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European Communities (Finance) Bill

Volume 698: debated on Monday 4 February 2008

My Lords, I beg to move that this Bill be now read a second time.

The purpose of the legislation is to enable the United Kingdom to give effect to the new own resources decision agreed by the Council of Ministers on 7 June 2007. This own resources decision reflects the December 2005 agreement on the financial perspective from 2007-13 which had three complementary and inseparable elements: expenditure, revenue and budget review. That agreement was good for Europe and good for Britain. The own resources decision contains the detail of the revenue element of that financial perspective agreement. It amends the arrangements for financing the budget of the European communities for the period 2007-13.

Clause 1 allows the own resources decision to be put into effect by providing for it to be added to the list of community treaties in Section 1(2) of the European Communities Act 1972. This means that payments made by the United Kingdom as a result of the decision can be charged directly onto the consolidated fund under Section 2(3) of the European Communities Act 1972. Clause 2 simply cites this Act as the European Communities (Finance) Act 2008 and repeals the European Communities (Finance) Act 2001, which it supersedes.

The new decision has a number of effects. Appropriations ceilings will be frozen at the levels set for the 2000-06 budget period. The ceiling on annual appropriations for payments is 1.24 per cent of EU GNI and for appropriations for commitments it is 1.31 per cent of EU GNI. Appropriations for commitments are forecast to fall below 1 per cent of EU GNI during the current budget period. The current arrangements for VAT-based contributions will be amended by reducing the maximum call-up rate to 0.3 per cent, increasing member states’ residual contributions based on GNI. This is to be welcomed and further develops the trend towards fair and transparent contributions.

Between 2007 and 2013 only, the maximum rate of call on VAT-based contributions will be further reduced for Austria, Germany, the Netherlands and Sweden: 0.1 per cent for the Netherlands and Sweden; 0.15 per cent for Germany; and 0.225 per cent for Austria. For the same period, 2007-13 only, gross reductions in GNI contributions are introduced for the Netherlands of €605 million per annum and for Sweden of €150 million per annum. Both of these amounts are in 2004 prices.

The new decision also retains a correction mechanism in favour of the United Kingdom—the abatement—along with the reduced financing of the correction benefiting Germany, Austria, Sweden and the Netherlands. However, after a phasing-in period between 2009 and 2011, the UK will participate fully in the financing of the costs of enlargement by disapplying all non-agricultural expenditure—that is, money in support of economic development—in the new member states from the abatement. Finally, the additional UK contribution resulting from the reduction in allocated expenditure is limited to €10.5 billion in 2004 prices over the period 2007-13.

In summary, the UK’s abatement remains intact on all agricultural expenditure across the EU and on all expenditure in the EU 15. So the rebate is preserved and will rise in value. Along with the fact that the ceilings on budget expenditure are retained and that budget expenditure will fall to less than 1 per cent of EU GNI during this budget period, that makes this a good deal for the taxpayer. At the same time, we will, along with the other net contributors to the EC budget, pay our fair share of the costs of enlargement. The UK supports enlargement, which we know will be good for Britain, creating new trading opportunities and new jobs. So the December 2005 agreement is right for the taxpayer and for Britain’s economic interests. It is good for Britain and Europe. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Davies of Oldham.)

My Lords, the Minister, with his customary charm, has put such a gloss on events that it will take a little while to scrape off the coats of varnish and reveal the unvarnished truth. In plain language, the Bill puts the stamp of legality on a major betrayal of this country’s interests. It seeks to legitimise the act of Tony Blair in surrendering a part of our rebate, which was protected by our veto and which no one could touch without our agreement, for precisely nothing. We have a duty to put on record what happened and to explain in simple terms what led up to Mr Blair’s abject surrender before history is rewritten.

It all started honourably enough with Mr Blair championing the expansion of the EU into eastern Europe and his acknowledging that the new members would need help as they shed socialism. The money could only come from the farm budget and that would lose the French money. But, thought Mr Blair, the French would be persuaded to agree to the reform of the common agricultural policy and to a drastic decline in farm payments if Britain sacrificed at least part of its rebate. It is not, as you will see, quite what Mr Blair told the British people, but it is clear when one pieces together his utterances that that is what he had in mind.

It is fairly difficult if not impossible to understand how Mr Blair ever persuaded himself that the plan would work because back in 2002 he had persuaded Monsieur Chirac to agree to enlargement by promising the French president that French interests would be protected and, to that end, he had signed up to a common agricultural policy settlement which promised farmers continued subsidy to the tune of 40 per cent of the total EU budget right through to 2013. Inevitably, come 2005, the French were having none of Mr Blair’s plan.

Faced, however, with the inevitable, “Non”, there was not the slightest need for the Prime Minister to do what he did, which was, with great alacrity, to abandon his call for a budget freeze, abandon his call for a fundamental reform of Europe’s finances, and hand over part of our rebate on a plate. That is what he did, and no amount of ministerial waffle can disguise that fact. What, of course, he should have done was to take the rebate off the table, pack his bags and return home. But he surrendered.

The tale now is that all this was necessary to secure enlargement and we could not “will” enlargement without being prepared to pay for it, but that really is rewriting history. Mr Blair told the Commons:

“The UK rebate will remain and we will not negotiate it away. Period”.—[Official Report, Commons, 8/6/05; col. 1234.]

When the then Chancellor of the Exchequer was asked in an interview whether the rebate was non-negotiable, he answered in one word—“yes”. Mark you, this was all said in 2005 when enlargement was already a fait accompli. With enlargement a done deal, Mr Blair was still saying the rebate was non-negotiable. He knew enlargement was going to cost money, but some of the money would have to come, he thought, from reform of the EU finances and reform of the CAP; as to the rest, everyone would have to chip in under the then existing system, which involved of course the continuance of Britain’s rebate. That is what he was, in effect, telling the British people.

That was the plan, that was the promise, but it is certainly not what he finished up with. If the rebate had remained, Britain would have paid over the next seven years an extra £12 billion. Because of Blair’s surrender we stand to pay an extra £19 billion over the period, with things set to get worse after 2013 because the limit on the cost to Britain of the reduction in the rebate ends in that year—and, of course, there is no meaningful reform of the EU’s finances, let alone any reform of the common agricultural policy.

Now we come to perhaps the most dismal part of the story. Where has the extra money gone? Scandalously, it is not, in the main, going to the main entrants. Unbelievably, Ireland, whose per capita income is 30 per cent higher than the EU average, is to get more per head than Lithuania, Slovakia or Poland. Furthermore, France, while becoming a net contributor, will remain the EU’s biggest recipient and the UK will remain the smallest.

Mr Blair surrendered. As Philip Hammond in another place put it, that is something we have grown used to, and every surrender carries with it the same lame excuse. It is always said that we had to surrender; failure to do so would have precipitated a crisis and, even worse, shown our lack of commitment to the EU. We have heard that so many times. French critics of the French Government do not call it anti-EU when the French Government fight to protect the interests of their own taxpayers and citizens, and the British people are entitled to expect the British Government to fight for the interests of Britain in the same way as all other countries in the EU fight for their people’s interests. That Mr Blair signally failed to do. No wonder the President of France wants him to become president of Europe.

Clearly Mr Brown was watching in horror while all this was going on. At the time a Treasury official told the press,

“We have ended up giving away much more than we expected and with precious little to show for it in return”.

Does anyone doubt that he was expressing his master’s view? One of the then Chancellor’s aides went even further and said that the sell-out—that was his word—would inevitably lead to public spending cuts. The Prime Minister knows well enough what he could have done with the £7 billion that Mr Blair threw away; he could have built 28 new general hospitals every year, employed an extra 220,000 nurses, cut the basic rate of income tax by 2p or cut council tax by nearly 35 per cent. He would not even have had to break faith with the police. But when he could, on first coming into office, have refused to accept the deal and demanded a renegotiation, instead he lamely accepted the deal. He has proved as supine and neglectful of the national interest as his predecessor and now must share with him the responsibility for a shameful as well as a costly business.

My Lords, I should say at once that I disagree with almost everything the noble Lord has just said, but I will leave it to my noble friend to reply to that. For my part I make it clear that I am a Europhile, but one does not need to be a Eurosceptic to have considerable concerns about the European Union budget. The only thing I could not understand about the noble Lord’s speech was his absolute certainty about what the budget would provide in the years ahead; I wish I could be so certain.

I have been concerned about the lack of a clear audit certificate on EU budgets for years, but our own all-party European Union Select Committee said, about own resources, that it saw no need for changing it. The committee was, however, concerned about costs and expenditure, although it did not refer to the nonsense of expenditure and waste arising from travelling between Brussels and Strasbourg every month. I wish some of the recent renegotiations might have taken account of that and got some concession for it out of the way. In any large organisation, whether it be one of 27 nation states or even a small country like the United Kingdom, which has comparatively reasonable management of its budget, such an arrangement is bound to be costly—and that would apply with or without the new treaty.

The Explanatory Notes to the Bill are interesting on the question of costs. Paragraph 16 tells us, with regard to the financial effects of the Bill, that:

“The calculation of the UK correction shall be adjusted by progressively excluding expenditure allocated to member states which have acceded to the EU”—

not this year, but,

“after 30 April 2004, except for agricultural direct payments”.

So, that tells us. Or does it? Paragraph 17 goes on to say:

“The additional UK contribution resulting from the reduction in allocated expenditure is limited to €10.5bn”,

not in today’s prices, but “in 2004 prices”. Then we are told that the European Agricultural Guidance and Guarantee Fund, Guarantee Section, will also have other effects, and:

“This change will be phased in as follows: 20 per cent budgeted in 2009, 70 per cent in 2010, 100 per cent from 2011”—

always assuming we can live that long. That should tell us what the cost will be to us. But does it? Paragraph 18 says:

“The effect of the new decision on the United Kingdom’s net contribution to the Community budget will depend on the total size and pattern of Community expenditure”.

Of course it will—but what will that expenditure be?

I wondered how I could find out what this is literally costing us as a net contribution to the European Community budget. It seemed a reasonable thing to ask. I got a copy of the April 1997 spending review. This should be simple, I thought; it will tell us immediately what the cost is. In table 6.2 on page 72 we are told that the net expenditure transfer to the EC in 2005-06 was £4.435 billion—the figures were not yet in trillions. Even that is not clear, because that is billions in accrued public spending. Then we are told that the estimated outturn for 2006-07 will be an accrued £4.652 billion. The plans for the following year—that is, the year we are now in—were for £5.01 billion. Now we know.

Actually, we do not know, because there is much more in the public expenditure review. In table C.1 on page 189, we are told that the gross GNI contribution—everyone knows what GNI is, of course—is £8.685 billion, this time not in accrued money but still in billions. We are told that there is a UK abatement of £3.675 billion, so we get to the same figure for 2007-08 of £5.01 billion. That, then, is the net contribution. But is it? We are told in the notes on the same page that some of the money is in one particular kind of expenditure and some in another. I declare an interest: I have used all the terms in those notes in my time in preparing budgets, presumably even a European Union budget figure. We are told that there is even one possibility that some of the money is in real cash terms, but then we are told that the TME effect of EU membership is given by GNI-based contributions, less the UK’s abatement—less an amount in respect of the cost of collecting TORs. Of course, we all know what that is—I see the noble Baroness does. It means total managed expenditure, and then by the traditional own resources. Therefore, we now know what the net EC contribution is.

I regret to say that we do not because in addition to the pages I have quoted there are another 17 pages of the Comprehensive Spending Review which tell us about our net contribution to the European Community budget. Can my noble friend give an assurance that in future he will present our net cost to the European Community budget in terms that might even please the noble Lord, Lord Waddington. I will not refer to the noble Lord, Lord Pearson. I would not expect him to be pleased about it at all.

My Lords, does the noble Lord agree that it would be helpful if the Minister set forth the gross as well as the net contributions because it is the gross contributions that we pay, out of which Brussels is graciously pleased to send back some billions on projects designed to improve its own image, which we would not necessarily spend if we were not in this frightful racket?

My Lords, I am not sure that there is anything at all I can say that would enable the noble Lord, Lord Pearson, to agree with any single figure in the European Union budget because he wants us out of the EU altogether. I respect his view but it is not one with which I agree.

All I ask of my noble friend is that he will try to give an assurance that, in future, he will present these figures in the Comprehensive Spending Review and in the annual expenditure round in terms that the noble Lord, Lord Pearson, can understand even if he does not agree with them. Despite my criticism of the way the expenditure is given to us, I remain convinced about the benefits of our membership of the European Union. The advantages are enormous. Certainly, I hope that the Conservative Party will not go as far as the noble Lord, Lord Pearson, would like because it would be to the enormous disadvantage of the United Kingdom. What it tells me is that a referendum on such complex issues as the way the money is obtained and spent would be nonsense. It is difficult enough for us in Parliament to understand. Some of us think that we have an idea about raising revenue, but the idea that the average man or woman—readers of the Sun or even the Times—would remotely comprehend whether to say yes or no in a referendum is nonsense.

My Lords, my noble friend Lord Waddington has already done a magnificent job of exposing the history and folly of our increased contributions to Brussels. I imagine that my noble friends Lord Stoddart and Lady Noakes will continue the good work and I would not like to queer their pitch. Therefore, I hope it will be helpful to place the Bill against the broader economic background of our EU membership, which is even more expensive and destructive of this country’s future. It is because of that background, as well as because of our cash contributions, that we should not pass the Bill tonight.

I remain astonished at the continuing inability of our political class to grasp a simple fact: our trade with our clients in the European Union is separate from our membership. The two things are different, and the former does not depend on the latter. Our politicians, bureaucrats and most of our political media seem to believe that our trade with the EU, and the three million or so jobs that depend on it, would be lost if we left the political construct of the Treaties of Rome and continued in free trade and friendly collaboration with our neighbours in Europe. I can only assume that they continue to believe that because they have no personal experience of international trade or commerce. Their dream of European integration is therefore free to banish common commercial sense from their minds.

That common commercial sense contains several hard facts that no amount of dreaming will dispel. The first hard fact is that the EU’s average external tariff, supported by the World Trade Organisation, has now fallen to below 1 per cent. That makes the single market somewhat redundant anyway. Then there is the fact that our EU partners sell us more than we sell them, so they need our trade more than we need theirs. We are in fact their largest customer, taking some 18 per cent of all EU exports. The United States of America comes second, with 16 per cent. Therefore, whatever happens politically, that trade would not be lost and nor would the jobs that depend on it. The jobs depend on the trade, not on our EU membership.

Our position would therefore be stronger than that of Norway and Switzerland, for example, neither of which is in the EU but both of which export more per capita to it than we do. That fact alone surely confirms that EU membership is irrelevant to a healthy trading relationship with the single market. It is no good the Minister and your Europhile Lordships replying that Switzerland is smaller than us and therefore what goes for Switzerland would not go for us. I am afraid that is nonsense and that the reverse is obviously true. The Swiss economy is similar to ours in many ways, but we are roughly 10 times its size and, as I have said, we are the EU’s largest client, so we could easily agree at least as good a free trade deal as that enjoyed by Switzerland.

In parenthesis, the Swiss Federal Government have helpfully gone further and estimated that full EU membership would cost Switzerland nearly nine times as much in budgetary contributions as its present bilateral trading arrangements—or some 4,940 million Swiss Francs versus 557 million Swiss Francs. A similar study here would no doubt come up with the same sort of picture and reveal the many billions that our EU membership costs us more than a simple free trade agreement with the single market.

Talking of free trade, Written Answers to me on 16 January reveal that the EU already has free trade agreements with Chile, Mexico, South Africa, Liechtenstein and Iceland, as well as Norway and Switzerland. It is negotiating free trade agreements with a further 42 countries. Why not us? Why is it that none of these countries, nor most of the other countries in the world, feels the need to join the EU? The answer is that membership is cripplingly expensive and wasteful and removes the right of its members to govern themselves. The latter disadvantage is beyond the scope of this debate but no doubt we will return to it when we come to debate the proposed Lisbon constitution.

It is not only British Eurosceptics who are saying that EU membership brings no economic advantage. The leading French think-tank, the Conseil d’Analyse Economique, which reports to the French Prime Minister, said nearly two years ago that neither the single market nor the euro had done anything for the economy. I quote:

“no sudden burst in the trade of goods and services”—

such as was seen in North America after the North American Free Trade Agreement was signed in 1989—

“has been observed since the Single Act entered into effect in 1993, nor since the euro was introduced in 1999. The price convergence which EU monetary union was supposed to bring also did not occur, and convergence even came to a standstill in 1999 … The authors believe that these problems may largely be attributed to the EU’s institutional shortcomings … Economic integration has stagnated and no longer promotes growth”.

Since it is a semi-official French Government report, it goes on to recommend that the cure is even more Europe, and more economic integration and deepening from Brussels. So it gets the solution wrong, but the analysis of the status quo remains depressingly accurate.

I am aware that the Government are fond of quoting a rather different analysis from the Commission, entitled, Steps Towards a Deeper Economic Integration, which claims that the single market has created 2.5 million jobs across the EU and boosted prosperity by €225 billion in 2006. If the Minister is going to produce those figures again this evening, will he pause and consider the €660 billion which the EU competition commissioner, Verheugen, estimates is wasted on EU overregulation and red tape? Does that not make the EU economies some €435 billion worse off, even on the Eurocrats’ own figures, or around 4 per cent of GDP? I look forward to the Minister’s comments.

It is a continuing national scandal that the Government refuse to sanction an official cost-benefit analysis of our EU membership. In the absence of such an exercise, the several private academic studies which have been carried out put the cost of our membership, including our cash contributions, at anything between 4 and 10 per cent of GDP. The reason for the Government’s refusal to commission an analysis can be only that they know that the result would make the British people very angry indeed. Our membership of the European Union costs millions of jobs.

I suppose that that is why the Government invent all sorts of other justifications for the project of European integration. They say that, as part of the EU, we can better fight climate change, which is a pointless exercise. They say that we can deal with international drug-trafficking and terrorism, and generally promote peace and goodwill in our time. I fear that I am again straying into constitutional rather than economic territory, so suffice it to say that this is all make-believe. We would have much more and better influence as an independent sovereign state in all these areas than we do as a minority player in the EU.

I return to the hard cash that we hand over to Brussels. Thanks to this Government’s cowardly failure to hold on to the rebate secured by my noble friend Lady Thatcher, I gather that the amount is set to rise to some £25 billion gross by 2012, and £12 billion net. The figures start to escalate fast in 2010-11, so I am advised—the noble Lord, Lord Barnett, may know better, but even he appeared to be confused. The deal was, as I understand it, that the French would agree to an inquiry on CAP reform if we lowered the rebate. So we lowered the rebate, and the French have refused any reform of the CAP, which is one of the most destructive policies on the planet, until 2013 and probably until 2020. That is EU negotiation for you: honourable, great fun, and well worth it. As I said at the outset, I have no doubt that my noble friend Lady Noakes will deal with this sorry saga in greater detail.

I conclude by reminding your Lordships that we are talking about wasting an awful lot of taxpayers’ money. A mere £1 billion equips and staffs a decent-sized district hospital indefinitely, as I have pointed out to your Lordships previously. The figure cited by my noble friend Lord Waddington only built the hospital; my figure builds it, equips it and staffs it indefinitely. We should look at the gross, not the net, figures, after Brussels has been graciously pleased to give back some of our money to spend on projects designed to improve its own wretched image.

I remind your Lordships, too, that we are handing over these huge sums to an organisation which is institutionally and hopelessly wasteful and corrupt. It is therefore wholly unworthy of our support. Its own internal auditors have refused to sign off its accounts for 13 years. It employed its first qualified chief accountant in 2002, in the shape of Mrs Marta Andreasen, after the scandal-ridden Commission had been forced to resign. It then sacked her when she refused to sign the first set of unaccountable accounts which were put in front of her. The EU’s Civil Service tribunal naturally found against her in November, parroting the Commission’s case. She is a brave and thoroughly decent woman, and she will now appeal to the EU’s Court of First Instance. I trust that we all wish her luck and justice. For years, nobody would employ her because they did not want to offend the beast in Brussels, but I am proud to say that she has recently agreed to become the UK Independence Party’s treasurer. My party at least will be kept on the straight and narrow.

That is more than can be said for the European Union, to which we should not give another penny until its accounts are fairly audited. We should reject the Bill and spend the money which goes with it on better purposes of our own.

My Lords, I think that it is pretty well known that, as far as I am concerned, we should never have joined the Common Market and it would be in the best interests of our country to leave the European Union. I always make that declaration so that people know exactly where I am coming from.

The Bill is a money Bill. Therefore, this House can have no effect on it at all. It can pass amendments, but they will mean absolutely nothing. It can reject the Bill if it wishes, but the Bill will still go through the House of Commons after a month and receive Royal Assent. I suppose, therefore, that this is an opportunity for us to say exactly what we think about the European Union and the amount of money that we contribute to it for whatever we get out of it, which some of us think is negative rather than positive.

I am sure that we are all obliged to the noble Lord, Lord Waddington, for tracing the history of where we came from to get to the settlement that we are discussing. It is an interesting settlement, but worse than the one that we could have achieved if the then Prime Minister had held to his beliefs. Unfortunately, he did not, so we are paying more than we otherwise would have done. We should also be grateful to the noble Lord, Lord Barnett, who has obviously done a great deal of work on this and has shown how difficult it is to arrive at a correct figure. A bewildering array of statistics has to be gone into. One wonders whether there is a deliberate plan to obscure exactly what the British taxpayers are paying.

As far as I can see, the gross contribution per annum is some £14 billion. After the rebate, that comes down to, at present, £5.5 billion per annum. That sum will rise, by 2011, to £6.5 billion net per annum. As the noble Lord, Lord Pearson, pointed out, it is the £14 billion figure that is important, because that is what taxpayers pay. The money coming back does not come back to the taxpayer. It comes back to individuals, such as individual farmers—people like the Duke of Westminster—to agricultural businesses, and so on. Make no mistake: the taxpayer is in for a big sum, which is much larger than the net figure so often quoted. Money goes to local authorities but again, as has been pointed out, not to projects that would get first priority from local government itself; it goes to projects that are forced on them, in many cases by the European Commission.

It goes even further. There are other projects that are not included—at least, as I understand it—in these figures but that place an extra burden on taxpayers. I do not think that the Galileo programme, for example, is included in this gross figure; it is additional. We also pay one-third of our aid budget to the EU, which then inefficiently administers it and sends it to irrelevant places. It does not go where the British people would like it to go—to Africa, in particular. We are paying out a lot of money as taxpayers.

I read the debate in the House of Commons. The Ministers there kept saying that this annual tribute is worth while because 57 per cent of our trade is with Europe. At least, the Minister opening the debate said 57 per cent, but by the time the Minister closing the debate spoke the figure had been reduced to 55 per cent. In either event, whether 55 or 57 per cent of our trade is with Europe, we trade with Europe in permanent deficit. Indeed, the latest annual figure is a deficit of £38 billion, which is the great majority of our total overseas deficit with the countries of the world. Since 1973, the accumulated deficit on trade amounts to some £350 billion. Incidentally, our gross contribution since joining is £213 billion. Even the net contribution amounts to £66 billion.

I have never been able to understand why British taxpayers have to pay this large annual tribute to trade with the European Union. We do not have to pay a tribute to the United States or other third countries. We do not have to pay a tribute to India, so why must we do so in order to trade with the European Union? Our Prime Minister, Mr Brown, has just visited China to promote trade. When he came back, he claimed that his visit heralded a new “strategic partnership” with China. We did not have to pay any tribute to China to get additional trade with that country, so why on earth do we have to shovel billions of pounds into EU coffers every year?

The future lies with countries such as China and India, not with the EU. Indeed, restrictive practices and overregulation by the EU make it more difficult to trade with third countries than it needs to be. The European Union is increasingly interested in the nooks and crannies of British life. For example, the European Parliament now wants to ban patio heaters, as if that is anything to do with this great European Union. I point out that it has been said that these patio heaters contribute less to global warming than the European Parliament does in moving backwards and forwards from Brussels to Strasbourg every so often. Why do we have to have this interference from the institutions of the European Union?

I also noticed in the Commons debate that some MPs seem happy for British taxpayers’ billions to be used to subsidise other countries. However, I guess that the majority of British people believe that charity begins at home and that the annual tribute paid to the European Union, much of which is badly directed or fraudulently converted, would be better spent in the United Kingdom on things such as those referred to by the noble Lord, Lord Waddington. I could add to that list reducing child poverty, increasing the state pension, putting more police on the streets and carrying out many other projects to improve social well-being and the decrepit infrastructure that we now enjoy—or, rather, suffer from—in this country.

The truth is that the issue is not about trade but about being part of a European empire—apparently including Russia, the Middle East and north Africa, according to the Foreign Secretary’s speech of 15 November. He might not believe that a superstate will be created, but a reading of the Lisbon treaty convinces me that that really is the aim. However, that is a matter for big debate later, when this House comes to scrutinise the Lisbon treaty. In the mean time, unfortunately, we have to pass this awful Bill.

My Lords, this important Bill was brought to your Lordships’ House on 16 January, the day after its remaining stages in the Committee of the Whole House in the other place, which is normal for treaty-type Bills, and Third Reading. But the Bill is not just important; it is essential to fulfil the European Council agreement between the sovereign member Governments of the member states, which was concluded to make an adjustment.

As we know, the adjustment gives effect to the Council decision of 7 June last year on the own resources change and the complex new formula for the replacement mechanism. I am grateful to the noble Lord, Lord Barnett, for his exegesis of these complicated matters. Perhaps he will agree with me that it also shows that all budget calculations and examinations have their complexities, disutilities and complications—not just the European Union. There is a special additional element in the blending of the national cultures of each member state.

Although the debates in the other place gave rise to the usual semi-hysteria from certain Members—only a small number—about these wicked EU treaties constantly sapping the very life-blood from the heroic but embattled Britannia, they also brought out the need to exercise proper scrutiny of complicated new measures, which by their very nature are hard to follow even for the cognoscenti. This Parliament rightly prides itself on a robust and proper system of scrutiny of all EU legislative instruments. We sometimes in this House make a little too much fuss regarding communications which are, after all, not legislation, but policy assertions. In this case there was an understandable anxiety in the Commons that there was not enough time for a review of these new spending modalities and the budget implications for the UK of the new treaty arrangements and the EU budget, as it would be.

However, broadly the Government were right to remind the other place that the consequences of not agreeing to ratify this legislation would be to throw open the whole system and go back to the previous formula. Furthermore, scrutiny does not and should never mean scrutiny to oppose a measure. It is also vital to inform and explain to Members of Parliament in both Houses and the public and sometimes to improve legislation as it goes through each member state. I always contrast in both Houses the extreme speed with which most other major treaties on our membership of other international organisations are understandably passed on the nod in this Parliament, basically because everyone automatically agrees that they are a good thing. People feel that there is no need for a lengthy debate.

In this case, a small, noisy and eccentric minority of Members dislike intensely, indeed hate—that is not too strong a word—our membership of the European Union. I agreed with much of what the noble Lords, Lord Stoddart and Lord Pearson, said about some of the budget and trade figures, but the noble Lords confirmed yet again their wish for us to leave the Union. But there are probably 50 to 100 good reasons for our membership, and the budget calculation is only one aspect. That is the reality that the British public, in so far as they follow this complicated matter, would probably agree with. Only Europe gets the fierce and unusual scrutiny that we see every day, especially—and again, quite rightly—with our vividly accurate reports from the EU Select Committee and various sub-committees.

Secondly, these treaty Bills are often the result of extended and painful negotiations by our sovereign Government with all the other sovereign Governments—sovereignty writ large in the European Union—to reach a sometimes complicated compromise. As each party makes concessions, it would be easy every time to scream that we have sold out to wicked foreigners, because they would normally be in the majority against our unique position with the budget rebate. However, reaching a decision on behalf of the British people is precisely what our elected Government are there for—the exercise of governmental sovereignty on behalf of the electors of this country. That is the essence of parliamentary democracy. The anti-Europeans cannot have it both ways, moaning about a so-called loss of sovereignty which applies as much to our elected Government as to the Parliament where they secure their regular majority. For all its faults, warts and blemishes, that is the system.

It is also worth remembering that the EU budget system, unlike that of many sovereign member states, apparently now including Britain, is constantly virtuous, since the mechanism ensures that, broadly speaking, the outgoings always equal the receipts, at least over a significant period of time. This is naturally so as it is an allocation system, like the money allocated to local authorities. On the subject of local authorities in Britain, the number of staff directly employed by the Commission in Brussels—even allowing for enlargement to a much greater union, and including overseas missions—is still smaller than that of an average county council in the United Kingdom.

We all know the four sources of the resources in this mechanism. I will not go into detail, save to refer, as the Minister did, to the reduction in the VAT call-up rate—compensated for by increasing the GNI-based contributions of all but two member states. This has produced a much better adjusted system that allows for the latest economic differences between member states. Paragraph 9 of the Explanatory Notes explains the complicated adjustment arising from the UK surrendering a small part of its rebate. I would not read it out even if I had time, but it is a very telling paragraph. When this unique concession was secured by the Tory Government in the mid-1980s, I do not recall that it was intended to last for ever. Perhaps British Governments hoped that it would, but that was not the agreement in the European Union. It has already lasted 20 years, with the latest, very modest adjustment.

The principle of gross contributions by member states was always that of an automatic formula mechanism, not the strident Sun newspaper concept of “Give us back our money”. As far as the net contributions applied, ours quickly got out of line in relation to our GDP and output measurements. However, this was not the fault of the other member states—it was because our total farm output was less, pro rata, than that of others, and because we imported far more from third countries, particularly from the old Commonwealth countries. The situation was relatively difficult.

I will quote from the other place on one matter, which summed that up very well. Rob Marris, from the Labour Benches, said:

“My right hon. Friend spoke briefly about the origins of the rebate. Was it not the case that Mrs. Thatcher was able to negotiate the rebate because the structure of the UK economy in those days was markedly out of line with the structure of the economies of France in particular, and of Germany? Those structural differences—the differing proportions of GDP raised from the agriculture sector in contradistinction to that raised from industry and the service sector—have changed, particularly in France and Germany. The rebate negotiated by Mrs. Thatcher and the basis on which it was negotiated were almost bound to change over time, as the economies of those other main rich western members of the EU changed”.

The Minister, Andy Burnham MP, now Secretary of State for Culture, Media and Sport, said:

“My hon. Friend is absolutely correct. The point … is how the decision that we are debating to some extent reforms the way in which the own resources decision is constructed”.—[Official Report, Commons, 15/01/08; col. 845.]

That is how people should now regard this matter. A comparison can also be made with Germany, which has always contributed the biggest amount to the EU, usually with no complaints in the German press and perhaps with only rare complaints from a small number of Members in the Bundestag. It is a given datum and accepted as part of Germany’s contribution, being the biggest economy.

Today, we also need to note carefully paragraph 16 on page 3 of the Explanatory Notes concerning the 12 new member states. That sets out the essence of the adjustment in this scheme. Our contribution will now be limited to £10.5 billion at 2004 prices over 2007-13, as the Minister himself stated. This is now roughly equal to France’s contribution but much less than that of Germany. It was a classic response from the opportunistic Mr Tony Blair, trembling as usual lest he displease Mr Rupert Murdoch and the “Daily Wail”, when he claimed that the other countries—as usual, to secure peace and quiet with the recalcitrant British, as sadly they regularly perceive us to be—had promised a thorough review of the EU budget and the common agricultural policy from 2013.

The farm review proposals will be promulgated soon—perhaps even during the Slovenian presidency—and legislation may follow in that six-month period or perhaps under the French presidency. We shall see how it turns out. While farmers everywhere have to expect a long-term erosion of the subsidy system, production subventions have already virtually ceased to exist in their old form. However, in reality, no member state can allow farmers to starve, and therefore even in the future compromises will be needed. Some kind of support system, even a residual one, will have to continue.

France has been mentioned, and I declare an interest in that I also live there. No one can say that France has not adjusted to the decline in farming with a fall in the population involved now down to below 3 per cent, which was the traditional British figure 10 to 15 years ago. The Third Reading in the other place brought out a number of other important matters. As I emphasised earlier, the budget adjustment was literally unavoidable to support very useful non-farm support budgets in the eastern European member states. I assume all noble Lords here will agree that that was a very worthy objective. Secondly, there was the sense that the amendment to new Clause 1 in the Commons was somewhat mischievous to say the least. However, I think it had the come-uppance that it deserved.

EU contributions, even with the bearable and modest increase, remain a tiny part of total UK government spending. Indeed, the Minister alluded to it being a net contribution of 1 per cent plus. For that, we get enormous benefits from our membership of the European Union, especially in the creation of a huge number of jobs and two-way trade. As the noble Lords, Lord Stoddart, Lord Pearson and Lord Waddington, said, as a country we have traditionally had a disturbingly high deficit compared with other advanced countries in the world. The United States may be an exception at the moment because the US trade deficit, as well as the budget deficit, is enormous and out of control.

Unfortunately, the Tory party remains totally isolated in the EU and, in particular, in the European Parliament. That is very noticeable when one visits and talks to the Members there. I predict that, if it intends to remain deeply and fundamentally hostile to virtually all aspects of our membership, as was shown in the Commons debates in Committee and at Third Reading, that will be another, possibly vital, factor in explaining why an election victory will not be in the bag, as some Conservative Members in the other place tend to believe because of their lead in the polls. If that is so, I trust that Mr Gordon Brown or his successor will continue the recent, brand new trend, after Mr Blair’s contortions and changes of mind, including on the referendum for the European Union reform treaty, of showing more enthusiasm for our 34-year membership. Mr Brown has begun to do that. “Britain for a new Europe” was mentioned when he addressed a recent conference. After all, like all the other member states—the old 12 or the old 15—we should be getting used to our membership of the European Union by now.

My Lords, it is a pleasure to follow the noble Lord, Lord Dykes, whose speech did not surprise us. No word of criticism about the European Union has ever been known to come from the noble Lord, Lord Dykes. What did surprise me was that when he reviewed the Third Reading of this Bill in another place, he selected the only Back-Bench Member to speak in favour of the Government, who happened to be a Labour Back-Bencher. He did not reflect what his own colleagues in another place actually said or did because his own colleagues voted with the Conservatives against the Third Reading of this dreadful Bill. It gives me no pleasure whatever to take part in this Second Reading debate. The Government should be ashamed that they are asking Parliament to ratify one of the worst financial deals in Europe that any Government have ever done. That is saying something because an awful lot of bad financial deals have been done in Europe over the years and your Lordships’ House should be ashamed to be part of the process.

We have had some excellent speeches this evening, laying bare the dreadful truth of this Bill. My noble friend Lord Waddington gave an excellent historical account of the betrayal of the UK’s interests. I shall be repeating some of that and make no apology because it is important to understand the scale of what has happened. The noble Lord, Lord Barnett, dazzled or perhaps confused us with his mastery of the figures. His conclusion was that we should not have a referendum, which I found surprising. I would only say to him that that question is a very simple one and I look forward to debating it with him when the other Bill comes here. We also had my noble friend—I still call him my noble friend—Lord Pearson and the noble Lord, Lord Stoddart, who ranged more widely, as they do, into cost-benefit analysis. I shall not be tempted down those lines today, however tempting they are.

In 1984, the UK’s interests were the keen concern of the Prime Minister at the time, my noble friend Lady Thatcher. She tenaciously and skilfully fought for our country. To do that she had to alter the financial settlement with which a previous Labour Government had saddled us. She had to persuade all of the other countries in the EU. She did it and obtained the rebate mechanism which has delivered a total of £54 billion to the UK economy by the end of last year. It was a triumph.

The Government’s hand in going into the last own resources discussion could not have been stronger. Changing the rebate requires unanimity. As my noble friend Lord Waddington has already pointed out, Mr Blair portrayed himself as the defender of the UK. He said,

“The UK rebate will remain and we will not negotiate it away. Period”.—[Official Report, Commons, 8/6/05; col. 1234.]

And of course Mr Brown agreed with the statement that the rebate was “justified and not-negotiable”. As ever, the public cannot believe a word that this Government say. We could not believe them when they said in their manifesto that they would give the people of Britain a referendum on the EU constitution and we should have known not to believe them when they said that they would protect our rebate. The details of the rebate calculations are not important. The essence of the rebate is that it reduces the UK’s contribution to Europe to a more reasonable level. If the rebate had remained untouched by the Government’s ham-fisted negotiations in 2005, the UK would be paying €10.5 billion less, or £7.8 billion at current exchange rates. In fact, this is expressed at 2004 prices, which is how the Government have chosen to continue to present the EU budget figures, including in the Explanatory Notes.. The only thing that we know for certain is that the final outturn cost to the UK will be higher.

I do not need to spell out for the House the financial position of the Government, which is getting tighter by the day. Last week, the Institute for Fiscal Studies calculated in its green budget that the Chancellor would need £8 billion of tax rises in order to keep within the Government’s fiscal rules. The National Institute of Economic and Social Research came up with £9 billion. Does anyone seriously doubt that we can afford the voluntary handout to the EU of nearly £8 billion, which is the consequence of this Bill?

Other noble Lords have referred to what the rebate could be spent on, but the issue is really whether we could save by making cuts in expenditure or in tax rises in the UK. The Government claim that the rebate is going up in absolute terms in the next financing period. Of course, it is going up because the totality of EU expenditure is going up at an alarming rate, which is where the real problem lies. Enlargement has increased the size of the EU budget. We accept that some overall budgetary increase is a necessary part of enlargement—a policy we support—but we do not accept that the level of the EU budget itself is correct, and I shall return to that later. We should have used our rebate leverage to work on that, but we did not.

I know that the Government like to present the Bill as the inevitable consequence of enlargement but that is a long way from the truth. The Bill does not affect the decision on total spending; it is just about the rebate. If Tony Blair had not abandoned his country’s interests in late 2005 our rebate would be roughly 25 per cent higher going forward. As it is we now have the double-whammy of a reduced rebate and higher underlying spending. Our average net contribution to the EU over the period 2000-06 was around £3.3 billion. Over the period to 2013, still at 2004 prices, it will be on average £2.3 billion higher, which is a rise of more than 40 per cent. I agree with other noble Lords that we should look at the figures before the EU gives us back some of our own money. The figures are quite bad enough when considered at a net level.

The structure of the rebate giveaway is about as bad as it could be for the UK. It ratchets up over the period so that the rebate as a proportion is much greater at the end than at the beginning. When we go into the next negotiation round, when the rebate reduction will cease to be capped, our rebate will be on a strong downward trend. The annual contribution paid net by the UK to Europe at the end of the next financing period is €6.4 billion at 2004 prices, and when inflation is added this will double our past rate of spending. That is likely to damage our prospects for a sensible negotiation in the next round since we will be arguing from such a low rebate base.

I turn to the underlying spending settlement. If the EU spent less, our rebate would normally be lower in monetary terms, but at least the net cash transfer to the EU would also go down. We believe that the EU should spend less. I remind noble Lords of the conclusion of the report Funding the European Union, to which the noble Lord, Lord Barnett, referred. That report—the 12th report of the 2006-07 Session—states:

“If real reform of the expenditure side were secured the scale of, and possibly the need for, the UK abatement would be reduced. The pressing need for reforms is on the expenditure side: reform of the revenue side, as addressed in this report, is desirable but less important”.

We thought that the Government shared those sentiments.

The worst example of spending, which is inefficient and unfair, is the common agricultural policy. It accounts for nearly 47 per cent of the overall allocated expenditure in the EU. The amount spent on it is set to rise over the period to 2013.

When Mr Blair began his retreat from his stance on the rebate—it was that,

“we will not negotiate it away. Period”—

he replaced it with some tough sounding words on CAP reform. But he blew it. He ended up giving away the rebate without any reform whatever. When he tried to explain his sell-out on the rebate to Parliament, he said,

“we also agreed on a fundamental review of all aspects of the EU budget, including the common agricultural policy … it is then possible for changes to be made to this budget structure in the course of this financing period”.—[Official Report, Commons, 19/12/05; col. 1564.]

I wonder whether Mr Blair was just fooling himself or deliberately misrepresenting the likely outcome.

When the Commission’s discussion document on the budget review finally appeared, it clearly indicated that there would be no changes in the financing period up to 2013. Worse, it concentrated on the revenue rather than the expenditure side of the budget. The French Agriculture Minister announced to the French nation immediately after the budget was agreed that there would be no review of the CAP. The then President Chirac followed that up by publicly declaring that the current CAP was safe until at least 2020, and current President Sarkozy has declared that CAP reform must feature more protection for French farmers—that means more money for French farmers. Similar sentiments have been muttered in the Club Med countries, Ireland and Germany.

The CAP is not the only necessary target for reform. Regional funds remain unreformed. The wasteful Commission will see its spending rise by 28 per cent in real terms when it is plain for all to see that this is wholly the wrong direction to travel, especially since, as referred to earlier today, for the 13th year in a row the Court of Auditors has declined to give the EU’s accounts a clean bill of health. When do the Government realistically expect any meaningful budget reform to take place? Do they still expect some reform in this financing period? What do they think is the honest timetable to achieve reform of the CAP?

This Bill does not deliver a fair result to the British taxpayer. It will deliver an annual bill of around £30 to every UK citizen. We will pay 20 per cent more than France even though our economy is only 6 per cent bigger. Ireland, the second richest country in the EU, will still be a net recipient from the EU. The highest spending per capita is in Luxembourg, which is ludicrous. Any system of funding that produces these results is not fair and ought not to be allowed to continue.

This Government had a veto back in December 2005. They not only failed to use it, but also set the UK up for further rounds of financial pain at the hands of our European neighbours. They have not even apologised. The Government have let the people of the UK down. We are invited to conspire with them by approving this Bill. It is a money Bill, so, as we were reminded by the noble Lord, Lord Stoddart, it is outside the powers of your Lordships’ House to do more than nod it through. From those on these Benches, it will not get so much as a nod to see it on its way.

My Lords, I am grateful to all noble Lords who have contributed to this robust debate. The fact we are restricted solely to Second Reading concentrates the mind wonderfully, and that is why such forceful speeches were made on the issues raised by the Bill. I emphasise that the Bill represents a settlement and a future for Europe which is promising, fulfils the requirements of the United Kingdom and asks noble Lords themselves some serious questions, as well as the ones they have addressed to me.

First, there was a great deal of emphasis on the problems of the CAP—started by the noble Lord, Lord Waddington, who made his usual forthright contribution. He of course knows that the Government are as one with him on the need for far-reaching reform of the CAP. That remains an important priority for the Government. Nor do we fail to recognise the challenge this represents, a challenge faced up to by previous Conservative Administrations, who found themselves unable to cope as adequately as we have done with these issues.

Let me make the point. The CAP budget is declining. In line with the Brussels ceilings agreed in 2002, the budget commitments for agriculture are on a downwards trajectory. They will be 7 per cent smaller in real terms in 2013 compared with 2007. In the current financial perspective, the CAP accounts for 43 per cent of the EU budget, compared to 56 per cent in the budgetary framework agreed in 1994.

From the force expressed in the speeches from the other side—not just by the noble Lord, Lord Waddington, although he made an excellent start, but reinforced by the noble Lord, Lord Pearson, and again by the noble Baroness, Lady Noakes, to say nothing of the noble Lord, Lord Stoddart—anyone would think that the CAP monster was maintaining itself with the same force that it had done in the 1980s and 1990s and that there was no change at all. The problem with the analysis of all the positions on the opposition Benches is that it is an analysis of a static position, when Europe, European economies and the British economy are very much in a dynamic relationship.

I want noble Lords opposite to recognise that there are real developments in the present position. The noble Lord, Lord Waddington, suggested that we were surrendering our rebate for nothing—that nothing was being gained from that at all—and that the British negotiating position had been a complete failure, a position reinforced in fairly trenchant terms by the noble Baroness, Lady Noakes. How is it, therefore, that UK and French net contributions will be in rough parity over the next period, with France’s net contributions rising twice as fast as those of the UK? Does that suggest that the British Government are being rolled over while others exploit the so-called weaknesses that we displayed? Far from it. That was the achievement of a real recognition of what should be fairness within Europe.

Of course, we have not gone far enough. We all recognise that aspects of the budget are quite unacceptable. My noble friend Lord Barnett made a plea for clarity and for the Government to make things easily understandable for Parliament and for the general public. I entirely sympathise with that. The strive towards transparency, towards making sure that the accounts are clear and that the British contribution is clearly analysed, is a determination of Ministers each time the issue arises. We all recognise that the failure of the European Court of Auditors to clear anything except a percentage of the budget is quite unacceptable. Let me say that the percentage of the budget that is being cleared by the Court of Auditors is rising significantly at present, but it is a rightful criticism that it is unacceptable that resources on that scale should be expended without clear analysis of the budget.

Of course we have reforms and a reform agenda to pursue in Europe. However, the position opposite seems to be not so much about reform but about how we can withdraw. When the noble Lord, Lord Pearson, talks about his noble friends, he is talking about his noble friends in three parties: his own, that of the noble Lord, Lord Stoddart, and that of the noble Baroness, Lady Noakes, who is in a slightly more significant party than him.

My Lords, did the Minister hint at any point that my party favoured withdrawal from the EU? If he did, I would like to make it clear that that is not our policy and was not included in anything that I or my noble friend Lord Waddington said.

My Lords, of course I accept that important point. What I can identify is that the noble Lord, Lord Pearson, was concerned to mention his noble friends across the parties and he included the noble Baroness, Lady Noakes, in that. He was fully confident that a great deal of that which she would express would find favour with him and reinforce his arguments—not, as she says, in the final conclusion that his party represents, which is why the noble Lord is a shining example of integrity, having recently withdrawn to it, although it took a little while. He was firmly within the embrace of the party of which the noble Baroness is such a distinguished Member for many years. However, she will appreciate that a large number of the arguments advanced by the noble Lord, Lord Pearson, take—as do those of the noble Lord, Lord Stoddart—their logical conclusion as withdrawal from Europe. The Conservative Party is able to contain, within its ranks, a fair number of people who subscribe to that view. However, its official position is a good deal more conditioned—I accept that from the noble Baroness, who expressed that accurately in her contribution. That does not alter the fact that we know where these arguments come from and where they draw great support.

In fact, at one stage, the noble Lord, Lord Pearson, was effectively saying, “I defer to some of the facts that the noble Lord, Lord Waddington, put forward”. Well, of course he did. They came from a similar source. They are facts that I was able to recognise as having been the product of a single document and body of thought about Europe. I merely say that that degree of understanding on the issues put forward by the noble Lord, Lord Pearson, is not an alien position within sections of the Conservative Party, but is shared by many.

I am not going to put words into anybody’s mouth. However, I will say that a great deal of the Conservative Party’s opposition on these issues falls shy of the withdrawal argument, but presents constant criticism in terms of the only solution, which seems to be to walk out on this position.

On the issue advanced by the noble Lord, Lord Pearson, I know he said that we could follow the example of Switzerland. Why does he not cite those countries that have joined the European Community over the past 20 to 30 years? Anyone would think that it is a small group of nations which had seen no growth, no ability to win any support and no extension of its membership at all, when it is exactly the opposite.

Some of these budget strains—and I hear what has been expressed on the opposition side about the budget increases, marginal though they are—are a reflection of the fact that enlargement bears costs. However, the Government have always been explicit about that. They never doubted that enlargement of the European Community would give rise to budgetary costs, but knew that they would lead to very significant advances within the Community.

The noble Lords, Lord Pearson and Lord Stoddart, are not right in expressing the view that the growth of the European Community does not produce jobs or increase trade—it does. There are very significant increases. Exports to Poland alone rose in the past three years by 89 per cent, compared with the rise of just 11 per cent before it joined the European Community. Is that coincidental or causal? The noble Lord, Lord Pearson, expresses that as coincidence. It is a pity he did not construct his speech around these remarkable coincidences in the way in which the European Community benefits the British economy.

The Government are concerned to demonstrate—as the noble Lord, Lord Dykes, expressed in his contribution—that the British people are bearing their fair costs within the European Community, which are remarkably similar to those that the French will bear over the next six years. These are two of the richest countries in the European Community. Of course enlargement carries costs, but in the past it has also meant great opportunities for Britain and the other countries of the European Community, and it will bear that fruit again.

I appreciate the strength of the points of view expressed on the other side of the House this evening. No one doubts the passion that comes to the European debate. That passion has shown no sign of abating in the past three decades or so of British politics, and I imagine that it is destined to be expressed in our debates on the issues to be confronted in the next decades. However, what are we left with? We are left with the Bill being presented to the House against a background in which the Government must negotiate tough terms, as they have always had to, within the framework of Europe and against a background in which great opportunities will present themselves. Those opportunities will be realised, which is why I commend the Bill to the House.

My Lords, the Minister asked me why I choose Switzerland. I do so, as I tried to say before, because it is a mature economy that is very similar in many ways to our own, although it is very much smaller, and because it has all the advantages of free trade and free movement of persons with the European Union but without the immense costs that afflict our economy for only 10 per cent of our trade. Ninety per cent of our economy does not even trade with the European Union, yet 100 per cent of our economy is afflicted.

My second point is to end with a question: if the Minister really wants to clarify our position on everything that we have discussed this evening—the budget, the rebate; even the noble Lord, Lord Barnett, was in something of a muddle about what it might all mean—why does he not commission a simple, cost-benefit analysis that would explain to the British people in words of one syllable that even I could understand exactly where we are financially, and indeed constitutionally, in relation to this project? Why do the Government not do this? It can be only because they do not want the answer.

My Lords, I have some sympathy with the noble Lord’s second point. He will know that the Government are concerned to clarify these issues as fully as possible and will endeavour to make progress on that. On his first point, however, is he seriously suggesting that the relationship between Britain and Europe after it had withdrawn from Europe would be roughly the same as the relationship between Switzerland and Europe? I hear what he says about the economies. Anyone would think that he had never been anywhere near political relationships or set foot in a political assembly and would not recognise the issues to which actions of that kind give rise. He can certainly press me as strongly as he likes about certain details with regard to the European Community, but if he thinks that I believe that the United Kingdom withdrawing from the European Community would have the same impact and relationships as Switzerland not joining the European Community, he and I live in rather different worlds.

My Lords, does the Minister agree that our position would be stronger?

On Question, Bill read a second time; Committee negatived.