House of Commons Hansard Debates for 28 Nov 1994

Mr. Kenneth Clarke: The hon. Gentleman is giving the impression that his amendment is merely designed to cut down on the quantity of canapes consumed and to cut agricultural spending a bit. I trust that he will accept that his amendment would wreck the Second Reading of the Bill; stop it from proceeding and prevent us from being able to endorse the Edinburgh deal. That would put us in breach of our treaty obligations to other members of the

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European Union. Why is he putting forward an amendment that does that when he supports the deal that we have done?

Mr. Brown: Of course the Government could bring the Bill back with the amendment that we put forward, but it is the Prime Minister who has made this evening's vote a vote of confidence. It is the Prime Minister who is trying to dragoon his troops into the Lobby. It is the Prime Minister who is responsible for the issue becoming more controversial than it need be. However, if he is seeking to pass an unchanged Bill through the House, he does not understand the feelings of the country about waste and fraud, and about what is happening to the common agricultural policy.

Mr. Nigel Spearing (Newham, South): Has my hon. Friend noted that the Chancellor has just claimed that failure to pass the Second Reading tonight would be a breach of treaty commitment? Does he share with me the impression that the Chancellor admitted that he has not read it, because is it not a fact that article 201 of the union treaty gives this Parliament an explicit right to agree or disagree with the provisional agreement made in Edinburgh two years ago?

Mr. Brown: I am grateful to my hon. Friend, whose erudition in those matters is well known. I heard the Chief Secretary to the Treasury yesterday repeating the words that the Chancellor said today: that we had to honour obligations that were made internationally and we could not be put off by a minority of dissidents in the House. The very Chief Secretary who says that this year was the person who voted against an analogous Bill as recently as a few years ago. [Interruption.] He does not seem to understand that that was also a negotiated treaty that he was asking the House to vote against. What about the role of the House?

Mr. Quentin Davies (Stamford and Spalding) rose --

Mr. Brown: Mr. Deputy Speaker, I do not know on which side of the debate the hon. Gentleman is, but I will give way to him because of his well-known interest in agriculture.

Mr. Davies: Is it not a fact that neither the hon. Gentleman nor his party said a word against the Edinburgh agreement when it was concluded? Is it not amazingly cynical to come to the House with an amendment designed to prevent the Government from implementing an international obligation to which the hon. Gentleman never objected at the time? Will not that be regarded as utterly cynical throughout Europe?

Mr. Brown: But if I may say so in language that I think that the hon. Gentleman would understand, we have always called for a fundamental reform of the common agricultural policy. I think that the hon. Gentleman, with his specialist knowledge, understands that. [Interruption.]

Mr. Davies: Will the hon. Gentleman give way? [Interruption.]

Mr. Brown: Mr. Deputy Speaker, I have made it clear from the Opposition Benches that amendments that deal with the problems of waste and fraud in the European Community can, I believe, command a majority throughout the House and that it is ridiculous for the Prime Minister to demand an unchanged Bill when, by

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debate and discussion and by the House performing its proper duties supervising the finances of the Government, we can obtain a better Bill. We not only--

Sir Terence Higgins (Worthing): Will the hon. Gentleman give way?

Mr. Brown: I will give way because of seniority.

Sir Terence Higgins: I am grateful to the hon. Gentleman. Will he make it absolutely clear to the House that, if his amendment is carried, he believes that the Bill will have obtained a Second Reading? Secondly, since he argues for amendments, can we understand that he proposes to table amendments in Committee, both on agriculture and on fraud, which would have any effect in reality on those two problems?

Mr. Brown: The Government could accept our amendment now and let us deal with the questions of waste, fraud and the common agricultural policy. [Interruption.] Mr. Deputy Speaker, the Government can accept our amendment. They could bring back the Bill after they had debated it this evening. It is not I but the Prime Minister who has made it an issue of confidence to be dealt with at 10 o'clock this evening.

Mr. Kenneth Clarke: It is important that the hon. Gentleman knows what he is voting about. His amendment would delete everything after the word "That" and would deny the Bill a Second Reading. It would substitute for it his form of words about fraud and agriculture, but the Bill would be defeated. It would not be possible for the Government to bring back the Bill in the same Session of Parliament. The hon. Gentleman is voting to defeat a Bill whose objectives he supports, and he does not even seem to realise that that is what he is doing.

Mr. Brown: I repeat, it is the Prime Minister who has made that an issue of confidence this evening. The Government could bring back the Bill, with the changes that we are recommending in it, if they chose to do so, but it is the Prime Minister who has chosen to make it an issue of confidence, and it is the Prime Minister who would pay the price as a result.

I shall now discuss the common agricultural policy. When even the National Farmers Union now calls for fundamental reform, when the Country Landowners Association has recently submitted a document calling for reform, when the wasteful CAP is a tax on food and a barrier to fair trade--since 1979, the cost of the CAP has increased dramatically--I ask Members on the Conservative Benches how they can vote tonight for no further action against a system of open-ended state intervention, the export subsidies that go with it and its inviolability.

The Prime Minister is elevating into a vote of confidence the lack of amendment to the Bill. Since the Edinburgh summit, what has happened to the Community agricultural policy and why is action now needed? Expenditure on the common agricultural policy continues to increase--despite the impression that the Chancellor gave--and in order to meet the guidelines, we are witnessing what the Senior Controller of European Spending, in talks that he has had, has called, "creative

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accounting". The only way that he could meet the ceiling, as he said himself, was by what he called "certain budgetary

devices"--counting the 1994 payments against the 1993 budget, closing the budget a year early or further delaying payments of credits to member states in one year. Having failed to condone the profligacy, we are being asked to condone the rigging of the balance sheets of the common agricultural policy, yet the Prime Minister would countenance no amendment related to that in the Bill.

What of this year's budget for the common agricultural policy? Of course there are now budget corrective measures if there is an overspend; of course the Commission cannot switch resources between sectors; but was not "Anglo Europe" right to report, on the use of budgetary devices for this year's budget:

"The figures in the official draft budget are merely juggled under the new rectifying letter"?

Surely it is right that the House should insist, when agricultural spending continues to increase--it will increase by £3 billion in coming years, a 10 per cent. increase despite all the reforms that have been made--that the House should be in a greater position to scrutinise the Executive with regard to that matter.

Mr. David Howell (Guildford) rose --

Mr. Brown: I am not giving way again.

Let us consider the tobacco regime, costing more than £1 billion a year, while we spend little on health education. In a previous debate, the then Minister of Agriculture, Fisheries and Food said: "It is not feasible to end tobacco production and support for it".

We are entitled to say, about something from which we obtain no benefit, when are talking about the uneconomical production of the most unsmokable and the most unhealthy cigarettes, that the Prime Minister is wrong to elevate the sanctity of the Bill, without amendment to tackle those abuses, into a vote of confidence. Despite everything that the Chancellor said this afternoon, this is the Government whose proposals on waste, on fraud and on the common agricultural policy cannot command the weight that they need and the influence that they should have in the European Community, because all political credit is being used up by the Government in fighting the social chapter, fighting for opt-outs, fighting European integration and losing influence in Europe as a result, simply because of the divisions in the Tory party.

The Government are fighting battles in Europe that they cannot win. Following battle after battle over the social chapter, they have persuaded no other country, no other entrant country, no other right-wing leader in Europe except Monsieur le Pen and not even many Conservative Members of the European Parliament. They now find that more than 50 of the top 100 British companies are implementing the social chapter anyway.

A no-change Bill, this vote a day before the Budget, the nature of the vote itself--a confidence vote without the Prime Minister being willing to appear in the House--and the edifice of absurdity that the handling of the Bill now represents, is predicated on the utter precariousness of the Conservative party's leadership and its control of the party.

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What is the Prime Minister asking us to have confidence in? What is the Government's European policy now? What is their ability to handle the issue of Europe on its merits? What is that European policy? The Conservative party has a vice-chairman who has to resign for attacking our European neighbours in the most infantile of terms, who says he wants Britain out of Europe. It has a deputy chairman who states explicitly that every European decision must involve not examining the national interest, but appeasing party dissidents: the party must therefore remain more Euro-sceptic than Labour--as the deputy chairman has said-- simply to achieve unity.

We are asked to have confidence in the Government's European policy as a result of all that. Their Chief Secretary, a signatory to the Bill, spent most of the 1980s opposing the very measures for which he now asks us to vote. Divisions on European policy are at the very heart of the Cabinet. The moment the Chancellor calls for convergence in Europe, the Secretary of State for Employment says that important national differences must be recognised; when the Chancellor says that he favours co-operation on exchange rates, the Employment Secretary wants to call for free floating; when the Chancellor says that he favours monetary union in principle, the Employment Secretary and a substantial section of the Cabinet say that it will mean "giving up the government" of the United Kingdom, and that that is the impossible.

Mr. Patrick Cormack (Staffordshire, South): Will the hon. Gentleman give way?

Mr. Brown: I will give way once more.

Mr. Cormack: Can the hon. Gentleman tell us, very simply, whether he agrees with what was agreed at Edinburgh in 1992?

Mr. Brown: We made our position absolutely clear at the time. We made it clear that we supported the Edinburgh agreement. What we will not support is a failure on the part of the House, and an unwillingness on the part of the Prime Minister, to consider any amendments to the Bill that deal with fraud, waste and the common agricultural policy. I think that, when he returns to his constituency, the hon. Gentleman will hear very clearly from his constituents that they, too, want action against waste, fraud and the CAP.

Where is the Prime Minister in all this? Sadly for the Prime Minister-- sadly for the Prime Minister-- [Interruption.] The hon. Member for Harrow, East (Mr. Dykes) thinks that I have nothing to say about the Prime Minister; he is mistaken.

Mr. Hugh Dykes (Harrow, East) rose --

Mr. Brown: I will not give way--although I am interested to note that the Maples memorandum, which was supposed to menace and threaten the Labour party, and suggest ways of shouting us down and silencing us, is now being used to get Conservative Back Benchers into line. Where is the Prime Minister at the end of all this? The authority of the Chancellor has been strengthened for a minute, while the authority of the Prime Minister has diminished. The dissidents in the Conservative party began by planning to challenge the Bill; they have ended

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up planning to challenge the Prime Minister, this year or next year. [Interruption.] The hon. Member for Southend, East (Sir T. Taylor) says that he is not leading the challenge, but I note a great deal of silence on the Bench beside him.

The Prime Minister has come to the House today in his customary capacity as head of the Government. True to form, he has turned up in person but he is no longer in charge. Once more, he is an onlooker of the great debates that are taking place. When Lady Thatcher resigned, the Conservatives believed that they had ordered the "New Statesman"; instead, they have got the "Spectator".

In similar circumstances, after meeting his Back Benchers in 1922, Bonar Law said of them:

"I am their leader; I must follow them."

The Prime Minister has added another pathetic dimension to his leadership: "I am their leader; I cannot make up my mind which faction to follow."

In the Conservative party, all options to negotiate in Europe, to influence events, to co-operate for the benefit of Britain and to be genuinely at the heart of Europe have been sacrificed to the overriding pressures of party strife. We have a Chancellor who cannot give us the exact figures in relation to the budget, a Prime Minister who now tells us that we cannot vote for amendments to deal with waste, fraud and the CAP and Conservative Back Benchers who spend all their time talking about the problems of waste and fraud but who will join the Government in the Lobby to vote against an amendment that raises those very issues.

Such is the tyranny of the factions within the Conservative party, and such is the impotence of the leadership, that the only European policy on which the Conservatives can now agree is to stand apart from Europe. Such is the weakness at the top that the only posture left to the Government in European negotiations is hovering between semi-detachment and complete isolationism. Such is the depth of disunity that they cannot understand that true patriotism--standing up for Britain's interests--means not opting out but co-operating, winning influence and leading to secure the best deals for Britain. The Government can no longer speak with a united voice; they can no longer speak for Britain. Their divisions are irreconcilable. They are intellectually bankrupt and politically exhausted. They should go, and go now.

5.15 pm

Mr. Norman Lamont (Kingston upon Thames): I am told by those who know more about it than I do that the issuing of suicide threats is a classic cry for help. It is in that spirit that I wish to help the Government tonight. In such cases, the key is to keep the potential victim talking, to prevent his mind from turning to any untoward action. Well, there has been a good deal of talking--rather too much, some might say. I am told that the Prime Minister is thinking of reintroducing Budget purdah.

I am grateful for the effusive thanks delivered by the Chancellor of the Exchequer for the role that I took in the Edinburgh negotiations. After the summit, I was happy to commend the deal to colleagues: it was a good deal, and I commend it again.

The Bill is, essentially, the price that we agreed to pay the Spanish for agreeing to enlargement. The danegeld--if that phrase can be applied to the Spanish--was kept to

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relatively modest proportions. I believe that it would have been difficult to secure a better deal. In the months coming up to the Edinburgh summit, we kept being told that if we did not achieve a new financial perspective, the Community would come to a halt-- that it would be unable to function and would run out of money. I must say that I did not find that an altogether convincing threat, and I am sure that the same thought occasionally crossed the mind of the Chancellor when he was dealing with the question of Italian fines on milk quotas.

The issue that I want to discuss is not the extra cost that the Bill imposes. I want to deal with the question to which my hon. Friend the Member for Billericay (Mrs. Gorman) referred: what is the true, underlying financial and public expenditure cost of our membership of Europe? What real figure represents the cost of our membership of the Union?

I want to discuss that matter because I believe that, even after 20 years, our membership of the European Union ought still to be able to be subject to rational analysis and ought still to be discussed in the light of the costs and benefits that result from it.

Conditions are now very different from those that obtained 20 years ago, when we joined the European Community. We live in a world of very low tariffs. The external tariff of the European Union is less; I believe that the arguments about access to the market, and about inward investment, therefore have much less impact and are less persuasive than was the case 20 years ago. All the time, however, the cost of our membership has been rising.

People could be forgiven for being confused when they are given so many different figures about both the Bill and the cost of our membership. My good friend Sir Leon Brittan tells us that the cost of the Bill is only the price of a newspaper a day. I do not know whether my right hon. Friend the Chief Secretary to the Treasury would regard £75 million as something that should be described in quite those terms.

My right hon. and learned Friend the Chancellor of the Exchequer has referred to the cost of our membership as being £75 million--he reconfirmed that figure today--rising to £250 million. He also referred to the real cost as being our current net contribution--just over £2 billion in 1993-94, rising to £3.5 billion in 1996-97.

Mr. Cormack: Would my right hon. Friend agree with our friend Sir Leon Brittan if he were still Chancellor of the Exchequer?

Mr. Lamont: I am coming on to what I think the costs are. I have no quarrel with what the present Chancellor of the Exchequer has said about the arithmetic of the Bill and I have not implied that I have. I wish to differ with the Chancellor in that I do not believe that the net figures are a measure of the true cost of our membership of the European Union.

It is an extraordinarily curious argument for Conservatives to say that the cost is what we pay in taxes, minus what we get back in public expenditure. After all, that is like saying that the education service, the national health service or lunch are free. It is like saying that the rate of income tax, which the Chancellor will announce for the year ahead in his Budget and which I suspect will

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remain unchanged at 25p in the pound-- although some of my hon. Friends may hope for something else--is not really 25p but 2p in the pound because we receive a lot back in terms of schools, roads, hospitals and the NHS. As I said the other day, the argument about us getting the money back reminds me of the campaign slogan of the mayor of Sa o Paulo in Brazil, who said:

"I steal but I give some back."

It cannot be disputed that the real cost of European-directed and sponsored programmes is, of course, our gross contribution to the European Community, minus our rebate. That cost could amount to about £6 billion this year, rising to £8 billion at the end of 1996-97. Our net contribution would represent the cost of our membership of the Community if it spent money only on things that our own Government wanted to spend money on. Of course, we know that that is very far from being the case.

The real public expenditure cost of the European Union, therefore, is somewhere between our net contribution in 1993-94 of £2.1 billion and £6 billion gross, and in 1996 it will be somewhere between the net cost of £3.5 billion and the gross cost minus the rebate of £8 billion. Throughout that period, the real cost of our membership of Europe will be much nearer the higher figure because the vast majority of European Union expenditure goes on things which we do not really want and which the Government would not have chosen to spend money on. Indeed, we know that, as a matter of principle and doctrine, the European Commission will approve expenditure in this country only on things that are additional to what the Government want to spend money on.

Mr. Dykes: I am grateful to my right hon. Friend for giving way at that point in his interesting analysis, but even his own more pessimistic figures amount to a maximum of about 1 per cent. of gross national product at the end of the period to which he referred. That is the cost of the strength that we gain from being in the European Union, with all the other sovereign countries working together on common issues.

Mr. Lamont: One per cent. of GNP is a significant sum of money which represents in excess in £6 billion. It is a much larger figure than that quoted in the debate as the cost of our net contribution to and membership of Europe.

We are told all the time that we get money back, but is that money spent on things that we want it to be spent on? The answer is, broadly, no. I am sure that I am not alone in feeling considerable irritation when I go around the country and see signs with the blue sticker and 12 yellow stars saying, "Funded by the European Union." May I make a suggestion to my right hon. and learned Friend? The Government should put a sticker underneath saying, "The European Union has decided to give you three quarters of your money back." It is absurd that we should be made to feel grateful for getting our money back through things that we would not have wanted to spend the money on in the first place.

Sir Russell Johnston (Inverness, Nairn and Lochaber): Will the right hon. Gentleman give way?

Mr. Lamont: I want to make a little more progress.

On the subject of fraud, my right hon. and learned Friend the Chancellor of the Exchequer referred to some of the new proposals in the Maastricht treaty and to the

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new unit against fraud which has a Dane in charge. The Dane will have to be good because, in my experience, the European Commission is not interested in fraud and has a considerable antipathy to the Court of Auditors.

I tried to make the subject of combating fraud one of the themes of the United Kingdom's presidency of the EC. I tried to get the Court of Auditors more involved in the work of European Finance Ministers. On one occasion, I convened a special meeting to discuss the matter. We had before us a Court of Auditors report detailing various frauds, particularly in the common agricultural policy. There was a report about grain being moved from one ship to another in Hamburg harbour and about people pretending that transactions had taken place and receiving money for those bogus transactions. Quite a number of the Ministers did not turn up. I opened the discussion. A large number of Ministers just read their newspapers. No one contributed a word to the discussion and then Mr. Delors attacked me for being political by introducing the subject of the Court of Auditors.

I remember, as will the Prime Minister, who I know has been rightly concerned about the matter, as was Lady Thatcher, how decisions on aid were made in the Community. My right hon. and learned Friend the Chancellor referred to aid to Russia and to other countries. The big decisions on aid and debt write-off are normally taken after the ECOFIN meeting in the morning, over cigars and port. Those decisions involve billions of ecus. No papers are prepared. I tried hard to take a radical and provocative initiative--to have bits of paper before we made those decisions. Again, that was turned down. When European Finance Ministers discussed aid for Russia, to which my right hon. and learned Friend referred, I remember that the attitude was that the Community had to give aid because it had to play a role in that development. Of course, aid to Russia is important, but, as time went by, there was reason to think that food aid was not necessary because no evidence existed of food shortages in Russia and there had been a good harvest. Even when statistics on the good harvest came in, could we get the European Union to reconsider the aid which had been allocated nine months previously, most of which had been lost in the distribution system or gone to the mafia and which was now unnecessary? No, we could not because Europe had to be seen to be acting and to be political.

Mr. Kenneth Clarke: Given that there is not much difference between my right hon. Friend and me on the things that he has discussed, I assure him that matters have moved on rather a lot since he was attending the meetings that he described. The Court of Auditors now attends the Council of Finance Ministers with the Commissioner responsible for dealing with fraud, and the Council has asked for individual complaints to be acted on and to be reported. Fraud was twice on the agenda of the Council of Finance Ministers during the German presidency. It will be on the agenda twice during the French presidency.

Only a month ago, with the assistance of my French colleague, I dropped a proposal for aid to the Ukraine, at a lunch of the kind about which my right hon. Friend rightly complains. The only difference between us is that

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my right hon. Friend described a situation that has improved. He played a large part in the Maastricht treaty that gave the Court of Auditors its additional powers.

Mr. Lamont: I was not seeking to argue that there was a difference between my right hon. and learned Friend and me on this matter. I wish him all the best in this new climate and new world of interest in fraud and giving value for money. All I can say is that I do not recognise it.

Value for money will always be difficult to achieve in Europe because money is politics and money is power. As my right hon. and learned Friend said, our money is used to bribe the Greeks, Spaniards, Portuguese and Irish to believe in ever-closer European union. Our money is equally used to bribe the regions of individual countries, including the United Kingdom, to believe in Brussels as the giver of aid and succour rather than the central Governments of those countries. In that way, the central Governments of those individual nation states can be made less relevant.

Europe is an issue that risks splitting the Conservative party, because the party as a whole has not yet accepted that our partners' ambitions are not compatible with Britain's continued ability to govern ourselves as an independent sovereign state. A minority would welcome that development, but for the majority of Conservatives in the House and in the country that outcome would be anathema. If Labour ever formed a Government, it would face precisely the same dilemma.

The Maastricht compromise reflected in the Bill was accepted by the Conservative party and Parliament for two reasons: it succeeded in delaying some of the most important aspects of European integration and was underpinned by the belief that Maastricht marked the high tide of Euro- federalism. That hope has proved unfounded. Only last week, Mr. van den Broek argued that the next intergovernmental conference should abolish our national veto on future treaty changes. If that were implemented, this country's sovereignty would be gone. It is important to recognise that divisive arguments on Europe--of which the costs of membership is an important example, because money is at the heart of the development of Europe--arise from the incompatibility between what is acceptable to Britain and what is acceptable to our partners. That is why this country needs to redefine its relations with Europe on a permanent basis.

For that reason, I am persuaded that we in this country must consider all options if we cannot negotiate a special economic relationship between Britain and our partners, including even withdrawal. We should not shrink from that logic but ask ourselves what is the best way to preserve our interests and to remove the source of tension with our European partners. The risk that stems from the Government's decision to make the issue one of confidence is that it may give the impression that the Government's overriding priority will be that the House will simply rubber-stamp whatever is agreed in some European town in 1996. I hope and believe that impression is unfounded--but the Government cannot proceed on the basis that we do not know what 1996 will be about and therefore do not need to think about it.

A conscripted army never fights as well as an army of volunteers, and the Conservative party is an army of volunteers. We should have the confidence to set out the issues and to debate them before our future is thrown in the melting pot in 1996. The Bill is a good deal, but it

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obviously does not address the issues that in time will confront us all.

5.34 pm

Mr. Peter Shore (Bethnal Green and Stepney): The right hon. Member for Kingston upon Thames (Mr. Lamont) has enlarged the debate by leaning forward in time to the crucial intergovernmental conference in 1996, which will tilt the balance and either move us decisively in the direction of an unwanted federal state, of which we shall be a province, or bring a halt to the process of integration that has proceeded for the past 30 years.

The right hon. Gentleman spoke well about costs, which go far beyond the minor sums that the Chancellor mentioned in respect of the increase in own resources which is at the heart of the Edinburgh agreement. It is misleading to think that the cost to us is measured by even the so-called net cost of the budget. The net cost is bad enough, having increased from £1,500 million in 1988 to £2,400 million this year. According to the Treasury's own figures, it is due to rise to £3,500 million in 1999, which is a doubling within a decade. That is a huge and unnecessary increase in the net cost--net of all repayments and abatement.

We should be debating not a Bill to increase Britain's net and gross contributions to the European Union, but how to reduce the increasingly unbearable burden of costs that our membership imposes. The right hon. Member for Kingston upon Thames was right to draw attention not just to net but to gross costs, which are increasing alarmingly. Again using the Treasury's own figures, the gross cost to Britain in 1990 was £6.4 billion. This year, it will be £8.3 billion, and for 1997-98 it will be £10.5 billion. That is a measure of the weight of the burden, which increases with every year that passes. I will direct my remarks not to the arithmetic, which has been the subject of considerable exchanges, but to the significance of the Court of Auditors report. It is a long time since December 1992, when the Edinburgh agreement was reached. Not least among events which have occurred since then was the publication only a fortnight ago--unfortunate timing for the Government--of the court's report. The Chancellor claimed that it is slightly more authoritative and penetrating than any report received so far. It is directly relevant to the Bill because it occurs to everyone to question why we should pay the European Union more money before it has put right its own waste, incompetence and fraud.

The figure of £6 billion does not relate just to fraud--that is only a component--but also to waste. My hon. Friend the Member for Dunfermline, East (Mr. Brown) gave many examples of the magnitude of the waste involved, such as vineyards being planted and then uprooted, and all kinds of false payments being made under the common agricultural policy.

It would be a disgrace if we did not insist on remedial action before additional tax revenues for the EU are approved. It is the oldest maxim of parliamentary government that grievances should be redressed before

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supply is granted. The need for redress is clear, and the House should face the fact that there will be no redress unless supply is withheld.

Mr. Dykes: Obviously, fraud must be tackled everywhere, both in the Union and in the member states, but is not the right hon. Gentleman being unusually illogical? In this country we accept that there is a considerable amount of social security fraud; it is estimated at more than £4 billion annually, I believe. Is the right hon. Gentleman suggesting that social security payments should be suspended to all other recipients pending the resolution of that problem? That is exactly the same ridiculous argument.

Mr. Shore: No. I said that there are very great differences. Let us return to the relevance of the Bill. The Chancellor, of course, challenges the figure of £6 billion which, if it is anything like the truth, is twice the total amount that the Community will raise--not just in Britain, but throughout the Community--from the addition to own resources. It will be an addition of some £3,000 million in increased expenditure. Many people would say that gross incompetence, waste and fraud amount to twice that figure. It would indeed be a disgrace if we did not try to put that matter right first.

Mr. Dykes: Will the right hon. Gentleman give way?

Mr. Shore: No.

I now add a point about which the House has not been aware so far: the Community's reaction to the Court of Auditors' report. The Commission's reaction has been almost as remarkable as the contents of the report itself. I read now from the European Community's "Week in Europe" dated 24 November 1994:

"Commission Secretary General David Williamson has rejected media allegations that fraud was widespread in European Budgetary spending. Commenting on the recent Court of Auditor's report he said the document was not about fraud but about financial management. It mentioned fraud only once in its 484 pages referring to just one transaction in Denmark."

That was the Secretary-General of the European Commission responding to a tremendous indictment of the Community's lack of effective control over budgetary spending, waste and fraud. What did the Auditors' report say? I quote from its introduction: "despite repeated assurances of remedial action, the Commission has not managed to achieve the results desired by the Budgetary authorities in the field of financial control."

It goes on to say:

"member state authorities continue to issue incorrect certificates for structural funds expenditure, in some cases covering expenditure which has not really been incurred or is eligible for aid" -- to use another word, fraud. Again, the report notes

"structural shortcomings in the internal control systems resulting in lack of proper protection of the financial interests of the Community against fraud and other irregularities."

What makes the situation totally unacceptable is that nearly all of those criticisms were made not just in 1994, but time and again over the past 10 years and longer. Indeed, the report itself says: "the audit of matters which are the exclusive concern of the Commission also reveals some of the same problems in 1993 as the Court has raised since 1983."

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