European Council
The Prime Minister (Mrs. Margaret Thatcher)
With permission, Mr. Speaker, I should like to make a statement.
I attended the European Council in Brussels on 19–20 March, accompanied by my right hon. and learned Friend Sir Geoffrey Howethe Secretary of State for Foreign and Commonwealth Affairs. As the House will already know, the Council did not reach agreement on the reform of the Community's finances nor on any of the other matters before it.
I made it clear at the meeting in Stuttgart last year that the United Kingdom would be prepared to consider an increase in the Community's financial resources, but only on condition that there was effective control of agricultural and other spending and that there was a fair sharing of the budget burden. We made progress towards securing control of spending by, first, an annual limit on overall expenditure and, second, a strict financial guideline on agricultural expenditure.
The French Presidency also proposed a lasting system for a fair sharing of the budget burden. We would have been able to accept this system, but some other member states, despite the long discussions over the past nine months, were still unable to do so. Nor were we able to reach agreement on the level of the United Kingdom net contribution which would result from the application of the system.
The Council also had a long discussion on the agricultural problems which had been remitted from the Agriculture Council. Ireland sought exemption from the super-levy on a quantity of milk which would have been higher than its 1983 production. Its demands and those of other member states would have led to milk production well over 1 million tonnes in excess of the production level set earlier by Agriculture Ministers for the Community as a whole. Further discussion of the agricultural package will take place in the Agriculture Council next week.
We made a sustained attempt to reach a satisfactory compromise on all the matters at issue. At the end of the discussions, the proposition which the United Kingdom was invited to accept was: first, that instead of a lasting, equitable system for Community financing there should be a five-year ad hoc arrangement which would have left us receiving less than the average refund which we received in the years 1980 to 1983; second, that we should endorse the unsatisfactory and discriminatory arrangement for milk which I have already described; thirdly, that we should accept an increase in the Community's VAT resources to 1.4 per cent. in 1986 and have in prospect a possible further increase two years later to 1.6 per cent.
I made it plain that neither the Government nor the British Parliament could accept such a package. Therefore, I did not agree to any increase in the Community's resources. The 1 per cent. VAT ceiling remains.
Immediately following the European Council, the Council of Ministers for Foreign Affairs met in order to see whether the objections to the United Kingdom's 1983 refund of 750 million ecu could be removed, but France and Italy blocked those regulations. The Government are considering what action we should now take to safeguard our position. [column 1050]
The Community is in a difficult situation. We shall, however, persevere in our efforts to achieve a reform of its finances and to make its internal and external policies more relevant to the needs of today's world. I want to see a more effective Community, developing its full potential. That is the Community in which I believe.
Mr. Neil Kinnock (Islwyn)
Does not the Prime Minister's statement simply mean that in Brussels she failed to get payment of a £500 million rebate of our money by a target date which she herself very deliberately set? Is it not the case that, nearly nine months after the Stuttgart summit, the Prime Minister is now even further away from securing agreements to end the injustice of the British budget deficit and that, in addition, she is isolated even from those who were prepared to help? If she had been going to Brussels as a supplicant, her lack of achievement might have been regrettable, but it would have been understandable. Can she explain to us and the country now how it was that, as the banker to the Community, with her client about to go bankrupt, she still failed to exert that unique power in order to achieve an agreement that would safeguard our interests and get our money?
The Prime Minister says that she wants
“a more effective Community, developing its full potential.”
Will she not agree that it is nothing short of outrageous, at a time when there are 15 million unemployed in the Common Market, that the leaders of western Europe could meet for three successive summits and still not produce a single proposal for the economic expansion which our country of Britain and our continent of Europe so desperately need?
The right hon. Lady says in the statement that
“the Government are considering what action we should now take in order to safeguard our position.”
Will she accept that in any consideration undertaken by the Government there can be absolutely no question whatsoever of subscribing to a Common Market whip-round in the form of Supplementary Estimates put before the House, and that any business anticipated for next week on that basis is hereby withdrawn?
Finally, will she now tell the House and the country, without any ifs, buts or delays, when she is going to introduce the necessary legislation to enable our country to withhold Common Market contributions?
The Prime Minister
First, the right hon. Gentleman says that we failed to get payment of the 750 million ecu refund. I agree that that was not forthcoming. I believe that he should direct his criticisms to France and Italy, because it was France and Italy that deliberately blocked the regulations. That agreement came about at Stuttgart in June last year. It is reprehensible that the Community has not so far honoured its obligations.
The right hon. Gentleman is right to say that we had help from a number of colleagues in the summit. As to getting a reasonable, equitable and permanent financial arrangement in the system, President Mitterrand in the chair was helpful, as were a number of colleagues. As I said in my statement, they were not all ready to have a system, and therefore proposed an ad hoc arrangement. Having been at this for some time, as have my predecessors before me, because we are all hampered by the system of own resources agreed in 1970, I believe that [column 1051]we need a permanent system. I note that that view is shared by the European Parliament. Others of our colleagues prefer the present system.
The right hon. Gentleman does not understand the difference between being a banker and being a net contributor. If he did, his other questions would not have followed.
As to the summit proposals for expansion—yes, we were concentrating this time as we did in Athens, on trying to get agreement on a package of measures that had been referred up to the European Council. It is correct that the Ten failed to agree.
Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
You failed. You are a failure.
The Prime Minister
Oh, so the hon. Gentleman wants me to agree to that package, which I rejected—how very interesting.
Mr. Foulkes
indicated dissent.
The Prime Minister
He wants us to agree to the majority. He wants us to agree to 1.4 per cent. VAT. He wants us to agree to a totally inequitable milk package, which would have caused great trouble to our farmers; the essence of that milk package was that there should be no discrimination. The hon. Gentleman would have preferred me to go with the nine rather than to go on batting, as I did, for a fair agreement for Britain.
As to the Supplementary Estimate, which was due to come before the House some time in the near future, that is necessary because the Community is already above its 1 per cent. and is spending at 1.1 per cent. As to our action following the refusal to let us have our refund by 31 March, which is not a legal necessity but has been the habit and custom of the Community with past refunds, the Cabinet will be considering tomorrow morning what action it is best to take, and a statement will be made to the House tomorrow.
Mr. Francis Pym (Cambridgeshire, South-East)
Since a more determined attempt than ever before was made to reach agreement, since my right hon. Friend has lived to fight another day—she has told the House this afternoon that she will—and in view of the magnitude of the issues raised by the principle, practice and legality of withholding, does she agree that it would be wise to resist the temptation to withhold?
The Prime Minister
I think that it is wise first to discuss the matter in Cabinet tomorrow morning—[Hon. Members: “That will make a change.” ] However, one cannot go on as if nothing had happened. These refunds should have come to Britain. They were agreed nine months ago and should have been here, and it is reprehensible of the Community that they have not arrived. It is almost intolerable that one should be expected to send a supplementary levy in the face of what has happened.
Mr. David Steel (Tweeddale, Ettrick and Lauderdale)
Is it not a unique sign of the Prime Minister's failure of diplomacy that all the other nine member states seem out of step except her? Does she accept that, on the balance of budget payments point, her position would have been much stronger if the Government had not regularly refused resources from the regional and social funds of the Community because of the Government's objection to public expenditure within Britain? Does she accept that, [column 1052]as long as she continues with her obsession on purely budget matters, she ignores the wider issues being discussed in the Community by other member states, such as security and defence and the French proposals on banking and insurance, all of which would be in our long-term interests?
The Prime Minister
As to the right hon. Gentleman's observation about being out of step, I point out that, of the 10 members of the Community, two are substantial net contributors—Germany to the considerable extent of over 2,000 million ecu and Britain with our unadjusted net contribution of 2,000 million ecu. France is the only other net contributor, at some 19 million ecu, and all the others are net beneficiaries. The reason for the result yesterday is that they like being net beneficiaries and are not prepared to yield up their benefits to reduce our contributions. In my opinion, that is totally inequitable. We shall not get the Community in a stable state or able to field its full potential in the outside world until we feel that we have an equitable system for bearing the financial burdens of the Community. I would say that those who are against that are out of step.
May I make it perfectly clear, on the subject of the regional fund, that every penny spent by the Community in Britain is more than covered by expenditure by the British taxpayer or the consumer. It is when we have covered all of that that we are still a substantial net contributor across the exchanges to Brussels. The wider matters of security and defence are not within the remit of the Community.
Mr. Norman St. John-Stevas (Chelmsford)
Would the Prime Minister agree that to seek a permanent solution to the budget problem is to be both patriotic and a good European? How can there be a prosperous and ongoing Community if one of the leading members is continually rankling under a sense of injustice? In view of what my right hon. Friend says about the reservations of other member states on the system proposed by the French President, will she now initiate a constructive and vigorous bilateral series of talks through the Foreign Office, so that, by the time of the next summit, this problem can be permanently disposed of?
The Prime Minister
I agree with my right hon. Friend that we shall not get a stable or effective Community until the budgetary contributions are related to economic circumstances and ability to pay. That is what we shall strive to achieve, and I believe that that is what the Parliament believes in. It also wants a permanent system. It is not easy to achieve, because some of the other members are net beneficiaries and like it to be that way, but the objective of a stable and effective Community is worth striving to achieve, and that is what we are trying to do.
On the second question, of bilateral discussions, we have already had a number of bilateral discussions between meetings, and we shall continue to have more. The present situation is not sustainable, and I believe that we are entitled to fairness and equity—the same fairness and equity that we always accord to others.
Dr. David Owen (Plymouth, Devonport)
Could the Prime Minister agree that she said last night that only a narrow divide separated the negotiations? Would she not agree that, in such a situation, with skill, that gap can be [column 1053]closed, but that the way to close the gap is not for Britain to take an illegal act? Does the Prime Minister recall the words that she used in September last year, that Britain sticks to its treaties, and her warning that countries that break their treaties on one occasion do so on other occasions? If that was acceptable as a lecture to the Chinese Government, surely it is something that the Prime Minister should stick by. Is she entitled to go to the Community and talk about the will of Parliament before she has tested the will of Parliament? May I make it quite clear that some of us will resist any legislation to withhold payment in this situation?
Mr. Dennis Skinner (Bolsover)
Send back Jenkins's pension.
The Prime Minister
Yes, it is quite right. There was a comparatively narrow gap between us towards the end, and I use that as evidence of the strenuous efforts that we have made to compromise because we genuinely wanted a settlement. The gap that that offered us was, of course, not of a permanent system. That was a big gap. We need a permanent system, and that is an enormous gap. We must go back to that.
On amounts, the difference was between 1,000 million ecu and hoc for five years, and a system giving about 1,250 million ecu under a formula. The two are not totally comparable, but in so far as the gap was small for one contributor, it was smaller still for the other nine who rejected it, because it would have been allocated in ninths among them.
Several Hon. Members
rose——
Dr. Owen
What about the treaty?
The Prime Minister
I forgot to answer the question about the treaty.
I must point out to the right hon. Gentleman that, although there is no exact precedent for the present situation where two member states have blocked refund regulations implementing payments already agreed by the European Council, there have been previous occasions when small amounts of money have been withheld. For example, in 1979, France, Denmark and the United Kingdom refused to pay full VAT contributions as they considered the 1979 budget to have been improperly adopted. In 1981, the French, German and Belgians similarly refused to pay in full in respect of the 1980 supplementary budget No. 2. So there have been occasions on which some money has been withheld before.
Mr. Robert Janckson (Wantage)
My right hon. Friend will recognise the disappointment, and indeed the anguish, which many of my hon. Friends will fell at this turn of events. In view of the provocative action by the French and Italian Governments in blocking the 1983 rebate payment, will my right hon. Friend recognise that she will have strong support on the Conservative Benches for a patient and cautious response? If the Government find it necessary to take steps to safeguard our position they should be most careful to minimise the inevitable reactions and repercussions.
The Prime Minister
I share my hon. Friend's disappointment. We did try to get a settlement. We did try to get a permanent system. We did try to get equitable figures attached to that system. Equally, I agree that we [column 1054]simply must take steps to safeguard Britain's financial position. It is not our fault that we are put in a position where we have to do that, but we must do it.
Mr. J. Enoch Powell (Down, South)
Will the Prime Minister, ignoring the loud protestations of those who have run away from their election pledges, recognise that her stance at Brussels corresponded, as it often does, with the instincts and wishes of the British people, and that she will have the full-hearted consent of Parliament and people to her insistence that Britain shall have its rightful needs?
The Prime Minister
I am grateful to the right hon. Gentleman. We are entitled to a fair and reasonable deal and to go on fighting fro just that.
Sir Anthony Meyer (Clwyd, North-West)
Is my right hon. Friend aware that she has, by her conduct of these negotiations, demonstrated her deep understanding of the wishes of the British people? IS she further aware that it is her responsibility to safeguard the interests of the British people and that the two things do not necessarily coincide?
The Prime Minister
I believe that the interests of the British people are that we should pursue a fair and reasonable budgetary system for British contributions, and indeed, for the contributions of other member states. I believe that those contributions to the European budget must take account of economic circumstances if we are to have to stable Community that is able to survive and play an effective role in the wider world.
Mr. Merlyn Rees (Morley and Leeds, South)
What advice will the Prime Minister give the Cabinet tomorrow when it meets under these most unusual circumstances as it what we should do if these European Johnnies do not give in to her demands?
The Prime Minister
The right hon. Gentleman will have to wait 30 years for the records—unless he is lucky enough to have an earlier leak.
Mr. Jonathan Aitken (Thanet, South)
Is my right hon. Friend aware that her correct and courageous stand at Brussels yesterday will be greeted on the Conservative Benches and throughout the country not merely with warm support but with positive jubilation? IS she further aware that there will be plenty more of that support if she decides with the Cabinet tomorrow to introduce the necessary withholding legislation next week?
The Prime Minister
I am grateful to my hon. Friend. We did strive very hard to reach a settlement. We were prepared to compromise where it was reasonable to do so, but I believe that the package that I have described to the House in my statement was unacceptable, and I believe that the decision we therefore took was the correct one.
Mr. Eric Deakins (Walthamstow)
Has the Prime Minister ruled out as part of any temporary or permanent financial settlement any system based on refunds, in view of what has happened to our 1983 refund?
The Prime Minister
The problem is this. We always speak of an equitable settlement in terms of net contributions. For that, we make a calculation which is based on money sent to the Community by way of levies, and 1 per cent. of VAT, which are own resources, and the gap between what we send to them and what we get out in expenditure. That we call the net contribution. That is not a system which the Community itself accepts. [column 1055]Therefore, it talks about refunds. The fact is, therefore, that we get into a whole lot of what I can only call Community jargon, which makes it very difficult for us all. I still believe that we are right to adopt the net contribution or the net benefits as the right criterion for getting an equitable financial settlement.
Sir Anthony Kershaw (Stroud)
While fully accepting that it is impossible to ask Parliament or the British people to accept a solution which the regard as basically unfair, is my right hon. Friend nevertheless satisfied that, amid all the welter of figures and Community jargon, we may lose sight of the main purpose of the Community, which is to ensure peace and democracy in Europe?
The Prime Minister
It is precisely because I want to get away from the annual or bi-annual welter of figures and Community jargon that we want a lasting system. We were very near to getting a lasting system, and the Presidency was most helpful. I think that, if we continue to persevere, we shall be able to get a system, but then of course we have to put in place the figures which would ensure that our net contribution was a reasonable one.
Mr. Roy Jenkins
rose——
Hon. Members
Oh!
Mr. Speaker
Order. Every right hon. and hon. Gentleman has a right to be heard.
Mr. Jenkins
Since the Prime Minister, as I understand it, has made it clear that agreement was very near late yesterday afternoon or early yesterday evening, will she make it explicit that because Anglo-French disputes——
Mr. David Nellist (Coventry, South-East)
What?
Mr. Jenkins
Anglo-French disputes!
Because Anglo-French disputes can be particularly disruptive, will the Prime Minister make it explicit that President Mitterrand played a very constructive role in trying to seek a solution? Will she, in considering whether to withhold payment, consider the dangers of following the example of Liverpool city council, and of responding to a budgetary position that she does not like by illegality?
The Prime Minister
I gladly respond to what the right hon. Gentleman said. This is not a British-French problem; it is much wider than that. The President of the European Council, President Mitterrand, was very helpful in securing the negotiation of a system, and the text put before the Council for decision was a Presidency text. France, I believe, and a number of other member states, would have accepted that system, but there are some who would not have done so. He was also helpful in trying to reach agreement on a compromise on figures, but we were just not able to close the final gap.
Mr. George Gardiner (Reigate)
Is the Prime Minister aware of the general anger which will be felt over the provocative action by france and Italy in blocking our 1983 refund and that, although no one wishes to see this dispute escalate, her government would be amply justified in withholding an equivalent amount from our budgetary contribution, at least pending the next European Council meeting?
The Prime Minister
I am grateful to my hon. Friend. I think that blocking was unwise, and will sour relations—[Hon. Members: “Who did it?” ] France and Italy. Those refunds in fact were agreed in Stuttgart last June. [column 1056]We have had difficulty in securing the right procedure for them to come to Britain. It was almost all cleared through the parliament, and then came the blocking in the European Council. I hope that it will soon unblock those funds. In the meantime, we must consider what action to take to safeguard our position, which must be safeguarded.
Mr. Joseph Ashton (Bassetlaw)
Is not the Prime Minister breaking the law? Has not she gone on strike against the Common Market? What is the difference between her position and that of the NUM, or that of the Labour councillors who refuse to carry on with an arrangement? Has the right hon. Lady brought her rose=foloured glasses with her today to distinguish herself from Arthur Scargill?
The Prime Minister
No law has been broken. I believe that the Common Market is in default with us in not letting us have those refunds by 31 March. That is different.
Mr. Cranley Onslow (Woking)
Is my right hon. Friend aware that no one in this House of outside is likely to feel much anguish unless it was thought that the Government were not doing their utmost to defend what President Mitterrand called “Britain's reasonable interest” ? Is she also aware that in the attitude that she has taken she has our full support, and that she can take as much time as she likes to maintain that interest?
The Prime Minister
I am grateful to my hon. Friend for those remarks. We shall persevere, as I have already said. We need a permanent system and reasonable refunds. We have always played a very constructive part in the Community and shall continue to do so. However, we could not go any further, particularly over farming and agricultural matters, because that would not have been fair to our own farmers.
Several Hon. Members
rose——
Mr. Speaker
Order. I realise that this statement is very important but there is an important Opposition Day ahead of us and a ten-minute Bill. I propose to allow questions to continue until 4.10 p,.
Mr. Gordon Wilson (Dundee, East)
The Prime Minister is right to press for a permanent solution to that long-standing problem. However, if it is true that there was a small gap to be closed and that she had the support of the French President, may not her abrasive style of negotiating have prevented it from being closed? Will the right hon. Lady therefore be careful in future and seek allies from the other countries instead of dissuading them from supporting us?
The Prime Minister
I do not accept that. Of course one fights fiercely for Britain's interests, just as the others fought fiercely for theirs. If voices were raised, they were not mine.
Sir Brandon Rhys Williams (Kensington)
Will my right hon. Friend accept that her position over the increase in own resources is very strong, and that she has the warm support of hon. Members on both sides of the House, and, indeed, of the country? However, would it not weaken rather than strengthen her position if we took a step with regard to our payments to the Community that many of our friends would hold to be petty and illegal?
The Prime Minister
My hon. Friend will have heard me from this Dispatch Box constantly being absolutely [column 1057]correct in putting forward advance payments to the Community and in refusing to countenance withholding them. I was absolutely correct in that respect until the Community went into default with us. When the community goes into default with us, we have to consider safeguarding our position.
Mr. Kevin McNamara (Kingston upon Hull, North)
Is not the truth of the matter that in her negotiations as Prime Minister the right hon. Lady has lost at every turn of the coin, and has failed in all her negotiations? For example, Scunthorpe, in my area, has to real steel industry left because of the number of jobs that she has discarded. Hull and Grimbsy are also in my area, and she has sold the whole fishing industry down the river because of her interest in trying to obtain this sort of agreement. The record of her negotiations is one of failure, failure, failure, while claiming to have such a strident interest——
Mr. J. Enoch Powell (Down, South)
What was the hon. Gentleman's policy in the general election?
Mr. Kevin McNamara
I say to the right hon. Member for Down, South (Mr. Powell), who is barracking from my left, that I stood up for Britain and did not support the right hon. Gentleman, just as I do not support him now. We have lost job after job. How many jobs are we going to lose——
Mr. Speaker
Order. Such lengthy questions are very unfair to other hon. Members.
The Prime Minister
I shall take up three of the hon. Gentleman's ponts. First, we had the courage to face the problems of the steel industry which the Labour Government ran away from. Secondly, we negotiated the first common fisheries policy where others for many years had failed. Thirdly, although our entry into europe was negotiated and then renegotiated by the hon. Gentleman's Government, my Government negotiated refunds of 1,100 million ecu a year on average for four years.
Mr. Churchill (Davyhulme)
Is my right hon. Friend aware that, in contrast with the long-sinded carping of the Leader of the Opposition, her stance will command the overwhelming support of the British people? Is she further aware that, in particular, those of us who have long held, and continue to believe in, the ideal of European unity are whole-hearted in our support for her determination to ensure that the United Kingdom does not become the milch cow of Europe?
The Prime Minister
In all its dealings, the United Kingdom has been very generous to the Community, and I think that we are entitled to a fair deal in return.
Mr. Ron Leighton (Newham, North-East)
How much longer is the Prime Minister willing to continue with this exercise in Euro-futility? Is it not clear that Dublin, Stuttgart, Athens, and Brussels were entirely predictable fiascoes? IS the right hon. Lady aware that the British people are fed up to the back teeth with such constant haggling and wrangling, and realise now that membership was a ghastly mistake? Will she tell the French President that, if the continental countries want to develop their own CAP, we wish them well? However, if we extricate ourselves from the EEC, we shall have much better relations with our neighbours.
[column 1058]The Prime Minister
No, Sir. I believe that it is in the best interests of this country to continue to belong to the Community. However, the Community will not be effective unless we obtain a fair and equitable agreement. It took three summits to obtain a fair, although temporary, refund. It took from Strasbourg, to Dublin, to Luxembourg—three European Councils—to obtain that. This time, we have so far done two. Perhaps it will be third time lucky.
Mr. Robert Hicks (Cornwall, South East)
In view of the very serious and sad situation that has been caused, and, not least, the further creation of anxieties and certainties for those most involved with European policy, such as the agriculture sector, does not my right hon. Friend agree that as the gap is relatively narrow, there is a very strong case for sending the Foreign Secretary to meet his and her European counterparts so that there can be an effective sweeping up to obtain a satisfactory solution as was achieved by one of my right hon. and learned Friend's predecessors?
The Prime Minister
Sir Geoffrey HoweThe Foreign Secretary has been very active, both up to and during this European Council. He was, of course, negotiating along with me, and will continue to negotiate in foreign AFfairs Councils in future. I know that my hon. Friend also has considerable interests in agriculture, and I should point out that some most contentious agricultural issues came up at the European Council. Some countries did not wish to have cuts in their milk production, although the rest of us were all having cuts. They wished to have no cuts, and some even had increases in production. That would have led to an extra quota-over and above what the agriculture Ministers agreed—of 1 million tonnes, which would have been most unfair to our farmers.
Mr. Dick Douglas (Dunfermline, West)
As other nations in the Community like being net beneficiaries and wish to put no limit on that, and as we do not like being net contributors, will the Prime Minister reverse the process and put a time limit on that?
The Prime Minister
The hon. Gentleman will remember that we have had refunds for four years which have averaged 1,100 million ecu a year. That has meant that the refunds—in Community jargon—have been about two thirds of our net contribution, leaving us with only one third to pau. That was a reasonable deal, but it was only an ad hoc arrangement. The Community will not extend it. Since, if we obtain agreement, we are going into a period of increases in own resources, it is vital that we should obtain a fair distribution of the burden. It seems totally unreasonable to say that those who are net contributors and who bear an unreasonably large share of the burden should pass over bigger resources. Really, the one depends on the other.
Mr. Hugh Dykes (Harrow, East)
Will my right hon. Friend assure us that there is no danger that we many eventually have to pull out of the Community? To solve the crisis, will she take note of the suggestion that there should be an early emergency summit before June?
The Prime Minister
I do not think that there is much point in having another summit, let alone an emergency summit, until a number of private contacts have ensured that we are likely to be more successful next time. We had a number of high level contacts before. There was a good [column 1059]deal of support on the system but not quite enough on the amount, although the gap is small. I think it is set that we try behind-the=scenes contacts before we have another summit.
Mr. Speaker
Mr. Russell Johnston.
Mr. Skinner
Another Liberal? We have had two from the SDP.
Mr. Russell Johnston (Inverness, Nairn and Lochaber)
Surely the Prime Minister will agree that the whole object of this is to win the argument in negotiation——
Mr. Skinner
Every one a Common Marketeer.
Mr. Johnston
—to win the argument in negotiation and to win friends? Does she not feel that the fact that she has been described as intransigent by representatives of all other countries in the Community represents a failure in her own approach? In particular, was not her contentious treatment of Dr. Garret FitzGerald of Ireland—a poorer country than ours, faced with genuine problems on the agricultural package——
Mr. Speaker
Briefly.
Mr. Johnston
—symptomatic of that approach? Is it not the case——
Mr. Speaker
Order. I called the hon. Gentleman just before ten past four and he should now bring his question to an end.
Mr. Johnston
Is it not the case that, if one does not give and does not admit, one is not likely to get very much?
The Prime Minister
With regard to the Irish point, our own farmers are having to take a cut of 7 per cent. on last year's production. A number of other countries are taking a cut of 7 per cent.; others are taking less. The cut that Ireland was asked to take was larger. We were obviously prepared to say that Ireland should have a goodly share of the 600,000 tonnes extra quota that the Agriculture Council had put aside so that her cut was the same as that which would have to be endured in Northern Ireland, which would have been a 7 per cent. cut. What the hon. Gentleman is saying is that Ireland should have had exactly what she wanted, which was no cut at all but rather an increase in production of 260,000 tonnes. That is the inevitable consequence of what the hon. Gentleman is saying. That would have been devastating to Northern Ireland, to Scotland, to Wales and to British farmers. Also, he might be interested to know that the attack on that was led by other people in the Community.
Mr. Kinnock
In the informal bilateral exchanges in which the right hon. Lady will be engaged, will she be conveying the impression which she appeared to convey in Brussels, that this country would be willing to subscribe a 40 per cent. increase in Community VAT resources? If she anticipates such a subscription, will she come to the House before any such suggestion is made, even informally? Finally, the right hon. Lady—I am sure inadvertently—did not give me a direct answer to the last question that I raised. Can she now tell us when the Government will introduce the legislation to enable us to withhold our contributions to the Common Market?
The Prime Minister
With respect to the right hon. Gentleman, I did answer that. I said the matter would be [column 1060]considered tomorrow morning and that a statement would be made shortly. It is advisable to consider the matters and also to consider the legal consequences before one makes such a statement. We must take steps to safeguard our position.
On the other matter, we want strict financial restraints on the total European budget and in particular on the agricultural budget; those should be embodied in the budgetary procedure so that they can bite. Therefore, we made it clear that if there were strict financial constraints plus a fairer sharing of the burden, we would consider an increase in own resources. As the right hon. Gentleman will be aware, such an increase in own resources has to be ratified by each and every parliament in the Community.
Several Hon. Members
rose——
Mr. Edward Heath (Old Bexley and Sidcup)
rose——
Mr. Speaker
Order. I did say that we would bring questions to an end on this very important matter at ten past four, but I think the House would wish to hear the right hon. Member for Old Bexley and Sidcup (Mr. Heath).
Mr. Skinner
On a point of order, Mr. Speaker.
Mr. John Maxton (Glasgow, Cathcart)
On a point of order, Mr. Speaker.
Mr. Speaker
Order. I called the right hon. Gentleman.
Hon. Members
Oh.
Mr. Heath
Is my right hon. Friend aware that to have reached broad agreement on three out of the main factors in the discussion at the summit is a remarkable achievement? To have reached agreement on a system of financial discipline, for which we have rightly been pressing, although it may not be everything to which we are accustomed in the House, is a major step forward. For the Ministers of Agriculture to have reached broad agreement on a package with the exception of the Republic of Ireland, where it ought to be possible to make adjustments, in view of its political situation and its importance to us in the political sphere, and to have reached broad agreement on our own resources in the Community being increased to 1.4 per cent., is a major achievement and means that this summit was unlike any other which preceded it. When one considers the financial arrangements for this country, then I understand——
Mr. Skinner
Question.
Mr. Heath
I am asking my right hon. Friend whether she is aware of these facts—that the difference between the offer made by President Mitterrand and ourselves was reduced to 15 per cent.; 85 per cent. of what was being asked for by the Prime Minister was agreed. This is a very narrow gap.
In regard to the time limit, five years for budgets is a considerable time, although if it is possible to get acceptance for a permanent system, we would support it. [Hon. Members: “Too long.” ] That is a remarkable achievement, for which my right hon. Friend should take credit. Is it not right in regard to the rebates that President Mitterrand has always made it clear that his agreement was connected with the agreement on own resources? Therefore, there is a difference of view between France and Britain.
[column 1061]Mr. Nicholas Winterton (Macclesfield)
This is longer than the Leader of the Opposition.
An Hon. Member
“This is the leader of the opposition.”
Mr. Heath
Therefore, in these circumstances, is my right hon. Friend aware that many of us could not accept illegality in withholding funds from the Community?
Mr. Skinner
Will the right hon. Gentleman give way?
The Prime Minister
What Edward Heathmy right hon. Friend says does not wholly accurately reflect what took place. The agreement on strict financial guidelines was a very hard-fought agreement. It was not finally put to the summit, so we are not quite certain whether the text which embodied the word “guarantee” would have been accepted, but all the way it was a very hard-fought agreement by my right hon. and learned Friend Sir Geoffrey Howethe Foreign Secretary and myself. I hoped that would have been accepted.
With regard to agriculture, with all due respect to my right hon. Friend, there were some very difficult matters upon which a reserve was put by the Agriculture Council, to be referred to the European Council. It was not only the Irish position that caused difficulty but also the Italian and Luxembourg positions. They wished, too, to have special quotas so that they would not have to reduce the amounts of milk produced. Those too were caught in a great contest and those matters are still referred to the Council. There is still no decision on the variable beef premium, which is extremely important to our own farmers.
Therefore, there were a number of things upon which a reserve was put by the Agriculture Council and upon which the European Council did not agree. Then came the Irish position, under which they did not want merely a portion of the 600,000 tonnes extra quota that had been agreed by the Agriculture Council but a complete arrangement. That was hotly contested, and indeed, refused by the Common Market summit.
With regard to own resources, there is no agreement on that unless there is agreement on other matters. The own resources provisional decision went further than most of us wished, in that the proposal was for 1.4 per cent. in 1986 and envisaged the prospect of 1.6 per cent. in 1988. That also was hotly contested, for reasons that my right hon. Friend will know. [Hon. Members: “Too long.” ] I am answering questions that have been put to me, and my right hon. Friend is entitled to answers.
My right hon. Friend referred to what he called the gap in the British contribution. It is much wider than it seems because one cannot compare 1,000 million ecu ad hoc for five years with a sum of 1,250 million which is given under a system and which means that we put a limit on our net contributions even through increased expenditure. The gap involves both the system and the amount. Nevertheless, we went a long way to try to reach agreement. We were all prepared to compromise and I am sorry that we did not achieve an agreement which was satisfactory to Britain.
Several Hon. Members
rose——
Mr. Speaker
Order. Ten-minute Bill.
Mr. Skinner
On a point of order, Mr. Speaker.
Mr. Maxton
On a point of order, Mr. Speaker.
Mr. Eddie Loyden (Liverpool, Garston)
On a point of order, Mr. Speaker.
[column 1062]Mr. Speaker
I shall take points of order. Mr. Maxton.
Mr. Maxton
I wish to raise a point of order, Sir, about the number and party membership of hon. Members who were called to ask supplementary questions on the Prime Minister's statement. It is, to say the least, disturbing that six members of minority parties and four members of the alliance were called.
I have raised this matter with you before, Mr. Speaker. It is time that we had an answer. The Liberal party and the SDP act here as two parties, but everywhere else as one. It is an abuse of the House if they are treated here as two parties, when they fight the European and district elections as one party. Members of the Labour party represent the largest minority in the House and they have a right to your protection as much as members of other parties.
Mr. Skinner
On a point of order, Mr. Speaker.
Mr. Speaker
Order. Is it on the same point?
Mr. Skinner
Yes, Mr. Speaker. I realise the difficulties in which you are placed on such occasions, because within both main parties some members are still strongly pro-Market—I do not know why—and the majority of the Opposition still believe that Britain should be out of the Common Market and will fight for that. [Interruption.] Dr. Death is on behind me. In my 14 years in the House I have never witnessed such a curious tete-a-tete between the Prime Minister and an ex-leader of the Tory party. What puzzles me even more is that, while I can understand you, Mr. Speaker, having to call the leader of the Social Democrats and the leader of the Liberal party—although I might not agree with it—I take exception to another Liberal Member being called who has a direct interest since he is fighting a European seat in the Highlands. On top of that, the man who receives a big fat pension from Europe was also called on behalf of the Social Democrats. I think that it is taking things a bit too far when real strong anti-Marketeers cannot have a bite at the cherry.
Sir Anthony Kershaw
On a point of order, Mr. Speaker.
Mr. Speaker
The same point?
Sir Anthony Kershaw
The same point. Are you aware, Mr. Speaker, that the hon. Member for Bolsover (Mr. Skinner) got in as many words as anyone else, albeit from a sitting position?
Mr. Speaker
I shall deal with the last point first. I am not aware of that, since I cannot hear everything from here.
May I say to the House with the greatest sincerity that I seek to balance opinions in the House? In a matter such as this, which covers both sides of the House, it is difficult to achieve perfect balance, but I seek to call those who are for a case and those who are against. I also took into account those whom I called at Question Time on a broadly similar matter. I shall also take all this into account when I draw up my list of those who will take part in the subsequent CAP debates. Those hon. Members who were unfortunate enough not to be called at Question Time or for the statement will be given precedence later in the CAP debate.
Mr. Bernard Conlan (Gateshead, East)
Further to the point of order, Mr. Speaker. The House clearly understood that you said that questions on the statement would [column 1063]terminate at ten past four. We understand why the House might want to hear the views of the right hon. Member for Old Bexley and Sidcup (Mr. Health). Would Back Benchers get the same treatment, or is this an extension of the Privy Council rule, which takes precedence over the normal rules for Back Benchers?
Mr. Speaker
I hope that the House will agree—I think that it does—that ex-Prime Ministers—[Hon. Members: “No.” ] Order.—that ex-Prime Ministers, from whichever side of the House, have a very special position in this place. [Interruption.] It is perfectly true.
Mr. Nellist
He was sitting down all the time.
Mr. Speaker
Order. I am making a statement. It is true that the right hon. Gentleman did not rise earlier during supplementary questions. I am sorry that he did not, but when eventually he did rise I felt that the House would wish to hear his views.