European Standing Committee B
Wednesday 10 December 1997
[Mr. Peter Atkinson in the Chair]
Agenda 2000: The New Financial Framework
10.30 am
Mr. Philip Hammond (Runnymede and Weybridge): On a pont of order, Mr. Atkinson. We have previously had difficulties with documents for this Committee, and I regret that I was able to look at the documents for the first time only late last night, when I discovered that the explanatory memorandum--a most important document--had been miscopied, so that paragraphs 13 to 19 are missing. They are key paragraphs relating to the policy and financial implications. I was fortunate enough to obtain another copy this morning, but I imagine that other hon. Members have had the same problem with the miscopied paragraphs, which makes it difficult to appraise properly the Government's response to the Community document. I should like to express the Opposition's concern about the continuing absence of proper and timely documentation for these Committees.
The Economic Secretary to the Treasury (Mrs. Helen Liddell): Further to that point of order, Mr. Atkinson. I am very sorry that this has happened. There always seems to be a problem with papers for these Committees, and all hon. Members have an interest in trying to improve the system. These gremlins creep in because of the volume of papers, but I do not underestimate the inconvenience that has been caused to hon. Members. I understand that the relevant paragraphs are being photocopied as I speak, and will be available to the Committee in a few minutes.
The Chairman: I call the Minister to make her opening statement.
10.31 am
Mrs. Liddell: When I read the Scrutiny Committee's report, which concluded that Agenda 2000 was of ``considerable political significance'', I felt that someone had become a master of understatement. It is one of the key issues that we have to address, as we come to the closing years of the 20th Century and look back on its history. In Agenda 2000 we are considering a significant change that will embrace a number of countries that have spent much of the century cut off from the rest of Europe, because of the political system that operated within them. The European Union is embarking on the most complex set of parallel negotiations in its history, including economic and monetary union, and Agenda 2000.
The Government wholeheartedly support the broad themes of the Agenda 2000 communication: the eastward enlargement of the Union; the reform of the common agricultural policy and the structural funds; and continued attention to budgetary rigour. In the broadest terms, many hon. Members on both sides of the Committee would be able to find common ground for agreement on these points.
Having said that, I should make it clear that the Government do not agree with all the Commission's proposals. The Government are fairly closely aligned with the Commission on the priorities for enlargement, but we think that the proposals for CAP reform are much too modest. We are also concerned about some of the proposals for the structural funds. The Committee will not be surprised to hear me say that the Commission could have been even more rigourous in its financial approach. Hon. Members should not expect me to defend every detail of the Commission's ideas, but the Government recognise that they are a helpful starting point for discussion--nothing more. As the Americans say, there is a way to go on these matters.
The matters that we are discussing today will be under discussion at the Luxembourg European Council, which opens on Friday of this week. They will continue to be a priority during the United Kingdom's presidency. Our discussion of these matters, in the run-up to the Luxembourg Council, is most timely. I ask the Committee to understand, however, that I do not wish to prejudice the Government's negotiating position in the proceedings of the Council. For that reason, I apologise if I cannot give full answers to some questions. When I think that I am constrained by our negotiating position in the discussions at the weekend, I will make that clear in my replies. I hope that there is no suggestion that I am hiding behind the negotiations as a means of evading questions that I cannot or will not answer.
Of the three proposals in this June's Agenda 2000 communication, without doubt the most exciting is that on European Union enlargement. The Government firmly take the view that additional members should be able to join the Union as soon as it and they are ready. It is exceptional that such a unifying process is envisaged after the seemingly irreconcilable divisions of a few years ago. I understand that there will be a full scrutiny hearing on all the enlargement issues in the new year.
It is important to understand the significance that the Government attach to the reform of the EU's policies as part of the requirement for successful enlargement. The Government are committed to striving for reform of the CAP, which currently has a nonsensical effect of the Union's economy and the Community's budget. Moreover, as the CAP accounts for about half of the Community's expenditure, reform would significantly aid the long-term financing of enlargement.
Reform of structural and cohesion funds is also necessary to direct spending where it is most needed and to maximise value for money. This Committee reviewed the structural policy reform issues yesterday, and its sister Committee is today looking at the CAP aspects.
The United Kingdom believes that policy reform must go hand in hand with budgetary discipline. The Government want to ensure that the ceiling on own resources of the Community remains at the current level throughout the coming enlargement process. To prepare for the period when the costs of enlargement peak, it is necessary to ensure that Community spending is set well below the current ceiling at the end of the next financial framework. It is essential that there is a clear working margin under the own resources ceiling.
During the presidency of the European Union, we expect the European Commission to publish more detailed proposals on the reform of CAP and structural funds, and on the future financial framework. The discussions at Luxembourg--and other meetings of the Council of Ministers--will influence those proposals; the United Kingdom's position will, in turn, be influenced by what is said today.
Even without the detailed proposals before us, it is clear that we are at the beginning of a very long process. We are unlikely to reach decisions on any of the policy reform or financial issues during the United Kingdom presidency--it might take another year to do that. However, I hope that we shall be able to set the process going with a strong impetus towards reform and efficiency.
We are here to focus on future financing, so I remind the Committee of the three key points in the dossier for which the Government will be arguing in the coming months. First, we shall argue for the maintenance of the 1.27 per cent. own resources ceiling, which is mentioned in the motion I will move later; secondly, we shall argue for the restraint of Community spending on all fronts, so that it remains well below that ceiling; and thirdly, we shall argue for no change to the system of contributions, including our abatement.
I think that there is a good deal of support for those propositions throughout the Committee and the House. However, there are many issues that we shall want to discuss in detail. It will be a lengthy process, but I hope that the replies I give today will elucidate some of the issues. If I am not able to elucidate any of the issues, I shall certainly ensure that members of the Committee receive full replies. I look forward to the debate.
The Chairman: I remind the Committee that we have until 11.30 am for questions to the Minister. I further remind the Committee that questions should be short and brief and asked one at a time, because all hon. Members will have ample opportunity to ask as many questions as they want.
Mr. Boswell: I thank the Economic Secretary for her helpful introduction and I invite her to confirm, in the spirit of her concluding remarks, that the Government's attitude to the own resources percentage ceiling--set at 1.27 per cent. of gross national product--should be viewed in the context of the prediction that there will be growth within the EU fifteen of 2.5 per cent. per annum. Giving evidence elsewhere, the hon. Lady tabled a useful sensitivity analysis of the results, stating how much headway would be left under the ceiling. Can she confirm, however, that the Government's attitude to the own resources ceiling is as robust as their attitude to the British rebate, which the hon. Lady memorably said was ``set in stone''?
Mrs. Liddell: I am grateful to the hon. Gentleman for his question, which allows me to clarify the Government's position. The Government have a firm commitment to the 1.27 per cent. own resources ceiling. We shall probably return later to the hon. Government's question about growth, which is important because there is an assumption of about 2.5 per cent. growth, which the Commission assumes will leave a margin of 0.05 per cent. Even a small downwards variation in the estimate could bring about a tightening of the margin. There should be the utmost rigour in ensuring that the margin of the financial perspective remains as wide as possible.
I confirm our clear commitment to retaining the 1.27 per cent. own resources ceiling. I should also like to make it clear that that should obtain throughout the enlargement period--and certainly for the period under consideration of 2000 to 2006. That would allow the ceiling to grow in line with economy, but we are not sympathetic to reviewing the ceiling within that period.
Mr. Hopkins: My hon. Friend referred to agricultural spending and to the Government's disappointment at the Commission's view that spending on agriculture to 2006 will rise by the rate of inflation plus three quarters of GNP growth. That amounts to little basic change in agricultural spending. Will the Government challenge that view more fundamentally? How does the Commission's estimate square with the Government's wish for fundamental reform and a significant reduction in agricultural spending?
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