House of Commons Hansard Debates for 7 Dec 1994

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An important feature of new clause 12 is that we say that not only own resources but the expenditure that will flow from those own resources should be the subject of annual reports. If you have any doubts, Mr. Lofthouse, paragraph (a) of new clause 12 covers the point clearly.

I therefore draw to the Committee's attention the aspects of expenditure that we shall approve. However, first I should like to say something to the Paymaster General. I listened to the Budget last week. I sat and listened to the Chancellor boasting about the degree of financial and Budget discipline that he had managed to instil and obtain. One of the key successes that he claimed in our last Budget was that he had stopped carrying over expenditure; the savings resulting from lower inflation had been clawed back, and that is why the public sector borrowing requirement was decreasing. That was one of the central things that he said. How could the same Minister and the same Cabinet likewise approve article 7 of the own resources decision, which reads:

"Any surplus of the Communities' revenue over total actual expenditure during a financial year shall be carried over to the following financial year"?

That means that there will be, presumably, built-in continuing expenditure, irrespective of whether one can find meaningful plans for spending the money and whether it will be efficiently spent--it does not matter. The money will be carried forward from year to year.

How can the same Government who, in their national Budget, argued passionately that they had achieved that form of budget discipline approve an article of that type? We might want to carry money over to spend, but how can a Government who actually preached about prudence of that character, endorse and support article 7 of the own resources decision?

Mr. Spearing: I suggest a possible answer to my hon. Friend. It is the old style of secret package bargaining. They have said, "And if you do not agree with that, we will not maintain your rebate." 6.45 pm

Mr. Rowlands: My hon. Friend is absolutely right.

There is another matter to which I draw the Committee's attention because it has not been discussed tonight, although my right hon. Friend the Member for Llanelli (Mr. Davies) mentioned some aspects. The other part of the bargain that was made was the determination of the expenditure that will arise from those own resources between now and 1999. It is not true that, one of these days, we shall decide where the money is to be spent. That matter was also determined at Edinburgh. It should be the subject of annual reports of the character that we suggest in new clause 12.

I should like the Minister, when he replies, to tell us the status and nature of the "Financial perspectives 1993 to 1999--Appropriations for Commitments" which was attached to the own resources decision after the Edinburgh conclusions, which said not only, "This is how we shall raise the new money and the new own resources," but, "This is where it will be spent."

Let me draw the Committee's attention to those commitments and decisions. For example, it was decided that there would be an increase of no less than 19 per cent. in real terms in administrative expenditure. The current

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Government, who have said that administrative savings must be made so that all pay and salary increases in the public services may be met from increased productivity in each Department, support a policy that the administrative expenses of the Commission, and so on, should increase by 19 per cent. in real terms.

Where is the consistency in the approach? Why is there that complete set of double standards--that we have to have the greatest possible control of the administrative costs of running the public services in this country but we shall endorse, as a result of the Bill, a 19 per cent. increase in the Commission's administrative expenses? I honestly do not understand how one squares those arguments.

We were left with the major impression that somehow we had capped CAP--that we had capped the costs of CAP. But a commitment--as I understand it, a legally binding commitment--of the same kind and character as the Bill makes on the own resources decision was contained in the Edinburgh decision, which ensures that, far from the expenditure being capped, there will be another increase in CAP in real terms of about 9 per cent. between now and 1999.

I considered the two aspects that should matter most to a constituency such as mine. Initially, I was pleased to note that the cohesion fund will increase by 73 per cent. between now and 1999--again, as I understand it, a legally binding commitment to spend the money which we are raising in the Bill, and which is being raised in the own resources decision, on the cohesion fund. I was pleased, that is, until I found out--this is why we need reports of the type suggested in new clause 12--the way in which it has been rigged. The criteria that will be used for cohesion funds ensure that only three or four countries will benefit. Communities such as those in parts of Mid-Glamorgan whose gross domestic product per capita is as low as that of many communities in Spain or Portugal will not be able--partly as a result of the present Government's policies--to qualify for any expenditure under the cohesion fund.

I should have been delighted at the 39 per cent. increase in structural funds; here, at least, some money might be repatriated back into communities of the character of those in my constituency. However, one finds that the whole of Wales is ruled out of objective 1 status and therefore will not qualify for anything but a fraction of that 39 per cent. increase in structural funds. In fact, one encounters such problems repeatedly.

The hon. Member for Harrow, East (Mr. Dykes) said that those moneys could be used to improve the lot of the constituents of Llanelli and of Merthyr Tydfil and Rhymney. I want to tell him the sad story of RECHAR--of trying to obtain funds for coalfield communities such as mine when the pits were closed. We bargained and haggled. Haggling between the Government and the Commission went on and on until such expenditures were way behind the closures. They were supposed to be lifelines; the lifelines came very late indeed as a result. So, even when we have tried to manipulate and utilise the expenditures that are envisaged in the decision, we have found them horrifically bureaucratic and difficult to apply.

Finally, I draw the Committee's attention to the aspect that is the most extraordinary result and consequence of the Edinburgh own resources decision, and therefore makes necessary the reports which are provided for in our new clause 12. Did any Minister come before the Dispatch Box between the Edinburgh summit and May 1994 to tell

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the House that, as a consequence of the determination of the expenditures that I have described, more than 50 per cent. of the overseas aid budget will be spent by agencies outside the United Kingdom? Was any hon. Member informed by any Minister at the Dispatch Box that the consequence of agreeing those guidelines, those appropriation commitments, legally bound the overseas aid budget to increase and increase in European terms although the United Kingdom's sum total has been capped?

We shall be in an extraordinary situation. Next year, because of expenditure in the United Nations, but primarily because of the increases in the European overseas aid budget, which we shall be legally bound to pay, more than 50 per cent. of a major Department's public expenditure will be spent by agencies outside the control of the House and the Government. That is extraordinary.

Ministers who grappled with the problems of financial accountability should be horrified. I believe that the right hon. Member for Mid-Sussex was once responsible for the aid programme. He should be horrified at such Government expenditure and the fact that most of the money is now spent on agencies outside the control of the House, without any accountability to the Public Accounts Committee in the way that he suggested.

Mr. Renton: For the record, I should put the hon. Gentleman right. The Minister responsible for overseas aid to whom he referred was my good friend and namesake, now Sir Timothy Raison, not Timothy Renton.

Mr. Rowlands: I apologise--I thought that, in his Foreign Office days, the right hon. Gentleman had some responsibility for such matters. However, I hope that he is similarly horrified by the results of such policies.

According to the table on the appropriations for commitments, the European external aid budget will increase by 42 per cent. in real terms between now and 1999, while the British overseas aid budget will be capped, held at the same level or given a marginal increase. More than 50 per cent. of the aid budget will be spent on external matters outside our control.

More interestingly, 45 per cent. of the European aid budget is outside the control of the European Parliament because it belongs to the European development fund, which is not part of the budget. We do not control, supervise or scrutinise money from the European development fund--the European Parliament does not have any right to do so either, because that fund is not part of the budget. That is extraordinary, and all the more reason why we need information and knowledge. The right hon. Member for Shropshire, North (Mr. Biffen) said that knowledge was power. Information would warn us and we would see the pattern of expenditure developing. We would not be in our present position, where we find that decisions made in 1992 have led to extraordinary figures on overseas aid expenditure, with the House lacking control over them.

It is time for us to assert ourselves, not on a party basis but on a cross- party basis. This is a parliamentary matter and we need the information and reports on which to try to re-establish some degree of accountability and scrutiny--at least to know the consequences of the decisions being made. We did not know the consequences of many of the decisions made in Edinburgh in 1992. I thought that it was unfortunate and unfair when, on

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Second Reading, the Chancellor chided his Conservative Back-Bench colleagues--I think that the hon. Member for Tayside, North (Mr. Walker) was one of them--for not raising various matters about the 1992 Edinburgh decision. In fairness, the information was not available to the House. It was only gradually, as a result of questioning in Committees and vigilance, that we became aware of what was happening, what would happen and the consequences of some of the decisions.

Mr. Spearing: The Government seem to have forgotten that about a year ago in European Standing Committee B they dealt with the matter and there was a Division. One day later, on the Floor of the House, there was another Division on a measure being taken forthwith, and more than 40 Opposition Members voted against the sort of proposals contained in the legislation. Ministers have probably forgotten about that--they probably did not even know that it happened.

Mr. Rowlands: Every time we discuss such matters I become more worried. I was a slow learner, but on Second Reading I found myself becoming more sceptical as I began to realise how accountability was moving from the House as a consequence of the decisions being taken. We are entitled to ask for the sort of information that we demand in new clause 12. Will the Paymaster General tell us the status of the appropriations for commitments that I have been describing and outlining to the Committee? Are they legally binding commitments to expenditure? The own resources decision is a legally binding commitment on which the Government are unable to renege. Are the expenditures that were forecast and the commitments attached to the own resources decision legally binding? When it investigated the overseas aid aspects of the Edinburgh decision, the Select Committee on Foreign Affairs was told that those commitments were legally binding and we could do nothing about them.

Over and over again, the European Commission has failed to spend quite a lot of the money and has carried it forward or held it in account until it can find appropriate projects. Anyone who has begun to look, not at the corruption but at the waste and incredibly divided management of the European aid budget, will understand what I am saying. The Select Committee has been uncovering such problems in the past few weeks and hopes to report to the House soon. Without important changes to the management and accountability of the programme, the Committee would not agree to a 42 per cent. real terms increase in the European overseas aid budget. There will be an opportunity to raise those issues in our discussion on the next set of amendments.

We are calling for greater transparency and information so that we do not get caught unawares. We want to foresee the consequences of the decisions made in 1992.

Mr. Allason: I rise to support new clause 4 in the name of my hon. Friend the Member for Stafford (Mr. Cash) and a number of others, including myself.

I have no enthusiasm for the Bill, but it does not have the constitutional implications of the Maastricht treaty. New clause 4 is important because it will enable the House and the public to understand the matters that will be decided at the intergovernmental conference in 1996. We are seeking a sort of annual report which will describe our contributions precisely and in simple terms so that

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comparisons can be made with other countries. That is significant because it is in line with the traditions of the House in scrutinising all our expenditure.

Our traditions are not automatically accepted or followed by our European partners. Baroness Thatcher used to boast of her twice-weekly visits to the House to answer Prime Minister's questions. She would then remind her European partners that her Spanish counterpart, the Spanish Prime Minister, had the sole constitutional responsibility of visiting the Cortes just once a year to answer questions.

Scrutiny by the House is of enormous importance; it goes back to the principle of no taxation without representation. The issue before us today is taxation without information. We are seeking to ensure that the maximum information is placed before the House in a manner which enables us to scrutinise expenditure. If that is not allowed to happen, we shall certainly be moving towards taxation without representation. The issue of representation falls outside the scope of the subject of own resources, however, and I shall therefore not expand on it.

It is important that the public should have confidence, not necessarily in the fact that the money is well spent, but in the acceptance of all the principles of subsidiarity. Elected Members of Parliament should have the right and the ability to scrutinise where and how tax is being spent and to ensure that there is maximum transparency and scrutiny of the fraud that we understand has taken place in the European Union in recent years and thus to seek to minimise the disappearance of significant amounts of taxation. The Minister was eloquent on the subject of fraud. I know that it is a subject close to his heart because I heard him on my car radio on Friday afternoon when he emphasised the information that had been laid before the House. In an interview with Nick Clarke on "The World At One" he got the better of his interviewer by demonstrating that some rather abstruse items of information had been laid before the House. He clearly believes that the availability of information is important; that is also at the heart of new clause 1.

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It is our desire to ensure that the maximum information can be laid before the House. There is, of course, a danger in misinformation. Christopher Booker has written numerous columns about interference from Brussels and the ridiculous bureaucratic rules that are produced by directives. Apparently, they are the guiding light for environmental health officers up and down the country. If Christopher Booker is to continue his campaign, it is essential that the information he uses is accurate. We heard yesterday that he was uncharacteristically incorrect in saying that VAT on domestic fuel was a requirement of the European Union. Apparently that is not the case; Brussels makes no demands in that direction, so in those circumstances Christopher Booker would appear to be wrong.

Mr. Spearing: Without looking at the records, perhaps the Paymaster General would agree that our zero rating arrangement will come to an end in 1998 or 1999, when we shall have to negotiate whether a zero rating continues.

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In other words, there is a presumption under treaty regulations that we shall have to give it up or obtain an exemption in the future.

Mr. Allason: The hon. Gentleman is quite correct when he says that 1999--the date mentioned in new clause 4--is the date when all bets are off and all the assurances received in Edinburgh will be up for grabs. That is a cause for great concern, particularly as by then we shall already have experienced the intergovernmental conference, which has often been described as Maastricht 2. Who knows what kind of European structures will be developed as a result of Maastricht 2. I have no objection to having a debate on the subject and discussing in the House and elsewhere what Maastricht 2 will entail, but if we are to have that important debate with all its constitutional implications, it is essential that the House should have access to the information. There is only one way to get that information, and that is to ensure that it is included in the legislation by putting new clause 4 into the Bill.

The Minister clearly supports maximum transparency, and it is of enormous importance as we run up to this second critical time when the Maastricht structure will be reconsidered. The implications for Britain are enormous. There is no doubt that we went through an extremely dramatic trauma--I certainly did--over the Maastricht issue. If we are to repeat that exercise, it is essential that the public are reassured that they and their elected representatives have access to the maximum amount of information.

The question is how can that be achieved. New clause 4 does not describe the mechanism for that scrutiny. We have heard today all the problems related to fraud, all the problems related to how we judge gross national product and our doubts about Mediterranean practices in accountancy. We know what the problems are; the question is what our solution is.

All hon. Members on both sides of the House who have spoken today have praised the experience, skill and dedication of the Public Accounts Committee. It is held in very high regard and its status as the second most important Select Committee is recognised by the House. So the solution must be to allow the House to scrutinise the books by requiring the Public Accounts Committee to do so. Accordingly, I call upon the Minister to think carefully about including new clause 4 in the legislation. It is not a wrecking amendment; it would receive enormous support in the country because the bottom line is that those who elected us would have confidence that the House is exercising at least a degree of control over the expenditure--the vast grant that we are giving the European Union. Perhaps equally significantly, we must also ensure that the Public Accounts Committee takes those statistics and figures to pieces and makes annual reports to the House. That would be welcomed in all parts of the House and, more importantly, by the voters who--goodness knows--have little enough faith not just in the legislation but in the European Union.

Mr. George Stevenson (Stoke-on-Trent, South): In considering the accounting mechanisms for own resources, I agree with right hon. and hon. Members who have stated clearly that we cannot engage in that exercise without examining the demands on those own resources.

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I also agree with my hon. Friend the Member for Oxford, East (Mr. Smith) that a continued majority demand on those own resources is the common agricultural policy. It is no coincidence that at the same time as the own resources decision was taken by the Council of Ministers on 31 October a decision was taken on budgetary discipline. The two are very much intertwined.

We are talking not about fraud, but about expenditure that at the moment is envisaged. We are talking about expenditure and demands on own resources that at the moment are planned. Of course, the House can speculate all it likes about what is to happen over the next few weeks or months to the planned expenditure and, therefore, the demand on own resources, but at the moment when we are asked to take this decision I suggest that the votes of right hon. and hon. Members must be determined by the information that we have.

New clause 1 is therefore vital. It says, in effect, that cross-party concerns are involved and that there are serious matters to consider when we examine own resources and the demands made on them, particularly by the common agricultural policy.

Why can we not have a report? Perhaps a motion to the House over the next few weeks would help to clarify the position. We have to remove some of the uncertainties. That would give us an opportunity to put the Government to the test--to test their sincerity and their commitment to ensuring that the demands on own resources are kept within the constraints already described to us. We cannot calculate properly through the own resources mechanism what is required by the Community unless we consider its expenditure, not only in terms of the expansion of expenditure but in terms of its control. At present, we are not in that situation; I will give some examples to show why. As I understand it, the Government are saying, as of today, that expenditure is likely to be 2.6 billion ecu in excess of the agricultural guideline. The Government also say that we need not worry because they have measures in hand which are likely to remove that. I wish them luck. They may be successful. On the other hand, they may not. Demands on own resources will therefore be far greater than we are told at the moment.

In the course of the next few weeks we shall, I hope, know whether the Government have been successful. They have told me that alternative measures--appropriate steps--may have to be taken to raise a further 919 million ecu. They say that olive oil payments of 1.2 billion ecu to southern member states will be deferred until next year and are not contained in the present budget.

In those circumstances, how can we tell the Government that we trust them, that they should go away and do their best and that we will give them what can be described only as a blank cheque for own resources? That is not sensible. It should not be acceptable to the House, not in the interests of any right hon. or hon. Members, but in the interests of the House as a whole and the public whom we are here to represent.

I do not know how hon. Members will be able to tell their constituents that they voted for an own resources resolution that puts demands on the British taxpayer, but that they do not know how 2.6 billion ecu--about £1.8 billion--which is in excess of the present agricultural guideline, will be found. The Government tell us not to

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worry because they have the matter in hand and are not prepared to accept that. That is fine. I am prepared to take them at their word, although many of my right hon. and hon. Friends may castigate me for so doing.

If we are prepared to put the Government on trust, what is so unreasonable about asking them to accept new clause 1, which asks them to trust us, too? If they are so determined to clarify the issue and to ensure that demand on own resources is kept within the budgetary guidelines and disciplines that they have accepted, why can they not trust us a bit? Why do the Government insist that it is they who need a blank cheque?

Mr. Andrew Robathan (Blaby): Would the new clause allow the House to scrutinise what is happening right now, when taxpayers' money to the tune of about £20 million is being spent on advertising to discourage smoking while £1 billion--I think that it is pounds and not ecu--of resources which come mainly from the British taxpayer is being spent in the European Union on producing tobacco which is completely unusable and has to be buried or burnt?

Mr. Stevenson: Without going into the detail of particular expenditure headings under the common agricultural guarantee fund, I have tried to show the crucial relationship between own resources and expenditure. The two cannot be divorced. We cannot say that we will concoct an amount of revenue to be spent, but that we are not sure how it will be spent.

In a letter sent to me today by the Paymaster General, the Government admit that they are not sure how a significant part of that demand--2.6 billion ecu, which is about £1.8 billion--will be met. That sum is made up of 919 million ecu which may have to be obtained by what the Government describe as appropriate measures but which they do not specify, 1.2 billion ecu in olive oil payments which have been deferred to future years and 500 million ecu of the monetary reserve. The Government say that the 500 million ecu monetary reserve cannot be included in the calculation because it is there to be used in any case. But it is outside the agricultural guideline and outside the discipline that the Government have accepted. It is therefore financial sleight of hand, to say the least, for the Government to seek the support of the House for own resources when they are using expenditure that is outside the budgetary guideline that they have accepted as the limit of expenditure.

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If one accepts that the two elements of the equation cannot be divorced, as I argue strongly that they cannot be, the answer to the hon. Gentleman's question must be yes. It is therefore crucial that new clause 1 be accepted. It is also crucial because time is not on our side. If the Bill goes through unamended, the system will come into force on 1 January 1995. Unless new clause 1 is accepted and the Government are required to report back to the House on the implementation of article 8(2) of the Council decision, the Government will have, if not a completely blank cheque, a cheque with a significant number of noughts missing from it.

The British people expect nothing less than that we should tell the Government that we want to know exactly how they intend to control demands on own resources before we are prepared to support own resources as put to us at the moment. That is perfectly sensible and

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reasonable. As I have said, we are asking the Government to trust us a bit. We cannot get away with calling on the Public Accounts Committee to scrutinise the issue at this time--it is not practical to argue for that--but new clause 1 is a reasonable attempt at asking the Government to come back to the House and show us what they have done; if they have tried their best and made some progress, hon. Members may then support them. But to go ahead in this sort of blind-alley fashion cannot be right.

For those good reasons, I urge all right hon. and hon. Members to support new clause 1.

Mr. Heathcoat-Amory: The group of new clauses that we have been considering for the past few hours falls into two parts. New clause 1, which was tabled by the hon. Member for Oxford, East (Mr. Smith), states that the Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister as to the measures that the Government intend to take in order to implement article 8(2) of the new own resources decision. The other two new clauses, which I shall deal with in due course, call on the Government to publish annual reports on various aspects of the own resources system and the Community budget. But first I shall dwell a little on what may be called the lead amendment, concerning article 8(2), which is about the detailed provisions necessary to put the own resources decision into practice--in other words, the implementing mechanism for giving effect to the own resources decision that is the subject of the Bill.

First, I believe that new clause 1 is based on a misunderstanding, because it refers to the Government implementing article 8(2) of the new own resources decision, whereas in fact it is the Council of Ministers that agrees measures to implement that article. The Government have an effective power of veto over any measure that they find unsatisfactory, but they do not implement measures on their own, as the new clause implies. Of course the Government will be vigilant in using that veto if it proves necessary, and the House has a right to expect that.

Secondly, there is nothing new in article 8(2). The text introduced in the new own resources decision is virtually identical to that in the existing ORD dating from 1988, but a few cross-references have been altered because of changes to the underlying treaty. However, the most important point, which has been overlooked by the Opposition, is that there are no plans to revise the existing implementing regulations. So article 8(2) will not be used as a consequence of the new own resources decision, or at any rate not in the foreseeable future.

Mr. Hoon: The Paymaster General said that there was consistency between this decision and previous decisions on own resources. Will he explain why the original draft decision that gave rise to the decision we are debating contained specific reference to "fraud and irregularities" in connection with the Community budget, and the preliminary clause went on to detail the Commission's role in improving national VAT registration, calculation, recovery and control procedures? That was in the original

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draft, but it is not in the version that we are debating. Why was there a change, and were the Government responsible, in Council, for making that change?

Mr. Heathcoat-Amory: It is not clear whether the draft that the hon. Gentleman is talking about is a Labour party document or one of ours. He owes it to the Committee to be a little more specific in providing a reference if he wishes to ask a question. But when we deal with future new clauses or amendments, if they are debated, I shall endeavour to answer his question.

What I am saying is important to the Opposition Front-Bench spokesmen, because their new clause is postulated on the idea that a number of revisions will be made in the implementing regulations. That is simply not in prospect. In 1988, there were quite profound and radical changes to the implementing directives and legislation. There were two large regulations and a directive, which profoundly changed the system whereby own resources were raised.

The 1994 own resources decision makes no such radical change. It simply changes the figures within the programme. The programme itself is rolled forward into the new own resources decision. Indeed, that is specifically required and provided for separately by article 11(2)(a) of the new own resources decision, which explicitly provides the legal authority to continue using the earlier legislation. However, in due course new changes may be necessary to the implementing legislation, and any such decisions taken by the Council must be taken unanimously. That is a safeguard for the House and for this country. Any proposals from the Commission along those lines would be subject to the scrutiny requirements of the House. I believe that, on reflection, the hon. Member for Oxford, East will agree that it makes no sense to make the coming into force of what I hope will be an Act dependent on a resolution that contains nothing, because there is nothing at present to introduce under that heading. The hon. Member also talked about the United Kingdom abatement. He was joined in that concern by several other hon. Members, including my hon. Friend the Member for Stafford (Mr. Cash), and I believe that the right hon. Member for Llanelli (Mr. Davies) raised the issue as well. The Committee is right to be extremely vigilant about the British rebate.

First, I shall answer a specific question asked by the hon. Member for Oxford, East: the new working methods paper on the United Kingdom abatement that the hon. Gentleman mentioned is set out in Council document 5455/94, and an explanatory memorandum was provided to the Scrutiny Committee on 22 February this year. I assure the hon. Gentleman that the formula by which the United Kingdom abatement is calculated has remained unchanged since 1988.

Of course the Commission and many other member states would love to change and undermine the British abatement in one respect or another, and that brings me to a point raised by other hon. Members. There is nothing sinister in the requirement in the ORD that the Commission re-examine the British rebate by 1999, because it exactly replicates a similar requirement in the 1988 own resources decision. Indeed, the British rebate was examined in 1992.

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However, the crucial fact for the Committee is that the abatement continues in force until it is changed, and it can be changed only by unanimity. As such a change would be contained in a new own resources decision in 1999 or later, and as the change can come into effect only through the constitutional requirements on member states, in this country that means that it can come into effect only through primary legislation. It therefore follows that not only the Government of the day but the House of Commons will have a veto over any alteration in the British rebate.

I share the concerns expressed on both sides of the Committee about whether the Government of the day will maintain their position on the abatement. Opposition Members have reason to doubt their own Front-Bench spokesman, because the hon. Member for Dunfermline, East (Mr. Brown) said in 1992 that the British rebate would have to be up for renegotiation. So if the House is concerned to maintain the British rebate in its existing form--certainly I am--it must ensure that a Conservative Government are in charge in 1999.

Mr. Andrew Smith: Having heard that allegation previously, my hon. Friend the Member for Dunfermline, East (Mr. Brown) has made it clear that he did not say that. Does the Minister accept that? Moreover, my hon. Friend has made it clear that it is and has been Labour party policy to maintain the United Kingdom rebate. I therefore hope that there will be no repetition of that charge by Conservative Members.

Mr. Heathcoat-Amory: It is no comfort for me to know that that is claimed to be Labour party policy. Labour party policy changes week by week. What I do know is that the hon. Member for Dunfermline, East said on a radio programme listened to by millions of people that the British rebate was a matter for renegotiation. That shocked the House.

Mr. Smith: Will the Paymaster General give way?

Mr. Heathcoat-Amory: No. I will not give way to the hon. Gentleman, because I am answering the point he raised with me before. The hon. Member for Dunfermline, East, the shadow Chancellor of the Exchequer, said on the radio programme that the rebate was to be a matter for renegotiation. He may wish that he had not said that, and he may claim that it is no longer Labour party policy. I am illustrating to the Committee the fact that we get certainty and consistency on these matters only from Conservative Members. 7.30 pm

Ms Hilary Armstrong (Durham, North-West): The Minister really should accept Labour's assurances about what my hon. Friend the Member for Dunfermline, East (Mr. Brown) said. We can give him chapter and verse. On the radio this weekend, the Minister made claims about his tackling of the budget in the House last week which were not borne out in Hansard . We pressed him on what he had done about the European Parliament's amendment on fraud which was before the Council, and he refused to answer. However, on Friday or Saturday, he said on the radio that he had never been asked about that and that he

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was not pressed about it. I know that he was in some distress in the debate last week, but I also know that he was pressed and that he never answered.

Mr. Heathcoat-Amory: I am not sure what all that was about. I was referring to remarks made by the hon. Member for Dunfermline, East. If he has changed his mind, I welcome that. Consistency comes from Conservative Members.

Mr. Smith: How many times do we have to say it? We have made it clear, and my hon. Friend the Member for Dunfermline, East has made it clear, that he did not say what the Minister alleges he said. We have made it clear that it has consistently been Labour party policy to uphold the abatement procedure and the United Kingdom rebate. We have given those pledges in good faith. I now call on the Minister to accept them, and to desist from repeating falsehoods.

Mr. Heathcoat-Amory: The record will stand for itself. If the Labour party has changed its mind about the importance of the British rebate, I welcome that. I give an unqualified welcome to that. All my right hon. and hon. Friends welcome a sinner that repenteth. I now move on to a number of other issues raised in the debate. Serious points were raised about the GNP statistics, on which a great deal rests, especially the contributions from each member state. Again, this point was raised by my hon. Friend the Member for Stafford and, in truth, by the hon. Member for Oxford, East. I am glad to say that the Commission takes seriously the need to harmonise and to verify national GNP statistics. A GNP management committee set up in 1989 has led to improvements.

It was correctly said that the statistics emanating from former East Germany were unreliable immediately following reunification. It is not the case that the contributions from Germany as a whole are assessed separately from former East Germany and former West Germany. They are based on the whole country. It is, of course, true that the change from a command economy threw up great difficulties in correctly and accurately estimating GNP statistics. As the world now knows, they were all made up before Germany was reunified. The other point raised in the debate has been the role of the Public Accounts Committee. The Committee is right to pay tribute to the work done by the PAC, and to raise the possibility of extending its remit to cover some of the matters that have been debated during the passage of the Bill.

The National Audit Office may have a more direct and continuing interest in the actual auditing of the figures. It already has close links with the European Court of Auditors. When I met members of the court in London early this year, they went on to talk to and exchange ideas with the NAO. That does not undermine the case that has fairly been made out this evening for looking for ways in which to involve the PAC more intimately in this work.

The PAC has a present remit which allows it to take a considerable interest in these matters. I may be able to be of assistance to the Committee, and especially to my hon. Friend the Member for Stafford who raised the matter specifically. It is a possibility that we could look again at the Standing Orders governing the PAC to see whether

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changes might be appropriate to give it this wider remit. My right hon. Friend the Lord President is amenable to doing that. I have to put down the proviso that the PAC is a Committee of the House and not a Government committee. Decisions and discussions, therefore, of this nature will have to be conducted through the usual channels and, indeed, with the Chairman of the PAC. That very constructive suggestion has come out of the Committee, and it will meet some of the points raised in the debate.

Mr. Rowlands: As I understand it, the PAC is triggered off by the responsibility of the accounting officer--the permanent secretary of each Government Department. How will it be possible for the permanent secretary of any Department to be responsible for money that has been handed over to Europe and spent by the European Commission?

Mr. Heathcoat-Amory: I must not mislead the hon. Gentleman. I am not suggesting that the PAC can have a remit out of this country in pursuing expenditure in other member states. That would be stretching the terms of reference of the PAC to breaking point. That is not what I was suggesting.

Mr. Cash: I am grateful for the indication that my hon. Friend has given. I have been given to understand that the points he has just made resulted from discussions today with the Prime Minister. Furthermore, I was given to understand that a specific undertaking would be given that the intention that the PAC should be involved in the process was something on which I could rely in good faith. If my hon. Friend put it in terms of an undertaking, I would then seek leave of the Committee to withdraw the motion. It would be a significant Euro-realist step for the PAC to be involved in dealing with fraud and own resources. That would indeed be a watershed in the whole European saga. I should be grateful for the words that I have asked for to be put in terms of an undertaking.

Mr. Heathcoat-Amory: I have already explained that neither I nor my right hon. Friend the Prime Minister can direct the PAC, which is a Committee of the House. What I have already undertaken to do--I have the agreement of the Lord President--is to examine and to give a fair wind to changes in the terms of reference of the PAC, if the PAC considers that the terms of reference are a restraint on its action in this respect. My right hon. Friend the Prime Minister is certainly aware of this. He believes that tackling fraud and mismanagement, and getting better financial disciplines into the workings of the Community, are among the highest priorities that he takes into discussions in the European Union.

I turn now to points raised by the hon. Member for Newham, South (Mr. Spearing), among others, on the connected but separate issue of reports to the House and the opportunities that the House has for scrutinising not only the Government but the workings of the European Union. The hon. Gentleman has a long and honourable role in defending the privileges of the House in this respect. I can give him some of the assurances he seeks.

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First, however, I would like to point out to the Committee just how regular and numerous the reports already made by the Government to the House are.

My hon. Friend the Member for Torbay (Mr. Allason) said that he was a strong advocate of information and transparency on such matters. I strongly agree. I believe that the House has a right in that respect. I must say, speaking as a former deputy Whip, that it is not always frightfully easy to get people to sit on the Committee to undertake the scrutiny. Indeed, some of the debates held on such matters are rather thinly attended. But that does not detract from the fact that the House has a right to the information. Indeed, many right hon. and hon. Members attending this debate have, over many years, taken a close personal interest in these matters.

I emphasise that the quantity of information given to the House is seen by some as being too much, and of an indigestible nature, rather than too little. The figures for the net contributions to the EC budget are given out in the Red Book and at Budget time. In addition, the departmental report of the Chancellor's Departments is an expansion of the information in the Red Book and is presented around March each year.

In addition to that, there is an annual statement on the Community budget, which takes the form of a White Paper. The statement for this year was published in March and it gave further information. There are also the Government's six-monthly White Papers on developments in the European Union, and an enormous number of explanatory memoranda on the Community budget. On European matters in 1994 alone, 673 explanatory memoranda have already been submitted to the House, 59 of which covered budgetary matters. They triggered no fewer than 31 scrutiny debates.

In answer to the point raised by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) on the expenditure--

Mr. Spearing rose --

Mr. Heathcoat-Amory: May I answer the point raised by the hon. Gentleman's hon. Friend on the expenditure side of the budget? That was, of course, one of the matters that we considered last Monday, when the 1995 budget was under discussion in the House.

I would assure the hon. Member for Merthyr Tydfil and Rhymney that the overall discipline on the European Union is a ceiling on contributions, which cannot be breached. If one allies that ceiling on contributions with the fact that the European Community cannot borrow, it is a very real discipline on its expenditure. It has a financial perspective, which is an agreement between the Council of Ministers and the European Parliament, which, although not legally binding, is a political agreement, which sets limits for each category of expenditure year by year. However, a number of legal agreements cover matters such as structural funds and the cohesion funds.

I can reassure the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) one more time that the agricultural guideline will not be breached because it requires unanimity, and we will not sanction a breach of the guideline this year or next year. It is up to the Commission

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