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3.15 pm

The problem with the CAP is that no one knows any longer what it is for. It has outlived its original intent by many years. It was intended to increase productivity, and to ensure a fair wage for farmers and that the price of food was kept at a fair level. Now, it does almost the contrary on all three counts. Productivity has increased and there is no logic for the CAP's being converted into a social policy. Should intensive farming be encouraged? People tend to argue that, if farmers should receive special treatment, it is as custodians of the environment.

Fundamental thinking is urgently required on the matter and the UK should lead in that. If we do not undertake that, we are not serious about enlargement and the countries of eastern Europe will end up being badly let down. It is a mistake that repatriation failed as an idea in 1999 because other reforms had not reduced prices sufficiently to make it attractive enough. The present crisis in British farming, for example, needs immediate prescriptive attention, which we could provide much more effectively if we were managing our own agricultural policy rather than being forced into the inappropriate straitjacket of the CAP for British farming. By analogy, the only solution for Poland, Hungary, the Czech Republic and the other potential member countries would be for them to manage their own agricultural support policies and to have the freedom to decide what to do, within some broadly agreed cost guidelines.

Today, we are faced with the choice of a yes or no on a fundamental clause of two or three lines that concerns an EU decision which is a good decision in terms of how funding has changed but which is inadequate to meet its overall objective, which is to permit enlargement. I repeat the crucial message that, unless we have a major reform of the CAP—potentially along the lines that I suggested—well before 2004, there will be no enlargement then.

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Jim Sheridan (West Renfrewshire): I pay tribute to my predecessor, Mr. Tommy Graham, who, as many hon. Members will remember, was a colourful character both inside and outside the Chamber.

On behalf of my constituents I welcome the financial reforms to which the Bill commits us. It paves the way for the progressive enlargement of the EU. In doing so, I firmly believe that opportunities for growth, development and prosperity for all my constituents will flow from those reforms. I say that with a note of caution, however, as those objectives will be achieved by the British electorate only if there is a level playing field for worker participation and fair competition for all our businesses.

West Renfrewshire is experiencing significant job losses in the electronics and defence industries. Established companies such as Compaq and Selectron are making people redundant as we speak. Perhaps that reflects the difficulty that that industry is going through, but that is not the case with ROF Bishopton, where BAE Systems proposes the closure of its ammunition- producing facility. That is not happening because the skilled work force are resistant to change or unproductive. Their only drawback in life is that they belong to a country and are employed by a company in which consultation about factory closures and redundancies is a sham. Such companies can move production to other member and non-member countries of the EU with total impunity, at times exploiting the financial benefits that are offered from Europe. That is unfair and unacceptable to the British electorate.

I do not wish to ponder on the negatives of belonging to the EU: benefits flow from it. Tangible evidence can be found in my constituency, where European funding has helped to rejuvenate areas such as Port Glasgow, which has a high level of deprivation. Its people have been ignored for too long. The rejuvenation has been achieved without the taxpayers having to pay increased taxes and without any increase in our overall contribution to the EU budget.

The Labour Government's financial prudence, at home or in Europe, means that many of my constituents enjoy a stable standard of living, with low mortgage rates and even lower levels of unemployment. If we were to accept the Luddite approach to Europe articulated by many in the official Opposition, it would be disastrous for our country, our electorate and, more important, our businesses. Their lack of progress in Europe is consistent with the performance of our countries' national football teams, and let us hope that that will also improve.

Most of my adult life has been spent in manufacturing industry, and I make no apology for that. I have witnessed at first hand the corrosive effect on communities of needless job losses. The hostility shown by the official Opposition to workers' rights was a significant factor in those job losses and a major reason why I entered the world of politics. It is an extremely frustrating and humbling experience to have to depend on our European colleagues in the trade union movement to argue our case in European works councils simply because our British workers cannot be represented there.

In conclusion, it would be remiss of me not to mention my party's constructive partnership not only with our European partners but with the Scottish Parliament—a partnership that, unfortunately, the Scottish National party wishes to destroy. It is unfortunate that a party that claims to want independence in Europe is not present to hear this important debate on European finance.

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Many people have asked me for my assessment of my early days in this House. What has struck me most is the generosity, courtesy and advice offered by my experienced colleagues on both sides of the House. I think that I reflect the views of many of the new Members when I say thank you.

Mr. Edward Davey: I start by paying tribute to the hon. Member for West Renfrewshire (Jim Sheridan) for his maiden speech. It is clear from his first outing in the House that he will be fighting fiercely on behalf of his constituents and their interests, especially on employment in his constituency. I share concerns about job losses in the electronics sector of our economy. The imbalance in the British economy is a problem. We have regional imbalances and an imbalance between the manufacturing and service sectors. I look forward to future contributions from the hon. Member on that subject. He will bring a great deal of expertise and knowledge to bear on our deliberations.

On Second Reading we had a long debate on many issues surrounding EU budgetary reform—the cap, the need for greater accountability and the underlying issues of how the budget could develop. Clause 1 applies specifically to the details of the own resources decision. There are three elements to that decision that deserve discussion, one of which I want to focus on. The first is the change in the weightings given to the different elements of own resources and the switch away from the VAT element to the GNP element. That has been welcomed by hon. Members on both sides of the Committee, so there is probably little more to say about it except that we hope that it will continue. It is good that it has been achieved.

The second element is the ceiling of 1.27 per cent., which was agreed. Hon. Members on both sides of the Committee have generally welcomed that, in the sense that we need to ensure that before the EU takes more of the British taxpayers' hard-earned money it reforms its budget and the way in which it spends it. Therefore, putting a medium-term cap on its size is a necessary discipline, which the Liberal Democrats welcome.

The third element is the triumph that the United Kingdom Government claim for retaining the United Kingdom abatement. It may be a good thing, but there is no information before the Committee to enable it to know whether it is a good thing in the longer term. That may sound like heresy. We all remember Mrs. Thatcher coming back from Fontainebleau having achieved the abatement and claiming that it was a major success for UK diplomacy. Successive Governments have defended the abatement. It may prove that they were right to do so, but I shall ask the Minister some questions to find out whether the abatement is such a success as we have been told.

In order to retain the UK abatement, we have had to give up windfall gains that we would otherwise have achieved from the switch from VAT to GNP and other detailed changes behind the own resources decision, so the question for the Committee and the Government is whether what we have had to give up is more than we have gained from keeping the abatement.

It is clear from the Berlin summit communiqué that the amount that we had to give up was relatively small—the estimate was 220 million euros—but that was not the first

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time that the UK abatement was retained at the expense of windfall gains. In 1988 the Conservative Government negotiated the retention of the United Kingdom abatement. In 1988 and in 1992, windfall gains that might have accrued to the United Kingdom were given up in order to retain the abatement. The Committee will quickly see what I am implying: if by fighting to retain the abatement in 1988, 1992 and 2000 we gave up cumulatively more in windfall gains than would otherwise have accrued to us, we are losing out. That may or may not be the case because I do not have the figures.

The Library could not find in the communiqués issued after the 1998 and 1992 Councils a figure that was given in the same way as in the communiqué after the 2000 Berlin summit—in other words, the 222 million euros. There was no figure on record of the windfall gains that the UK gave up by retaining the abatement.

My question is factual. The Minister may not be able to give me an answer today, although perhaps her officials can help her out. If she cannot give me the figures, perhaps it is a good thing that the Third Reading debate will not be held until 16 October so that we can obtain the figures before we give the Bill its Third Reading. I doubt that there can be precise figures that would enable us to make judgments on the benefit of retaining the UK abatement and the successive amounts that we have forgone because we did not gain from those windfalls.

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