With the permission of the Ceann Comhairle, I propose to take Questions Nos. 5 and 6 together, as the subject matters are, in fact, intimately linked.
The Council agreement of 30 May 1980 provided for reductions to the British contribution to the Community Budget during the years 1980 and 1981. At the same time the Community pledged themselves to resolve the problem for 1982 by means of structural changes and, to this end, the Commission were mandated to carry out an examination of the development of Community policies, without calling into question the common financial responsibility for these policies, which are financed from the Community's own resources, nor the basic principles of the common agricultural policy. Taking account of the situations and interests of all member states, this examination will aim to prevent the recurrence of unacceptable situations for any of them. Detailed discussions of the issue will not begin until the results of the Commission's examination have been presented to the Council in June 1981. For this reason the item was not on the agenda of the recent Foreign Affairs Council and is unlikely to be discussed in any detail, until the Commission report has been presented to the Council.
However, it is nonetheless the case that the matter is the subject of ongoing study and discussion within the Community. I have recently held bilateral meetings to discuss this question with the Foreign Ministers of Denmark, Netherlands, Belgium, France and Germany, and similar meetings will take place in the near future with the Foreign Ministers of Italy and Greece.
At these meetings I have taken the opportunity of outlining the Government's views on the future development of the Community. In our view the forthcoming debate should not focus on exclusively budgetary issues. Instead, the Community and all its policies must be looked at as a whole and, as required by the agreement of 30 May, the situation and interest of all member states must be taken into account in order to prevent the recurrence of unacceptable situations for any of them. If the restructuring called for in the mandate of 30 May is to be in accord with the fundamental objectives of our Community, what is required now is for the Community to move forward by building on their achievements. To do this, it is imperative that the present artificial restraint on potential Community revenue be removed, through the raising of the legal limit on that revenue represented by the ceiling of 1 per cent VAT. That is the view which I, on behalf of the Government, have been conveying, and will continue to convey, to our Community partners.