Speeches, etc.

Margaret Thatcher

HC Stmnt: [European Council (Copenhagen)]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [124/167-78]
Editorial comments:
Importance ranking: Major
Word count: 6383
Themes: Agriculture, Executive, Defence (arms control), Industry, Monetary policy, Environment, Taxation, Trade, European Union (general), European Union Budget, European Union Single Market, Foreign policy (Australia & NZ), Foreign policy (development, aid, etc), Foreign policy (International organizations), Foreign policy (Middle East), Foreign policy (USA), Foreign policy (USSR & successor states), Foreign policy (Western Europe - non-EU), Law & order, Northern Ireland, Terrorism
[column 167]

European Council (Copenhagen)

3.30 pm

The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker, I shall make a statement about the European Council held in Copenhagen on 4 and 5 December, which I attended, together with my right hon. and learned Friend Sir Geoffrey Howethe Secretary of State for Foreign and Commonwealth Affairs.

At the previous European Council in June, we had decided that “the Community must submit the use of its resources to effective and binding discipline” and adopt regulations “to keep the level of expenditure within the budget framework.” Our principal task this time was to consider practical measures to give effect to these objectives.

Our discussions concentrated on three main aspects: first, the amount of spending and its control, with particular reference to agricultural spending; secondly, the level and objectives of the Community's regional, social and agricultural guidance funds; and thirdly, how the Community should be financed in the years ahead.

The first aspect is control of spending. I made clear to the House before Copenhagen our determination to see the Community's agricultural spending brought under proper control, together with measures to dispose of existing agricultural surpluses and prevent the build-up of new ones. I also made it clear that the most effective way to achieve our aim was by the introduction of agricultural stabilisers for each and every commodity.

We were able to go far in Copenhagen towards establishing the basis for stabilisers, which will impose automatic cuts in price support if agreed production levels are exceeded. All member states now accept that such stabilisers are needed. We made progress in particular towards agreeing tough stabilisers for cereals, oil-seeds and protein crops, on which spending has increased particularly sharply.

We also had before us a proposal, but only in very general terms, for a Communitywide set-aside scheme, which a number of Governments, including ourselves, support as a complementary measure to stabilisers. I am glad to say that the Commission's proposal for an oils and fats tax, which we had resisted strongly at the June European Council, was not further pursued.

On the second aspect, structural funds, the Commission had proposed a doubling of the resources devoted to those funds by 1992. In common with several other Heads of Government, I made it clear that this was out of the question. Our view is that growth of those funds must be contained within a strict framework of budgetary discipline, but that it would be right to concentrate a higher proportion of them on the less prosperous member states, particularly Spain and Portugal.

The third aspect was how the Community should be financed. We discussed proposals put forward by the Commission for restructuring member states' contributions to the Community budget in order to make the arrangements more fairly reflect national prosperity. Decisions on the future level of the Community's own resources will be taken only when improved budget discipline arrangements have been worked out in detail. I made it absolutely clear that we are not prepared to see any dilution of our Fontainebleau abatement. [column 168]

Much credit is due to the fair, indeed courageous, chairmanship of the Danish Prime Minister, Mr. Schluter, for the progress which we made. None the less, the large number of issues to be settled, and the amount of detail involved, meant that we were unable to finish our work at this meeting, the more so because each Government naturally want to be able to judge the results as a whole.

The Council therefore adjourned and will resume its discussion under German chairmanship in Brussels on 11 and 12 February, building on the work done at the Copenhagen meeting. On foreign policy questions, we issued statements on East-West relations, Afghanistan and the middle east. Texts are in the Library of the House. We recognised the importance of the meeting between President Reagan and Mr. Gorbachev and of the INF agreement which will be signed at it.

We urged the Soviet Union to withdraw from Afghanistan by a set date in 1988, and to agree to the establishment of an independent, transitional Government there. We also called for action to enforce implementation of Security Council resolution 598 on the Iran-Iraq conflict by means of a follow-up resolution.

Heads of Government also discussed the world financial situation. We welcomed the agreement between the Administration and Congress to reduce the United States budget deficit. We confirmed our commitment to run our economies soundly, keeping down inflation and encouraging enterprise. We stressed the importance of taking the necessary steps to have a Europe free from trade barriers by 1992.

In conclusion, the Council represented a significant move in our direction, namely towards effective and binding control of Community spending. A great deal of work remains to be done before the next Council, but the United Kingdom's determination to secure such control is very well understood and will not change.

Mr. Neil Kinnock (Islwyn)

After the Copenhagen summit, may I welcome the Prime Minister's recognition that what she hailed as “an effective discipline” and a “lasting” agreement on the European Community budget at Fontainebleau in 1984 has, in practice, been neither effective nor disciplined and certainly not lasting. I also welcome the Prime Minister's report that there was a significant move towards an effective and binding control on community spending at the Copenhagen summit. Arising from that, may I ask the right hon. Lady what she intends to do before, and at the Brussels special summit in the New Year, to ensure that the move towards legally binding and effective controls on farm spending is complete and to ensure that Brussels in 1988 is not Fontainebleau revisited?

The Prime Minister

The right hon. Member for Islwyn (Mr. Kinnock) is correct in saying that the controls that we wished to be binding at Fontainebleau and which were contained in a minute and in a resolution were not binding because the guidelines were not respected. That is why we made it clear at the last European Council meeting that the controls this time must be embodied in regulations so that they are legally binding.

At that particular Council meeting, when discussing those regulations, we wanted the price controls to be automatically applied the moment it was known that there were surpluses for the year in question. It was in getting those price controls automatically applied by the [column 169]Commission that called for a great deal of debate because, undoubtedly, there were countries that wished to weaken the mechanism and weaken the control of agricultural surpluses through the method by which they were applied.

I am sorry that that is a complicated answer, but it was a complicated question. It is absolutely vital that we get detailed regulations embodied so that they can be applied by the Commission and that they are legally binding.

Sir Anthony Meyer (Clwyd, North-West)

In view of the near impossibility of getting agreement on anything in a 12-member Community, and in view of the extremely helpful role played by the Commission in supporting the manifestly sensible proposals put forward by my right hon. Friend and the Government, is it not clearly in British interests that the Commission should play a larger role in reaching decisions within the Community?

The Prime Minister

The Commission had a number of draft regulations, and let us have those as long ago as last September. The Council of Agriculture Ministers had considered them, but had not been able to agree on them. We took the three main ones, but there are many others related to other commodities.

It has been our objective, in accordance with what my hon. Friend wishes, to give the Commission a bigger role. It has to apply the method automatically. There was an attempt to take it back to the Agriculture Council, but many of us felt that, if the decisions went back to the Council, price control reductions would never be made. We are proceeding in the direction that my hon. Friend wishes.

Mr. Robert Maclennan (Caithness and Sutherland)

Is this really the best that the Prime Minister can do—to report that she has no practical measures to report to the House to implement the June agreements? Is it not a sad commentary on Britain's powerlessness in the face of world economic matters that the best that the summit members can do is to stand on the sidelines and congratulate the United States Administration and Congress on reaching agreement, because they cannot co-ordinate their own domestic responses to this dangerous position?

The Prime Minister

May I remind the hon. Gentleman that the Community has 12 members? I am sure that, in his party, he would consider 12 members quite a lot. We have to get agreement among all those 12 members. Each of them is naturally concerned to do the best that is possible for their own country, as each of them has a veto. But we must agree on broad general principles, such as not piling up more agricultural surpluses, and methods of getting rid of the existing surpluses. That is not easy, and I do not think that the hon. Gentleman would wish to restrict debate or discussion. I hope that, had he been at that Council meeting, he would think that we had done a great deal of work which will count in reaching the final conclusions.

Mr. Terence L. Higgins (Worthing)

Does my right hon. Friend recall that the House last agreed to an increase in own resources on the clear understanding that there would be effective budgetary discipline? It would therefore be quite wrong for her to come back to the House and ask for a further increase to achieve the same objective. Will she say what steps are proposed at present to prevent the Community from spending money that it does not have?

[column 170]

The Prime Minister

My right hon. Friend is among the first to know about detailed and effective control. What has happened, as he will know, is that the Commission has had directions about the maximum spending for agriculture. The Agriculture Ministers, meeting in their own Council, have come up with decisions which are also binding on the Commission, but their decisions amounted to more than the money available. We simply must stop that position, and that is why the Commission is now drafting binding regulations. It is up to us, the separate member states, to ensure that those regulations are effective, however detailed they may be. That is the method by which we are proceeding, and that is why we said that we would give no figure for increase of own resources until we had made certain that the regulations would be binding.

Mr. David Curry (Skipton and Ripon)

Does my right hon. Friend accept that she is bound to be under intense pressure to reach a compromise in February, ahead of the French general election, and while the Germans hold the chairmanship? Will she undertake to resist such pressure, knowing that she will have the support of the whole House in going for a long-term deal that is delayed, rather than yet another short-term and unsatisfactory compromise?

The Prime Minister

I am grateful to my hon. Friend for his remarks. We shall indeed be under intense pressure, but we also apply intense pressure, and several of us are determined to tackle the problem of agricultural surpluses. We have put forward a specific proposal that, as long as other countries did the same, we would be prepared to depreciate the agricultural surpluses against our own budget. We thought that it would be better to start with a clean slate. However, although we were prepared to do that, not enough other countries were prepared to do the same.

The next point is to make certain that we do not build up future agricultural surpluses. Therein lies the difficulty. It is clear that a number of countries are more concerned to continue with the considerable incomes received by their own farmers, regardless of the surpluses that build up. We cannot take that view: the matter must be dealt with, and this time we must not run away from dealing with it.

Mr. Bruce Grocott (The Wrekin)

Is it not the case that, despite eight years of bluster, rhetoric and phoney deadlines, the burden of the common agricultural policy on the British taxpayer is as bad now as it has ever been? Is it not further the case that the only way we shall achieve a sensible food policy in this country is when decisions are made in Britain and not in Brussels?

The Prime Minister

No, Sir. Farmers here have benefited very considerably from the common agricultural policy, as a result of which we grow a much bigger proportion of our own food than we used to. That has been beneficial to the economy. Nevertheless, our farmers are the first to understand that we cannot together go on accumulating surpluses and that we need to get rid of the overhang of past surpluses. They are being very realistic and are asking us to take proper decisions because they know that, if we go on as we are at present, there will be an emergency, and the changes that we would then have to make would be much more dramatic and not give them time to plan for the future. I think that they are behind us in the reasonable line that we are taking over the surpluses.

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Mr. John Hume (Foyle)

Does the Prime Minister agree that the intended completion of the internal market by 1992 will bring major benefits to the industrial countries, but that there is no guarantee that those benefits will be evenly distributed to the poorer regions of the Community unless there is a strong regional policy. Does she also agree that such a policy can only be implemented if she accepts the Commission's proposal for a doubling of the structural funds and for a reduction of the regions to which they apply? The regions suggested by the Commission are Portugal, Greece, the Republic of Ireland, Northern Ireland, French overseas departments and parts of Spain. Will she tell us why she has reduced the list to Spain and Portugal? Does she not agree that the reforms of the common agricultural policy will hit hard those very same regions, thereby underlining the urgency of developing that regional policy?

The Prime Minister

The structural funds have increased in real terms by 47 per cent. since Fontainebleau in 1984—a very considerable increase. It is totally unreasonable to ask now for a further doubling of those structural funds. That is a view taken by the majority of the nations in the Community. Of course, those who get far more out of the Community than they put in wish to vote for increases in structural funds, but they, too, must be reasonable.

A part of the increase in the funds, going particularly to Spain and Portugal, we thought was justified. One must remember, in making provision for writing off the surplus agricultural produce, that Spain and Portugal were not responsible in any way for it, yet might have to pay for some of it. So it seems reasonable, as their needs are greater than those of other countries, that they should have a larger part of the increase in the funds than other countries will have.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Did my right hon. Friend point out that if agricultural expenditure is at last controlled there will be no need for any increase in own resources? Did she further point out that it would be difficult, if not impossible, to get approval for any proposal for an increase in own resources in this House?

The Prime Minister

I know my hon. Friend's views on this. I know that technically he is correct, if one could have a very sharp reduction in the amount of food being produced now and also an actual disposal of all the surpluses. But, as he knows, about half the total budget goes towards storing and disposing of surpluses and not a great deal of it goes to farmers. He is therefore asking for too much at once. We must act at a speed which our farmers can plan for and which will be realistic. That will be the view that we shall take.

Mr. Nigel Spearing (Newham, South)

Is there not a possible solution in procedure? Is it not a fact that the Agriculture Ministers, when they disagree, remit their difficulties to the Agriculture Council? Why do they not remit them to the Finance Council? Would it not be better for them to do so, for the Finance Council to set the limit and then for the Agriculture Ministers to decide how the money is to be spent? Why can the Council of Ministers not arrange for that sequence of events before Brussels, so that it is the combined Finance Ministers who decide and the Agriculture Ministers who execute?

[column 172]

The Prime Minister

I think that there is a fundamental fallacy in what the hon. Gentleman is saying. He believes that if all decisions went to Finance Ministers they would all be quite tough. Some Finance Ministers are not like ours—they are not nearly as good. Some Finance Ministers are very tough until it comes to agricultural spending, and then they become almost like Agriculture Ministers. I am afraid that the hon. Gentleman's scheme would collapse, which is why we must get the method closely written down in detail in the regulations. It must be automatic in its application, so that a given amount of increase in any particular product must be assessed towards the end of the year and must result in a given amount of reduction in the price for that product. That will have its impact in future years.

Mr. John Marshall (Hendon, South)

I congratulate my right hon. Friend on her successful opposition to the oils and fats tax, which would have hit consumers and Third-world suppliers and, paradoxically, would have taxed the consumption of vegetable oils and encouraged the consumption of animal fats.

The Prime Minister

I am grateful to my hon. Friend. The oils and fats tax was discussed four separate times at the last European Council meeting at Brussels. Four of us fought it off each time, on the grounds that if there is a surplus of something it is quite absurd to put up the price. In any case, we do not want the price to be put up for the housewife, who is the ultimate consumer. I believe that the matter is now dead. Fortunately, we received many representations from overseas countries, some of whose only possible exports—to pay for imports from other countries—are those very oils and fats that the Community wanted to tax.

Mr. Eric S. Heffer (Liverpool, Walton)

The right hon. Lady said that there was a brief discussion on the Iran-Iraq war. Did she have an opportunity to discuss with the French Prime Minister the release of the French hostages? She may have seen in today's press that some of the Iranian opposition forces in France have been arrested; there is fear that this could have been part of a deal. If those Iranians return to Iran they are dead; there is no question about that. Therefore, will the right hon. Lady say what her thinking, and that of the Government, is on this matter, because we all want the hostages out, but we do not want innocent people who oppose regimes such as that in Iran to be sent back and faced with the death penalty.

The Prime Minister

The only way that I can answer the hon. Gentleman—I am not responsible for French matters—is to say, yes, I did have a bilateral discussion with the Prime Minister of France, who assured me that no ransom money at all has been paid for the hostages, and that there was no question of supplying arms to Iran. With regard to other matters, it is for the French Government to reply. I can only say to the hon. Gentleman that just because people are being deported it does not mean that they are being deported to their country of origin.

Mr. Eric Forth (Mid-Worcestershire)

Does my right hon. Friend believe that the lessons of Fontainebleau—[Hon. Members: “—bleu.” ]

Mr. Speaker

Order. The hon. Member for Mid-Worcestershire (Mr. Forth) must ask a question of the Prime Minister and not address those below the Gangway.

[column 173]

Mr. Forth

Does my right hon. Friend believe that the other members of the Community have learnt the lesson of Fontainebleau as thoroughly as we have? Does she believe that they are as committed as we are to financial discipline in the Community in the future? Will my right hon. Friend go to Brussels in February with the same ends and the same determination as when she went to Copenhagen?

The Prime Minister

The answer to the last part of my hon. Friend's question is yes, I shall go with the same determination. Not all our colleagues are as committed to financial discipline as we are, which is why we had difficulty in fashioning the details of the regulation. That, too, will be one of the things that will take up most of our time at the next Council. We shall have to do a great deal of work in the meantime to make it clear that we must have the detailed regulations and that they must be effective. We shall go with the same determination; it is quite right that it might not be settled at the next Council, but I believe that it will be settled at the following one in June.

Mr. Roy Beggs (Antrim, East)

Will the Prime Minister follow up her brief chat at Copenhagen with Mr. Haughey and request the extradition of Charles Caulfield who is living openly in the Irish Republic and is believed to have masterminded the Enniskillen Remembrance day massacre? He is believed to have been responsible, with others in a four-man hit squad, for the murder of over 100 people in Northern Ireland and is presently believed to be controlling and organising IRA activities in Fermanagh.

The Prime Minister

I let the Taoiseach know of my strong views on extradition and the changes that have been made in the same terms as I spoke about them to the House. I think that he knew the depth of feeling, both my own and that of the House. He has assured me that, if the changes are not satisfactory and do not result in effective extradition procedures, they will, as he told the Dail, be reviewed. People cannot be found guilty unless they are brought before a court, and he is anxious that those accused of crime be brought before a proper court to be found innocent or guilty.

Mr. David Heathcoat-Amory (Wells)

Does my right hon. Friend agree that, although most people in Europe now accept that agricultural expenditure must be restrained, there is an unhealthy tendency to regard the social, regional and all other funds as acceptable alternatives that can therefore be increased? Does she agree that it is against precisely such forms of wasteful and arbitrary public expenditure that she has fought in this country for eight years? Will she do the same in Europe?

The Prime Minister

Yes, there is a tendency to make extra demands on the Community budget. When we bear in mind that three countries make net contributions to the budget and nine countries take out net benefits, we have quite a battle to make certain that the results are reasonable. I agree with my hon. Friend that we cannot have effective financial discipline if considerable demands are made. We must watch that expenditure as closely as we watch expenditure on our national budget.

Mr. Dennis Skinner (Bolsover)

These negotiations are dragging on a bit, aren't they? Will the Prime Minister tell us whether the negotiations to deal with the Common Market's budget and forecast bankruptcy will be settled before the merger negotiations that are taking place [column 174]between the Liberals and the Social Democrats? May I give her a forecast? I think that both sets of negotiations will end in tears.

The Prime Minister

I think that one set of negotiations will not end in tears.

Hon. Members


Mr. Teddy Taylor (Southend, East)

As the last set of strictly binding regulations presented to the House have proved to be a sick joke—with, for example, a record 500,000 tonnes of butter having been sold to Russia at a price of 6p a pound in the past seven months—does the Prime Minister agree that an agreement that does not curb agricultural production is nonsense? How can she call the proposals for cereals “tough” , when all that is proposed is a 5 per cent. reduction in price after a level which exceeds the current level of production? Surely we need real answers to this and not just another cop-out.

The Prime Minister

The level of production of cereals is still a matter for argument and we are arguing precisely upon the point made by my hon. Friend.

As my hon. Friend is aware, butter surpluses are going down. I am afraid that one of the ways surpluses are reduced is by selling off to countries that are prepared to buy them. The only alternative would be to dispose of them as waste, and that would be repugnant to many people. We have to try to dispose of them as best we may, because I do not have the slightest shadow of doubt that the great overhang of surpluses has a damaging effect on world prices. Therefore, we dispose of them to those who can buy them and through food aid. However, butter for Africa is not in great demand.

Ms. Hilary Armstrong (Durham, North-West)

As it is the Government's stated policy to reduce citizens' dependency on the state, will the Prime Minister confirm that that is her policy for the farming community, too? If it is not, how much support for the farming community is she going for?

The Prime Minister

That is being argued about in the Community at the moment, to determine what should be the agricultural guideline. This year, agricultural spending in the Community has been of the order of 27,000 million ecu and we are arguing about the guideline for the future. It is true that we wish to reduce dependency on the state and we must remember that the produce of most farmers does not come near the Community or the Commission in any way, because the farmers grow and sell it themselves. It is only that which goes into intervention or to export which comes with the guidelines that I have described.

Mr. Nicholas Fairbairn (Perth and Kinross)

Will my right hon. Friend remember the words of Cicero—that what to some is stubborness is to others pertinacity? Will she remember that it is offensive to ordinary people in this country that half the budget of the EEC is just wasted and note that the agricultural community of Scotland is delighted that she has had the principle to hold out for a real, honourable and lasting agreement?

The Prime Minister

I am grateful to my hon. and learned Friend. I believe that we are getting the Commission—and a bigger and bigger proportion of members of the Community—on our side. It will still be a problem to get rid of those surpluses. As I said earlier, I wanted a clean slate approach, under which each of us [column 175]wrote off surpluses against our own budgets. It is now proposed that surpluses be written off against the Community budget—but by the year 1992, so by that time there should only be strategic surpluses and not the great overhang of surpluses that we have at present.

Mr. Peter L. Pike (Burnley)

Despite all the Prime Minister's comments about stabilisers, the simple fact is that we have failed to achieve an acceptable solution to the common agricultural policy and to the budgetary problems of the EEC. Does the Prime Minister genuinely believe that a real solution acceptable to this country will be achieved by next spring, or will she be tempted to follow the solution that she has followed on other issues by going for the abolition of the common agricultural policy and the surcharging and disqualification of those not able to fix a budget by the appropriate time?

The Prime Minister

As the hon. Gentleman is aware, 12 of us have to agree. Most of us are determined to have agricultural stabilisers for each and every commodity, and most of us want them to be effective. There is, indeed, a problem with agricultural surpluses. I remember that, when I first came into politics, it was asserted that we would have the problem of world food shortages, yet now there are surpluses. There are enormous competitive subsidies on the part of the United States, Europe and Japan. In the economic summit, we talk about getting those down as part of a joint effort. We also discuss it in the Organisation for Economic Co-operation and Development and in the GATT round. We need concerted action by the 12 members of the Community, and with the United States, Japan and other agricultural producers.

Mr. Harry Greenway (Ealing, North)

I welcome what my right hon. Friend said about Afghanistan, but will she go a little further and say what contacts are being made with the Soviet Union in an effort to persuade it to modify its position and get out of Afghanistan as soon as possible?

The Prime Minister

Both my right hon. and learned Friend Sir Geoffrey Howethe Foreign Secretary and I spoke about the matter yesterday, and I have not the slightest shadow of doubt that it will be spoken about now by President Reagan and General Secretary Gorbachev. The Secretary-General of the United Nations, too, is now trying to reach a solution. We were particularly anxious—as the Soviet Union is negotiating through the United Nations—to make it clear that the occupation of Afghanistan was unacceptable to the West and that we called for a withdrawal during the next year. The matter will be considered further through the United Nations.

Mr. Ieuan Wyn Jones (Ynys Môn)

More than once this afternoon the Prime Minister has talked of the need to control agricultural surpluses. I am sure that the right hon. Lady is aware that we are not yet self-sufficient in sheepmeat production. She will be aware, too, of the importance of sheepmeat to producers in Wales and particularly of the importance of the sheep variable premium, worth about £22.8 million a year, to Welsh sheep producers. Will the right hon. Lady ensure that the price support mechanisms available after the talks are concluded will be no less than they are at present and that Welsh sheep farmers will continue to enjoy the fullest support?

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The Prime Minister

We did not discuss the sheepmeat regime. It has been discussed in the Council of Agriculture Ministers, and I assume that it will be further discussed by that body. We do not have a measure in the Community of whether we are self-sufficient. If we took that measure there would never be any oils or fats imported into the Community from any other country. If we stopped other countries exporting to us—particularly some of the Third-world countries—they would have no money to buy our exports of manufactured products. We do not make it a test of production that we should be self-sufficient. If we did, it would have a very damaging effect on New Zealand, which has come a long way—and fought in two world wars—to support us. The sheepmeat regime will be considered further by the Council of Agriculture Ministers.

Mr. Nicholas Bennett (Pembroke)

My right hon. Friend's statement will be welcomed by farmers and consumers in my constituency as a robust and resolute stand to get down agricultural spending as part of the budget. Will my right hon. Friend bear in mind the considerable sacrifices made by dairy farmers in my constituency since milk quotas, which they now accept, were introduced in 1984? Will she ensure that our European partners are aware that our farmers want a fair system, but a system that guarantees them a stable income?

The Prime Minister

Yes, Sir. Milk quotas are an example of a successful method of reducing agricultural production in a particular commodity. At first, they put up milk production, but now they are acting to get it down. That shows that other stabilisers could have equal success in getting rid of the surpluses that we still possess.

Mr. Bob Cryer (Bradford, South)

Does the Prime Minister agree that since 1983—during the operation of the Fontainebleau agreement—we have contributed £4.4 billion to the Common Market? Would she confirm that 70 per cent. of the Common Market budget goes on the common agricultural policy and that strong vested interests prevent the CAP from being changed and that budget being reduced? Will she also confirm that our balance of trade in manufactured goods is about £10 billion in deficit, and will she not follow the bold and courageous leadership that she so admires in Communist Mr. Gorbachev and prepare alternative plans for withdrawal from the Common Market—in case the next summit is as disastrous as Copenhagen?

The Prime Minister

No, and I was not aware that that was Labour party policy. Perhaps the hon. Gentleman is enunciating from the Front Bench below the Gangway a new policy. That would be devastating to many of our manufacturing industries because the greater part of our exports go to Europe. If the hon. Gentleman would join us in trying to get good design, low industrial costs and greater efficiency, we should be able to take advantage of the Common Market to put up our manufacturing exports.

Mr. Kenneth Hind (Lancashire, West)

My right hon. Friend will no doubt be aware that the farming community in the north of England will very much welcome her determination to have budgetary restraint in the community. Will she tell the House whether the opening of the Community to British financial services was considered at the Copenhagen summit, as that is looked for by the banks and insurance companies of this country?

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The Prime Minister

Yes, Sir. We constantly tell our partners in the Community that while there is largely a free market in manufactured goods—there are still some barriers, although not necessarily monetary barriers—there is not a common market in services. When we get one—by 1992—it will be of very great advantage to our service industries and we should be able to put up our balance of trade and services with the Community.

Mr. Tam Dalyell (Linlithgow)

Has the Prime Minister had brought to her attention an article in The Independent last Friday by Nicholas Ashford on “The Thatcher dominance of foreign policy” , which is a serious discussion about the Prime Minister's relations with the Foreign Office? Can the right hon. Lady explain why her key adviser in Copenhagen, as in so many other matters, Mr. Charles Powell, has remained in post for four years, considerably longer than would normally have been expected—Mr. Ashford 's question as well as mine?

The Prime Minister

I am very well satisfied with all the advice that we get from the Foreign Office on European matters—very well satisfied.

Mr. Bill Walker (Tayside, North)

Will my right hon. Friend bear in mind that, in the difficult negotiations—in which she is to be congratulated on her firmness—in the final analysis Scottish farmers expect her to deliver a fair and reasonable agreement and they would rather wait for a proper and final agreement that is seen to be fair than have a botched-up one which, at the end of the day, will bring no credit to anyone?

The Prime Minister

I am grateful to my hon. Friend. Yes, our farmers realise that the problem must be dealt with. They want it to be dealt with so that they know how to plan for the future both in arable crops and livestock, and that is our objective.

Mr. Tony Banks

Why does not the Prime Minister come clean and admit to the House that the Copenhagen summit was a complete fiasco and a failure with a lot of discussion about matters over which the EEC has [column 178]effectively no control, such as the Iran-Iraq war and the Soviet occupation of Afghanistan? Since she is so concerned about disposing of the food mountains and was unable to reach an agreement on the CAP, why does not she dispose of the food mountains to the pensioners of Britain this Christmas? In my constituency of Newham, we have tonnes of beef and butter. Will she tell the pensioners of Newham, and, indeed, the rest of the country, that they can get their NHS choppers into those food mountains this Christmas?

The Prime Minister

First, the hon. Gentleman was not at Copenhagen. It was not a fiasco; it was a very good meeting and very thorough. The hon. Gentleman has a habit of talking about meetings at which he was not present and about which he does not know. If one were to dispose of the present butter surpluses, they would immediately be replaced by new ones, because people would not buy the butter that is presently being produced but would go for the older butter, so there would be no increase in consumption.

Mr. Elliot Morley (Glanford and Scunthorpe)


Mr. Speaker

Was the hon. Gentleman here for the statement?

Mr. Morley

Yes, Sir.

In the discussions about reducing the grain and cereal surpluses, was there any discussion about the use of nitrate fertilisers and their reduction, in view of their disastrous effect in some parts of Britain and also in line with the EEC's stated policy of balancing the agricultural and environmental needs of different nations?

The Prime Minister

No, we did not discuss that matter. We were concerned to make sure that, if there were increases in production, there would be an automatic reduction in price. Of course, increases in production can result from an increase in area or an increase in productivity. There are other measures to deal with farming by more natural methods, but we did not discuss them.