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15 Jun 2004 : Column 702

EU Finance

[Relevant documents: Fifteenth Report from the European Scrutiny Committee, Session 2003–04, HC 42-xv, The EU's Financial Perspective for 2007–13 and Reform of the Structural and Cohesion Funds; 21st Report from the European Scrutiny Committee, Session 2003–04, HC 42-xxi, paragraph 2, on regional and cohesion policy; 22nd Report from the European Scrutiny Committee, Session 2003–04, HC 42-ii, paragraph 1, on the Financial Perspective 2007–13; Minutes of Evidence taken before the European Scrutiny Committee from the Chancellor of the Exchequer on 20th April, Session 2003–04, HC 528-i; and the Minutes of Evidence taken before the European Scrutiny Committee from the Secretary of State for Trade and Industry on 4th May, Session 2003–04, HC 574-i.]

Mr. Deputy Speaker (Sir Alan Haselhurst): Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.

4.16 pm

The Paymaster General (Dawn Primarolo): I beg to move,

The Government welcome the opportunity to debate the European Commission's communication on its framework proposals for the next financial perspective and its third report on economic and social cohesion. It is of course right that the debate is taking place on the Floor of the House so that all hon. Members with an interest may contribute.

As part of the scrutiny process, the European Scrutiny Committee has asked further questions about the Government's position on the Commission's future financing communication. The Government have given full answers to those questions and I am glad to learn that the Committee shares our attitude that the EC budget should be subject to a rigorous assessment of its value for money and supports the need to appraise existing activities.

On 10 February 2004, the Commission published "Building our common future: Policy challenges and Budgetary means of the Enlarged Union 2007–2013", which set out its proposals on the political priorities of the enlarged European Union, the framework, instruments and levels of EC budget expenditure, and how that expenditure should be financed between 2007 and 2013. That was followed on 18 February by the publication of the Commission's third report on economic and social cohesion, which set out progress made towards achieving economic and social cohesion
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in the Union and the Commission's proposals on the future of the structural and cohesion funds over the same period.

As the European Scrutiny Committee noted, the Commission's communication is an important document, so it is right for the House to have the opportunity to debate its contents. In the communication, the Commission defines its three priorities for the next financial perspective: first, the completion of the internal market so that it can play its full part in achieving the broader objective of sustainable development; secondly, establishing the political concept of European citizenship that is based on the completion of an area of freedom, justice and security, and access to basic goods; and, thirdly, having a Europe that plays a coherent role as a global partner.

Mr. John Redwood (Wokingham) (Con): Will the Minister remind the House what the auditors found regarding the high proportion of waste and fraud in the current disposition of the budget? What action can Her Majesty's Government take to force the Commission to undertake better and wiser expenditure of moneys so that our taxpayers may get a rebate instead of being asked for more?

Dawn Primarolo: The right hon. Gentleman, who follows these debates closely, raises an important issue. We shall debate this afternoon how to ensure that the Commission has an appropriate budget that is clearly based on subsidiarity, and is also based on added value and understandings about appropriate expenditure that is properly monitored and accounted for. I urge him to bear with me as I outline the Commission's view before moving on to the Government's key principles and our objectives in the negotiations. In doing so, I will deal with his points, as well as many others.

The Commission communication sets out its budgetary proposals to support the achievement of its objectives. As for the overall level of spending, it proposes commitment appropriations of more than €1 trillion over the period 2007 to 2013, representing an average of 1.26 per cent. of the EU gross national income, compared with 1.08 per cent. in 2004. The corresponding proposed payments ceiling is about €930 million, averaging 1.14 per cent. of EU GNI, compared with 0.97 per cent. in 2004. Hon. Members will note the wide scope of the communication proposals, which include increases in spending on research, education, training and EU networks intended to boost competitiveness and employment covering: fresh action in the area of citizenship, freedom, security and justice; the integration of the European development fund in the budget; measures to improve the quality and effectiveness of expenditure; a road map designed to bring together goals, objectives, instruments and indicators; proposals on the duration of the financial perspective; and the classification of expenditure.

Mr. Peter Luff (Mid-Worcestershire) (Con): Will the right hon. Lady give way?

Dawn Primarolo: I should first like to make one final point. I stress to the hon. Gentleman that I am setting out the Commission's proposals, which include flexible procedures for adjusting expenditure ceilings.
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Mr. Luff: The document that the right hon. Lady is outlining seems to be one of huge and genuine significance. Is it primarily a matter for the Treasury or the Foreign Office? I understand that the Minister for Europe will respond to our debate.

Dawn Primarolo: I remind the hon. Gentleman that the House is discussing two sets of communications this afternoon—the financial perspectives, on which the Treasury leads, and the cohesion report, on which the Department of Trade and Industry leads. However, it works closely with the Treasury, both on the financial perspectives and on cohesion.

It may help the House if I give the Government's view of the Commission's proposals, which are politically unrealistic and unacceptable. It has failed to grasp the opportunity offered by the negotiation of a new financial perspective to increase the effectiveness and transparency of European Union expenditure and to consider how allocations within a limited EU budget can best be focused on adding value at the EU level, including underpinning the Lisbon strategy for European economic reform. The issues of effectiveness and transparency go to the heart of the questions asked by the right hon. Member for Wokingham (Mr. Redwood).

Mr. David Stewart (Inverness, East, Nairn and Lochaber) (Lab): Does my right hon. Friend share my view that the fact that the UK is a net contributor to the EU budget is a crunch issue? Increasing the budget effectively means that the UK taxpayer is paying twice.

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