Speeches, etc.

Margaret Thatcher

HC S [European Community (Membership)]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [889/1021-33]
Editorial comments: 1538-1614.
Importance ranking: Key
Word count: 4574
Themes: Agriculture, Parliament, Union of UK nations, Commonwealth (general), Conservative Party (history), Defence (general), Employment, Industry, Monetary policy, Privatized & state industries, Trade, European Union (general), European Union Budget, Foreign policy - theory and process, Foreign policy (Western Europe - non-EU), Labour Party & socialism
[column 1021]

3.38 p.m.

Mrs. Margaret Thatcher (Finchley)

Yesterday Harold Wilsonthe Prime Minister opened the fourth major debate in 14 years on Britain's membership of the EEC. On each of the first three occasions the Prime Minister began the day as an enthusiastic advocate of the cause that his Government were proposing. This time the Prime Minister chose to open with a very low-key speech leaving out most of the broader issues or dwelling on them only briefly.

We are aware of the right hon. Gentleman's problems. If we were not aware of them yesterday, we have been made aware of them in Question Time today. At present he has to rely more on his political opponents than on his alleged political friends to secure the decision which he considers right for Britain.

It has been suggested in some quarters that my party might find it tempting to withdraw support in order to embarrass the Prime Minister. But we have voted consistently for Britain in Europe by a large majority and would not think of performing W-turns on this issue.

In 1961, when the right hon. Harold Macmillan first came to the House with the idea that we should make an application to the Common Market for membership, the Labour Party was lukewarm in the debate. Indeed, it did not vote upon the main question. On that occasion the Conservative and Liberal Parties voted 313 for the application. There were only five votes against, of which one was Conservative.

In 1967, when the Prime Minister made his application, 488 hon. Members voted for the application, and only 62 against, including 26 Conservatives. [column 1022]

In 1971, on the result of the application, 356 hon. Members voted for it and 244 against, which included some of ours.

Throughout, our record has been consistently that the vast majority of the Conservative Party have voted for the European idea in support of making applications, even when some of the right hon. Gentleman's party did not vote in support of the first application, and again we have supported the idea of Britain in the European Community.

The Prime Minister dealt mainly with the renegotiations and the Labour Party manifesto of 1974. I do not believe that this issue will be decided on those matters. The results set out in the White Paper are difficult to assess and very complicated. I believe that the matter will be decided on the broader issues associated with membership, and it is this argument which I propose to deploy today. I will deal, first, with the case for being in the Common Market, then the case for staying in, and finally the alternatives.

First, the case for being in the Common Market. I believe, with a number of hon. Members who spoke yesterday, that the paramount case for being in is the political case for peace and security. It is taken for granted now that Western Europe, which has been the centre of troubles within our lifetime, will not embark again upon its own destruction. I think that we should not too readily take that for granted but for the tremendous efforts and constructive purpose which have led to those nations working together in the Common Market.

One of the measures of the success of the Community that we now take for granted is essentially security. I think that security is a matter not only of defence but of working together in peace-time on economic issues which concern us and of working closely together on trade, work and other social matters which affect all our peoples. The more closely we work together in that way, the better our security will be from the viewpoint of the future of our children.

I believe that people today recognise two quite different needs. First, there is the need to be part of some smaller group to which we can belong and feel and know we belong. We see that daily in a certain amount of revulsion against [column 1023]size. [Interruption.] I hear sounds coming from a certain direction. The country with perhaps the greatest devolution of power—Germany—is one of the most active members of the Common Market. So there is this need which we must all recognise and take into account in our policies and in the institutions which we fashion.

The second need is the knowledge that it is only when we get and work together that we can achieve the larger objectives which we are seeking to achieve. It seems to me that the prospect of the Common Market fulfils both those needs—the need to identify with one's own nation and country and the need to work together as a community and an alliance of nations for the well-being and betterment of mankind.

Mrs. Winifred Ewing (Moray and Nairn)

May I take it from the right hon. Lady's remarks that she supports the view that powers should be devolved to Scotland equivalent to the powers of the Bavarian Parliament?

Mrs. Thatcher

The hon. Lady would be unwise to conclude anything of that kind. The Conservative Party has always stood for genuine devolution of decision making. I am sure that the hon. Lady will be interested to know that the letters which I get from some people in her country say that Edinburgh is just as remote as London. The hon. Lady has not been here as long as I have. That sounds rather like the Prime Minister. I must not fall into his ways too soon, but I admire his instinct for self-preservation.

I believe that these two needs are met by countries being in the Common Market and working together for the larger purpose. Therefore, my first reason for believing that we should be in the Common Market is peace and security.

The second reason concerns what I believe to be most important—access to secure sources of food supplies. We had quite a lot of argument and debate yesterday about food in the Common Market. I think that we have to view that against the background of the world's food reserves and the amount of food that this country needs to import. We need to import at least half our food to survive. Taking into account the import of fertilisers and foodstuffs, it comes slightly [column 1024]above the 50 per cent. mark. The figures were given in the Lubbock Memorial Lecture at Oxford recently.

Against the background of that need we must remember that the world's food reserves are now smaller in proportion to its consumption than they have ever been. We now have to live from the products of one harvest to the products of the next. The reserves are not sufficient, or the same, as they used to be in the past. In these circumstances, it is only prudent and sensible for the Government to obtain steady access to the Community, which could be self-sufficient in many agricultural products, and which, because of its combined bargaining power, is in a far better position than any single country to negotiate with the rest of the world.

We are the most vulnerable country with our need for food imports. Therefore, it is vital that we secure access to continuous and good sources of food supply. In some years supplies from the Continent will be more expensive; in other years they will be cheaper. But the great benefit is access and greater stability of supplies.

Obviously we had some debate about prices. I notice that the White Paper is very modest in its claim. But undoubtedly the common agricultural policy has not had the effect upon food prices which many opponents of the Market thought it would have. One has only to look at the latest official Government reply in Hansard of 17th March to see that Shirley Williamsthe Secretary of State for Prices and Consumer Protection said: “the overall level of food prices in the United Kingdom is not at present significantly affected one way or the other by our membership of the European Community.” —[Official Report, 17th March 1975; Vol. 888, c. 1125.] The right hon. Lady took the general overall picture. Of course, some commodities are up and others are down in price.

Mr. Norman Buchan (Renfrewshire, West)

Does the right hon. Lady recognise that there are two points here? First, it is irrelevant to the comparison whether the CAP has put up prices or not, but it has. [Interruption.] The right hon. Lady was making the point that the CAP had not put up food prices and she used this answer to prove it. It does not prove it. The CAP did put up our food prices. [column 1025]

Secondly, on the comparison that the right hon. Lady was making, all the major commodities—beef, lamb, butter and cheese and all the grains, including wheat and maize—are dearer than outside the Common Market. The answer and the White Paper are wrong and totally out of date.

Mrs. Thatcher

As far as I can see, what the hon. Gentleman is saying is that the EEC prices did not put up food prices in this country but the CAP did. I should not like to argue that from a public platform. I prefer to take the official Government reply, which I believe is correct—that the overall level of food prices in the United Kingdom is not at present significantly affected one way or the other by our membership of the Community.

The third main reason why we should belong to the Community is that it is the largest trading and aiding unit in the world. It is larger than the United States; larger in the amount of goods which it imports than the United States; larger than the United States in aid. It is a very great advantage for this country to be a part of that very much larger trading bloc. This has become very obvious to other countries. We can appreciate that by looking at the number of them which wish to negotiate direct with the Community, no longer so much with the separate countries. Country after country wishes to obtain access to the Community itself, to the most powerful market in the world. They are far more interested in the Community than they ever would be in supplying us alone.

Furthermore, as time goes on we are more likely to get access to the raw materials we need to fabricate our exports through bargaining as part of a community than we are ever to achieve by bargaining on our own. It is part of the same economic argument. One needs access to secure supplies of food; one needs access to secure supplies of raw materials—particularly if one has to import them to survive.

At present, on the trading point, half of our trade is with Western Europe as a whole. Through our membership of the Common Market we have preferential access to all those countries, which we should not otherwise have. Those countries comprise our eight EEC [column 1026]partners, the seven remaining EFTA countries, with which we have free trade agreements by virtue of belonging to the Community, and Greece, Turkey and Spain, which have Community preferential agreements. Therefore, on the broad strategic trade and aid argument we have preferential access to Western Europe, with which we conduct 50 per cent. of our trade. I doubt very much whether we should be able to get that on our own.

Yesterday we had a good deal of argument about the trade deficit. Indeed, the hon. Member for Renfrewshire, West (Mr. Buchan) had a good deal to say about that, as indeed had the right hon. Member for Battersea, North (Mr. Jay). The Minister of State for Foreign and Commonwealth Affairs, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), substantially answered the question last night, but unfortunately—[Interruption.] I said earlier that the Government had more friends on the Opposition side of the House than on their side. I am being proved right with almost every interjection.

On the trade deficit we were challenged. What right hon. and hon. Gentlemen did not say was that about four-fifths of the trade deficit came from the supply of about five different commodities to this country. Had we not bought them from Europe we would have had to buy them at the same or increased prices elsewhere.

First, on food, including dairy products, which we bought from Europe because many of the products were lower in price than they were in our traditional markets, to substitute our traditional markets for Europe would have meant that the adverse balance would have been worse than it was. Secondly, fuel accounted for part of the deficit. Because of the increased oil prices, we bought fuel products from the EEC—we had to buy some of them because of lack of refining capacity—and they went up in price, so that was a neutral factor in relation to the deficit. On plastics and steel we had an adverse balance. Again, we had to have some of these commodities because we could not supply them. We could not supply the plastics partly because of the Flixborough disaster, and we could not supply the steel because the British Steel Corporation was not able to supply enough last year. If we had not got [column 1027]those supplies from Europe we should have had to buy them elsewhere.

On all of these things, membership of the Community did not have an adverse effect on our balance of trade; in fact, it helped us, in so far as some of these things cost us less in Europe than they would have cost elsewhere. [An Hon. Members: “What about the balance of payments?” ] The balance of payments is worse under the present Government than it has ever been under any other. Furthermore, we are borrowing more under the present Government than we have ever borrowed under any other.

The fourth main strategic reason for us being in the Common Market is to provide a world rôle for Britain. We on the Opposition side of the House have always attached great importance to a world rôle. On our own, as a nation of 55 million, we would have some voice, but not enough. Traditionally, Britain has always been part of a larger grouping, and was listened to partly because of that grouping as well as because of our own particular attributes. It used to be the Commonwealth, but since then most of the Commonwealth countries have become independent and have set up their own trading preferences and arrangements. That did not happen only after our accession to the Common Market. For years and years the Commonwealth preferences were being eroded, as those of us who tried to sell to many of the Commonwealth countries knew. Naturally, they set up their own industries, and naturally they protected them in the early stages. That meant that steadily our markets were closing down. I watched that process year after year. It became vital that as those markets closed down, so we should be able to open up markets of equivalent or greater capacity elsewhere.

The Community opens windows on the world for us which since the war have been closing. It is already strong and already a major influence in the world.

Those are the four big strategic points for being a member of the Community. They are as strong now as they ever have been.

There are also additional points now for staying in the Community which perhaps did not exist at the beginning. First, the Commonwealth itself now wants [column 1028]us to stay in. I know of no adverse comment on this matter. All the comments that have been made, whether by the Prime Minister of Australia, the Prime Minister of New Zealand, the Prime Minister of Canada, the Indian Minister of Commerce, or the Jamaican Ambassador to the United Nations in New York, have been to the effect that they wish us to stay in. This is indeed a further powerful reason for staying in.

The second reason is that we can begin to quantify some of the benefits. The document produced by the Britain in Europe Group, which sets out 176 examples of grants and loans made in the last two years by the Community institutions to this country, is most effective. It sets out specific examples of grants and loans totalling some £290 million, which have gone all over the country.

Mr. E. Fernyhough (Jarrow)

How much is loan and how much grant?

Mrs. Thatcher

The grant is £89 million and the loans are £200 million. That leaves out of account £176 million paid from the guarantee section of the Community's Agricultural Fund.

One can point to a large number of tangible benefits in the form of grants coming to this country. The right hon. Gentleman the Leader of the Liberal Party enumerated a number of separate items yesterday. They vary from very large grants of some £34 million or £35 million to small grants such as grants to the families affected by the Flixborough chemical plant explosion. The EEC gave grants to the planners and grants to agriculture. It gave one grant after another to which one can point; and, of whichever area one is speaking, all this came from the EEC.

Another reason for staying in is that our partners have done everything possible to be both co-operative and constructive. It has been noticeable how they have helped this Government through all their renegotiation difficulties. I believe that on the whole Harold Wilsonthe Prime Minister and James Callaghanthe Foreign Secretary did a good job in the negotiations, and so far as they have obtained improved terms we are delighted and hope that those, too, will help to keep Britain a member of the Common Market. My right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw) said yesterday [column 1029]that he believed that renegotiation is a continuous process. It was my right hon. Friend the Member for Knutsford (Mr. Davies), I believe, who described the Common Market as almost a non-stop negotiating machine. Of course, that is likely to be so in any community which is an organic, living community. It is constantly developing the whole time, constantly responding to the interests of its members.

The right hon. Member for Jarrow (Mr. Fernyhough) indicated a moment ago a certain amount of scepticism about the total amount of grants and loans, but it is quite clear from the White Paper that our calculations, made two or three years ago, about the effects of the Common Market on our Budget were wrong. It is equally difficult to try to make precise forecasts of the sums involved here when we are looking to the future. All we know is that the figures given in the White Paper show that this year, when we were expecting to pay a net contribution of some £165 million, our net contribution turned out to be only £31 million; so our calculations were wrong. The result has been that we have contributed far less to the Community budget than we had expected to contribute. That is another plus for Britain.

On the common agricultural policy, despite what the hon. Gentleman has said, that has not had as adverse an effect on world food prices as he and some of his hon. Friends, and a number of other people, feared at the time it was negotiated. But, in fact, there are very good reasons for believing that the agricultural policy will gradually become more consumer-oriented than it has been in the past. It is natural that as a country has fewer people working in agriculture and more working in the manufacturing industries, its policies will become more directed towards the consumer than towards the agricultural producer; but I and a number of my hon. Friends would hold very strongly that those who work in agricultural production should get just as good a living as those who work in producing manufactured goods.

Another good reason for staying in is the effect that there would be on investment and jobs if we were to pull out. Again, this is very difficult to quantify. [column 1030]Obviously, quite a number of multinational companies will prefer to invest in Europe rather than here if we are not a member of the Common Market. A number of companies here have already indicated that they feel that if we were to withdraw there would be a loss of jobs. Firms like GKN, Lucas and Vauxhall, and a number of people in the chemical industry, have indicated that if we were to withdraw investment would not be forthcoming here; and in their view it would have an adverse effect on jobs.—[Interruption.] I assume that the hon. Member for Bolsover (Mr. Skinner) is interested in getting investment, even overseas, if it helps us to provide jobs in areas where jobs are needed.

Mr. Frank Hooley(Sheffield, Heeley)

Is not the right hon. Lady aware that in 1973 the outward flow of industrial capital, or capital for investment, from this country to the Common Market countries was £400 million while the flow the other way was only £50 million?

Mrs. Thatcher

I think the hon. Gentleman is trying to accelerate new investment towards the Common Market and away from this country. The position is already difficult. We should not try to make it more difficult still. We want more investment here and are quite happy for multinational companies to come and invest, particularly in areas where we need jobs.

The last reason for staying in is that it would be traumatic—to use James Callaghanthe Foreign Secretary's own expression—to come out. When we went in we knew exactly what we were going into. We had had very powerful negotiations, under my right hon. Friend the Member for Sidcup (Mr. Heath), over a period of two or more years and knew exactly the conditions we were to face when we went in.

If we were now to withdraw, it would be a leap in the dark. We should not have any idea of the trading conditions into which we were coming out, or of the effect on sterling. It is not a genuine alternative. A genuine alternative would be to have two sets of negotiations and choose between them; but that would not be possible. We knew what we were going into because of the careful negotiations. If we withdraw we have no idea of what alternative trading arrangements we shall be able to secure. Quite a [column 1031]number of people have made a different suggestion, that perhaps we could return to EFTA. We are already a member of the free trade area by virtue of being a member of the Common Market; and if we were out every EFTA country would have to secure EEC permission because of the free trade agreements. Secondly, we would be a market of only 40 million, which is hardly comparable to a market of 200 million in the EEC. Thirdly, agreements on EFTA are particularly tough on rules of origin, and those in themselves, in the way they operate, could have an adverse effect on some of our trade, particularly in motorcar components.

Having been through some 60 pages of the rules of origin one understands the difficulties associated with them. As hon. Members will know, there are provisions covering certain sensitive products in EFTA agreements under which tariff barriers have gone down, particularly in textiles, with the EEC. Those barriers would be erected again. So even if we could get into EFTA, that would be no answer to our problems. A second alternative would be to have a free trade agreement with the Community. The first thing that occurs to one on this is that a time when one has just broken a treaty is not, frankly, the best time to ask for another, particularly when one is a country of a similar size to other countries in the Common Market and one's products are such that one competes with many of the others.

Many people may say that Norway did so, but she got agreement before she went in; and Norway is a market of only 4 million people with an economy quite different from ours. Any such arrangement would require protracted negotiations which would probably follow the general lines of those agreed with other EFTA countries, and again there would be sensitive products. Secondly, the clauses and articles dealing with State aid to nationalised industries are, if anything, slightly tougher in the free trade area agreements with the EEC than they are in the initial EEC agreement. That EEC agreement specified certain grants that were compatible with the treaty. The free trade area agreement does not repeat those particular grants; and, as I have said, it is slightly [column 1032]tougher on State aid to nationalised industries than the EEC treaty ever was.

Mr. Douglas Jay (Battersea, North)

Does not the right hon. Lady realise that if we withdrew in that situation over the broad area of industrial goods this country would really be in a free trade relation with both groups and, therefore, all we would be abrogating—[Interruption.] Well, if hon. Members do not understand that they do not understand the basic facts. In that situation the onus would be on any other country to alter the status quo and take the initiative in raising tariffs against us. Does she really think that that is likely to happen?

Mrs. Thatcher

The right hon. Gentleman is taking a virtually unique view in thinking that he can select certain parts and not others, that he can just opt out of the agricultural part and keep the free trade area part. But if we abrogate a treaty we abrogate all the treaty and then have to start negotiating again. I see absolutely no grounds for believing that one can get exactly those bits one wants while taking none of the others which do not happen to suit one.

Mr. Jay

Does the right hon. Lady not realise that the EFTA countries are now in exactly that position of industrial free trade without the Common Market obligations?

Mrs. Thatcher

The EFTA countries negotiated their own particular treaties with the EEC. We have no such treaties. We should have to start the negotiations all over again. We do not have such a treaty and we do not know whether we would get it. The time to ask for a new treaty would not be when we had just broken the old one. As the right hon. Gentleman knows, those EFTA countries which are steel producers had to promise to align their steel prices with those of the Community without consultation. There are also certain other restrictions on fishing which were applied to Norway, although I agree that fishing has not yet been fully resolved in the treaty.

The choice is whether to be outside the Community and yet have to accept everything which it decides on trading provisions, including standards and safety provisions and prices of steel, or whether [column 1033]to stay in the Community and have an influence over all those decisions which will seriously and closely affect the whole of our industrial life.

Mr. Ron Thomas(Bristol, North-West)

Is the Leader of the Opposition suggesting that the EEC will prejudice its £2,000 million balance of trade surplus with us simply out of pique and erect trade barriers and become the inward-looking club that many of us feel it is?

Mrs. Thatcher

What I am suggesting is that the hon. Member has absolutely no grounds for assuming that we should get a free trade area agreement with the EEC when it has made strenuous efforts to meet all our requests and demands to keep us in the Community. I believe that the hon. Gentleman wants to accept those parts of the treaty which suit him and forget about the rest.

I hope that our economy will soon be in better shape and overcome the adverse balance of trade, and I am sure that Harold Wilsonthe Prime Minister shares that view. We cannot assume that we would have an alternative area to go to, and the result may be that we should have to go it alone. There being no certain alternatives, it would seem that we have very carefully to consider keeping the arrangements and agreements we already possess before going completely into the unknown. Being in the EEC will not, of course, solve all our economic problems, or anything like it. Some of them are home grown and have to be dealt with by us. There are the problems of inflation in particular which we have to cope with ourselves, whether we are in or out of the Community.

For Britain to abrogate a treaty is bad for Britain, bad for our relations with the rest of the world and bad for our future trading relationships. I believe that Britain has always played a major rôle in the world and still has a major rôle to play. I do not believe it can play that rôle to best advantage on its own, and if we wish to give our children maximum peace and security in a very uncertain world, our best course of action is to stay in the Common Market.