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Mr. Peter Luff (Mid-Worcestershire) (Con): I am slightly surprised by the relatively sparse attendance in the House this afternoon, particularly after the interesting results of the European elections which were declared at the weekend. Perhaps it is a similar situation to that scene in "Fawlty Towers" in which Basil Fawlty says, "Don't mention the war." Perhaps that is what we are trying not to do this afternoon.
This is a debate of huge importance, the significance of which I simply had not realised until I made the mistake of starting to read the documents available for the debate. In that context, I am grateful to you, Mr. Deputy Speaker, for your assistance in obtaining the omission from one of the key documentsthat valuable piece of paper is now in my hands.
Having said that, to my absolute amazement, I must agree with every word of the Government motion[Interruption.] It is not easy, but I am afraid that I must. I associate myself particularly with the following:
"the Government's efforts to refocus allocations within a budget of 1 per cent. of EU Gross National Income . . . and that the future European Union Budget should be reprioritised and refocused in line with the principles of subsidiarity and spending that adds value at the European Union level."
Of course, I am freed from the obligation to speak about regional and cohesion policy, not because it is not important in British terms, as it is for counties such as Cornwallmy father-in-law comes from Cornwall, hence my love affair with the county. It is also important for the whole future of the enlargement project, which is supported on both sides of the House. The enlargement project is tremendously important, and it is tremendous news that the former Soviet countries are now part of the enlarged, democratic European Union, which we want to make a success, as we do future enlargements, as the process has not ended yet.
My part of the world, however, including the constituency of my neighbour, the Minister for Industry and the Regions, the right hon. Member for Redditch (Jacqui Smith), who will wind up the debate, does not benefit from regional policy funding, although we have pockets of poverty, as she and I would admit.
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Mr. David Stewart: Does the hon. Gentleman share my view that it is not just important to help the poorest people in Europe but that there are great export opportunities for the UK to the 10 accession countries? It is a win-win: we help the poorest countries, but we also help UK enterprise.
Mr. Luff: That is absolutely true. I agree entirely with that comment. The spirit of consensus rules yet again. Many concerns have been expressed about outsourcing of service sector jobs to India, for example, but we enjoy a trade surplus with that country at present, because of economic success and dynamism and our successwhich has not always been the casein selling to that country.
Mr. Luff: I guess that my hon. Friend is a member of that Committee. I had forgotten. I repeat that we owe a debt, particularly to him. It is a useful report, particularly the second paragraph of the summary, which says it all:
"The new Financial Perspective will determine the overall revenue and expenditure of the EU and the expenditure on each category of EU activity for the seven years from 2007 to 2013."
"It will also largely determine the net contribution to the EU of each Member State, and the future of the UK's budget rebate."
I do not intend to say anything about the rebate, except that I was delighted to hear the marvellous achievement of my right hon. and noble Friend Lady Thatcher so widely acknowledged throughout the House. I am sure she would be very pleased to hear Liberal Democrats and Labour Members praising her for that historic achievement. I am also delighted to hear of the Government's robust intention to defend the rebate in the face of the rather worrying proposals in the Commission's document.
"As well as determining the shape of the EU's finances it"
"will set the Commission's policy agenda."
Two thirds of the document on which I want to concentrate, "Building our common Future", consists of a manifesto for the development of the European Union, while the remaining third is a bid for funding and management of that funding. We are therefore engaging in a debate of huge significance. The Committee concluded that the decision on the financial perspective was
"therefore one of the most crucial forthcoming EU decisions",
If we look at the missing page that you obtained for us through your good offices, Mr. Deputy Speaker, we
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see that the Commission plans about a threefold increase in spending on
"Competitiveness for Growth and employment",
"Citizenship, freedom, security and justice".
It plans to spend half as much again on the EU as a global partner, and there is a planned increase of a third in administrative costs. I can imagine how both the Chancellor and the shadow Chancellor would feel about a proposal from any UK Department to increase its expenditure by a third over the next seven years. Overall, this is a total increase of 31 per cent. in real terms EU spending.
Tucked away in the document, and highlighted by the Committee's report, is possibly the most horrifying recommendation of alla recommendation for a Euro-tax, to be levied by the EU on individual citizens of individual member states. It would be
"a relatively major and visible tax resource payable by EU citizens and/or economic operators"
whatever they are; it is a lovely phrase. That could partly replace GNI contributions. Three routes are proposed for the securing of tax revenue: a tax on corporate income, a "genuine VAT resource"in other words, a sales tax imposed at European levelor an energy tax. It is all right, we are assured, because
"In each case, the tax burden for citizens need not increase as the EU tax rate need not increase as the EU tax rate could be offset by an equivalent decrease in the rate accruing to the national budget in the same tax, or of the rates of other taxes."
That means the EU becoming more and more like a state, a country in its own right, with its own flag, president and constitution and tax-raising powers. That is huge. I am delighted to hear that the Government are resisting what is, for me, a sticking point, but it is extraordinary that the idea has even surfaced in the document.
I made the mistake of reading the document. I think that every Member should be compelled to read it, because it would horrify most of them. The introduction gives us three hints about why the Commission is driving in this direction. I love this:
"To give Europe a Constitution is a powerful and symbolic act, but it is as yet unrealised. The European Union must continue down the path of integration, and avoid the trap of unwieldy inter-governmentalism."
According to the second principle, Europe has not been doing terribly well economically compared with the United States. That, of course, is true. There is a paragraph on growth rates, and how much better the US has done than the EU-15. The Commission's solution is not the solution it should be proposingderegulation. It says:
"Robust, coordinated and coherent action is needed to reverse this trend."
"value added lies in transnational and Europe-wide action. Here, national authorities are ill-equipped to take into account the full benefits or costs of their actions. Effectiveness requires large critical masses beyond the reach of national governments alone, or in networking efforts made at national level."
"It is a question of political direction, to be made on the basis of a clear vision of what we want to do. These choices will determine whether the European Union and its Member States are able to achieve in practice what European people expect."
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