Europe that we can preserve European culture, European standards and European values, and British culture, British standards and British values are part of that. This is what the young generation of Britain and Europe want us to do, and that is why I 1151 will support every step for Britain to enter the Community.
§ 11.30 p.m.
§ The Chancellor of the Duchy of Lancaster (Mr. George Thomson)
I begin by expressing my appreciation to those hon. Members who have had the patience and the stamina to remain in the House until this late hour, and I apologise for inflicting a speech on them. The number of hon. Members who have been trying to speak and the number who have failed to do so shows clearly that we were right to meet the convenience of the House by arranging for the extra hours of this debate. In any case, I suspect that my right hon. Friend the Leader of the House, whose affection for all the institutions of Brussels is so well known, thought that it would be useful for me, to accustom myself to the negotiations in Brussels, which are inclined to go on into the early hours.
We are now midway through an impressive and important debate. It cannot, by its nature, be as historic as the one in May, 1967, when the House decided by a memorable majority to renew Britain's application to join the European Community. That decision has been taken and is not in question today, but my impression from this debate is that no one, not even those whose scepticism has been pretty consistent and sincere, is now seriously urging that the question of British membership should not be put to the test in negotiations.
As my right hon. Friend the Foreign and Commonwealth Secretary said, the Government's policy is to try to secure fair, acceptable and tolerable terms. We do so in good faith, believing that success will mean tremendous advantage to Britain, to the Continent and to the world. But it goes without saying that there is no question of going in unconditionally, of going in at any price.
Perhaps I should start with some economic matters which were not in the White Paper and were never meant to be in the White Paper. I refer to the economic problems of Britain's entry relating to the Commonwealth and E.F.T.A. The White Paper, of course, was purely a domestic economic assessment. It was not meant to deal with these other economic matters, which are of great importance. The Government's position about 1152 safeguarding both Commonwealth and E.F.T.A. interests remains exactly as it was set out in the application which we made in the summer of 1967, and I am glad of this opportunity to reaffirm this fact.
As a former Commonwealth Secretary, I think that I can claim to be deeply conscious of the Commonwealth issues in the forthcoming negotiations. The negotiations will, of course, have considerable Commonwealth repercussions. The system of Commonwealth preferences will obviously be affected. I assure the House that there will be continuous consultation with our Commonwealth partners. One example of this is going on at the moment. The Prime Minister of Mauritius has visited the Foreign and Commonwealth Office twice in recent weeks for discussions and has himself been visiting the countries of the Six. I know from personal experience how dependent Mauritius and other developing countries are on the Commonwealth Sugar Agreement, and we have laid special emphasis on safeguarding the long-term interests of developing countries and territories dependent on sugar exports. Mauritius' dependence is more than 90 per cent. of its exports of sugar under that agreement.
Again, I welcome the opportunity to repeat our commitment to seek special safeguards for New Zealand's dairy produce. I do not believe that it will be impossible for us to secure agreements of this kind, and I am confident that, in the long run, the Commonwealth as a whole will benefit from the enlargement of the Community and from a strong and prosperous Britain in a strong and prosperous Europe.
I remind my hon. Friend the Member for Blyth (Mr. Milne), who mentioned the importance of E.F.T.A. in regard to the negotiations, that not only does our position remain the same concerning our obligations to our E.F.T.A. partners but E.F.T.A. was never meant to constitute an obstacle to European unification. There is no reason why it should prove to be one. The interests of the members of E.F.T.A. are very varied, but all have much to gain from the removal of the economic division of Western Europe.
§ Mr. Thomson
I must refer my right hon. Friend to the agreement which was reached at the London meeting of E.F.T.A. in 1967. As my right hon. Friend was one of the principal participants at that meeting, he must remember it clearly.
The hon. Lady the Member for Hamilton (Mrs. Ewing) raised a number of points which not only concern Scotland—we both have the honour to represent Scottish constituencies—but are of general importance to many parts of the United Kingdom.
She asked how British entry into an enlarged Community would affect the Government's development area policies. As the representative of a Scottish development area city, I am particularly aware of these anxieties. I remind the hon. Lady of what my right hon. Friend the Prime Minister said in his statement on 2nd May, 1967, regarding our application, when he explained that one of the things that he had been particularly careful to do in his tour of the capitals of the Six was to make absolutely clear that our development area policies would be able to continue once Britain was part of an enlarged E.E.C. This is of great importance to Scotland, Wales, Northern Ireland and a number of regions of England which suffer from underdevelopment and unemployment.
§ Mrs. Ewing
Would the right hon. Gentleman now answer my question? In the negotiations, who will speak specifically for Scotland on these matters?
§ Mr. Thomson
I am coming to that, but first I wish to deal with the biting attack that she made on the whole concept of the E.E.C. I drew from her remarks the impression that she had nothing but utter contempt for the idea of the Common Market—I think I see the hon. Lady nodding in agreement—and that she would not touch it with the end of a caber.
1154 The hon. Lady went on to attack a number of hon. Members for changing their minds with the passage of time about British entry into the Community. I confess that I was fascinated by her temerity because I was reminded of an interview which she gave to the Glasgow Sunday Mail a short time after being elected to this place, which is a very short time ago, in which she said that Scotland would be a member of the Common Market in its own right.
§ Mrs. Ewing rose——
§ Mr. Thomson
The hon. Lady gives it. She is entitled to take a reply.
The hon. Lady then attacked hon. Members on both sides of the House for what she apparently regarded as political expediency in regard to policies and attitudes towards the Common Market. I remind her that quite recently the S.N.P. made a really big change in its policy towards the E.E.C. I have the authority of the Scotsman, a newspaper which is normally reasonably sympathetic to her party, for saying that, since on 26th January of this year it contained an editorial saying that the S.N.P. had changed its policy remarkably. The Scotsman went on to complain that the S.N.P. was learning bad habits from other parties, like vote-catching at the expense of logic.
§ Mrs. Ewing
The right hon. Gentleman is not correct. We have the same policy statement on the Common Market, and I shall be delighted to send the right hon. Gentleman several copies of it. Our policy, as contained in our policy statement, has remained the same since before I was elected to this House. It is interesting to note that the Government place such weight on the Sunday Mail.
§ Mr. Thomson
The hon. Lady is not stating the facts as I understand them. I have looked very carefully at the Scottish National Party's statements recently, and the Scotsman is absolutely right. The Scottish National Party previously had a policy that was quite consistent, though I did not agree with it that Scotland should go into the Common Market but as an independent country. Now it has come out against the Common Market with some very colourful language.
1155 But I do not wish to spend undue time on the hon. Lady. I simply answer her question: who speaks for Scotland on these matters? I speak for Scotland in the negotiations on entry into the E.E.C., as I speak for the United Kingdom, just as my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) will speak for Wales in the negotiations, as he will speak for England, in matters of agriculture. My right hon. Friend the Secretary of State for Scotland will, of course, as always in the Cabinet, very carefully safeguard Scottish interests in these matters.
I turn to points made by the right hon. Member for Barnet (Mr. Maudling) and my right hon. Friend the Member for Battersea, North (Mr. Jay). The right hon. Member for Barnet claimed that figures in the White Paper did not take account of the new financing arrangements for agriculture that have been made following The Hague conference. My right hon. Friend went to the other extreme, as I understood him, and claimed that transitional arrangements in this matter were very trivial and that we would assume burdens to which there was no ceiling at the end of the transitional period.
Both right hon. Gentlemen are wrong. I refer the right hon. Member for Barnet to Table 9 in the White Paper, which takes account of these decisions. My right hon. Friend has overlooked two aspects of this very important matter. The first is action in agricultural reform to limit expenditure, to which the Six pledged themselves at their summit meeting at The Hague.
The second major imponderable concerns the likely British contribution to this expenditure. This is something important which Britain must negotiate. It is noteworthy that the Commission's Report for 1969, which was very recently issued, emphasises that the recent agreement was designed tocorrect certain glaring inequalities that had been developingin the sphere of agricultural contributions and was designed toensure that the financial burdens were allocated in a way which corresponds more closely with criteria based on the national product of each Member State.That was a very significant statement. An equitable attitude as shown by the Com- 1156 mission's Report would impose a much more reasonable contribution on this country. It is in that spirit that we shall approach the essential negotiations. It is a major point.
§ Mr. Thomson
I ask my right hon. Friend to study more carefully in HANSARD the words I have used, because I have used them with care. I think that they offer a reassurance to us that, given a spirit of good will, equitable arrangements can be made on this matter that will ensure that we do not have to pay an unfair share of the contribution on agricultural finance.
My right hon. Friend raised other larger issues of economic policy. He might prefer an answer to some of these from my right hon. Friend the Chancellor of the Exchequer, who will open the debate tomorrow, if he has the good fortune to catch the eye of the Chair.
My right hon. Friend, my hon. Friend the Member for Blyth and other hon. Members drew attention to what they regarded as a fallacy in the Government's argument about respective growth rates in the E.E.C. and E.F.T.A. It will be seen from Table 14 in the White Paper that the E.F.T.A. average growth rate—if one takes Britain out—is 4 per cent. That includes Portugal, which is in some ways a developing country rather than a fully developed country. I freely concede that the 4 per cent. is the same as the E.E.C. average growth rate, but this ignores the real point.
The point is that Britain joining the E.F.T.A. countries means, for most of them, an increase in the size of their market by about 1,000 per cent., whereas for Britain it means an increase in our market of only 60 per cent. This deals with the point made by the hon. Member for Peterborough (Sir Harmar Nicholls), who fears that in an enlarged community the E.E.C. countries will do very much better in our markets than we will do in theirs. If the hon. Gentleman really believes that, and he speaks as a business man, he must have a very poor idea of the competitiveness of British industry, 1157 an idea which I should not begin to share, because the truth of the matter is that if we went into the E.E.C. we would enjoy a 300 per cent. increase in the market that is available to us, whereas our joining the Six would give them an increase in their market of less than 30 per cent.
§ Sir Harmar Nicholls
I said that our industries were vital, keen, and good, but that geography would insist that they were based on the other side of the Channel. The firms would do well, but the nation would suffer. It would be denuded of industry.
§ Mr. Thomson
I think that if my hon. Friend examines the figures he will see that they are irrefutable. I do not think anybody can question the change in the size of the market that will be available, and I take a more optimistic view of the enterprise of British business than is taken by the hon. Member for Peterborough.
From my point of view, as the Ministerial negotiator, the White Paper seems to be a welcome production. For too many years the obstacle to the enlargement of the Community has been the refusal to allow negotiations to start. Now that this obstacle has been removed, and confidence has been increased in the Community by the fact that the Six have come to an agreement on agricultural finance, there is a natural feeling of confidence amongst the Six. But this feeling of confidence must not be allowed to disguise the real problems which will have to be overcome if negotiations are to succeed. The White Paper points to some of these problems, and by doing so it will help to remind those on the Continent and in Britain of the difficult negotiations that lie ahead.
We must remember that it is in the interests of no member of the Community that any other member should be saddled with burdens which are unreasonable or damaging. The development of the Community depends on the development 1158 of the common interest. If the Community can approach Britain's problems in the same spirit in which it has tackled the problems of the existing members for many years, the outcome will be fair, but what cannot be ascertained in negotiations is the cost to Britain of not being able to obtain acceptable terms for entry. Several hon. Members have emphasised this. At the end of the negotiations the Government and Parliament will have to make their own judgment of this cost against the cost of entry which has resulted from the negotiations.
One has to look at the position at the end of the century. If Britain remains separated from the E.E.C., we shall then be the only advanced industrial country of our size without a continental-size home market. Japan has almost twice our population, and she has different industrial traditions from ours. Sweden has a very much smaller population, but a very much bigger geographical area, and is able to specialise to a degree that is impossible with our size of population. The E.E.C. would be greatly weakened by our absence but would also certainly be growing steadily stronger than ourselves.
The real choice comes when the negotiations are completed. We shall have to make a judgment between the alternatives for Britain at the end of the century. Will the condition of the British people be better inside the Community on the terms shown to be available or as an island economy over-shadowed by more powerful continental neighbours? That choice is not for this House this week, but, when it comes, our children, who will spend much of their lives in the 21st century, will not lightly forgive us if the Parliament of the day gets it wrong.
§ Mrs. Anne Kerr rose——
§ Mr. Thomson rose——1159
§ Mr. Thomson
None of this is to argue for a moment that Britain cannot exist outside the E.E.C. I always deeply suspect arguments in politics that there is only one way to salvation and that the other way is disaster. The Government approach the forthcoming negotiations in the spirit of giving our people the frankest possible appraisal of the economic considerations, and we are able to tell them that Britain is strong enough to make the painful adjustment of joining and strong enough to stay out if we have to.
But I do not believe that there are dramatic alternatives. If we do not get fair terms for entry, the practical alternative is to go on much as we are, relying on our membership of E.F.T.A., the Irish Free Trade Treaty and the Commonwealth preference system. In facing this alternative we must also face the fact that the majority of our E.F.T.A. partners are applicants themselves for membership of or association with the E.E.C., while some of our Commonwealth partners have already negotiated agreements on their own and others will no doubt do so. I want to be clear that we can assure our economic future if we have to stay outside the E.E.C. but that it will be a sad and tragic second best, not only for Britain but for the rest of Western Europe as well.
I have been impressed by the number of hon. Members who have drawn attention to the political considerations associated with this question. Here again, of course, there are alternatives. There are a number of organisations such as W.E.U., the Council of Europe, the E.C.E. and N.A.T.O. in its European aspects which do carry out a useful degree of co-ordination of policies. Some of them could, with will and imagination, be made even more useful than they are at present. But none would bring that degree of harmonisation of policies which would come inevitably from an enlarged E.E.C.
Already the sheer fact that the senior Ministers of the Six—the Prime Ministers, Finance Ministers, Foreign Ministers and Agriculture Ministers—meet regularly together and take decisions together creates 1160 a fabric of political unity which will not come about in any other way. Britain's place is inside that, taking a full part in these meetings and decisions. This is not a matter of European mysticism, as I know a number of hon. Members feel, nor a matter of compensating for the glory of an empire lost with the glory of going into a greater Europe. It really is a plain matter of how Britain can best promote her own economic interest and, in the end, her own security.
A number of hon. Members have asked questions about the future of the political developments of Europe. We are supposed to be the home of pragmatism. A senior Community Minister told me the other day that when I arrived in Brussels I could look forward to some lessons in pragmatism. The House will recognise the wisdom of the Six in adopting such an approach at this stage.
The Preamble to the Rome Treaty says that the members are determined to establish foundations of "ever closer union" among themselves, but leaves the precise form of that union to evolve pragmatically. The present members have shown in practice that they recognise that they must proceed by consent if they are to progress. There is no automatic obligation to any particular form of political unity by adhering to the Treaty. My advice to the House is that we should work together on a practical basis and allow institutional forms to develop as we have so often allowed them to develop in this country to suit the work we want to do together. That is the wise and correct approach.
I want to answer the point raised by the hon. Member for Hove (Mr. Maddan) about food prices, which was thoroughly dealt with by the Foreign and Commonwealth Secretary. I would remind the House of what the Prime Minister said in the debate in May 1967, about the need to safeguard the interests of the lower-paid members of the community in a period of rising prices. The Prime Minister said:The Answer to their problem must lie in social policies, particularly pensions, to ensure that they are not asked to bear a disproportionate part of the cost of British entry into the Community. Rather, indeed, will it be our aim to shield them from any short-term adverse effects."—[OFFICIAL REPORT, 8th May, 1967; Vol. 746, c. 1065.]It is important to remember that.
§ Mr. Maddan
I had particularly in mind those who do not qualify for social security benefits, but who have to live on very small fixed incomes.
§ Mr. Thomson
There will be a real problem there, just as there is a problem with poverty today, for those earning very low incomes, who do not qualify for social security benefits. It will become more acute in a period of rising prices, and I hope that what I have said shows that there must be positive action to protect those most vulnerable to high food prices.
To sum up, if fair terms can be found, Britain and the Continent, in an enlarged Community, will be able to compete with the United States and the Soviet Union in the advanced technologies in a way that neither Britain nor the Continent can do divided. If fair terms can be found, Britain and the Continent will be able to contribute to the developing countries of the world on a scale that neither Britain nor the Continent can do if divided. If fair terms can be found, Britain and the Continent will be able to protect their own trading interests in future Kennedy Round negotiations and defend their own ways of life against outside pressures, from wherever they may come, and promote their own ideas for East-West détente and world order in a way that neither can do divided.
I do not follow the argument that by enlarging the Community we are dividing Europe in a way that makes East-West détente more difficult. I would say that the opposite was the case. I fail to understand the arguments. In the efforts being made to produce a détente by the Federal Republic of Germany in its new "Ostpolitik," membership of the Community does not seem to be any 1162 barrier to its putting forward positive policies.
The economic and political prize for Western Europe, if the Community can be enlarged, will be great. The economic price for achieving this unity cannot conceivably be paid by Britain alone. I am sure that we shall be ready to contribute a fair price for enjoying the benefits of unity.
It is in that spirit that I look forward to the privilege and responsibility of opening negotiations for Britain in the summer. The final decision must be for Parliament, but the Government remain determined to pursue these negotiations to a conclusion, committed to obtaining fair terms for Britain and confident that on that basis great things can be achieved for Western Europe as a whole.
§ 11.58 p.m.
§ Mr. James Scott-Hopkins (Derbyshire, West)
We have listened with great interest to the right hon. Gentleman, who has put forward a good case for acceptance of the Government point of view. He said that it was in this country's interest to start negotiations. We cannot take a decision on this tonight, or tomorrow night. What we have to do is to try to assess—by summing up the arguments put forward tonight and reading the White Paper—whether the Government should start negotiations. On the basis of this White Paper there are many arguments that can be adduced. If I may turn to the purely agricultural aspects——
§ It being two hours after Ten o'clock, the debate stood adjourned, pursuant to Order.
§ Debate to be resumed this day.