House of Commons Hansard Debates for 28 Nov 1994

Mr. Smith: The right hon. and learned Gentleman shakes his head, but extra charges and extra payments to Europe arise from the imposition of VAT on fuel. Those costs do not arise from the calculation of VAT under the agreement that the Bill will incorporate because the VAT base is already harmonised. They arise because VAT on fuel adds to the calculation of member states' gross national product at market prices. It thereby increases both the fourth resource of funding and the cap on the GNP- related third resource. It is estimated that that will add about £8 million a year to Britain's European contributions, a fair proportion of the extra £75 million that the Chancellor talked about. The Government should now provide what they have so far failed to provide: an exact estimate, which hon. Members might like to take

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into account when they vote this evening and when they vote on VAT on fuel, which we hope they shall have the opportunity to do soon. In reply, the Minister may say that the figure amounts to only a few million pounds. We say that it is a few million pounds that British users of fuels, especially pensioners and disabled people, should not have to pay. They will be furious that they are forced to pay not only VAT on fuel, but, as a consequence, more money to Brussels. It adds insult to injury and people will not forget. The Opposition's argument is that the Prime Minister's approach to the Bill is deeply flawed. We say that, if Britain's contributions are to increase, the House has a right to decide on the action that the Government should take to cut out fraud, waste and the excesses of the CAP. We say that, far from being anti-European, action on these matters is essential to build confidence in Europe. Nothing more corrodes public support for the European Union than fraud, waste and excess perpetrated at their expense. Nothing more entrenches narrow, crabbed nationalism, which falsely imagines that isolation from Europe is the best way of winning friends and markets. A Europe of budgetary waste and fraud, agricultural excess, political centralisation and itinerant Parliaments will never win public support. A Europe that acts for peace, prosperity, jobs, trade, infrastructure, the environment and human rights, a Europe of person-to-person contact through travel, twinning, sporting and cultural exchanges, a Europe with real political subsidiarity, can win confidence. That is what we must seek--a people's Europe, not a Europe of vested interests.

The Opposition say, too, that a proud country is able to take a lead and to say yes and no, but it is scornful of the Prime Minister's maybes. There is, however, something even more important than the Prime Minister's reputation, the Government's standing or party advantage in the House this evening. It is the Chamber's responsibility for overseeing, scrutinising and, where necessary, amending legislation. The Prime Minister has called into question the integrity of the House of Commons. Hon. Members will vote on the words of the amendment. They are:

"this House believes that the European Communities (Finance) Bill is not an acceptable measure as it increases United Kingdom contributions to the European Union without action by Her Majesty's Government to cut fraud and waste in Europe or to reduce expenditure on the Common Agricultural Policy."

A true majority of right hon. and hon. Members agree with those words and I have no doubt that a true majority of people in this country support them. The people are watching and counting and they are paying the price for the fraud, excess and waste that we want stopped.

I call on right hon. and hon. Members in all parts of the House to carry the will of the people into the Bill tonight. The amendment is right. The British people will be our judge.

9.34 pm

The Paymaster General (Mr. David Heathcoat-Amory): The House is used to lack of consistency from the Labour party but we just heard from the hon. Member for Oxford, East (Mr. Smith) a particularly choice example of trying to oppose something without actually being against it. We all know that Labour wants higher contributions made to the European Union.

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It has argued for them, requested them, stands for them and would implement them. Nevertheless, Labour has found a way of tabling an amendment that would wreck a Bill to give effect to higher contributions.

The hon. Member for Dunfermline, East (Mr. Brown), answering an intervention from my hon. Friend the Member for Staffordshire, South (Mr. Cormack) said that he supported the Edinburgh agreement, yet the hon. Gentleman tabled and argued an amendment that would have the effect of blocking a Bill that takes that same agreement into law and would release those contributions.

To put the matter beyond doubt, the House authorities have confirmed that Labour's amendment is a wrecking amendment. If passed, it would block the Bill. Any thought that Labour can be in favour of the Edinburgh own resources decision yet vote against it is shown to be a sham.

Mr. Bill Walker: Can my hon. Friend confirm that the Government's view is that the House should properly monitor legislation, particularly that affecting finance, and that the Government are not adverse to amendments that allow the House to scrutinise matters more carefully? Could not amendments be tabled and accepted at a later stage?

Mr. Heathcoat-Amory: No amendment to the Bill has that effect. The House must either approve or not approve the own resources decision taken at Edinburgh. Any conditional or half-acceptance would not have the effect of giving approval, and of giving effect, to the decision negotiated by my right hon. Friend the Prime Minister.

My right hon. Friend the Member for Northavon (Sir J. Cope) said that Labour's stance takes to almost absurd lengths the duty to oppose. We have established as point one that Labour will vote against a measure in which it believes and that it wants.

Mr. Cash: Will my hon. Friend the Minister say whether or not the Government agree with the substance of the amendment that I tabled, which invites the Public Accounts Committee to take a substantial interest in fraud? The answer that he gave my hon. Friend the Member for Tayside, North (Mr. Walker) suggested that was not the case. Perhaps I misunderstood my hon. Friend the Minister. Will he get that straight?

Mr. Heathcoat-Amory: I strongly believe in this House taking a close interest in mismanagement and fraud in the European Community. Indeed, I have just sent an explanatory memorandum to the Scrutiny Committee about the European Court of Auditors report for 1993. The point that I was making, in response to an intervention by my hon. Friend the Member for Tayside, North (Mr. Walker), is that an amendment to the Bill not only would not have such an effect, but would block the Bill's Second Reading and prevent the entering into force of the own resources decision in any form.

Mr. Andrew Smith: I am grateful to the Paymaster General for giving way. Let us get this absolutely clear. Is he saying that the Bill must go through unchanged?

Mr. Heathcoat-Amory: The hon. Gentleman is welcome to table amendments in Committee. I am saying that the amendment tabled by the official Opposition, if passed this evening, would not have the effect of amending in any way the Bill or the decision. It would

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block the Bill, which could not then be reintroduced in this Session. That was not understood by the hon. Member for Oxford, East or by the hon. Member for Dunfermline, East in his earlier speech. Mr. Smith rose --

Mr. Heathcoat-Amory: I have answered the point that the hon. Gentleman made. He made his own speech earlier in the proceedings, which I shall now endeavour to answer.

I want to take the House back to some of the comments made in the debate, particularly those by my right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke). He made the point that an international agreement entered into by my right hon. Friend the Prime Minister is something that the Prime Minister is entitled to see passed into law by the House even though it is two years after the Edinburgh Council. The task faced by my right hon. Friend at that Council was, indeed, daunting. The Community was in the depths of a world recession. The single market was not then in place. The Uruguay round of GATT was in the greatest difficulty. Denmark's future in the Community was in doubt, and the prospect of further enlargement to include the Nordic countries and Austria was completely over the horizon. Those and other issues were tackled with great determination by my right hon. Friend the Prime Minister and other Ministers. Co-ordinated efforts were made to stimulate growth in the Community. My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) played a leading part in the growth initiative at that time. I wish to pick up on one point that he made: that the external tariff of the Community was of decreasing importance. I put it to my right hon. Friend that the landing rights at French airports were denied to British Airways not by tariff barriers but by non-tariff barriers. I think that he will agree that the Spanish market, to which he referred, is by tradition a protectionist market. It takes the force of Community law and the single market to break down those barriers for British exports.

None of this would have been possible without the settlement of the financial questions faced at Edinburgh. The political way was cleared for a solution to the Danish question. Negotiations were started with the EFTA countries and Austria, and a new commitment was made to free trade and deregulation. What was essential at that negotiation was to clear away the difficult issue of own resources. That had been under discussion in the Community for more than 10 months, and the previous Lisbon Council had failed to resolve it. The Commission wanted a higher figure. It wanted the own resources of the Community to increase to 1.37 per cent., not by 1999 but by 1997. The abatement was also under fire. The abatement negotiated in 1984 at Fontainebleau has netted back to this country some £16 billion. Other member states, naturally, wished to remove it.

The abatement is under threat not from other member states but from the words and actions of the hon. Member for Dunfermline, East. Just before the Edinburgh Council, referring to our abatement, he said: "There has got to be renegotiation over that."

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The Opposition would have given in on just about everything. Here I agree with the point-- [Interruption.]

Madam Speaker: Order. I am sorry to interrupt the Minister. Conversations should be a little less noisy. It is extremely difficult for both sides of the House. I can hear many conversations which should be less noisy.

Mr. Heathcoat-Amory: I agreed with the intervention and with the speech made by the right hon. Member for Strangford (Mr. Taylor) who said clearly that the Opposition parties--the Liberal Democrats and the Labour party--could not be trusted on European matters because they would give in to just about everything. The itch to tax and to spend runs very deep through Opposition Members.

As we know, in the event, the own resources ceiling was to rise to 1.27 per cent. by 1999. That is less than half the increase proposed by the Commission and supported by the Labour party in the European Parliament. The British abatement is secure. In answer to the point raised by the hon. Member for Newham, South (Mr. Spearing), it can be changed only by unanimity in 1999. That will require primary legislation in this House which means that a vote here is required before the abatement is changed, even at that late date.

The effect of that decision, negotiated by my right hon. Friend the Prime Minister, is to increase our net contribution by £75 million next year and by about £250 million in the last year of the century. Of course, the existing decision means that there is growth anyway in the size of the European budget due to growth in the size of the Community's gross national product and the effect of inflation. It is that increase which many people have muddled up with the increase attributable to the Bill. In fact, the yearly increase flowing from the Bill will be considerably less than that under the previous review in 1988.

By 1999, the adjustment to the contribution ceiling contained in the Bill will cost each person in this country about 7p a week at today's prices. All Conservative Members agree that all public expenditure needs to be looked after. I ask the House to keep a sense of proportion and to compare that 7p a week at today's prices with, for example, the £28 a week which is everyone's share of the social security budget today.

A comment has been made by several hon. Members about the abrupt increases in the United Kingdom's contribution that can be seen from one year to the next. By cunning choice of baseline, a steep increase can be seen between specific years. I think that the House now understands that there are technical reasons for that. This country has a financial year that runs from April to March. The Community accounts on a calendar year so it can be easily seen by any hon. Member that a shift in expenditure or contributions within a calendar year can take that expenditure out of one financial year and into another. If one combines that with the effect of the abatement, whereby we get reimbursed a year in arrears, it is plain to see that our contributions fluctuate from year to year. There is, therefore, nothing sinister in the figures put forward by my right hon. and learned Friend the Chancellor of the Exchequer early last week.

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I regret the scepticism expressed by my hon. Friend the Member for Southend, East (Sir T. Taylor) who said that he wanted the true figures. He has the true figures. My right hon. and learned Friend the Chancellor is not keeping some secret update from the House--far from it. He actually brought forward by a week, for the convenience of the House, the figures that would normally be published on Budget day.

Fraud and mismanagement have been mentioned by many hon. Members in this debate. My right hon. Friend the Member for Shropshire, North (Mr. Biffen), in his elegant way, referred to the problem of financial management and what he termed the "lack of focus" in some European Community spending. As usual, his comments need to be taken seriously by Ministers. I agree with many of the sentiments expressed by Conservative and Opposition Members about the lack of adequate financial management in the European Community.

There is also the linked, but actually separate, issue of fraud. That was raised by, among others, the hon. Member for Kingston upon Hull, West (Mr. Randall) and I can assure him that the Government take extremely seriously the criticisms and recommendations laid out in the European Court of Auditors report. It is, by definition, extremely difficult to quantify fraud. Some of the wilder estimates given by hon. Members during the debate were, frankly, just guesses. I can assure the hon. Member for Stoke-on- Trent, South (Mr. Stevenson) that, contrary to what he said, the European Court of Auditors has not put a figure on prevalence of fraud.

Having said that, I agree that financial management in the Community is not good enough and fraud is far too prevalent.

Mr. D. N. Campbell-Savours (Workington): On the whole question of fraud, what happens if the measures introduced to deal with fraud after Maastricht do not work? Supposing that, next year and again the year after, the Court of Auditors produces another report of a similar nature. What will the Government then do? Will they take the Community to the wire? Will they pursue a policy of brinkmanship, or will we hear the same old drivel well into the future?

Mr. Heathcoat-Amory: Fraud, like sin, can never be totally eliminated but I can give the House the absolute assurance that we will pursue this issue with renewed vigour. That includes, which I think will be of assistance to the hon. Gentleman, the wider use of administrative penalties. So, where serious shortcomings are identified, we recommend the cutting off of further funds to the areas or projects identified. That was a point raised and a request made by my right hon. Friend the Member for Horsham (Sir P. Hordern) among others.

Combating fraud is not simply a question of spending more money. It is typically Labour thinking to suppose that the quality of any organisation or initiative is judged simply by the amount of public money spent on it. Yes, we need greater policing of EC expenditure. We also want to see more preventive measures to take away the opportunities for fraud at source.

Mr. Andrew Smith: On preventive measures, will the Paymaster General answer the question to which no answer was given to my hon. Friend the Member for

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Dunfermline, East (Mr. Brown) earlier? Will the Government, in seeking to prevent a defeat on VAT on fuel, be making that issue a vote of confidence?

Mr. Heathcoat-Amory: That is not a subject for today's debate, Madam Speaker, as I am sure that you agree.

The question of fraud, which is of interest to the House this evening, is a matter that we shall be pursuing partly by the better policing of expenditure and partly, as I also mentioned, by better preventive measures.

Mr. Geoffrey Dickens (Littleborough and Saddleworth): Could the Paymaster General simplify this a little for the sake of people at home? Is it not right that we have a very good deal, through the Prime Minister at Edinburgh, and that we are paying very much less than we would have been paying into Europe, which is very important? In fact, it is petty cash in Treasury terms. For it, we are getting inward investment in the United Kingdom, we are getting millions of pounds back out of Europe for environmental reasons and I think that the rebels in this House have not even understood the whole question.

Mr. Heathcoat-Amory: We all welcome my hon. Friend back and the whole House will agree with his intervention.

My final point about fraud is that we must remove the distortions which give an incentive to fraud. There is a connection in that regard with CAP reform. Many of the frauds in the Community arise because of a disparity between EC prices and world prices. That is why the Government have pressed so hard for CAP reform. The MacSharry reforms, which were agreed in 1992, are a very big step in that direction.

When Labour was last in office, agriculture consumed more than two thirds of the EC budget. The figure is now about half and it will continue to fall, not because of Opposition criticism but through the determination and practical steps taken by Conservative Governments. In response to points raised by my hon. Friend the Member for Southend, East and others, let me say that the agricultural guideline which sets a limit on agricultural expenditure will be rigidly observed. As it can be increased only by unanimity, I can repeat the assurance to my right hon. and hon. Friends that we will police that guideline absolutely.

The amendment, with its weasel-worded rejection of the Bill, would achieve none of those things to improve the war on fraud or to reform the CAP.

Mr. Cormack: Will my hon. Friend tell the House that we are determined to be tough on fraud and tough on the causes of fraud?

Mr. Heathcoat-Amory: I can give that assurance to my hon. Friend. The amendment would not assist in the smallest degree. The House is aware that the Labour party is the party of public expenditure at home and, since its last U-turn in its attitude to the European Union, it is the party of public expenditure in Europe: public expenditure good; European public expenditure even better.

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The Official Report is littered with requests from Opposition Members asking for, urging and demanding more expenditure. In his previous post as shadow Foreign Secretary, the right hon. Member for Copeland (Dr. Cunningham) said on 24 November 1992:

"We firmly believe that there should be Europe-wide measures on employment, job creation, investment in transport infrastructure, measures for industrial regeneration and investment."

The hon. Member for Oxford, East, who replied to the debate on behalf of the Labour party, called for more money before Edinburgh and for even more expenditure afterwards.

The Liberal Democrats are just the same. As usual, it depends on which audience they are addressing. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) said that he wanted

"a bold, and . . . generous settlement at Edinburgh".--[ Official Report , 24 November 1992; Vol. 214, c. 773-85.]

However, he and his party are apparently supporting an amendment which would wreck the only settlement that is on offer. I hope that the Liberal Democrats have explained to their rural constituents their new-found interest in CAP reform and reduction in agricultural expenditure.

Contrary to what the hon. Member for Oxford, East said, there has been nothing in the speeches of Opposition Members, before or after Edinburgh, about the need for budgetary discipline and cracking down on fraud. They have never mentioned the European Court of Auditors. We can look in vain for any reference to the problem of fraud or waste in their speeches in 1982 and since, yet now they produce that as a fig leaf to cover their amendment.

This is a sham amendment put forward by a party with a sham policy on Europe. It is opportunistic, it is inconsistent, and it is wrong. Opposition Members hope that, by betraying their principles, they will bring down the Government and then betray ours. I say to my right hon. and hon. Friends: do not fall into a trap so crude. The Bill is about an extra 700ths of 1 per cent. of gross national product at the end of seven years. It is worth more than that to stand firm and fight for the European Community we want and not to sell out to the Opposition parties. I urge the House to reject the amendment.

Question put , That the amendment be made:--

The House divided : Ayes 303, Noes 330.

Division No. 5] [22.00 pm

AYES

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Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Alton, David

Anderson, Donald (Swansea E)

Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Austin-Walker, John

Banks, Tony (Newham NW)

Barnes, Harry

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

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Beith, Rt Hon A J

Bell, Stuart

Benn, Rt Hon Tony

Bennett, Andrew F

Benton, Joe

Bermingham, Gerald

Berry, Roger

Betts, Clive

Blair, Rt Hon Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N (N'c'tle upon Tyne E)

Bruce, Malcolm (Gordon)

Burden, Richard

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Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Mrs Anne (C'bridge)

Campbell, Ronnie (Blyth V)

Campbell-Savours, D N

Canavan, Dennis

Cann, Jamie

Carlile, Alexander (Montgomry)

Chidgey, David

Chisholm, Malcolm

Church, Judith

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ann

Cohen, Harry

Connarty, Michael

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Corston, Jean

Cousins, Jim

Cox, Tom

Cummings, John

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Cunningham, Rt Hon Dr John

Dafis, Cynog

Dalyell, Tam

Darling, Alistair

Davidson, Ian

Davies, Bryan (Oldham C'tral)

Davies, Ron (Caerphilly)

Davies, Rt Hon Denzil (Llanelli)

Davis, Terry (B'ham, H'dge H'l)

Denham, John

Dewar, Donald

Dixon, Don

Dobson, Frank

Donohoe, Brian H

Dowd, Jim

Dunnachie, Jimmy

Dunwoody, Mrs Gwyneth

Eagle, Ms Angela

Eastham, Ken

Enright, Derek

Etherington, Bill

Evans, John (St Helens N)

Ewing, Mrs Margaret

Fatchett, Derek

Faulds, Andrew

Field, Frank (Birkenhead)

Fisher, Mark

Flynn, Paul

Foster, Don (Bath)

Foster, Rt Hon Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Galloway, George

Gapes, Mike

Garrett, John

George, Bruce

Gerrard, Neil

Gilbert, Rt Hon Dr John

Godman, Dr Norman A

Godsiff, Roger

Golding, Mrs Llin

Gordon, Mildred

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