European Council (Dublin)
The Prime Minister (Mrs. Margaret Thatcher)
With permission, Mr. Speaker, I should like to make a statement on the results of the European Council held in Dublin on 3–4 December. I was accompanied at this meeting by my right hon. and learned Friend Sir Geoffrey Howethe Secretary of State for Foreign and Commonwealth Affairs. The conclusions of the Council have been placed in the Library of the House.
The Council covered four main subjects. First, we examined the economic situation in the Community on which the Commission had submitted a detailed report. In particular, we discussed the creation of more jobs by opening up the internal Community market for all goods, services and professions; by defining European standards for products; and by improving the Community's performance in advanced industrial technology. This has to be achieved in the context of—
“moderation in the evolution of real wages”
and
“a pause in the growth of current public expenditure and a decline for several years in its share of gross domestic product” .
The Council agreed to set up a review of manpower policy with the aim of directing training to sectors where labour will be needed, of encouraging job mobility and of fostering enterprise, especially among young people.
Secondly, the European Council reached agreement on the Community's position in the enlargement negotiations with Spain and Portugal. Two major issues had been outstanding—wine and fisheries. Both were satisfactorily settled. Unfortunately, Greece reserved her position on enlargement, linking it with a bid for more money for Mediterranean programmes. However, the enlargement negotiations will now go ahead on the outstanding issues and, we hope, be brought to an early conclusion, with a view to accession on 1 January 1986. The outcome will have to be referred back to the Council of Ministers, especially in view of the position adopted by Greece.
Thirdly, we gave particular attention to further measures to relieve famine in African countries, particularly in Ethiopia. We agreed that the Community and its member states should provide 1.2 million tonnes of grain in 1985. This is a really major effort which the United Kingdom strongly supports. We appealed to other donor countries to match this effort.
Fourthly, we had a preliminary exchange on reports from two groups established after the Fontainebleau meeting. These groups are dealing with Community institutions and with practical measures such as easier movement of goods and frontier formalities. The final reports will be substantively discussed at the European Council in the first half of next year.
The European Council also urged the Environment Ministers to reach agreement at their meeting tomorrow on guidelines for the reduction of lead in petrol—a British initiative within the Community—and on vehicle emissions.
Within the context of political co-operation, the Council endorsed the principles for dealing with terrorism and the abuse of diplomatic immunity, which were adopted in September and are now being put into practice. [column 353]We discussed East-West relations, stressing the importance of reaching satisfactory arms control agreements, and the middle east. In the discussion on central America we reaffirmed our support for the Contadora process.
Finally, the Foreign Affairs Council adopted the text on budgetary discipline, including the strict financial guideline for agricultural expenditure. It is the result of considerable efforts over a period of years by Britain to ensure the better control of Community expenditure and a better balance in the Community budget.
Mr. Neil Kinnock (Islwyn)
The most welcome news that comes out of the Dublin summit is the agreement to release 1.2 million tonnes of grain for Ethiopia and other African countries in the coming year. Will the Prime Minister give us an undertaking that, as the grain surplus of the Common Market continues to increase, she will prevail upon the other Heads of Government to increase that allocation as the opportunity arises.
Unfortunately, other consequences of the Dublin summit are much less satisfactory than the decisions on famine relief. First, the Prime Minister has failed to get the discipline over the Common Market budget that she promised. When reporting to the House after the last summit in June, the right hon. Lady said:
“we should like the principles to be embodied formally and legally in the budgetary procedure, but it must be done in such a way as to guarantee them.” —[Official Report, 27 June 1984; Vol. 62, c. 1001.]
Will she now confirm that the document on budgetary discipline approved by the Dublin summit has no legal status, that it will operate on the basis of majority voting with no British veto, and that it falls lamentably short even of the objectives which the right hon. Lady set herself and promised us back in June?
Secondly, the Prime Minister may talk in her statement of the strict financial guidelines for agricultural expenditure, but is it not a fact that the 1985 Common Market draft budget, which will provide the basis for our 1986 arrangements, provides for a further and significant increase in the proportion of the budget going to agriculture and provides also for cuts in science, technology, investment in research and expenditure on transport and energy? Did the Prime Minister challenge that budget, because it will mean heavy disadvantages for Britain? In the light of that, is the right hon. Lady now prepared to reconsider her rash commitment six months ago to increase British VAT own resource payments to the Common Market by 40 per cent. in the coming year?
Tomorrow, the House debates the Chancellor's autumn statement, which provides for reduced expenditure on housing, education and other vital provisions such as regional aid and training. Against the background of financial stringency at home, how can the Prime Minister possibly justify the increased largesse to the Common Market to which she again committed herself in Dublin?
The Prime Minister
I thank the right hon. Gentleman for his comments about Ethiopia. The Community has pledged itself to provide 1.2 million tonnes of grain between now and the next harvest. All of that grain is not for Ethiopia—other places in Africa also need a considerable amount. It is thought that overall 2 million tonnes are needed of which the Community says it will provide 1.2 million tonnes. The Community is saying to [column 354]other donors, “Will you please at least match that?” There is a considerable number of other donors who, as the right hon. Gentleman knows, are being very generous.
Considerable amounts of grain are due to land in Ethiopia, with 112,000 tonnes of wheat due to arrive in Ethiopian ports in December and another 94,000 tonnes in January, so that the distribution is kept up. As the right hon. Gentleman knows, the distribution is going well. It is vital that we have both flow and distribution. I do not think that we can commit ourselves at the moment to increased amounts. The total amount of cereal allocation in the budget is about 1.1 million tonnes. Not all of it goes to emergency aid; some of it is committed elsewhere. It is a combined effort between the Community and its member states. The right hon. Member will be aware that member states have been very active on their own behalf in helping Ethiopia, as well as within the Community. The text on financial budgetary discipline is binding on the Council itself, but it is not being embodied into a treaty or technically—legally—into the budgetary process. [Hon. Members: “Why not?” ] Because one simply cannot get agreement from all 10 countries. All of them have, however, agreed that the Council, which is the deciding unit in the whole Community, shall be bound by the clause on financial budgetary discipline. I hope that the right hon. Gentleman will welcome that.
With regard to the right hon. Gentleman's remarks about the autumn statement and public expenditure, he will have noted that I quoted from one of the documents submitted by the Commission to the Council in the discussion on employment, urging a reduction in public expenditure as a proportion of GDP.
Mr. Julian Amery (Brighton, Pavilion)
Is my right hon. Friend aware that, while the aid that we are, quite rightly, sending to Ethiopia is reaching the Ethiopian army and much of the civil population under Government control, the larger part of the country is not under Government control, and that none of the aid that we are sending is reaching the areas under the control of the National Liberation Fronts of Eritrea and Tigre? As a result, there is a tremendous influx of refugees—nearly 1 million—into the Sudan, and it is becoming an intolerable burden on the Sudan.
Will my right hon. Friend give serious consideration to sending aid through the Sudan to the areas controlled by the National Liberation Fronts of Eritrea and Tigre? There is some justification for doing so, in that those two organisations have offered a truce to the Ethiopian Government and the Ethiopian Government have not responded to it.
The Prime Minister
I am aware that not every area in Ethiopia has managed to get food, but the distribution is very much better than it was. My right hon. Friend is the first to be aware of the difficulties of getting supplies of food and water to the areas concerned. We are very much aware that Sudan is another area in need of help, and I shall take up what my right hon. Friend said about it.
Mr. J. Enoch Powell (South Down)
How far are the new budgetary arrangements, as they affect Britain, capable of being overturned or deferred by action on the part of the European Assembly?
The Prime Minister
I do not believe that those new arrangements can be overturned by the Assembly. The [column 355]Assembly has to act within the treaty. As the right hon. Gentleman knows, the treaty refers to 1 per cent. VAT, and his question is pertinent to some of the things being considered at the moment. The Assembly cannot go beyond 1 per cent. VAT. It has certain margins within that provision but cannot go above it.
Mr. Terence Higgins (Worthing)
What case is there for any increase whatever in EC agricultural expenditure?
The Prime Minister
My right hon. Friend may take that view, and some of us may go quite a long way towards meeting him on it, but it is not a view taken by everyone.
My right hon. Friend will also be aware that when we took the first steps to limit the guarantees on certain agricultural produce, it caused problems in Britain. We have to be aware that whatever is done is done gradually.
Dr. David Owen (Plymouth, Devonport)
What is the Government's view on the fact that the majority of Community countries wish to have an intergovernmental conference now on the treaties? In the light of the Greek attitude and the impending enlargement of the Community, are there not advantages for Britain in streamlining the Commission from 17 to 12, in safeguarding budgetary disciplines, and in ensuring that, provided we retain the safeguard of the Luxembourg compromise, there is more majority voting?
The Prime Minister
As the right hon. Gentleman knows, those matters are being discussed in the Dooge committee.
With regard to the right hon. Gentleman's point about reducing the number of Commissioners from 17 to 12, even at Fontainebleau I said that we were prepared to accept that. We think that it is absurd to have 17 Commissioners. There is not the work for 17 Commissioners to do. I must tell the right hon. Gentleman that I was not necessarily followed in my conclusions by other countries which have two Commissioners. I hope that ultimately they will see the wisdom of what I said.
With regard to majority voting, I have no wish to extend it beyond what is at present provided for in the treaty. Majority voting can operate in many areas, but we must stick to the Luxembourg compromise. From what the hon. Gentleman has said, I understand that he agrees.
Mr. David Harris (St. Ives)
What about the fishing aspects of the Dublin summit? In particular, can my right hon. Friend assure our fishermen that the negotiating position agreed there will not be to the detriment of our fishermen, particularly in the south-west of England where Spain clearly hopes to gain increased fishing rights?
The Prime Minister
The Community adopted an agreed negotiating position on fishing. For obvious reasons, that has not been published, but I do not think that my hon. Friend would be unduly concerned about its provisions. I am sure he would feel that they reasonably protected Britain's interests.
Mr. Nigel Spearing (Newham, South)
The Prime Minister has said that the Council has bound itself in respect of budgetary discipline. If that were to be so, would not that need financial regulations? Has not the Council reached conclusions only?
The Prime Minister
No, the conclusions bind the Council, but the hon. Gentleman is right in that this matter has not been transferred into regulations. Other members [column 356]of the Community did not think that that was necessary. We would have preferred it, but the conclusions are now binding on the Council.
Mr. David Crouch (Canterbury)
Will my right hon. Friend give more details about the satisfactory settlement on wine? Am I right in thinking that this settlement requires a much greater distillation of wine, and what effect will that have on the production and use of industrial alcohol in this country?
The Prime Minister
My hon. Friend will be aware that when wine production exceeds a certain amount—and it is triggered by three different criteria—the wine then goes for distillation into alcohol at a very much lower price. That is meant to be a disincentive to growing so much wine in the following year. I refer to table wine, not vintage wine. We are very much aware of the effect that this could have on industrial alcohol in this country. It is therefore important that the triggers are effective to reduce the amount of wine grown in successive years. That will thereby reduce the amounts that go to distillation because the price of that wine would be so low as to make it not worth producing.
Mr. Roland Boyes (Houghton and Washington)
Was there any discussion on the easier movement of professions in the internal Community market? Did the Prime Minister take the opportunity to raise the Football League's opposition to the free movement of footballers, which could have a devastating and damaging effect on the finances and standards of English football?
The Prime Minister
No, the hon. Gentleman will be well aware that we are talking about equivalence of qualifications, which can take a long time to negotiate. It is important to complete that part of our work so that our young people are able to practise more easily in other Common Market countries.
Mr. Stefan Terlezki (Cardiff, West)
What provision has the EEC made for food and medical supplies to the 3 million Afghanistan refugees in Pakistan?
The Prime Minister
That is not dealt with through the EEC. We give refugee aid to Pakistan. We have tried to be as generous as possible, because we understand and applaud the excellent provision which Pakistan has made for those refugees from Afghanistan. I shall give my hon. Friend the precise figure. It was up to £3 million, but it may now have gone over that.
Mr. Andrew Faulds (Warley, East)
During the conversations on the middle east, did the right hon. Lady pursue the suggestion put by the Greek Prime Minister that there should be a European initiative towards a settlement in the middle east, or is she simply prepared to wait until the American President bothers to notice the problem?
The Prime Minister
The hon. Gentleman will have seen the communiqué on political co-operation. The discussion on the middle east was not extensive. A new initiative could emerge only after very extensive consideration of the kind which specifically occurred at the Venice summit. The discussion was brief. Therefore, the communiqué summarises our present position and says that each of us has kept our contacts with the several parties involved in the middle east dispute. We intend to continue to keep those contacts separately and as a Community.
[column 357]Mr. Eric Forth (Mid-Worcestershire)
Is my right hon. Friend satisfied with the provisions made in the context of enlargement both for migrant workers and the access of British industry to Spanish markets? Does she share my unease that the Greek bargaining position that is now being taken up is a foretaste of what is yet to come regarding Mediterranean countries' pressure on northern European countries on agricultural matters?
The Prime Minister
We have a particular interest in the negotiation of industrial tariffs of the Community with Spain in the negotiations for enlargement. We are not yet satisfied with the conditions, but they are still under negotiation. We are aware of the matter both regarding the quota on cars which are imported into Spain and on the high tariff imposed on them. Therefore, we want increased quotas and reductions in tariffs to take place especially steeply during the early years.
The Greek Government are demanding considerable sums for Mediterranean programmes. The sums were of such an order that my colleagues and I did not think that we could possibly agree to them, bearing in mind that Greece already derives substantial net benefit from joining the Community, which has increased steeply during the past two years.
Mr. Roy Jenkins (Glasgow, Hillhead)
Does the Prime Minister recognise that Mr. Papandreou has become her most apt pupil in unilateral intransigence? Nevertheless, does she agree that it would be singularly inappropriate for Greece, which was eager to speed its entry into the Community to block the entry of two at least equally qualified Mediterranean countries? Does she agree that that is an example neither of Socialist internationalism—a rare commodity these days—nor of democratic responsibility?
The Prime Minister
I recognise no similarity. The right hon. Gentleman has reason to know that the United Kingdom is still a substantial net contributor to the Community—[Interruption.]
I note that the right hon. Gentleman says that that is very good. He should be the first to understand that Greece is a substantial——I am sorry——a substantial taker-out from the Community and wants substantially to increase the sum which it takes out. There is, therefore, absolutely no parallel between the two cases. However, I agree that it would be disgraceful if Greece were to use that particular demand to block the entry of both Spain and Portugal. I am grateful to the right hon. Gentleman for expressing that sentiment in the House.
Mr. Francis Maude (Warwickshire, North)
My right hon. Friend announced the intention to proceed to the free exchange of services within the Community. Will she say when we may expect a genuine Common Market to replace the protection that exists at present?
The Prime Minister
My hon. Friend is right in saying that the article of the treaty on the completion of the Common Market for internal services has been pursued least, although in order of priority it comes above that for agriculture. It is a matter to which the Dooge committee is giving special attention. We have a special interest in it. The committee will report in March, when we shall consider how to take forward its proposals, and we shall have a substantive discussion on it by June 1985. The sooner we get a complete internal market in services the better.
[column 358]Mr. Ernie Roberts (Hackney North and Stoke Newington)
At the meeting did the Prime Minister raise the urgent and serious problem of massive unemployment in Europe? What cures and solutions did she suggest at the meeting?
The Prime Minister
As I said in my statement this was the first part of our discussions and the first matter to which we addressed our attention. I pointed out that there was a substantial report from the Commission—the annual economic report—which was geared especially to
“the dominant problem of unemployment.”
It set out four particular groupings and 16 guidelines on matters to be followed. There is a full copy of the report in the Library.
Several Hon. Members
rose——
Mr. Speaker
Order. There is to be a further statement of great importance, an application under Standing Order No. 10 and an important debate lies ahead of us. I shall take two more questions from each side.
Mr. Ralph Howell (Norfolk, North)
I am glad to hear of the initiatives taken to try to solve the problem of unemployment in the EEC. Is my hon. Friend aware of the success of the United States in its work fare schemes in place of welfare? Will she institute a serious inquiry to see whether their methods can be useful in solving our unemployment problems?
The Prime Minister
We did not discuss those schemes in detail at this meeting, but they were discussed in detail at the London economic summit, at which many European Community countries were present, when President Reagan described them. Some of my hon. Friends in the Department of Employment have been studying those schemes.
Mr. Tom Clarke (Monklands, West)
When the Council considered the provision of grain and food aid to Ethiopia and to other countries, did it take into account the role of the United Nations and its various agencies? If so, what conclusions were reached?
The Prime Minister
Yes, we took into account the role both of other countries and, as many of our colleagues pointed out, of the extremely generous gifts from individual citizens and groups in other countries. We took the measure of what we could do both as a Community and as individual countries, and decided that we could provide 1.2 million tonnes of grain, out of a required amount of, we calculated, 2 million tonnes. That is not only for Ethiopia. There are other countries in need in Africa. Many of us also contribute to the world food programme which has been active in securing greater supplies of food to Ethiopia.
Sir Anthony Kershaw (Stroud)
Considering the attitude of Greece, is it expected that enlargement will cause particular difficulties, and when may we hear the outcome? Is it generally accepted that Greece has an absolute veto in all circumstances about enlargement?
The Prime Minister
Negotiations will go ahead on the remaining matters, which were wine, fish and industrial tariffs, for Spain and Portugal. We hope they will be completed by March so that the March Council can consider them. I think that it is technically true that Greece or any member state would have a veto on enlargement [column 359]because if one insists on having a Luxembourg compromise on the veto, that inevitably follows. I hope that we shall be able to point out, as right hon. and hon. Gentlemen have, that it would be completely unjust if Greece, which is doing extremely well from its membership of the Community and is a democracy which has known non-democratic days, blocked the entry of other newly established democracies into the Community, when a purpose of their entry is to help and strengthen their democracy.
Mr. Russell Johnston (Inverness, Nairn and Lochaber)
Is the Prime Minister suggesting that Greece is getting enough from the Community already? If so, does she still believe that economic convergence is a central objective of the EC? If the sums that Greece is receiving are sufficient, what hope can there be for a poor country such as Portugal? How and when does she expect the standard of living and economic opportunity of the poorer countries to be significantly improved?
The Prime Minister
In 1982, Greece's net receipts were £404 million, and in 1983 they amounted to £555 million. That represented the sharpest rise in any member state's net receipts, and made Greece the second largest net recipient of European Community funds after Italy. Greece has also benefited from certain special measures such as postponement of the introduction of VAT, which means a benefit of some £140 million. On top of those benefits, other sums were offered to Greece in pursuance of the agreement that we had, that such funds should be provided for integrated Mediterranean programmes as a consequence of enlargement. Therefore, extra on top of that has been offered to Greece. Greece said that it thought that that was not enough, but we said that it was all that the Community could afford for the time being. The hon. Gentleman mentioned convergent economic policies, but the Community is not meant to be a mechanical redistributive mechanism.