2003 Draft Preliminary Budget

[back to previous text]

Mr. John Wilkinson (Ruislip-Northwood): May I reiterate the salutation from right hon. and hon. Members at serving under your chairmanship, Mr. Benton?

What is the Treasury's estimate of the United Kingdom's gross and net contributions to the European Union in 2003? Why were those figures not included in the Chancellor's statement yesterday, given that they constitute an enormous opportunity cost for the United Kingdom, especially pensioners, whose living standards are steadily declining?

Ruth Kelly: Those figures, as far as it is possible to provide them, are in the public domain. The 2003 preliminary draft budget implies a UK gross contribution of £8,455 million after an abatement of £3,075 million. It is not possible to provide an accurate forecast at this stage of what our net contribution implied by the 2003 preliminary draft budget is likely to be, as that will depend on inherently uncertain future receipts. However, we publish trended forecasts of the UK's fiscal year net contributions, which are published in the Red Book and the pre-Budget report. The trended net contribution forecast for 2003–04 published in the latest document is £3.2 billion.

Mr. Hopkins: I was going to ask a similar question about trends in our net contribution. I support my hon. Friend's statement that it is in Britain's interests to keep budget spending down, but would it not also be in Britain's interests to see a substantial shift from agricultural spending to structural fund spending? Should we not promote that more strongly?

Column Number: 007

Ruth Kelly: I agree entirely with my hon. Friend. It is in our interests to see a reform of the common agricultural policy, but he will recognise that we are in the vanguard of pushing for that reform. We want to see a move from production-based support to support for goods that the public really wants, and to the promotion and sustaining of our rural environment. We will continue to press for that, and I am pleased to say that the Commission suggests an interesting—and, given its point of view, relatively radical—package of reforms in the mid-term CAP review. I hope that we can persuade other countries to sign up to it and perhaps push the Commission even further down that line.

Mr. Luff: It was remiss of me not to welcome you to the Chair in my opening point of order, Mr. Benton. I apologise for that omission.

The Minister will have expected my second question, which is on the European Parliament and the budget, an issue on which the European Scrutiny Committee may want to scrutinise the Government. The Committee points out that the provisional preliminary draft budget is below the financial perspective ceilings set, and that the European Parliament has a habit of wanting to allocate that in full. Will the Government encourage the Council to examine closely the European Parliament's bids for extra spending?

Ruth Kelly: Of course we engage in constructive negotiations with the European Parliament, recognising that it has its own priorities and that we should try to accommodate them while seeking to preserve maximum budget discipline. An aim of the preliminary negotiation of the draft budget will be to secure as large a margin as we can underneath the current ceilings to give us room to manoeuvre. Of course we shall continue to monitor the proposals of the European Parliament as closely as possible.

David Cairns: Although I do not expect my hon. Friend the Minister to negotiate reform of the CAP successfully on Thursday night, she will be aware that it remains a priority for this country. We should bear in mind the way in which other states have used single issues, such as Spain's objections to the incorporation of Gibraltar airport into the single European sky, which held that project up for a long time.

Will the Minister raise with her French counterparts the issue of France's disgraceful and illegal decision not to allow British beef to be imported into France? Perhaps she could tie that in to some reforms that the French Government might want to make, as they are obviously jeopardising the entire project. The problem is causing real pain to farmers throughout the United Kingdom, especially in Scotland, large parts of which were not affected by BSE in the first place. I am sure that my hon. Friend understands their anger.

Ruth Kelly: My hon. Friend raises the issue of British beef. As I am sure that he and other hon. Members are aware, we are going through a legal process. It is clear that the French are breaking European law, and it is a benefit of our membership of the European Union that we can take such matters

Column Number: 008

through the courts. The British Government continue to urge the French to change their policy on British beef and recognise the fact that our beef is among the safest in the world.

As I told my hon. Friend the Member for Luton, North (Mr. Hopkins), we also continue to press for radical CAP reform, which decouples direct payments from production support.

Mr. Robert Walter (North Dorset): Paragraph 23 of the Minister's explanatory memorandum says:

    '' ''The Community budget has significant financial and policy implications. Since the UK is a net contributor to the EC budget it is in the UK's interest to restrict growth in the budget''.

We contribute €13.8 billion from a total budget of €100 billion. The size of that sum led me, when I was a member of the Scrutiny Committee, to suggest that the debate be held on the Floor of the House.

I shall ask the Minister about two matters related to the statement in the explanatory memorandum that the Government's key priority would be to press for reductions in the preliminary draft budget proposals. First, will she tell the Committee what discussions she has had with other member states about alliances that could be built in the Council of Ministers to achieve those reductions? Secondly, would she go along with the spirit of the Foreign Secretary's statements during the Adjournment debate on European affairs that if matters came to a vote, the vote should be public?

Ruth Kelly: I am delighted to say that we have established constructive working relationships with other member states in the European Union—in great contrast to the situation under the Conservative Administration. We have secured a deal that preserves the rebate. If the hon. Gentleman cared to examine recent figures, he would see that after the abatement the United Kingdom gross contribution will be 14.21 per cent. compared with 23 per cent. for Germany, 17.31 per cent. for France and 14.22 per cent. for Italy. We have constructive working relationships and are not forced to vote on issues. We win our case by persuasion, and we have secured a good deal for Britain.

Mr. Hopkins: May I draw the Minister's attention to fish? Her memorandum refers to additional money for restructuring fishing fleets. I understand that Spain is a large beneficiary of European Union fishing expenditure, yet it has possibly the largest fishing fleet and has derived most benefit from the Community's open seas policy. Will my hon. Friend consider the justice of the distribution of expenditure on fishing by the European Union, given that British fishing has suffered substantially? We have a long coastline and a big fishing industry, which has suffered greatly from European fishing policy.

Ruth Kelly: I certainly welcome the Commission's recent review of the common fisheries policy, which proposes a comprehensive reform package to tackle over-fishing and ensure that there are sustainable fisheries both in and beyond EU waters. The proposed reforms have a cost element, which has yet to be fully scrutinised and debated by member states. However, the overall package moves us in the right direction. My

Column Number: 009

hon. Friend is right to draw to my attention the predicament of fishermen in the UK.

Mr. Wilkinson: I want to follow on from the pertinent question asked by the hon. Member for Luton, North. Given that the flexibility instrument is having to be deployed since spending on compensation for British fishermen has, needlessly, been made redundant by the failure of the CFP to conserve fish stocks, has the Minister studied the Norwegian and Icelandic examples? Those countries have no need for such moneys to be disbursed because they conserve their fish stocks effectively. Has the Treasury examined the relative financial merits of pulling out of the CFP and maintaining flexibility instruments at the expense of the British taxpayer?

Ruth Kelly: The hon. Gentleman's views on fishing are well known in the House.

Mr. Ivor Caplin (Hove): And on Europe.

Ruth Kelly: Indeed, as my hon. Friend says, so are the hon. Gentleman's views on Europe; I know that he would like us to withdraw from the CFP and the European Union. Of course, I fundamentally disagree with him about the benefits of being part of a common approach and a single market, on which 3 million jobs depend, because we certainly benefit from the single market. For example, in financial services, we have seen a sharp fall in gas prices as a direct result of being part of the single market. I have spelled out the package proposed by the Commission. I believe that we should take these matters forward in collaboration with our European partners, and I shall continue to negotiate in the same vein.

Mr. Luff: I shall interrupt my flow of questions because I want to continue on the issue of fishing. I am intrigued by the Minister's defence of the CFP, a policy that even a Commissioner would not defend, and certainly a policy that even the most enthusiastic European should accept has been a disaster for Britain's fishermen. How is it possible to develop a draft budget when that policy is up for grabs? The review must be completed by December 2002 or the policy falls. A wild array of possibilities are open to the Commissioner who puts together the budget, from no expenditure at all, if the CFP is not renewed, to significant new expenditure to cope with its restructuring. How can that be accommodated in the time scale for the budget?

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 16 July 2002