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Joyce Quin (Gateshead, East and Washington, West) rose—

Dr. Nick Palmer (Broxtowe) rose—

Mr. Clappison: I shall give way to the right hon. Lady first, because she was a Minister with responsibility for Europe.

Joyce Quin: Given that, before the meeting in Berlin, Conservative Members predicted that the abatement was in danger, that we were in danger of breaching the own resources ceiling and that we would get a poor settlement on structural funds, will the hon. Gentleman now admit that they were wrong on all three points?

Mr. Clappison: Our view was based on a completely honest, accurate and objective evaluation of the negotiating skills of those who were representing us at the European summit. They came home with nothing.

Dr. Palmer: The hon. Gentleman stresses in critical tones that we are net contributors to the EU. Were we to have a Conservative Government, would it be their policy to refuse to be a net contributor in the future?

Mr. Clappison: I think that the hon. Gentleman would make common cause with me in agreeing that we should try to bring down the net contribution by as much as possible, but the Government have failed to do that. The right hon. Member for Gateshead, East and Washington, West (Joyce Quin) shakes her head, but she will know the facts because she has been an Agriculture Minister as well. The Government have failed comprehensively in their attempts to bring down agricultural spending when their record is compared with that of Conservative Governments throughout the 1980s and 1990s.

My hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) referred to the way in which other countries have benefited from the negotiations while we, at best, have stood still. Although the language in the explanatory notes is as torturous as the Minister's argument, the Government cannot avoid admitting that

"the financing arrangements of the correction are changed to reduce the amount borne by Germany, Austria, Sweden and the Netherlands."

We are also net contributors to the European budget, but our contribution has not been reduced.

Dr. Robert Spink (Castle Point): Will my hon. Friend clarify a detail of the negotiation? Is it not a fact that the Prime Minister yielded part of the abatement that we should have received as a windfall from enlargement, and is that not worth hundreds of millions of pounds a year?

Mr. Clappison: My hon. Friend is right. He raises the important question, which I have pondered, of when is a

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windfall a windfall, and when does it contribute something to someone else? A windfall is an interesting term to use.

Before I deal with that, however, I want to emphasise the fact that although other member states in a budgetary position similar to the United Kingdom's benefited from the negotiations, little progress was made on reducing our net contribution to the EU budget. After the negotiations and the legislation, with which the Government are so pleased, the UK will continue to pay to receive the benefits of EU membership, to which the Minister referred, while other members obtain those benefits and receive a payment or make a smaller payment than we do. I listened carefully to what he said about the future of the net contribution. Implicit in his comments was the idea that the UK will remain a net contributor. He did not say whether that diminished or grew as a result of the negotiations.

On the windfall, the explanatory notes say:

"provision is made for the United Kingdom to forgo the 'windfall' gains it would have received from the"

switch from VAT-based contributions to gross national product-based contributions and from the decision to allow members to retain a higher proportion of customs duties. It will be interesting to know why a change that the UK might obtain is characterised as a windfall and is thus a benefit that must be removed. Given that we have been such a large net contributor to the EU budget—the second largest after Germany—a windfall is exactly what many people see other member states getting as a result of our membership. Householders and taxpayers of this country will think that our Government should fight to preserve or obtain what is described as a windfall if it means making a cheaper contribution and lower taxes for our citizens. No doubt there will be an interesting technical explanation for that, and perhaps the Liberal Democrats will be able to give it.

Mr. Edward Davey (Kingston and Surbiton): I am afraid that I cannot help the hon. Gentleman on that, but does he agree that the normal dictionary definition of a windfall gain is a one-off gain? Does he, like me, suspect that some of the windfall gains that are referred to in the explanatory note might be on-going gains?

Mr. Clappison: I am surprised. That is a rare example of the phenomenon of a Liberal Democrat criticising the Government. The hon. Gentleman makes a legitimate point. The windfall to which he refers will recur year after year, and I am grateful to him for drawing attention to that.

No doubt there will also be an interesting technical explanation for the claim in the Labour party manifesto that

"our contributions are falling to similar levels as France and Italy."

That may be true of gross contributions, but it is certainly not the complete picture for net contributions, which are what matter.

The Economic Secretary pulls a face, so let me tell her what the Court of Auditors annual report for 1999 said about the net contributions. She might care to tell us later how that fits in with the Labour party's claims that our contributions are falling to levels similar to those of

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France and Italy. The report gives the net contributions as follows: France, £766 million; Italy, £1,153 million; the United Kingdom, £3,482 million. I should be interested to know how those could possibly be described as similar levels.

I turn now to EU expenditure on agriculture, which the Chief Secretary was brave enough to describe as the most radical reform of the common agricultural policy. He was prepared to go a little further than the Prime Minister, who in his statement following the Berlin European Council said that the Council had brought

"the common agricultural policy under tighter control than before. Agriculture spending by 2006 is planned to be less than 2 per cent. in real terms above its level next year, and falling."—[Official Report, 29 March 1999; Vol. 328, c. 732.]

In fact, agriculture spending, as a proportion of the total EU budget, is undiminished by the decisions made at Berlin, and I understand that the proportion will rise from 44 per cent. in 2000 to 46 per cent. in 2006. The old problem of the EU budget being unbalanced by huge spending on the CAP remains; the Government have made no progress on that, compared with the substantial progress made throughout the 1980s and 1990s. The Government and the Prime Minister have simply failed to deliver.

Mr. Redwood: I wonder whether my hon. Friend is being characteristically generous to the Chief Secretary and the Government by concentrating more on the United Kingdom's net contribution. The Bill will raise taxes on British people to make gross spending commitments far in excess of the net contribution. Does my hon. Friend agree that many of the spending commitments made by the European Commission in Britain are for projects or purposes that we would never support; and that, under the rules, many of the projects are in any case too marginal to be funded directly out of British taxpayers' money?

Mr. Clappison: My right hon. Friend makes an extremely good point. Not only is there a net contribution, but some of the EU money that comes back to this country is not used for purposes that our Government and our people would regard as a priority.

Mr. Andrew Smith: Does this money form part of the £20 billion cuts? Will the hon. Gentleman start listing where they would fall?

Mr. Clappison: We always know when we are hitting a nerve because the right hon. Gentleman has to come up with a completely different subject and a bogus statistic. I have genuine statistics from the Court of Auditors, on which he relies. I have drawn attention to this country's large net contribution and to the Government's statement that it is falling to a level similar to that of other countries. Of course, the Government want to try to cover up the fact that they have failed to get good value for the British taxpayer.

Mr. Bercow: My hon. Friend is a master of understatement, and that is part of his natural charm. Will he confirm that although agriculture expenditure, as a proportion of the total EU budget, will rise by approximately 2 per cent., as he said a few moments ago, it will rise by about 7.5 per cent. in 2001, relative to 2000?

Mr. Clappison: As well as being understated, I am honest, and I have to say that I do not have that statistic

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at my fingertips, but knowing my hon. Friend's great interest in statistics, I would be surprised if he were not correct. Another point that might find favour with my hon. Friend—one with which more dedicated connoisseurs of European statistics than me might already be familiar—is that the financial perspective predicted by the EU often turns out to be an underestimate: spending is often far greater than originally predicted.

There are strong grounds to suspect that EU spending on agriculture does not always meet the highest standards of financial regularity. My hon. Friend might think that that, too, is an understatement, but after the Chief Secretary's opening statement, I am trying to be as objective as possible. I think that the view that I have expressed is common ground among many. The Chief Secretary should be aware of the Court of Auditors' statement on the 1999 budget and the court's identification of unauthorised payments totalling more than 1 billion euros made to farmers under the EU agriculture programme.

We are strongly interested in fraud and irregularity. We note the Chief Secretary's comment about the establishment of the anti-fraud office under Commissioner Kinnock. We wish it well, but hope that the predictions that emerge from that office will turn out to be more reliable than some of those made by the Commissioner in the past. We take fraud and irregularity seriously.

On a related subject, we note that spending on administration—a matter with which the Chief Secretary did not deal—is to rise every year between now and 2006 and is to consume an increasing proportion of the EU budget. Spending on administration already amounts to 5 per cent. of the budget; it is set to rise to 6 per cent. in 2006. In fact, it appears to be one of the fastest growing, if not the fastest growing, items of expenditure in the EU budget between now and 2006. I should have thought that he would have more to say about that, given that it, too, is a cost to the British taxpayer.

The Bill and the negotiations that underlie it represent a missed opportunity for the United Kingdom. Whatever spin they try to put on it, the Government have failed to deliver better value for money for the UK taxpayer. They argue that their approach to the EU has at least preserved the UK rebate—one that was negotiated by a Conservative Government. It is hard to envisage a Government as ineffective in negotiations as the current Government managing to secure such a rebate in the first place.

The Government have made scant progress in addressing the problems of EU finance. It is hard to avoid concluding that, once again, they have missed the opportunity to address UK concerns and bring home better value for the UK taxpayer. The negotiations will benefit taxpayers in other countries, but not in this country. Whatever spin the Government put on it, they have missed an important opportunity.

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