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Mr. Corbyn : My point of order--
Mr. Speaker : Order. If the hon. Gentleman wishes to raise a point of order, he must raise one that I can answer.
Mr. Corbyn : My point of order, Mr. Speaker, is simply to ask when we shall have a proper statement on the subject and when we shall be able to debate the whole issue, so that the opposition to this crazy move can be voiced by the elected representatives in the House?
Mr. Speaker : I do not know, because that is not a point of order either. But I hope that there will be a debate, because it is certainly a major matter.
Mr. Tim Devlin (Stockton, South) : On a point of order, Mr. Speaker. We were delighted to see two new hon. Members introduced today, but it will not have escaped your notice that their combined electorates are lower than mine and those of many other Conservative Members. Would it be in order for you to arrange that secretarial allowances paid to hon. Members representing well populated constituencies are double those of Scottish Members?
Mr. Speaker : That is a matter for the Leader of the House. I suggest that the hon. Member's point would be an admirable one to put to the Leader of the House on Thursday.
Mr. Harry Ewing (Falkirk, East) : On a point of order, Mr. Speaker--
Mr. Speaker : Order. I have called the hon. Gentleman once.
Mr. Gerald Bermingham (St. Helens, South) : On a helpful point of order, Mr. Speaker. When there is raised in the House an issue such as that raised today, which affects the constituencies of many hon. Members-- including mine, which loses two hospitals and, in due course, its community services--it might be somewhat fairer if hon. Members from the various areas affected
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were called by you area by area. We on Merseyside seem always to suffer from the Liverpool syndrome. You always call an hon. Member from Liverpool, but there are many more of us on Merseyside than there are from Liverpool.Mr. Speaker : I appreciate what the hon. Gentleman says, and perhaps he will come and have a quiet word with me one day, when he might care to tell me, for example, who today he thinks I might have cut out so that he might have been called instead.
Mr. Tony Lloyd (Stretford) : On a point of order, Mr. Speaker. You are obviously well aware of the importance of today's private notice question and of the importance of the House as a means by which I, as an hon. Member, can defend my constituents who are genuinely uncertain about whether they will have a national health service hospital to which they can refer their medical needs. I appreciate that you are not in a position to discuss requests from Ministers, but when a matter is sufficiently important that it should be dealt with by way of a statement--which would give you the opportunity to allow questions on the issue to continue for longer--is it possible for you to take that fact into account in the amount of time that you allocate to private notice questions?
Mr. Speaker : That is precisely what I did. A private notice question is normally an extension of Question Time, as the House knows. I would not normally allow such a question to continue for more than 15 to 20 minutes. Today, it continued for nearly 50 minutes, so I did take into account the very point that the hon. Member raises.
Mr. Robert Litherland (Manchester, Central) : Further to that point of order, Mr. Speaker. There is a strong feeling that, unwittingly, you may have made a geographical error--
Mr. Speaker : Order. That is not a point of order. I am human and I am sure that I make many errors. I am very sorry if the hon. Member was not called.
Mr. Litherland : I raise this point of order, Mr. Speaker, not simply on my behalf but because no hon. Members representing north-west constituencies were called, yet three major hospitals in Manchester, including those affecting the constituents of my hon. Friend the Member for Manchester, Withington (Mr. Bradley) are to go. Neither my hon. Friend nor I was called, although we wanted to make protestations about there not having been any consultations on the subject. It is clear that a short statement did not do the subject justice.
Mr. Speaker : That is as may be.
Mr. Tony Banks (Newham, North-West) : Further to the point of order, Mr. Speaker. Perhaps I can be of assistance. If one examines the list of hospital trusts, one notices that no fewer than 13 of them are in London. It might assist you, Mr. Speaker, if you were cogniscant of the fact that I am the chair of the London group and that my colleagues are happy for me to speak on behalf of London, should I be called.
Mr. Speaker : I do not know whether all the hon. Member's colleagues would absolutely agree about that. They have never seemed to agree in the past. I understand that the hon. Gentleman is now a Front-Bench spokesman. It is difficult being a Front-Bench spokesman and the chair of the London group as well.
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Mr. Banks : Not really, Mr. Speaker.
Mr. Speaker : The hon. Gentleman wears two hats.
Mr. Harry Ewing : I apologise for raising another point of order, Mr. Speaker, and I do not apologise for raising it, albeit in the absence of the hon. Member for Stockton, South (Mr. Devlin), who raised a point of order and then left. I should be grateful if you would say that you seriously deprecate hon. Members in any part of the House referring to new hon. Members in the disparaging terms that the hon. Member for Stockton, South used. For such comments to be made about two new colleagues who have just taken their seats is an undesirable practice, which should be deprecated.
Mr. Speaker : What the hon. Member for Stockton, South (Mr. Devlin) said was not out of order. The House itself has a way of dealing with matters of that kind.
Mr. Keith Bradley (Manchester, Withington) : Further to the point of order raised by my hon. Friend the Member for Manchester, Central (Mr. Litherland), Mr. Speaker. May I inform you that the only hospitals in the whole of the north-west region that are opting out are in Manchester--in central Manchester and, in my constituency, the Christie hospital? May I suggest that in any future debate on this issue you recognise hon. Members who were not called this afternoon, and in particular that you recognise the essential nature of Christie hospital, not only as a local hospital but as a centre of national excellence for cancer care? I hope that you will bear that in mind in any future debate on opting out.
Mr. Speaker : I undertake to do that. I must remind the House that it is extremely difficult for the Chair, because I received the answer to the private notice question at the same time as the Minister rose to his feet to give it. It contained a long list of hospitals. It is an impossible task to expect the Chair to look down such a list and also to look out for hon. Members. I do my best, but I am sorry that I was not able to call the hon. Member and some of his hon. Friends.
Dr. Norman A. Godman (Greenock and Port Glasgow) : On a point of order, Mr. Speaker. May I seek your guidance on the question of calling hon. Members when statements are made? I have no complaint, because I do reasonably well--
Dr. Godman : I accept my hon. Friend's correction ; I do very well. I thought that there was a rule to the effect that Front Benchers who hop on to the Back Benches to ask questions are kept to the end of the queue, where they should be, and that genuine Back Benchers are called first.
Mr. Speaker : The hon. Gentleman was a distinguished member of the Opposition Front Bench some time ago. I think that the time an hon. Member is called does not really matter, so long as he or she is able to ask his or her question.
Mr. Kenneth Hind (Lancashire, West) : On a point of order, Mr. Speaker. I seek your guidance on a matter that is concerning me. Numerous Opposition Members have stood up in prime television time and said that the hospitals on the list, one of which is on the fringes of my
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constituency, are leaving the NHS. They know that that is not true. It causes the public who are watching much anxiety.Mr. Speaker : That is not a point of order for me. What is the point of order? I called the hon. Gentleman, did I not?
Mr. Hind : No, you did not. The public and the House are being misled about something that is blatantly not true. Therefore--
Mr. Speaker : Order. This is not the moment to pursue that point. These are matters of major argument and debate. The House should have a debate at some stage, I hope fairly soon. The Leader of the House will have heard what has been said, and I hope that we may have good news about it on Thursday.
Mr. Corbyn : On a point of order, Mr. Speaker.
Mr. Speaker : That is very selfish of the hon. Gentleman. He has been called once on a point of order. He must have consideration for others who wish to participate in the debate on the European Communities budget. Is it a point of order? The last one was not.
Mr. Corbyn : Yes. I want to clarify what you said in your answer to my hon. Friends the Members for Greenock and Port Glasgow (Dr. Godman) and for Newham, North-West (Mr. Banks) about Front-Bench spokesmen who seek to raise points on a statement or a private notice question. Do they get priority over Back Benchers or not?
Mr. Speaker : I take into consideration many things, such as the range of Back Benchers' opportunities. The hon. Gentleman is not in any sense a deprived citizen.
Mr. Corbyn : I am not on the Front Bench.
Mr. Speaker : No, but the hon. Gentleman is regularly called, not once a day but often several times a day. He must have consideration for Front-Bench colleagues, who do not always get as many opportunities as he gets.
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European Communities (Budget)
Mr. Speaker : I have selected the amendment in the name of the hon. Member for Thanet, South (Mr. Aitken).
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The Financial Secretary to the Treasury (Mr. Francis Maude) : I beg to move,
That this House takes note of European Community Documents Nos. COM(90) 121, relating to the Preliminary Draft Budget of the European Communities for 1991, 8182/90, relating to the Draft Budget of the European Communities for 1991, and 9865/90 and the supplementary explanatory memorandum submitted by Her Majesty's Treasury on 30th November 1990, relating to the European Parliament's proposed amendments and modifications to the draft Budget.
I know that the House has been waiting with bated breath for the debate to begin. This is my first opportunity to address the House on this important issue. It is an annual event that is of considerable importance for the House.
This year's budget procedure has been preceded and accompanied by developments of great moment in the world. We have seen historic change in eastern Europe, with political and economic reforms that the Community has rightly been quick to support. Germany has united--a welcome development that enlarges our Community. The United Nations sanctions against Iraq have had a disproportionate effect on three countries in particular--Turkey, Jordan and Egypt. The European Community has, properly, decided to provide special assistance to them. All those developments require changes to the Community's financial perspective.
In the past two years, European Community spending has generally been well contained. The figures for commitments in both the 1989 and 1990 budgets have been consistently below the ceilings in the financial perspective, at 2 becu and 4.5 becu respectively. The United Kingdom's net contribution was more than £2 billion in both those years. It would have been substantially higher but for the abatement provided by the Fontainebleau agreement.
The general level of spending under the European Community budget is likely to rise quite strongly in 1991, partly because of the exceptional factors to which I referred at the outset. There is, in addition, pressure on the agriculture budget, reflecting falling world prices--especially for grain-- depressed market conditions for livestock and a range of other factors, including the loss of export markets because of the Gulf crisis.
The financial guideline for agriculture was largely a product of Britain's determination to prevent a recurrence of the runaway growth in spending that brought the Community to the edge of bankruptcy in 1987. The guideline sets a legally binding limit on agriculture support spending. The annual growth of the limit is confined to 74 per cent. of the rate of growth of Community gross national product taken from the 1988 base. That guideline is buttressed by automatic stabilisers for most commodities, which trigger price cuts when production exceeds maximum quantitites set by the Council. Until this year, the system seemed to be achieving its objective of restraining expenditure. Cumulative expenditure in 1988, 1989 and 1990 was 11 becu below the guideline, but recent developments in the trend of agricultural spending suggest that next year the guideline may be under greater pressure. I fully understand the
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concerns of my hon. Friend the Member for Thanet, South (Mr. Aitken), as expressed in the amendment that he has tabled, about that upward pressure. It will remain essential to resist it.The House will recall that the inter-institutional agreement is a political agreement under which the Council, the European Parliament and the Commission have bound themselves to respect ceilings for each of the six main categories of Community spending for the five years between 1988 and 1992. Those ceilings are set out in the financial perspective. They need to be revised to accommodate expenditure which could not reasonably have been foreseen when the financial perspective was agreed.
The agreement distinguishes, within non-compulsory expenditure, between privileged and non-privileged spending. Privileged spending includes the structural funds, the research and development framework programme and the integrated Mediterranean programmes. This category will double in real terms in that five-year period, but for the non-privileged element, the Council has agreed to respect the maximum rate of increase calculated by the Commission within the framework of article 203 of the treaty. The calculated maximum rate for the 1991 budget is 7.2 per cent.
In June 1984, the European Council in Fontainebleau agreed a permanent mechanism to abate the United Kingdom's grossly disproportionate net contribution to the budget. By the end of next year, cumulative abatement under the mechanism will have totalled almost £10 billion, in addition to the £3.2 billion-worth of refunds extracted by my right hon. Friend the Member for Finchley (Mrs. Thatcher) before the Fontainebleau mechanism took effect. On that score alone, Britain is £13 billion better off today than it would have been under the sloppy arrangements that were so skilfully negotiated by the last Labour Government. Those arrangements amounted to a scandalous betrayal of British interests.
In June, the financial perspective was revised to provide for assistance to eastern Europe and to Mediterranean, Asian and latin American countries. A small amount for structural funds and administration was also included. The effect was an increase in the financial perspective by 200 mecu for 1990, 1.2 mecu for 1991 and nearly 1.5 mecu for 1992.
Mr. Tony Banks (Newham, North-West) : Does the Minister have the sterling equivalents of those ecu figures, which might assist those who are trying to follow the debate?
Mr. Maude : No, I have not, but I can lend the hon. Gentleman a pocket calculator, which will enable him to do the sums with great rapidity.
Mr. Teddy Taylor (Southend, East) : That is silly.
Mr. Banks : It was a genuine question.
Mr. Maude : I accept that it was a genuine question. I do not have the figures in exact equivalents, but they can easily be provided. If the House prefers to have them in that form, they can be provided. The difficulty arises because the accounts for the European Community are, properly, calculated in ecu. It is not difficult for sterling equivalents to be provided.
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Mr. Hugh Dykes (Harrow, East) : Are not we being a little panicky? Figures for international transactions are frequently given in dollars, and usually there are no protests from hon. Members. Taking the whole picture into account, does my hon. Friend agree that budget control is eminently satisfactory, not least due to pressure from the United Kingdom Government in recent years, compared with the previous position that he mentioned? That particularly applies to agriculture, which needs careful monitoring and depends much on the negotiations on the export refunds.
Does my hon. Friend further agree that the eastern European expenditure is being dealt with satisfactorily, that most German reunification expenditure is dealt with by German national expenditure and that the outlook remains one of further control and of remaining under the financial perspective?
Mr. Maude : It is right to say that the arrangements negotiated in 1988 have, until now, exercised a firm discipline on Community spending. It will remain of the utmost importance to continue that discipline. The present discussions on next year's budget illustrate how important it is to maintain that discipline. Although, for a number of reasons, agricultural spending has been well below the ceiling in the financial perspective, there is upward pressure for the future, and it will be very important to resist that.
Mr. Maude : My hon. Friend will be aware that discussions on the general agreement on tariffs and trade are going on at present. They should have at least the effect of restraining further increases. If, as I hope, a good agreement is reached, there may be a prospect of some reductions, which would be as welcome to me as to my hon. Friend.
Mr. John Butcher (Coventry, South-West) : Does my hon. Friend agree that the common agricultural policy budget is a massive aberration at the heart of Community finances? As we speak, the CAP threatens to undermine the general agreement on tariffs and trade and to impoverish not only the people of Europe, but those who wish to sell cheap agricultural products to this country. It is utterly foolish for us to vote for increases in aid from the European budgetary programme to the nations that are not allowed to trade with us in agricultural products. Does my hon. Friend further agree that his negotiations on this question on our behalf are really about whether the tradition of Adam Smith or the tradition of Colbert and of Richelieu will dominate European debates in future?
Mr. Maude : In reply to the first part of my hon. Friend's question, it is certainly right that we need to be careful to ensure that policies on agriculture enable developing countries--for these purposes, I include the reforming countries of eastern and of central Europe--to sell to us the goods that they are capable of producing. It is absurd for us to provide funds for such countries to firm up their economic reforms and, at the same time, to deny them markets where those products can properly compete.
For some time, I have argued that the GATT negotiations this year are, by quite a margin, the most important set of international discussions. Not only the future prosperity of the world but its future security depends on those discussions. I hope that those who are
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conducting the negotiations in Brussels at present will have in mind the terrible price that could be paid if a satisfactory outcome is not reached. There is a huge prize to be won if the discussions are successful, and a terrible cost if they fail.Mr. Dykes : I am sure that all of us agree unequivocally with my hon. Friend's view, and we all believe that the Community negotiators have a special responsibility in that context. However, does my hon. Friend agree that it is somewhat ironic that the United States negotiators usually fail to remind us that the bulk of the internal support system in the United States--deficiency payments, which we used to have, but no longer have--amounts to about 82 per cent. of the total United States dollar support for American farmers.
Mr. Maude : It is certainly the case that none of the protagonists in the discussion is quite as pure as he makes himself out to be. All the protagonists have a negotiating position and, at present, those positions are incompatible. A negotiating position is, of course, one on which one can negotiate. If the negotiators fail to reach a satisfactory outcome, they will have a heavy burden of guilt to carry.
Rev. Ian Paisley (Antrim, North) : Does not the Minister believe that the Government should now be applying themselves to getting rid of the green pound? Would not that be a considerable help in this matter?
Mr. Maude : The hon. Gentleman takes me beyond the scope of this debate. The green pound needs to be considered in the light of our entry into the exchange rate mechanism and the hon. Gentleman is right to draw attention to that matter.
Mr. Teddy Taylor : I hope that my hon. Friend can clarify a point about the GATT talks. Do my hon. Friend and the Government consider that the alleged 30 per cent. reduction in farm support is really a reduction? The Commission's proposals make it abundantly clear that farmers will be compensated fully for any reduction in subsidy, and that there is no question of freedom of trade being permitted. It would be helpful for us to know whether the Government consider that the alleged 30 per cent. reduction in agricultural support will be a real reduction, as the words in the proposal seem to show that there will be no reduction, but simply a reduction in subsidy, which will be compensated for by other subsidies.
Mr. Maude : My hon. Friend is right to say that it is not a question of a clean and straightforward reduction, as has been suggested. Equally, he will be aware that a substantial part of the 30 per cent. has already been harvested--if that is the right word in the circumstances--reflecting the changes in the common agricultural policy since 1986.
I can now provide for the hon. Member for Newham, North-West (Mr. Banks) the sterling equivalents for the figures that I gave earlier on the first revision to the financial perspectives in respect of eastern Europe. The figure for 1990 was £140 million, for 1991 it is £950 million, and for 1992 it is £1,035 million, at a conversion rate of £1 to 1.435 ecu, which is the central exchange rate mechanism rate.
In September 1990, the Commission proposed a further revision to take account of assistance to the front-line
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states in the Gulf conflict : Egypt, Jordan and Turkey. It was proposed to raise the ceiling for category 4 and for the total ceiling of the financial perspective by 630 million ecu.In October, a further revision was proposed to take account of the effect on the budget of the unification of Germany. The total ceiling for that purpose was to be raised by 1 billion ecu in 1991 and by just over 1 billion ecu in 1992. In return, the Council sought savings within current spending to offset those increases in part. In addition, a fourth revision has recently been proposed by the Commission to take account of agricultural rebates to Spain and to Portugal.
I want now to outline this year's budget procedure so far. The Commission presented the preliminary draft budget in July. For 1991, the preliminary draft budget was about 13 per cent. bigger than the adopted budget for 1990. I know that that will rightly concern the House. None the less, that budget was almost 4 billion ecu below the overall ceiling in the financial perspective. Total provision was equivalent to about 1 per cent. of Community gross national product, compared with the 1.19 per cent. ceiling allowed under the own resources decision of June 1988.
Two underlying trends in Community expenditure emerge from the preliminary draft budget. First, it provided for an increase of more than 13 per cent. in expenditure on agricultural market support. That reflected the expected growth in compulsory expenditure on agriculture which resulted from falling world prices rather than from any slackening of control.
Secondly, it provided for an increase of about 20 per cent. in spending on structural operations and on research and development. Those areas now account for almost 30 per cent. of the total budget. The budget also included 65 million ecu for measures to combat fraud, which was further evidence of the Community's desire to root out fraud, although much more remains to be done.
On 27 July, the Council adopted a draft budget about 830 million ecu below that proposed by the Commission and more than 4.7 billion ecu below the overall ceiling in the financial perspective. In the light of developments in eastern Europe, the Council decided that, exceptionally in 1991, it would not be appropriate to apply the maximum rate procedure to non- privileged, non-compulsory expenditure. However, the Council agreed to cut the Commission's proposed level of non-privileged expenditure by more than it had in previous years and endorsed a robust declaration making it clear that the procedure adopted in relation to this year's budget was an inevitable consequence of developments in eastern Europe and implied no weakening of budgetary discipline.
At the same meeting, the Commission said that it would present proposals for a revision of the financial perspective in the light of German unification. There was strong support from a number of member states-- notably from Germany and France--for our view that the revision should cater for unification and for nothing else.
Finally, the Council decided to take the Parliament to court over the 1990 second supplementary budget. The Parliament excluded some 780 million ecu from the amount of the 1989 budget surplus to be taken into the 1990 budget on the basis that inclusion would reduce member states' VAT payments below 1.4 per cent. and that the Parliament had powers under the treaty in respect of revenue. The Council could not and did not accept that,
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because its immediate practical consequence would have been to postpone bringing to account a substantial part of the 1989 budget surplus, with a consequent delay in member states receiving the benefit of reduced contributions. That would contradict the requirement of the financial regulation that surpluses should be brought to account at the earliest opportunity.For that reason, and for the more fundamental reason that the Council alone has competence over revenue, the Council agreed to initiate a court action to amend the Parliament's adoption of the second supplementary budget.
The Parliament presented its amendments to the draft budget on 25 October and voted for modifications adding over 1.9 billion ecu in commitments and almost 1.6 billion ecu in payments. In its amendments, the Parliament anticipated the proposed revisions to the financial perspective and thus threatened to breach the existing ceiling. As, in effect the Parliament has the last word on matters of non-compulsory expenditure, its amendments amounted to a challenge to the Council to approve revisions along the lines that it wanted. Otherwise, the financial perspective would be breached, and the inter-institutional agreement would be thrown into question. Two other problems emerged. The Council debated whether to reject two of the European Parliament's amendments to the structural funds category--known as category 2. These concerned a new environmental fund--LIFE--and a fund called "PERIFRA", intended to alleviate the effects of the Gulf crisis on poorer and outlying regions. The second problem stemmed from the Parliament's proposals on research. The Parliament wanted two things--first, to reallocate resources within existing multi-annual framework programmes and, secondly, a substantial increase in spending outside those programmes.
The amendments caused a number of difficulties. In particular, the reallocation of resources along the lines proposed could not be reconciled with the framework programmes agreed by the Council in accordance with the treaty and with the inter-institutional agreement, and risked serious damage to the concept of multi-annual planning that the Community has developed to lend certainty to the funding of long-term projects.
Following preparatory work in the Budget Committee and the Committee of Permanent Representatives, the Budget Council undertook its second reading of the 1991 budget. Initial discussion on 15 November was adjourned until 19 November to take account of related Economic and Finance Council discussions of the outstanding revisions to the financial perspective on that day. As expected, the consideration of revisions to the financial perspective dominated decisions on the 1991 draft budget.
In response to the presidency's report on its continuing discussions of the revisions with the Parliament, the Council insisted on a tough line, demanding off-setting savings from within existing headroom in the financial perspective. Moreover, as part of that process, the Council pressed for a satisfactory compromise on the Parliament's amendments to the 1991 budget--in particular, on research. The presidency undertook to seek an acceptable compromise. In the meantime, the Budget Council duly adopted its second reading position--in particular, it confirmed the rejection of the European Parliament's amendments on
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research and rejected the LIFE and PERIFRA funds. Furthermore, the Council insisted that agreement to a limited number of new Commission posts should be conditional on implementation of the Court of Auditors' report on improved staff management. The amendments that were accepted amounted to 200 million ecu in commitments and 154 million ecu in payments.The upshot was a revised draft budget in which commitments--at around 54.9 billion--are about 4.5 billion ecu below the overall ceiling in the financial perspective and in which member states' contributions are equivalent to 1 per cent. of Community GNP, compared with the annual sub- ceiling for own resources of 1.19 per cent.
Following further discussion at ECOFIN yesterday, I think that we may be close to an agreement on revisions to the financial perspective. There would be significant off- setting savings from within the existing headroom, the transfer of the Parliament's amendments on LIFE and PERIFRA funds out of the structural funds category of the budget, and modifications to the Parliament's amendments on research to bring them into line with existing framework programmes. The Parliament will undertake its second reading later in December, with a view to adopting the final 1991 budget before the end of the year.
The budget procedure is always a fairly tortuous affair, and this year has been no exception. We have had to be flexible in responding to major developments in eastern Europe, Germany and the Gulf. Equally, as a substantial net contributor, we have had to be firm in insisting that strict budget discipline is preserved. We shall continue to do so.
At the intergovernmental conference starting next week on institutional reform, we shall press hard for changes to the treaty which will intesify the war against fraud, deepen scrutiny of spending and require ever better value for the money supplied by tax payers and spent by the Community.
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