The unfairness story has been mentioned, but I am surprised that no one has said that the real villain of the piece seems to be France. France's gross contributions have been £9.2 billion, versus our contribution of £7.3 billion, but refunds to France amount to £8.5 billion, versus £3.8 billion to us. The net effect is that France pays £750 million, compared with the United Kingdom's £3.2 billion and Germany's £7.5 billion, but the French economy is broadly comparable in size to Britain's. That seems to be where the main unfairness lies.
I was surprised by the enthusiasm for the agreement, because surely the disappointment of Berlin was the failure adequately to reform the common agricultural policy. I do not understand how central and eastern European countries can join in a hurry until there have been considerably more reforms. We have heard comments about the Polish milk situation, and we are kidding ourselves if we think that enough has yet been done. The iron curtain came down 12 years ago, and it is a disgrace that we are still fiddling away and delaying membership for those states.
I wish to make the fundamental point that the United States, which is relatively homogeneous and has a common currency, has transfer payments of 11 per cent. of GNP. Implicit in the arithmetic before us is that 1.27 per cent. is economically sufficient for the less homogeneous economies of Europe that also now have a common currency. Detailed research does not appear to have been carried out on the fundamental issue of the amount of transfer payments that Europe is likely to need in the future.
My hon. Friend the Member for Hertsmere (Mr. Clappison) made the serious point that administrative costs are rising fast. After the major expenditure on the common agricultural policy and the structural moneys, there is £12 billion of other EU expenses in the budget of which precious little is seen. If £12 billion were spent on education or the health service in this country, it would make a colossal difference. It may be a small sum in terms of pence per citizen of the EU, but that large sum has manifestly not been well spent.
The Chief Secretary failed to refer to that fact that it was not just the Berlin agreement but, as I pointed out, the Council decisions of last September relating to contributions, and he failed to explain his understanding of what paragraph 16 is all about. It does not empower the levying of new European taxes; it invites proposals to do so and to review the British abatement yet again. Its existence, however, puts down a pretty important marker for the future.
The Chief Secretary said that he thought that Berlin had met the key objectives, but does he really think that that is true of CAP reforms? He also said that the effects on the United Kingdom were neutral, but I repeat my question on the significance of the windfall costs.
My hon. Friend the Member for Hertsmere regretted the inadequate reforms to the EU budget generally and made a convincing case that the relative position of Britain will deteriorate a little as the result of Berlin. He explained the costs of giving up the windfall and pointed out a small inaccuracy in the Labour manifesto, which had claimed that the UK contribution would fall to a level similar to Italy's. That is manifestly not the case.
Despite all the hullabaloo about the CAP and the fact that agricultural spending has stabilised at 45 per cent. and is down from the proportionately higher levels of the past, my hon. Friend pointed out that, in absolute terms, expenditure is not down much and will rise slightly over the next year or two. In essence, Conservative Members understand the fairness and approve the shift to GNP, but we believe that there has not been enough reform of the CAP and that there could have been a slightly better deal for the United Kingdom.
The hon. Member for Bexleyheath and Crayford surprisingly expressed surprise that the stealth and lack of transparency concerning many EU matters leads people to be cautious and to wonder what is going on. That is not surprising, and it would be better if communication were much more transparent. However, it is the objective of EMU to create a European state, although not in the traditional sense of the word. As all one's continental friends are clear, the objectives are not just economic, but political.
The hon. Member for Kingston and Surbiton (Mr. Davey) made a gentle, conservative speech that left me unclear about where the Liberal Democrats stand on Europe. I thought that they were much more enthusiastic than the Labour party for full European integration. He said that the Bill is modest and could be expensive for the UK. In addition, he regretted the fact that there were so few reforms to the CAP. Constructively, he wanted to repatriate to nation states expenditure that was not core expenditure. He also challenged the Chief Secretary's assertion that the CAP reform was radical and adequate. We, too, made that point.
The hon. Member for Broxtowe (Dr. Palmer) criticised us for arguing that administrative expenses were rising by too much. He made the silly point that just because it was only a penny or so per person, it did not matter. The absolute sums are substantial and hon. Members on both sides of the House are most critical of the waste in the £12 billion. That cannot be overlooked.
My right hon. Friend the Member for Wokingham plagiarised the Prime Minister. His contribution can be described as vintage Redwood. He made the robust assertion that camouflage is being used, because the Bill is supported by an underlying document which, at paragraph 16, invites the introduction of direct taxation by the EU and a further reduction in the UK's abatement. Even if the net financial deal is collectively reasonable, we should not deceive ourselves that the Berlin agreement is to our explicit financial advantage. It opens up the unknown, which could produce the fifth resource.
The hon. Member for Falkirk, East (Mr. Connarty) was keen on central and eastern European membership and enlargement, which we support. He made the fundamental point that it would strengthen a Europe of democratic nations and make them more outward looking. He also made an interesting contribution on tobacco fraud.
I congratulate my hon. Friend the Member for Leominster (Mr. Wiggin) on his excellent maiden speech. Having lived in that part of the world, I did not know that there had been two Prime Ministers from Leominster. What he said about foot and mouth and rural industries was moving and important. I hope that the Government will take note of it. He also made a significant point about how the CAP contributed towards some of the problems that spread foot and mouth, as well as commenting constructively on how it was mishandled.
The hon. Member for Caerphilly (Mr. David) argued that Berlin was good for Europe. In particular, he argued that it was sensible to have more GNP-based finance than VAT-based finance. However, I question his assertion that the CAP has been brought under adequate control.
I also congratulate my hon. Friend the Member for Tatton (Mr. Osborne) on his equally good maiden speech. He made an excellent and elegant contribution, which demonstrated a gracious handling of his predecessor. [Interruption.] I mean, of course, his immediate predecessor.
The hon. Member for South Derbyshire (Mr. Todd) made an interesting contribution arising from his business dealings with the European Commission. As a taxpayer, he was critical of the waste of money on what he implied were crackpot projects, and of excessive nepotism in the awarding of contractsI hope that his comments did not apply to him personally. He echoed the point made by my hon. Friend the Member for Hertsmere that it is bad news when administrative costs rise at a rate much higher than inflation with no justification.
I also congratulate the hon. Member for Moray (Angus Robertson) on his maiden speech. For those of us who come from south of Watford, it was an interesting education on the family background of Scottish nationalism. He made the interesting point that if Britain were broken up into separate components, we would have more votes in Europe than we do as one country. That is not a justification for Scottish independence that particularly appeals to me.
The hon. Member for Ellesmere Port and Neston (Mr. Miller) gave an interesting history of the original abatement negotiations, from Ian Gilmour's book. He also focused on the EU's ability to tackle fraud, but it seemed to me that he, too, was over-optimistic about the likely effects of the reforms to the CAP so far.
I congratulate my hon. Friend the Member for Castle Point (Dr. Spink) on his splendid retread maiden speechI think that that is the correct phraseand welcome him back to the House. He pointed out that the Berlin summit missed several opportunities, and he gave a vivid vignette of his constituents' sound, down-to-earth views, which rang extraordinarily true to me, being, as many will know, someone who grew up in the splendid county of Essex.
The hon. Member for Harlow (Mr. Rammell) welcomed an early debate on Europe following the general election, but he almost admitted that he knew that his views were not entirely in accordance with those of the majority of his constituents, even though he has, of course, been re-elected. He said that he understood why a majority of the British people tend to be Euro-sceptic, in the correct sense of the word.
My hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) made a splendid, bluntly persuasive speech, during which I observed Labour Members listening intently and, I think, secretly agreeing with much of what he said. He rightly pointed out that there has been no genuine reform of the CAP. He has been waiting more than 20 years for that and expects to wait at least another 30 years, if not for ever. He was healthily sceptical of all the usual optimistic arguments about the wonderful outcomes that never materialise. I remember that it was argued that the introduction of the euro would add 3 per cent. to GNP, but GNP shrank.
My hon. Friend pointed out that enlargement means that objective 1 and 2 grants to the UK are likely to come to an end. That is the Irish pointthat enlargement may be morally right, but we must be clear about what effects it must have that are in our interests. He also seemed to be saying that the EU had attempted to buy his support by making not one but five grants to his constituency, but I feel that there is little prospect of that attempt being successful.