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Ec (Single Market)

Volume 128: debated on Wednesday 2 March 1988

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9.

To ask the Secretary of State for Foreign and Commonwealth Affairs what part his Department is playing in furthering progress towards a single market in the European Community.

We shall continue to work for rapid progress in dismantling barriers to trade within Europe and for early adoption of the measures necessary to complete the single European market. The Government are mounting a programme to ensure that British business is fully aware of the opportunities and challenges involved.

While I welcome the constructive approach of Her Majesty's Government, as outlined by my right hon. Friend, does she agree that the ill-judged proposals from the Commission for the harmonisation of VAT, including the abolition of zero-rating, are in no way essential to the completion of the internal market, and that the facts are rather the reverse and the proposals of Lord Cockfield are likely to be an obstacle rather than a help?

There are a lot of doubts, including those expressed in the recent study by the Institute of Fiscal Studies, about the need for a regimented approach of the kind that the Commission has proposed. It was only yesterday that my right hon. Friend the Prime Minister said in the House:

"tax harmonisation in the European Economic Community is not necessary for the completion of the single market in 1992."—[Official Report, 1 March 1988; Vol. 128, c. 816.]
Nor are we the only member state that would have difficulties with Lord Cockfield's proposals. Each country would have its own particular difficulties. We shall study what is being put forward. There is absolutely no question but that any vote concerning taxation is by unanimity, just as the vote in 1977 was supported by the then Labour Government— a vote which led to the decision in the EC on spectacles just a week ago.

Will not the development of the single internal market lead to a lack of control over drug traffickers, terrorists and the spread of rabies? As the Minister knows, Lord Cockfield is determined to harmonise VAT. As he is a Conservative appointee by the Prime Minister, will the Minister say, in order to make the Government's position clear, that they will not renew Lord Cockfield's appointment when it becomes due?

The last point of the hon. Gentleman's question is not for me to answer. As for drugs, terrorism and rabies, the general declaration, as the hon. Gentleman probably knows, as he is a Member of the European Parliament, in articles 13 to 19 of the Single European Act, makes it clear that member states such as Britain and others are not prevented from taking their own measures to combat drugs, terrorism and other problems. At the same time as moving towards a single market, controls at the Community's external frontiers are to be strengthened.

Will my right hon. Friend continue to bear in mind that there are large numbers of hon. Members on both sides of the House who believe that the scope and rates of value added tax in Britain should be settled by the Chancellor of the Exchequer and approved by the House?

Indeed, they will be settled by the Chancellor and will come before the House, but my hon. Friend should note that no such changes to our present system could be made without unanimity. Unanimity is required, and we have no intention of changing our position on zero rates.

How did the Minister respond to the criticisms of the Government's proposals on the internal market by the director general of the CBI?

I believe that the job of the director general of the CBI is different from that of the Government and politicians in general. It is right that if the CBI has a view it should put it forward, but it is not necessarily one that is in the interests of the British people and the European Community.

Will my right hon. Friend ensure that the debate on the internal market does not become sidetracked by repetitive remarks about VAT, terrorism and all the byways of Europe, but concentrates on the essential task of creating a single industrial market place, which would be overwhelmingly in the interests of Britain?

My hon. Friend is absolutely right. Certainly there is a danger that the behaviour of the press, Opposition Members and some others, will mean that the real issues of a single market, which would so benefit this country and the whole of Europe, will be bypassed. We are pressing for progress in key areas such as the liberalisation of capital movements, financial services including insurance, the opening up of public purchasing across the Community, and the improvement of standards. We hope for progress in all those areas in 1988. It is no mistake that in our six-month presidency 48 out of 100 measures taken on in the internal market were achieved.

Is it not clear to the right hon. Lady that there is deep concern that in 1992 the sovereignty of the British people will take a further step backwards, that we shall increasingly come under the control of multinational companies and that Britain will suffer as a result? Is it not also clear that the time has come, despite what right hon. and hon. Members on my Front Bench might say, when we should say that the option is still there for the British people, if they so decide, to come out of the Common Market, if they consider that it is in our interests to do so?

I have often thought that the hon. Gentleman was living in the past. I am now sure. He cannot even keep up to date with his own Front Bench.

Whatever the rights and wrongs of tax harmonisation, does my right hon. Friend agree that if we are to get to 1992, which is in the clear British interest, there has to be a great deal more give and take than has been evident in the exchanges so far?

My hon. Friend is right. I cannot understand why something that is in the interests of this country and, indeed, of the whole of Europe—the high priority which the British Government have given to completing the single market by the end of 1992—is not understood by Opposition Members. The recent speech by the hon. Member for Dagenham (Mr. Gould) about the managed economy was protectionism by yet another name. It may have been published in Madison avenue, but its contents were firmly Bennite.

As Lord Cockfield is so out of touch on VAT with the views of the Government who nominated him, how could he possibly be nominated by the Government for another period in Brussels? Will the right hon. Lady confirm to the House the rumours that she is brushing up her languages and that her flitting has been ordered from Wallasey to the Berlaymont?

I can assure the hon. Gentleman that there is no truth in the rumours that he and others have been peddling in the press for some time. Whatever view any commissioner takes, it is his view and that of the Commission, and not that of the country from which he comes.