Michael Brunson
Prime Minister, this does not look as though it is a lasting agreement, which you said you always wanted? Because it seems only to be linked to when the new funds which are going to be raised run out.
Prime Minister
Ah yes, but there can be no change in those funds—no increase in them—without agreement by Britain and each and every other one of the Community. So, unless we got another reasonable settlement when they wanted even more funds, we would not agree to more funds and therefore the present funds should last.
Michael Brunson
But that sounds as though you might have to come back in two or three years time for another row?
Prime Minister
It may want to increase the resources which go to the Community and if they do not agree a reasonable settlement [end p1] for Britain, there would be, but do not forget that at that time the present arrangement would be in existence and could not be changed without unanimous agreement and that is what makes it endure.
Michael Brunson
Are you saying that you would, if necessary, never agree to anything in the future which did not have 66%; refund in it?
Prime Minister
Which would not have what I thought at the time was a reasonable satisfactory settlement for Britain. It might even be more.
Michael Brunson
The French though, are saying that this is not a permanent settlement.
Prime Minister
Well, just have a look at the communique. Let me spell it out again. As you know, 1%; of our VAT goes to the Community. Any change in that, any increase, has to be agreed by each Minister, each Parliament. We have agreed that it shall go up to 1.4%;. The condition for that agreement is a fair settlement for Britain. Now, what have we got? 1.4%; and a fair settlement for Britain. They cannot change the 1.4%; without our consent, without our Parliament's consent. [end p2] We are not likely to give that consent. Parliament will not give that consent unless added to an increase were another fair settlement for Britain. If we do not give our consent to any increase, the present arrangement lasts and goes on and on and on.
Michael Brunson
With permanent two-thirds increase?
Prime Minister
With 66%;.
Michael Brunson
Is this deal really linked to a country's ability to pay, which is another thing you always said you wanted? There is a vague mention of it in the preamble, but there is no mechanism to make certain that a poor country does not have to pay out.
Prime Minister
No, that was what we tried to get in the first place for each and every country. They regard this as very much a particular British problem and they were prepared to make arrangements for Britain that they were not prepared to make in the first place. In a way, that is a compliment to us. They realized we had a particular problem. They knew that the only possible weapon I had was persuasion and arguing our case, so they have done it on the basis that I [end p3] have indicated, the 66%; refund. They have put a little bit in about if any other country wants to come with a reasonably good case, then they will look at it on the basis of ability to pay.
Michael Brunson
But it is not a mechanism though, is it?
Prime Minister
It is a formula. It is linked with the 1.4%; I have indicated. It also operates in a particular way. It operates by reducing what we pay in VAT next year and also there is another technical thing, VAT is calculated in the particular way in which we wanted. If you take all those things into account—it is complicated and full of jargon—but it is a reasonable settlement.
Michael Brunson
What about all those demands at one time you were making that there had to be an absolutely firm agreement, for example, to make certain that the farm spending does not race away when the new funds are brought in? That is not in the deal today, is it?
Prime Minister
Oh, but it is. It was agreed at Brussels, if you remember. We agreed a text at Brussels and that now, again revived today, has been considered by Foreign Ministers and they referred it to Finance Ministers to consider. That [end p4] has two things in it: first, that measures will be taken to fix the total public spending for the year, at the beginning of the year, and second, that the agricultural part of that spending shall grow less fast than the increase in income of the Community; and they have to guarantee measures that will be effective to produce that result. Precisely how it is being done is being considered by Finance Ministers now. That is all part of what you call the “Stuttgart Package” which we were working out in Athens and then at Brussels.
Michael Brunson
But Prime Minister, that has still got to be argued about hasn't it? There is not anything fixed yet.
Prime Minister
The text is fixed, that is to say the wording is all fixed, and exactly how it shall be applied in terms, where they shall do it, how they shall do it, has to be sorted out, but the text and the word “guarantee” is in the text.
Michael Brunson
Is this the best deal you could have got?
Prime Minister
Oh very much so. I did not really expect to come away from Fontainebleau with this deal, 66%; and also the ECU 750 million which has been released after being [end p5] blocked. They have agreed another one, ECU 1,000 million for this year. I think it is a good settlement for Britain; better than I had hoped to come away with today from Fontainebleau. I could always have hoped for a bigger percentage. One can always do that, but all things considered, it is very reasonable and I think it is very good coming at the present time. We could do with some good news and it just shows that when the only weapon is persuasion, when the only thing you can do is get together, that politicians can get together, can negotiate and can agree. It would be nice if other people would take the hint.
Michael Brunson
Is this the end of the everlasting row with Europe?
Prime Minister
I believe so. It has been exasperating, requiring immense patience, but you know, in the end, I think, what sways the balance is that each of them knew that had they been in the same position that Britain is in they would have put forward the same arguments and they would have expected us to respond to them in the way they have responded to us, and you said many things about politicians, but it has been a good day for politicians today.