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Mr. Gill: The right hon. Gentleman makes a very interesting point. Should not that money be spent in accordance with the wishes of the House? The right hon. Gentleman referred to our net contribution to Europe, but surely we should concentrate on our gross contribution. That huge amount of money goes beyond these shores, and other people decide how it should be spent. That money must be raised from the British taxpayer, not just the net amount.
Mr. Davies: I tried to find out what our gross contribution is, but I gave up, because I could not work it out, so I shall leave the point there. Perhaps the hon. Member for West Dorset, who is itching to intervene, could tell us?
Mr. Letwin: As always, I have followed the right hon. Gentleman's remarks with great interest. Is he aware of a
further problem that is dawning? It relates to the point that he has just made. The Community's budget has traditionally been adjusted from year to year on the basis of expectation. We discovered from the Economic Secretary to the Treasury that it now lies about 40 per cent. above actual expenditure in the past year. If, in this coming year, the European Community spends up to the budget provided for 1997-98 in the preliminary draft budget and the draft budget, the net and the gross contributions to which the right hon. Gentleman and my hon. Friend the Member for Ludlow (Mr. Gill) referred would rise by 40 per cent.
Mr. Davies: Some years ago, the Treasury tried to explain to me about commitments and actual payments. In those days, the good old Treasury did not like this system. It did not like making commitments for future years: it likes to sow and reap in one year. The Treasury has been worn down, and has had to give in to this new fashion. I accept and understand the hon. Gentleman's point.
If we did not have to pay the £2.5 billion, there would be plenty of money for Liverpool. There would be no need to worry about losing objective 1 status, because the money would come from good, old-fashioned public expenditure.
That £2.5 billion is a charge on the Consolidated Fund, and we cannot do anything about it. All Chancellors and Chief Secretaries have to consider cutting public expenditure, but they cannot cut the £2.5 billion, because it is a charge on the Consolidated Fund. The Chancellor is keeping to the same control totals as the right hon. and learned Member for Rushcliffe. He has control over the vast range of public expenditure, but he has no control over our contribution to Europe: if the figure goes up, he can do nothing about it. It is a different type of payment.
During the debates on the treaty of Amsterdam, several hon. Members referred to qualified majority voting. As a matter of principle, I am not too happy about qualified majority voting. I take the old-fashioned view that international organisations should determine matters by consensus. We are told that, if there had not been qualified majority voting, the single market would not have been created. That is an a priori statement: I do not know how it can be proved. At the Uruguay round, a hundred countries were able to agree, not by qualified majority voting but by consensus, on the most major step forward in the freeing of international trade since the general agreement on tariffs and trade was established at the end of the second world war.
Britain could be outvoted on a matter involving expenditure. A few years ago, large sums of money were quite rightly spent on cleaning up our beaches and ensuring that our water was clean and fit to drink. Whether that expenditure was decided by qualified majority voting, I do not know. Britain could be in the minority on such a decision. That expenditure would become a charge on the Consolidated Fund. A future Chancellor could not take such expenditure into account when determining cuts in public expenditure. The area of public expenditure over which a Chancellor, and ultimately the House, has control would thereby be reduced. That is contrary to the democratic control that we like to think we have over expenditure.
Dr. Liam Fox (Woodspring):
I think that hon. Members on both sides of the House can agree on two points. The level of debate in this country on the subject of Europe has been far too low. It has been conducted at the level of five-year-olds wearing pro-European and anti-European badges. There is far too little debate in the public domain, as reported from this House by members of the press who are again absent today. There is far too little debate about the substantive issues involved in these complex subjects.
For a few days, I tried to look at the newspapers objectively to see whether I, as a member of the public, could glean any understanding of the issues. I was fully aware of who was on what side, who the personalities were and who their opponents were, but I was totally incapable of deducing from the written press what issues divided the individuals. I am afraid that that has been one of the pitfalls in recent years. We should take the debate to the level of the contribution of my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard). The Conservative party will be leading the debate in the next four years or so, while we wait to return to government.
There is another debate that we should have: the debate that dare not speak its name. We should determine the parameters in our relationship with the European Union. Both the Conservative party and the Labour party are split on Europe: they are the only two parties that matter, because they are the only two parties that will govern this country. The split is not down the middle.
There are splits on the fringes of the parties. Some people say, "We must get out of Europe because it is foreign." Others say, "We must accept everything with a Euro prefix because it is necessarily wonderful." The vast majority of us are in the middle, and we consider objectively what is in Britain's interests. We do not engage in knee-jerk reactions, pro or anti. An institution can be only what we mould it to be. Therefore, we cannot accept the words of those who say, "We must get out of Europe because we do not like some things in it," nor can we say that we must stay in Europe at any price, irrespective of what Europe dishes up. Those are not rational positions for a Parliament which says that it governs in the interests of the British people.
We must be frank about the good features of Europe. The Foreign Secretary spoke about Europe's ability to take Spain, Greece and Portugal within a short time from military dictatorships to stable democracies. However, we must also be frank about Europe's bad features. In
countries such as Spain, there is utterly unacceptable structural unemployment. More than a third of young people are out of work, and that is quite unacceptable. In terms of enlargement, we must accept all those arguments, because, if there is to be meaningful and successful enlargement, there must be fundamental policy changes in Europe, not least to the common agricultural policy, which would simply be incapable of sustaining the strains that would result from the increase in membership from eastern Europe.
There must also be a change in the culture of the European Union. A good example of how that culture must change came to my desk when I was a Foreign Office Minister in the previous Government. The Germans, the French and others were championing the newly emerging democracy of South Africa. They said, "We want to help. We want to do everything possible." Their first chance to help was to open European barriers to South African trade. They said, "Of course we can open them, but not to agricultural products." That was the one area in which we could have helped that emerging economy, but we were incapable of doing it because, despite all the rhetoric about the EU having an outward-looking foreign policy, when it came to challenging the interests of small French and German peasant farmers, the politicians could see no further than their next election. That is the fault line in the enlargement process.
The European Union's approach to the third world needs a great deal of looking at again. If we are serious about helping developing countries, the one action that we in Europe can take is to open our markets to their goods. There is no point people in Europe saying that they want to help while operating protectionist policies. As a free-trading country, Britain must take the lead on that. We need a new outward-looking Lome convention and a new African, Caribbean and Pacific arrangement, so that the ACP countries are dealt with on the basis of their economies and not their geographical locations. It is nonsense to treat a country with a single-commodity economy in the same way as one with a large complex economy and give them the same aid.
Britain can be proud of the quality of its aid. In my experience of dealing with that subject as a Minister, there is a great deal to be desired about the way in which the European Union manages its aid projects. There is a great deal more to be said for the cost-effective way in which we manage such projects than about the way in which they are managed through the EU. I hope that the Government will look again at the relationship between our bilateral and multilateral aid programmes, especially in terms of aid that goes through the EU and the quality of the aid that we can deliver relative to the size of our budget.
We have a pivotal role in Europe, because we are not just European--we have a wider perspective as a result of our history, our links with the United States and our membership of the Commonwealth. Those factors give us a different perspective from that of our European partners. In Europe, diversity is almost regarded as bad. We should be proud of the fact that we have a different perspective to bring to Europe. Perhaps the greatest feature that we can bring to it is that we are a free-trading nation.
I have great respect for the Foreign Secretary, but I was appalled when he tried to perpetrate the con that is so often perpetrated about the quantity of our trade and its
relationship to Europe. He said that the majority of our trade was with Europe. It was only when he was pulled up about whether he was referring to visible trade that he gave way. For anyone to pretend in this nation in 1997 that our invisible trade is less important is utter nonsense. I think that it goes back to Labour's dislike of financial services and the City of London and to some of the basic character traits that no soundbite can quite excise. It shows that Labour is not as in tune with the importance of the City of London and our invisibles as it should be.
No matter how one looks at it, arithmetically, if 47 per cent. of our trade is with the European Union, 53 per cent. is with countries outside the EU. That means that it is far more important for us to have an outward-looking Europe and to move towards further trade liberalisation. We must take some matters on board. Since the beginning of the decade, only two countries in Europe have sustained their share of world trade. Italy has held its share, while Britain's share has marginally increased. Every other country in the EU has had a diminution in its share of world trade in this decade.
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