§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley) (by private notice)
asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the vote by the European Parliament on Friday 27 July to reject the rebate for Britain.
§ The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind)
Our 1983 refunds, totalling £440 million, were agreed by European Heads of Government at the European Council in Stuttgart over a year ago. Two principal steps were needed before the refunds could be paid: approval by members states of the necessary implementing regulations and agreement by the European Parliament to transfer the sums concerned from the reserve chapter of the budget.
Two member states, France and Italy, made it clear after the Stuttgart meeting that they would approve the regulations only in the context of overall agreement in the negotiations on budgetary imbalances.
Following the agreement reached at Fontainebleau in June, France and Italy gave their agreement to payment of the refunds. The only remaining substantial step was for the European Parliament to approve the necessary transfer. This was done by the Budgets Committee of the Parliament on 12 July by a vote of 25 votes to nil with two abstentions. Following that vote, on 26 July the advisory committees of member states approved the necessary decisions actually implementing payment of the refunds on projects in the United Kingdom. All the procedures to enable the refunds to be paid had thus been completed.
As hon. Members know, the new Parliament held its first session last week. It decided to overturn the decision taken by the Budgets Committee and to hold up payment of the 1983 refunds.
There is no possible justification for the Parliament's petty and churlish action. Agreement on our refunds was reached at Stuttgart by all Heads of Government and was specifically endorsed by them at Fontainebleau. The Fontainebleau settlement itself met the Parliament's earlier conditions. There was no ground for new conditions being set. There was no ground for linking payment with the issue of the 1984 overrun, on which the Government have made positive proposals in conformity with the treaty and consistent with the own resources system.
The Parliament's inept behaviour will not affect the Government's attitude to discussions of the 1984 budget overrun, which will be resumed at the Budget Council on 6 September. It will, however, make the search for an agreement more, not less, difficult.
One of the most welcome conclusions of the Fontainebleau summit was that, in future, our refunds would be paid automatically on the revenue side of the budget. This would prevent similar difficulties from arising in the future. It may be for this reason that the European Parliament has been making difficulty over our 1983 refund, the last refunds in which it will be involved.
The Fontainebleau agreement set the Community's finances on a new and sounder basis. We have no quarrel with other member states, which are working with us to implement the Fontainebleau agreement. Hon. Members will have noted the statement of the French Government 26 criticising the European Parliament's action. When the European Parliament next meets in September, we trust that it will rethink its hasty, intemperate and damaging action. The President of the European Parliament has said that the eventual repayment of the refunds is not in doubt. That promise will have to be honoured.
§ Mr. Foulkes
Is it not clear from the Minister's amazing language and from the Government's extreme embarrassment that the Prime Minister's so-called agreement at Fontainebleau is a mirage? What do the Government plan to do to sort out the mess? Will they now agree to our proposal to withhold from our current contribution an amount equivalent to the refund due? I can repeat the assurance given by the Leader of the Opposition that we will co-operate fully with the necessary legislation.
If the Government will not do that, will they take action to ensure that the Heads of Government who agreed—or appeared to agree—the deal at Fontainebleau persuade their MEPs to honour the deal? What is the Government's view on referring the European Parliament's decision to the European Court, since the decision conflicts with the decision of the European Parliament's own Budget Committee, acting with powers, on 12 July?
Will the Government confirm that the agreement to increase VAT own resources, which the Prime Minister made at Fontainebleau, is hereby suspended until our rebate is paid?
Will the Minister confirm that the Government will take one of the courses of action that I have described; that they will take effective action, and not stand back mesmerised, pretending that agreement has been reached when the reality is quite different?
§ Mr. Rifkind
The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) attacks this agreement, but he seems to have forgotten the simple fact that the agreement was between Heads of Government and that to this day all Heads of Government have fully honoured the obligations into which they entered under that agreement. Indeed, the French Prime Minister was quoted in the press as describing the European Parliament's action as "wrong and disastrous".
The support of other European Governments is essential to ensure that the conclusion of Fontainebleau is fully satisfied. The hon. Gentleman and the House will recall that my right hon. Friend the Prime Minister had exactly this problem in mind when she insisted that for the future any refunds due to the United Kingdom would be paid by an automatic reduction in our contributions in the following year. There will, therefore, be no possibility in any subsequent year of the European Parliament being involved in such a process. Precisely because of the experience of the last few days, my right hon. Friend was absolutely right to insist on that as an essential factor in the Fontainebleau agreement.
The hon. Member also asked about the legality of the decision by the European Parliament. I am not in a position to give a definitive opinion, but any legal challenge would undoubtedly take many months and have an uncertain outcome.
We certainly hope that other Governments will do what they can to bring home to their MEPs the need for the Parliament to honour the obligations, not simply of Fontainebleau but of the commitments that it entered when 27 it set conditions for the release of these funds. Now that the conditions are fully satisfied, the European Parliament suggests new conditions.
I confirm that there will be no question of the House being asked to ratify an increase in own resources while the refunds remain unpaid.
§ Mr. Geoffrey Rippon (Hexham)
May I commend the moderation of the Government's response to a dishonourable action? Bearing in mind that the Fontainebleau agreement will not be affected, does my hon. Friend agree that the real damage has been done to the European Assembly, its credibility and its reputation, and that it hardly deserves, even by courtesy, the description of a Parliament?
§ Mr. Rifkind
My right hon. and learned Friend's remarks are fully justified by the circumstances. I must emphasise that on this occasion the European Parliament laid down certain conditions which it insisted had to be satisfied before the refunds could be transferred. Those conditions were fully satisfied, and the European Parliament then chose to change the conditions. That was a dishonourable and despicable action to take.
§ Mr. J. Enoch Powell (South Down)
Do the Government believe that the European Assembly should have been given this power?
§ Mr. Rifkind
It is precisely because we believe that it is not able to use this authority in a responsible fashion that my right hon. and learned Friend has insisted, successfully, that in future it should have no such power.
§ Mr. Tony Marlow (Northampton, North)
As it is obvious that the main motive behind the Assembly's possible illegal action is a desire by European institutions to spend money which they do not have, and to which they are not legally entitled, will my hon. Friend give a commitment not to introduce measures to increase Community own resource until adequate mechanisms are in place to prevent overspending by the Community? In the interests of simplicity—so that the audience here and on the other side of the Channel may understand—will he give his answer in one word, yes or no?
§ Mr. Rifkind
I hope that my hon. Friend will forgive me if I decline that last invitation. The Government have already made it clear that any question of own resources is dependent on satisfactory conclusions being reached on budgetary discipline. That is a matter to which Finance Ministers have still to address themselves.
§ Mr. Russell Johnston (Inverness, Nairn and Lochaber)
Is it not less than two months since we were being told that the Conservative Group in the European Parliament had enormous powers of persuasion, charismatic capacities and Messianic abilities of leadership? How is it that so quickly the butterfly has reverted to being a caterpillar? Further to the question asked by the right hon. Member for South Down (Mr. Powell), which the hon. Gentleman did not answer, does he agree that it is passing strange that an old Parliament should be encouraging a new one to be deferential to its Executive?
§ Mr. Rifkind
No one is seeking to persuade the European Parliament to be deferential to anyone. We are 28 simply expecting it to honour the obligations that it has entered into and carry out the commitments that it has promised.
§ Sir Anthony Meyer (Clwyd, North-West)
As, once the sound of fury has died down, the task is to get the European Parliament to reverse its judgment, what does my hon. Friend think can be done to counteract the adverse effect on the opinion of other MEPs of the oafish behaviour of the British Socialist Members of that Parliament?
§ Mr. Rifkind
It is indeed a matter of misfortune that the Socialist Members of the European Parliament have made such a negative impact so far. I am bound to say in fairness, however, that on the matter with which this question is concerned the British Socialist Members voted with the British Conservative Members and that apart from the one representative of the Scottish National Party, all United Kingdom Members were against the proposals passed by the European Parliament.
§ Mr. Nigel Spearing (Newham, South)
With reference to the powers of the Assembly, which were referred to by the right hon. Member for South Down (Mr. Powell), is the Minister not aware that they were surreptitiously given to the Assembly by this House on the evening of 8 December 1975 by extremely questionable procedural means which were fully outlined in the Adjournment debate of 16 March 1979? Is he further aware that on that occasion in 1975 there was no official spokesman from the then Conservative Opposition who could either assent to or dissent from the passage of that power? Does not the attitude of the Assembly show that every nation bar the United Kingdom is willing to fund agricultural expenditure as sky high as it wishes?
§ Mr. Rifkind
The power of the Parliament arises from the fact that Britain's refunds are at present dealt with as if they were additional parts of expenditure by the Community. Precisely for that reason we have insisted, and successfully reached agreement, that in future refunds will be paid by a reduction in our contribution.
§ Mr. Jim Spicer (Dorset, West)
Is it not a fact that, in spite of the overwhelming vote in the Budget Committee only a fortnight ago, the warning signs were clear that opinions in the new European Parliament were moving towards rejection? May we have an assurance that all possible steps were taken to persuade the other member Governments to use their best endeavours to get their Members to vote? If they did not do so on Friday, what guarantee can my hon. Friend give the House that their best endeavours will be used again between now and September? The European Parliament would understand that this is a crucial issue and that horrendous damage could flow from it.
§ Mr. Rifkind
My hon. Friend will be the first to understand that Members of the European Parliament must take full responsibility for the actions of which they have been the authors. I agree with my hon. Friend that the Budget Committee's conclusion, when no one voted against the proposal to transfer the resources, shows how phoney and artificial was the decision taken last Friday on spurious grounds to change an earlier decision.
§ Mr. Tony Benn (Chesterfield)
Despite what the Minister has told the House, do the Government intend to go on paying our contributions in the normal way from now on while this decision is still pending?
§ Mr. Rifkind
I have already emphasised that the British Government's disagreement and dispute is not with any other Member Government of the Community, and not with the Community itself. Our dispute is with the European Parliament, which has been the author of the disagreement.
§ Mr. Teddy Taylor (Southend, East)
The Government have obviously given much thought to this matter since Friday. Can my hon. Friend say how he thinks the issue might be solved if, as is likely, the Common Market runs out of money before the so-called Parliament comes to a decision? Will he make it abundantly clear that the Government have not closed their mind to the possibility of withholding payments?
§ Mr. Rifkind
The Government have already made it clear that it is their view that the Community's expenditure this year should be within the legal ceiling laid down by the Committee. That is something that might not be thought agreeable by other member states, but if the Community is to impress the population of the member states as a whole of its seriousness in controlling Community expenditure, it must undertake to comply with the existing legal limits on spending.
§ Mr. Allan Rogers (Rhondda)
The Minister has cast blame everywhere except upon himself. Will he accept a small measure of blame, especially in view of his critical stand in relation to his position today and his position on the Spinelli report earlier in the year, when he and his party made statements to the effect that they wanted to see an extension of the powers of the European Parliament? If there were that extension of powers, the authority of the European Parliament would be far greater than it is now. It ill-becomes the Minister to turn his head in the way that he has over the past couple of months.
§ Mr. Rifkind
The hon. Gentleman has achieved the rare feat of making two basic mistakes in one question. First, the Government have not supported the extension of the powers of the European Parliament as proposed by the Spinelli report. Secondly, I have not sought to blame everyone. I have deliberately excluded from blame all except those who took the decison last Friday. The only group responsible for the problem are Members of the European Parliament who last Friday voted in the way about which we complain.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Can my hon. Friend explain to the House why it is that, as has been said, the Budget Committee of the old Parliament had power to act and vote as it did without anyone voting against it, yet the Socialist ex-President of the Assembly did not choose to sign the agreement, as he could have done?
§ Mr. Rifkind
My hon. Friend is correct. Once the Budget Committee has approved a proposal, the normal procedure is that the President of the Parliament certifies to the European Commission that the matter has been approved, and payment can be made forthwith. The President of the Parliament, on his own authority, chose to overturn the normal rules of procedure of the Parliament over which he presided until recently.
§ Mrs. Ann Clwyd (Cynon Valley)
Will the Minister confirm reports that both his office and the Prime Minister's office made desperate telephone calls to Chancellor Kohl while he was on an autobahn in Germany last Thursday to ask him to use his influence with the Christian Democratic Group in the European Parliament, with which the British Conservative Group apparently has a strong understanding? As he plainly failed to get any sort of agreement with the Christian Democratic Group, will the Minister give us the gist of the conversation with Chancellor Kohl?
§ Mr. Rifkind
I am not aware of any conversations with Chancellor Kohl either by my own office or by No. 10 Downing street.
§ Mr. Eric Forth (Mid-Worcestershire)
Does my hon. Friend agree that one of the dangers in a case such as this is over-reaction and that, by concentrating so much on the actions of a Parliament elsewhere, we are dignifying the matter with an importance that it does not necessarily have? The mere passage of time, if the Government stick to their guns in Community expenditure, will go a long way towards solving this problem.
§ Mr. Rifkind
My hon. Friend is correct, but I must emphasise that we are in the position of requiring the approval of the European Parliament for the payment of the refund. That step will not be necessary in future. My hon. Friend's comments show how correct we were to insist on the change.
§ Mr. Ron Leighton (Newham, North-East)
Is it not the case that the summit communiqué was not laid before the House? Is it not the case also that a careful reading of that document shows the ambiguity of what was agreed? The communiqué spoke of steps taken to cover the 1984 budget, and on that assumption the rebate was agreed for this country. It was agreed that we would get some funds back if we paid more in; in other words, that we should pay for our rebate. Is it not clear that there is no discipline and control over the budget, that agricultural spending is still completely out of control and that the Fontainebleau agreement will not represent a permanent settlement of this matter? Is it not clear that, once again, the Government have ended up with egg on their face and that the only way to obtain justice is to withhold that which is justly ours?
§ Mr. Rifkind
The hon. Gentleman is incorrect. In earlier comments I quoted the remarks of the French Prime Minister. The hon. Gentleman will remember that the French had the Presidency at Fontainebleau. The French Prime Minister has described the European Parliament's decision as "wrong and disastrous". His comments are similar to ours.
§ Mr. Edward Heath (Old Bexley and Sidcup)
Does my hon. Friend agree that the main objective in this case must be to find an acceptable solution to the financial problems of the Community? As he has just stated that, to obtain that solution, it is necessary to have the approval of the European Parliament, does he agree that we are least likely to influence the other Members of the European Parliament by abusing their apparently perfectly legal action? Is my hon. Friend aware that to obtain a solution to this problem the actions of Governments as well as of the Parliament are required? That means that we must no longer remain isolated in solving the problems of the Community's finances this year, as we were at the 31 ministerial meeting. Will my hon. Friend advise those who are taking the decisions that the Government should show that they are prepared to accept a reasonable solution to the annual problem and then try to influence the European Parliament to approve our refund?
§ Mr. Rifkind
I listened carefully to my right hon. Friend's remarks. I must express some disappointment at the fact that he has not chosen to express any criticism of the way in which the European Parliament has used what might be its legal power on this occasion. The simple fact is that the European Parliament laid down certain conditions for the release of those funds. Those conditions were more than fulfilled. The European Parliament then chose to change the conditions. I believe that the House and the Government are entitled to express strong disagreement at and disapproval of that action. I am bound to say that as strongly as I can.
I agree, however, with my right hon. Friend that it is essential to ensure that the problem of the finances of the Community overall is properly resolved this year. The Government have seen how the original request by the Commission for an increase in supplementary funding this year has been reduced by almost exactly half during the past month or so. We believe that the Commission should make further efforts to reduce any overspend to a far smaller amount. Only when it is clear that there is no room for any further savings will it be necessary to consider the appropriate action.