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Question accordingly agreed to.Resolved,
That the Revenue Support Grant Report (England) 1992-93 (House of Commons Paper No. 188), a copy of which was laid before this House on 24th January, be approved.
It being after Ten o'clock, Mr. Speaker-- put the Questions necessary to dispose of proceedings on the other motions relating to local government finance, pursuant to the Order [4 February]. Resolved,
That the Revenue Support Grant Distribution (Amendment) (No. 2) Report (England) (House of Commons Paper No. 190), a copy of which was laid before this House on 24th January, be approved.
That the Population Report (England) (No. 3) (House of Commons Paper No. 189), a copy of which was laid before this House on 24th January, be approved.
That the Special Grant Report (No. 3) (House of Commons Paper No. 191), a copy of which was laid before this House on 24th January, be approved.-- [Mr. Heseltine.]
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SUPPLEMENTARY ESTIMATES 1991-92
Class XX, Vote
1
European Community (Budget)
Mr. Speaker : I have selected the amendment in the name of the hon. Member for Thanet, South (Mr. Aitken).
10.16 pm
The Financial Secretary to the Treasury (Mr. Francis Maude) : I beg to move,
That a further supplementary sum not exceeding £450,000,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges for civil services which will come in course of payment during the year ending on 31st March 1992, as set out in House of Commons Paper No. 182 of Session 1991-92.
Mr. Tony Marlow (Northampton, North) : On a point of order, Mr. Speaker. This is a very important matter, involving a great deal of money. I understand that at the moment our net contribution is of the order of £2,800 million in a year. The motion seeks to increase our contribution by £450 milion on the basis of a vote by the European Parliament the legality of which is disputed.
My hon. Friend the Financial Secretary will speak for the Government. We are grateful to him and are impressed by his ability, but my point of order to you, Mr. Speaker, is that perhaps at this time a Law Officer of the Crown should be present to explain the highly intricate legal aspects of this important issue, because a great deal of money is involved. I think that it would be for the benefit of the House if a Law Officer were present.
Mr. Speaker : What has been said will have been heard by the Deputy Chief Whip, who is on the Front Bench. We must now proceed with the debate.
Mr. Maude : As my hon. Friend the Member for Northampton, North (Mr. Marlow) has just pointed out in his point of order, the supplementary estimate which is before the House relates to our contributions to the 1992 budget of the European Communities. The estimate is needed because the European Parliament's recent adoption of the budget is open to legal question. The Council is considering its legal position, but, because of the legal uncertainties, the Government cannot at the moment treat the 1992 budget as agreed between the institutions. Therefore, for the time being, we must approach the 1992 budget and our contributions to it on the basis that the budget has not been adopted.
When a budget has not been adopted, monthly contributions are calculated on the basis of one twelfth of the last adopted budget, in this case the 1991 budget. The European Communities Act 1972 gives authority to contribute on this basis, without further parliamentary approval. The Government are therefore seeking parliamentary approval for this estimate to cover contributions in excess of those due, had a budget for 1992 not been adopted.
The procedure we have followed in presenting this estimate reflects comments by the Treasury and Civil Service Committee in a similar situation in the early 1980s. The Committee's second report in the 1981-82 Session expressed the view that the Government should refuse payment of any disputed sums unless the matter had been debated and decided by Parliament. On two subsequent
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occasions, in January 1985 and 1986, when we again needed estimates provision for part of our contribution, it was possible to provide the opportunity for debate before the first payment fell due, but the circumstances and timing in the present case prevented us from doing so again. Nevertheless, we are presenting the estimate as early as we can and well in advance of the normal spring round of estimates to provide the House with an early opportunity to debate the issue.Mr. Chris Smith (Islington, South and Finsbury) : I am grateful to the Financial Secretary for giving way, especially so early in his remarks. For the sake of clarity, will he confirm that the disputed amount between the Parliament's budget and the Council of Ministers budget relates to £12 million of expenditure by the United Kingdom, not £450 million?
Mr. Maude : The hon. Gentleman is correct. The monthly amount that the estimate seeks authority from the House to contribute to the 1992 budget is only £1 million per month--that is the disputed amount. In the light of its legal advice, the Council will take a view on the basis for action in the European Court. Subject to that advice, the Government will urge the Council to bring a case against the Parliament. The Commission will implement the 1992 budget adopted by the European Parliament pending the Court's judgment, which we hope will soon be available.
Mr. Marlow : I am afraid that my mind moves slowly at this time of the evening--
Mr. Hugh Dykes (Harrow, East) : We understand that.
Mr. Marlow : I thank my hon. Friend for his comments.
As I understand it, we are being asked to vote an extra £450 million for an eventuality that may not arise, subject to a legal decision within European institutions--am I right or wrong? If I am right, why must we make a decision tonight on whether we are likely to approve the sum of £450 million? How does that sum relate to the £12 million or £1 million per month, which my hon. Friend has just agreed with the hon. Member for Islington, South and Finsbury (Mr. Smith)?
Mr. Maude : For reasons that we have previously debated in the House, the British contribution to the EC budget last year was abnormally and atypically low--about £1.2 billion. The underlying level of contribution is about £2 billion a year, so even if the budget had been as accepted by the Council of Ministers, a large sum in addition to last year's contribution would have been payable by the United Kingdom Government. Therefore, the amount in dispute, as has been said, is no more than £12 million in terms of the United Kingdom's contribution to the budget.
Mr. Nicholas Budgen (Wolverhampton, South-West) : Will my hon. Friend explain what he means by the "underlying contribution" and the "atypical contribution", as it is difficult for us to understand?
Mr. Maude : That simply reflects an average taken over the years. For a variety of reasons, last year's abatement was substantially larger than that of the year before and that for this coming year.
Mr. Budgen : Why should we regard the average as the underlying figure? As I understand it, there is an heroic
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new role for the EC. More especially, we are hoping--as I imagine the House is, as it is in favour of the gradual move towards a common currency--a vast expansion of the regional fund. Why should we expect that the average should be the underlying figure? If we wish to be at the heart of Europe, we must expect a vast increase in our contribution to that heroic enterprise.Mr. Maude : We expect no such thing. We do not base our contribution for the coming year simply on the extrapolation and average of previous levels, but on the calculation, already available, of what the contribution will be in the coming year. Although my hon. Friend may prefer to think of it as such, it is not simply a shot in the dark.
Sir Teddy Taylor (Southend, East) : What is my hon. Friend's latest estimate of our net contribution in 1992, assuming its legality? Does he agree with the famous Treasury and Civil Service Select Committee report, which stated in paragraph 12 :
"If this situation"--
which the Committee thought was unsatisfactory and unprecedented-- "arose again, the Government should refuse payment"?
Mr. Maude : My hon. Friend is right to refer to that report, which stated that, if a payment were to be made, this was the procedure that we should observe. This is not a new departure. The same procedure was used on occasions in the past, apart from those to which the report referred--such as in 1985 and 1986, when comparable circumstances arose.
Mr. Roger Moate (Faversham) : We are asked to approve a vote of £450 million. The "Supply Estimates 1991-92 Class XX Net Contributions to European Community Institutions" baldly presents a figure of £450 million. The only explanation offered is : "Payments resulting from the adoption by the European Parliament of a larger Budget for 1992 than that permitted by Community legislation."
We are now told that the figure amounts to approximately £1 million a month, or £12 million a year.
The motion asks for a sum of £450 million. Is the information I quoted all that the House is entitled to have, coupled with my hon. Friend's explanation--which was not at all clear? Are we talking about £12 million or £450 million? Will my hon. Friend the Financial Secretary explain why we are asked to authorise a payment of £450 million?
Mr. Maude : That sum represents the difference between our contribution last year on the basis of the 1991 budget and our contribution this year on the basis of the agreed 1992 budget. Even if the budget agreed by the Council of Ministers had been adopted, it was only slightly smaller than that adopted by the European Parliament. The bulk of the £450 million to which the estimate refers is attributable to not just the purportedly illegal portion on which the European parliament voted but the operation of the United Kingdom's abatement this year, compared with last year.
Mr. Tony Favell (Stockport) : A number of us are rather simple when it comes to such matters, as my hon. Friend the Financial Secretary knows. Is the sum of £450 million the total increase over last year in spending for the 12
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months on which we are now embarking? Is it an extra £450 million for the whole of the year, or will there be more on top of that?Mr. Maude : No. The United Kingdom's contribution this year, as we made clear in the budget debate before Christmas, is likely to be in the region of £2.5 billion. That compares with a contribution last year in the region of £1.2 billion. Last year's contribution was abnormally low, and compared with a contribution in 1990 of close to £3 billion-- which was abnormally high.
This year's contribution not only reflects an average but is, as it happens, close to the underlying average level of contribution over the years.
Mr. Budgen : My hon. Friend has performed according to the highest traditions of his old professions at the Bar, by obscuring in a very difficult case. I refer him to page 8 of the "Supply Estimates". Does he agree with the description of the payments concerned as "Payments to the European Communities resulting from the adoption by the European Parliament of a larger Budget for 1992 than that permitted by Community legislation"?
If he agrees that we are giving authority to an illegal budget--a vast overspend--does he not also agree that that is somewhat unwise? In the bad old days, when we were trying to achieve a balanced budget--and when our previous leader was trying to get back "her money", as she was vulgar enough to call it--we were quite keen to reduce Community expenditure. If, late at night, we agree to illegal overspending by the EEC, will we not seriously undermine the Treasury's endeavours to prevent the same from happening in the future?
My hon. Friend has been defending the Government's position in rather the same way as a highly intelligent barrister defending a very crooked fraudster. Let me sum up my two points. First, does he agree with the description given on page 8? Secondly, does he agree that it would be extremely stupid to take such action if we are to try to reduce Community expenditure in the future?
Mr. Maude : It is always a pleasure to listen to my hon. Friend when he is trying to be helpful. His intervention is much appreciated.
I concede that the passage on page 8 could have been more happily phrased ; but it is wrong to interpret it as meaning that the whole £450 million flows from the disputed element of the budget.
Mr. Budgen : What words would the Financial Secretary use?
Mr. Maude : My hon. Friend has invited me to redraft the passage while I am on my feet making a speech. I shall certainly have a look at it.
My hon. Friend has asked me to contemplate a further point, and I am very ready to do that, too. He suggests that the wording undermines the Treasury's endeavours to contain Community spending. I do not believe that it does. I should point out that this is not just a United Kingdom concern ; the entire Council is unanimous, and, if the case is sustainable, we shall seek to challenge the budget in the European Court of Justice. That is the right course to adopt.
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We no more undermine our desire to contain Community spending--which, I should tell my hon. Friend, is as intense now as it has ever been--by adopting the measures that I invite the House to adopt tonight than we did in 1985 and 1986, in comparable circumstances. In both those years, the Government invited the House to agree a supplementary estimate in very much the same terms.Mr. Budgen : But not for an illegal budget.
Mr. Maude : The budget was in dispute, and was not capable of being treated as having been agreed between the institutions in the way to which the European Communities Act refers. On that occasion, the Government invited the House to accept the course that is being suggested tonight.
Mr. Marlow : I am grateful to my hon. Friend for giving way : he is being extremely courteous this evening.
A couple of minutes ago, my hon. Friend said that the level of our net contribution to the Community last year--cash out of pocket per citizen-- was about £25. This year, he says, it will be an extra £25. In other words, every family of four in my constituency will be asked to provide the European Community with a free handout of an extra hundred quid. What will they get for that extra hundred quid--and what do I tell them when they come to me and say, "Look, Mr. Marlow, we read our newspapers and find that European money in Italy is being fraudulently misapplied, it is ending up in the pockets of the Mafia, and you are asking us for another hundred quid, with all the other bills that we have to pay"? What does my hon. Friend think I should tell my constituents?
Mr. Maude : I am confident that my hon. Friend is resourceful enough to think of an adequate reply without my assistance. My right hon. Friend the Member for Finchley (Mrs. Thatcher) negotiated in 1984 an abatement that is permanently in existence in Community law and can be changed only by unanimity. We have no intention of allowing it to be changed. Over the years, that has saved the British taxpayer large amounts of money that would otherwise have gone to the European Community budget in the form of an ever greater net contribution. The existence of the Fontainebleau abatements means that the amount that we contribute net to the budget, while still substantially larger than is acceptable to the House, is a good deal smaller than it would otherwise have been.
Mr. Dykes : I am grateful to my hon. Friend for giving way to someone who, unlike some previous speakers, has an objective view of these matters. My hon. Friend is a financial spokesman for a Government, who, for whatever reasons, have gone from an original expectation of no deficit or borrowing requirement to a huge deficit and a borrowing requirement of, probably, £25 million. That is a factor about which my colleagues who are against the Community have made no complaint and which they have accepted with equanimity. Given that, could not the Financial Secretary defend the technical difficulties facing the Government with more robust energy? My hon. Friend does not have to apologise to anybody when he is talking about a mistake that represents 7 per cent. of the contingency reserve, which is an accidental aberration anyway.
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Mr. Maude : I appreciate that my hon. Friend is seeking to be helpful. However, even when the British public finances were in substantial surplus, we remained equally concerned to ensure that the EC budget and our contribution to it were constrained.Mr. Bob Cryer (Bradford, South) : The hon. Gentleman knows that the Government have continually expressed concern about expenditure being out of control in the Common Market. What sort of signal will this proposal send to the Common Market, which is still under heavy criticism for its excessive, not to say lavish, expenditure on, for example, the common agricultural policy? Will it not take this as a further signal that the Government are not concerned about scrutiny of financial expenditure?
Mr. Maude : I do not believe that it will send that signal. There is nothing revolutionary or new in the approach that the Government are advising the House to take. This has been done before, and we preserve the legal position. If the budget is being illegally adopted, the place for that to be set right is in the European Court of Justice. That is where the Council will take the case--
Several Hon. Members rose --
Mr. Maude : I am conscious that, when we debated the budget before Christmas, I was criticised for taking up too much time with my opening speech. I do not want to be subject to the same criticism tonight, and I hope that the House will recognise that most of the time has not been taken up by me.
Mr. Ron Leighton (Newham, North-East) : On a point of order, Mr. Deputy Speaker. Are there not two sides in the House? Although this debate is vastly entertaining and instructive, is it merely an internal party or family affair--or can members of the Opposition also join in?
Mr. Deputy Speaker (Sir Paul Dean) : The Minister has already said that he does not want to take too much of the House's time in what is a fairly short debate. He has already been very generous in giving way.
Mr. Budgen rose--
Mr. Frank Haynes (Ashfield) : Further to that point of order, Mr. Deputy Speaker. This is a very important point, and we want to pin it down. If we do not pin it down now, it will not be pinned down tonight.
Mr. Budgen : May I make a final attempt to pin the Minister down?
Mr. Deputy Speaker : Order. Is the Minister giving way?
Mr. Budgen : My hon. Friend refers to previous years in which there has been a dispute between the United Kingdom--I assume that we are still allowed to refer to the "United Kingdom"--and our masters in the European Community. My recollection is that, on previous occasions, there was a dispute about the necessity for discretionary areas of expenditure, especially in relation to agriculture.
There is a sharp distinction between that and what is set out in the supplementary estimates, which is illegal overspending. Will my hon. Friend confirm that, in
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previous years when there was a dispute, there was no suggestion that the EC was illegally overspending and that, therefore, today's debate is about something quite different? We are being asked to give parliamentary support for expenditure which, as stated on page 8, is greater than that "permitted by Community legislation".Mr. Maude : I do not believe that we are asking the House to underpin an illegal arrangement. The right way to contest that budget, if it is found to be illegal, is in the Court and that is what the Council of Ministers will seek to do. When a budget has not been agreed between the institutions, arrangements have always been made to allow payments to be made in any event. That is the course that the Government are inviting the House to follow.
Mr. Leighton : Bearing in mind the fact that many of the member states pay nothing in net terms, can the Minister explain why he uses the curious phrase that more than £1.2 billion is an abnormally low figure? He is telling us, I think, that we have to pay another £450 million this year. What exactly shall we get in return for that money? As we are one of the poorer nations of the Community, why are we not a net beneficiary? Is it not true that we are paying more money into the Community budget to subsidise nations richer than ourselves than we give in aid to the third world? Does that make much sense?
Mr. Maude : We have discussed these matters before, so the hon. Gentleman knows that the amount that we pay in net contributions to the budget is substantially less today than it would have been had we not had to renegotiate a much better arrangement than that which we inherited in 1979.
Mr. Leighton indicated dissent.
Mr. Maude : The hon. Gentleman shakes his head, but he should acknowledge that the arrangements negotiated by the previous Labour Government were extremely disadvantageous to the United Kingdom. It took my right hon. Friend's negotiations year after year to improve the position which leaves the contribution as relatively limited as it is, although it remains unsatisfactorily large.
Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak) : We understand the Minister's problem although he is arguing a very poor case with his usual great charm and expediency. If it is true that the proposal may be illegal and we shall have to go to the Court, why the hell do we not wait to learn what the Court says? If it is ruled to be illegal, surely we would get the money back. The other lot, when they were in power, did not do a very good job of ensuring that we saved money, but it seems odd to most of us to argue that, because we have done a wonderful job, we are happy to make an illegal payment. To help with his problems, I suggest to the Minister that he withdraws the motion until we find out whether it is a legal or illegal payment. Is that not a helpful and sensible suggestion?
Mr. Maude : I am deluged with helpful suggestions tonight, and I am very grateful to my hon. Friend for making yet another. My hon. Friend put his finger on the point. If the budget is eventually found to be illegal, it is perfectly possible--indeed, it would happen automatically--for the disputed amount of £1 million per month to be recouped as a matter of course. There is no problem about that. I stress to the House that the position of the United
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Kingdom Government and their net contribution to the EC budget is not prejudiced by the supplementary estimate which I invite the House to adopt tonight.Mr. Haynes : I hope that the Financial Secretary will listen. The Government have their hands in our pockets again. Is it true that the Government have to bring expenditure to the House for approval first? Will the Minister nod to that? Is it true that any Government expenditure has to be approved by the House?
Mr. Maude indicated assent .
Mr. Haynes : The Minister agrees. Now we are getting somewhere. The point is that, in Europe, they have got it all wrong, and they have made a cock-up of the job. Now the Minister comes to the House for an additional £450 million because the European budget has already been approved. The Minister is here again because they made a cock-up over there. I will have to go back and tell my constituents that the Government have got their hands in their pockets again.
Mr. Maude : It is not the Government who have their hands in the hon. Gentleman's constituents' pockets. It is the European Community financial arrangements which were negotiated with such skill by the Government whom the hon. Gentleman supported in the late 1970s. I have to
Mr. Haynes : On a point of order, Mr. Deputy Speaker. I was not a Member of the House at that time, and I do not know what the Minister is talking about. Please call him to order, Mr. Deputy Speaker.
Mr. Maude : For the avoidance of doubt, I concede freely that the hon. Gentleman was not then a Member of the House, although I recollect that he sought unsuccessfully to become a Member. In support--
Mr. Haynes : On a point of order, Mr. Deputy Speaker. I was not a candidate until 1979. The Minister has got it wrong again. He gets it wrong all the time. Please pull him up, Mr. Deputy Speaker.
Mr. Maude : I had not appreciated that the hon. Gentleman joined the Labour party so late in life. He has been a very welcome member of it ever since.
Several Hon. Members rose --
Mr. Maude : I am conscious that the House wishes to proceed. I have given way in the course of this speech more than I have given way in all my other speeches in the House since I became a Minister. I cannot be accused of treating the House with discourtesy. The interjections in the speech by my hon. Friends and by other hon. Members have enabled me to set out the case fully. On the basis of those arguments, I invite the House to approve the supplementary estimates.
10.48 pm
Mr. Chris Smith (Islington, South and Finsbury) : The hon. Member for Wolverhampton, South-West (Mr. Budgen) drew attention to the Government's description of the motion on page 8 of the supplementary estimates booklet. That description refers to
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"Payments to the European Communities resulting from the adoption by the European Parliament of a larger Budget for 1992 than that permitted by Community legislation."The figure of £450 million is attached. If that were an accurate description of the situation, it would be a matter of great seriousness to the House. We would be talking about a total of almost £500 million for a budget that appeared to be illegal. However, that is not the situation that faces us. The Government's description is at best inaccurate and it is certainly misleading.
First, in making the European Community budget, the European Parliament cannot and does not act alone. The Parliament and the Council of Ministers acting together form the budgetary authority in the European Community. The Parliament took its most recent decision on the budget on 12 December. It is perhaps worth noting that, when the budgetary committee of the European Parliament met on 9 December, the two Conservative representatives on that committee--Mr. Kellett-Bowman and Mr. Simpson--both voted in favour of the Parliament's budget. It is also worth noting that, when the budget went to the full European Parliament three days later, 29 Conservative Members of the European Parliament voted in favour of the budget.
Mr. Budgen : Does not the hon. Gentleman recognise that there is a clear conflict of interest between Conservative Members of the European Parliament and Conservative Members of Parliament? Quite honourably, the MEPs have sworn their allegiance to a supranational federal structure to which they wish to give enhanced power and extra expenditure. It is naive to pretend that those who vote for extra expenditure in the European Parliament have the same views or the same interests as Members of this House.
Mr. Smith : I was under the obviously mistaken impression that the Conservative party that the MEPs represented was the same as the Conservative party that the hon. Gentleman represents.
The budgetary process, which is a matter for Parliament and the Council of Ministers, has not yet run its full course. As the Minister was forced to admit by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), it is perfectly open to the Government to argue within the Council of Ministers for a challenge, through the European Court, to the budget that the Parliament decided on 12 December. The deadline for taking such a challenge to the European Court is 19 February. It is up to the Government and the Council of Ministers to decide whether they wish to mount such a challenge, and they have two more weeks in which to make that decision.
Mr. Maude : The hon. Gentleman said that I was forced to admit that it was open to the Council of Ministers to do that--not a bit of it. I owned up to it perfectly freely indeed, it is not a question of owning up or admitting to it ; I set it before the House. It is clearly the case and there is no secret or anything startling about it.
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