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Dr. Palmer: Does the hon. Gentleman's support for the comments of the hon. Member for Rochford and Southend, East (Sir T. Taylor) imply that he agrees with him to the extent that he regrets that we joined the EU in the first place?

Mr. Flight: No. I said that he made an excellent, entertaining speech, and I think that many hon. Members saw a great deal of hard truth in it. It is good that none of us has falsely glossy views. Whether we should have joined is a different subject from what will happen in future. My hon. Friend's main point was that there is nothing that anyone can do about that at present—a powerful point that was aimed at all of us.

My hon. Friend also asked what the cost of giving up our windfall payments would be. Specifically, albeit on a matter not directly related to Berlin, he asked the Government how much the sale of our gold holdings and the conversion of the proceeds into euros has cost. Many hon. Members, including me, have asked Ministers that question and there is no justification for their not having

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replied. They could give a conditional reply—that the figure is such and such at such a such a rate of exchange—but it is poor not to have replied at all.

Sir Teddy Taylor: I am sorry to interrupt my hon. Friend's splendid speech, but is he aware that today I received a reply to a written question that I put to the Treasury, in which I asked how many euros we had bought and what we had paid for them? All I received was a load of codswallop that does not state how many we have bought or the price paid for them. Why will the Government not tell the people how many they bought and what they cost, so that the people can know how much money they have lost? Is Parliament not meant to be a place in which we hold the Executive to account and get information?

Dr. Spink: Hear, hear!

Mr. Flight: My hon. Friend expresses my views entirely. I hope that we have the support of the hon. Member for Bexleyheath and Crayford in fighting the European habit of being obscure rather than transparent that appears to be creeping into British Government.

The hon. Member for Wimbledon (Roger Casale) overstated the extent of reforms to the CAP, especially in relation to what is needed. We heard a lively and most enjoyable speech from the hon. Member for Brent, North (Mr. Gardiner), but I put it to him that linoleum is as out-of-date a floor covering as the CAP is a way of managing agriculture. He would be extremely lucky if the average family in his constituency were £70 a week better off as a result of the modest reforms that have so far been made.

I welcome the new hon. Member for Bassetlaw (John Mann), who came across as a decent and down-to-earth Englishman. He made some useful comments about the reality of bargaining power and he is, rightly, a keen supporter of enlargement. I also welcome the new hon. Member for Morley and Rothwell (Mr. Challen), who made a balanced contribution to the debate in which he emphasised the importance of greater accountability.

The Berlin deal was not unreasonable, although we think that it could have been better. We would have liked more reforms to the CAP and we fear that the lack thereof will further delay enlargement to eastern and central Europe. None the less, we understand that bargaining had to be done and that the deal struck was probably not a bad one. We are concerned about what else has been opened up by the agreements made at last September's Council, and I should be interested to learn about the Government's attitude to paragraph 16—an issue to which the Chief Secretary did not respond.

We shall not oppose the Bill, but we look forward to scrutinising it in a great deal more detail in Committee in about 12 days' time on the Floor of the House.

9.33 pm

The Economic Secretary to the Treasury (Ruth Kelly): The debate has been very interesting. The hon. Member for Hertsmere (Mr. Clappison) called the Berlin

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summit a profound disappointment and a missed opportunity. In fact, it was not only an opportunity grasped but a negotiating triumph.

Before the Berlin summit, the Opposition set the Government three key tests: first, to limit the own resources ceiling; secondly, to secure the United Kingdom abatement; and, thirdly, to increase or improve our level of structural funds. Not only did we deliver on all three tests, but we achieved the most radical reform of the common agricultural policy since its inception and a real-terms reduction in European Union spending.

The right hon. and learned Member for Rushcliffe (Mr. Clarke) has advised his own party to listen and engage constructively with Europe. The right hon. Member for Kensington and Chelsea (Mr. Portillo) advised his party to turn down the volume on Europe.

Mr. Forth: No chance.

Ruth Kelly: I can already hear that Opposition Members are unwilling to listen to that advice. In fact, the attitude of the right hon. Member for Bromley and Chislehurst (Mr. Forth) shows clearly that if, by some chance, the Opposition were in government, there would be a rerun of the situation that existed the last time that the subject was debated, in 1994. There would have to be a motion of confidence in the Government, and the Conservative party would be torn apart by factionalism and rivalry.

I exempt from my remarks, partially at least, the hon. Member for Arundel and South Downs (Mr. Flight). I was extremely pleased that he acknowledged that the outcome of the Berlin Council was not a bad deal; that is praise indeed. Respite from the comments and bickering of the Opposition came from several excellent maiden speeches. I apologise to the House for not being in the Chamber to hear all of them all the way through. I congratulate the hon. Member for Leominster (Mr. Wiggin) on his contribution and his warm tribute to his predecessor, Peter Temple-Morris, and his diligent work in his constituency. The hon. Gentleman drew attention to the damaging impact of foot and mouth disease and the need to reform the common agricultural policy; he also made a passionate defence of farming interests, a sentiment that can unite both sides of the House.

The hon. Member for Tatton (Mr. Osborne) paid fulsome tribute to his predecessor, Martin Bell—at times the scourge of both sides of the House. The hon. Gentleman referred to the beauty and historical nature of his constituency in an eloquent speech. He is clearly a representative of the new, inclusive Conservative party, but it was a shame that he was caught up in the false rhetoric and claptrap of the anti-Europeanism that dominated contributions from the Opposition.

The hon. Member for Moray (Angus Robertson) made a passionate defence of his constituents; I welcome him to the House. He too paid tribute to his predecessor, Margaret Ewing, and made a passionate defence of fishing interests, a subject on which, no doubt, he will make many further contributions in the House.

The hon. Member for Castle Point (Dr. Spink) described himself as a semi or partial retread. He clearly enjoyed making his second maiden speech to the House; I enjoyed listening to him, and I am sure that he will play a full part in the proceedings of the House in future.

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The hon. Member for Hertsmere, who opened for the Opposition, made several points and called the Berlin summit a missed opportunity. He pointed out that the United Kingdom's net contribution will be about £4 billion this year and that the position of other member states has improved. However, he fails to appreciate that although Germany, Austria, Sweden and Denmark pay reduced contributions, because their share of the UK rebate has decreased, in fact the money has been reallocated among the other 14 member states, and our contribution has remained unchanged.

I shall set the matter of windfall gains straight once and for all. Opposition Members asked repeatedly how much we forwent. The answer is 220 million euros. The precedent for forgoing windfall gains was set by the previous Administration—first by Margaret Thatcher, then by John Major. Before negotiations on the new own resources decision, two windfall gains associated with changes to the financing system were given up. In 1988, the Conservative Government gave up a windfall gain when the GNP resource was first introduced; then, in 1994, when the VAT contribution was reduced—which increased member states' GNP contributions—the Conservatives agreed to forgo that windfall gain as well. The effect of these has been cumulative.

The only new windfall gains given up at Berlin were an amount of expenditure equivalent to pre-accession aid upon enlargement, and the increasing collection costs against the traditional own resources. The UK gave up those windfall gains to achieve a position that can be described unequivocally as not a euro more, not a euro less.

Mr. Edward Davey: I am grateful to the Economic Secretary for giving way, and I take this opportunity to welcome her to her position. Is the windfall gain a genuine windfall—in other words, is it a one-off gain that Britain would have got, or would it have continued over the period to which she is referring?

Ruth Kelly: The main windfall gain is the windfall gain that we would incur as a result of enlargement. If our spending on pre-accession aid was subject to the rebate upon enlargement, we would have a one-off gain. That clearly would not be fair. We have therefore sacrificed a one-off gain.

The hon. Member for Hertsmere questioned whether the UK's net contribution would be equivalent to that of France and Italy. I can tell him that it certainly will be. By 2006—assuming that six new member states join the EU, as is the common assumption—that will be the case. The hon. Member for Arundel and South Downs, who called France the villain of the piece, will no doubt be pleased that, as a result of the agreement, France will be paying relatively more towards the UK rebate.

Several hon. Members spoke about fraud. My hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) spelled out some of the measures that the Government are taking. Any fraud against the European Union budget is, of course, unacceptable, and the UK has been at the forefront of measures to combat the problem. Member states must work with the Commission to ensure that the part of the budget for which they are responsible is administered in accordance with the principles of sound financial management. The UK has supported measures

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to make member states accept their responsibility for administering Community funds—for example, through the introduction of fines for errors in the structural funds caused by inadequate member state controls.

As my right hon. Friend the Chief Secretary said earlier, the newly established European anti-fraud office was proposed by my right hon. Friend the Chancellor of the Exchequer. It has independent powers to seek out and investigate fraud against the EC budget. It is doing a good job already and has carried out a number of major investigations.

Alongside the establishment of the anti-fraud office, the Commission is revising its internal procedures to reduce further the scope for fraud to take place. Neil Kinnock has been appointed Vice-President of the Commission with special responsibility for reform, and we fully support his programme, which will modernise the administration of the Commission.

The radical reform strategy that Neil Kinnock proposed must be delivered by the end of 2002, but already it has introduced a code of conduct for Commissioners and Commission officials. It has published a whistleblowers' charter, established new and fairer arrangements for appointments to senior posts, and begun the major process of modernising the Commission's financial management procedures to establish clear lines of responsibility for preventing fraud and waste.

The reforms proposed by Neil Kinnock are far reaching, and we cannot expect them to be implemented overnight. It is important to their success that the reforms are subject to proper consultation and that they proceed by agreement. We are confident, however, that the programme of reform will be completed on time and that it will prove a strong safeguard against fraud.

The hon. Member for Kingston and Surbiton (Mr. Davey) called for wider budgetary reform and CAP reform. He argued that the Government should focus on outcomes. He noted that the 2001 EC budget is subdivided into policy areas. I assure him that that is an element of Commission reform that the Government strongly support. We have pressed and will continue to press for clear objectives and performance indicators for all EC expenditure programmes, and timely evaluations as part of the Commission's proposed move to activity-based management.

I completely disagree with the hon. Gentleman on reform of the common agricultural policy. At Berlin, we achieved significant price cuts for cereals, beef and milk. The intervention price for cereals was reduced by 15 per cent., and for beef it was reduced by 20 per cent. over three years. Dairy support prices were reduced by 15 per cent. over the three years beginning in July 2005. Those changes do not go as far or take effect as quickly as we would have liked, but they are nevertheless a significant achievement. They ensure that European beef and cereal prices will be brought closer to world levels.

The Agenda 2000 package will mean lower prices for consumers. It will be worth about £70 a year for an average family of four. As a result of the reforms, overall spending on the CAP will decline in real terms from 2002. As well as price reductions, the discussions in Berlin of the common agricultural policy also led to the introduction of the CAP second pillar. That will ensure that the CAP moves away from production-based subsidies and towards a greater focus on rural

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development. We have so far introduced schemes to improve and conserve the environment, including support for countryside stewardship, woodlands and organic farming.

We are also providing support to develop diverse and sustainable rural businesses. For example, such support is provided through the rural enterprise scheme and through processing and marketing grants. The reform package includes provision for member states to target up to 20 per cent. of direct aid funds on rural development measures. The UK has already introduced that change. Agenda 2000 in Berlin delivered a significant and welcome reform in the common agricultural policy, and we are keen to build on that reform in future rounds of discussion.

When I heard the contribution of the right hon. Member for Wokingham (Mr. Redwood), I thought that he was about to launch his own leadership bid, but he seems to have missed the boat on that issue, as on so many others. Throughout his speech, he referred to paragraph 16, by which he meant article 9. If he had scrutinised his previous actions, he would have seen that he endorsed a similar decision in 1994. The European Communities (Finance) Act 1995 states:

That position did not lead to a new EU tax then, and it will not do so now.

The right hon. Gentleman also questioned the validity of spending structural funds. I emphasise that such funds play a key role in the development and regeneration of areas. For example, they are worth almost £300 million to Cornwall over the seven-year planning period of the EU document. Other areas—south Yorkshire, west Wales and the valleys, as well as Merseyside—will also receive substantial funds.

We heard from my hon. Friend the Member for Caerphilly (Mr. David) about his personal experience of the common agricultural policy, and also about the application to south Wales of objective 1 status and its benefits for his area. We have seen subsidiarity at its best.

Several hon. Members spoke about increases for administrative expenditure in the EU budget, but they failed to note what that expenditure is for. Part of the increase is needed to fund the necessary costs of Commission reform. I wonder whether Opposition Members would question whether that is money well spent. Of course, the United Kingdom wants the same discipline applied to the EU budget as is applied to the national Budget. We shall continue to press for budget discipline.

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