| Previous Section | Index | Home Page |
Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): I am a little bemused. Since the Community's accounts have not been qualified by the auditors for the past nine years, how can we say that it is behaving responsibly?
Mr. Timms:
My hon. Friend makes an important point. This is the 10th year in a row in which there has
7 Mar 2005 : Column 1303
not been a satisfactory statement of assurance about the EU accounts. However, there has been progress in the right direction, particularly after the reforms that Neil Kinnock initiated when he was a Commissioner. Since January this year, an accruals accounting system has been in place, and it is a welcome step forward. To be fair to the Commission, it managed to implement it much more quickly than was widely expected or than has been the case in the UK. From that point of view, there is evidence that the Commission is putting its house in order, but my hon. Friend is right that there is some way to go before people across Europe can be confident that member states' financial contributions are being used properly.
Mr. John Bercow (Buckingham) (Con): Does the Minister agree that one example of the absence of joined-up thinking in the Union is the disparity between what is said on the subject of development and poverty reduction by the European constitution and what is demonstrated by the composition of the European Commission and the allocation of responsibilities? Is he aware that Commissioner Michel, who is responsible for development, has good reason to object to the fact that important parts of what ought to be his portfolio and his responsibility for expenditure are, in fact, in the hands of the Commissioner for External Relations? Is that not an example of the way in which important objectives end up being watered down or compromised by the competing political ambitions of people within the Commission?
Mr. Timms: I would not want to take issue with the hon. Gentleman's expertise on the Commissioners' portfolios, but there are important concerns about heading 4 of the EU budget, which applies to external actions and to which there is reference in the documents before the House. In the next financial perspective, we need an external budget structure that allows us to meet our priorities effectively and enables the European Union to be an influential and effective international development player. A number of issues need to be addressed if that is to be achieved successfully, and the hon. Gentleman may well have hit on one of them.
Chris Bryant (Rhondda) (Lab): Obviously, all hon. Members would want the vast majority of EU development budgets to go to the poorest countries, and the Government have held out for that strongly in discussions with the Governments of other member states. However, there is concern, particularly in Spain, Portugal, France and Italy, about the Maghreb. It is almost the 10th anniversary of the Barcelona protest, but there has been remarkably little progress. Many nations regard the Maghreb countries as our neighbours, who need close attention if they are not to become asylum, immigration and terrorism problems for us.
Mr. Timms:
I agree that we need to give a higher priority to low-income countries to meet the millennium development goals. Those are objectives to which the whole world has signed up. The European Union needs to play its part and we need a budget structure to
7 Mar 2005 : Column 1304
develop that. I also accept that there are issues around the European neighbourhood topic to which my hon. Friend refers, but my view is that those can be satisfactorily addressed within the parameters that we proposed—the 1 per cent. figure that I set out—by working closely with countries that have the characteristics that my hon. Friend mentioned. So I caution him against a view that large additional spending is required in order to address those concerns. I am not persuaded that that is the case.
Mr. Richard Spring (West Suffolk) (Con): Of great advantage to the countries around the borders of the Mediterranean, such as Algeria, are the Euro-Med agreements, which encourage trade and have a civil rights and democracy input. I am sure the Minister would agree that that is a valuable part of the role of the European Union in developing those countries.
Mr. Timms: Yes, I do agree. I had some exposure to that process when I was Energy Minister previously. I agree with the hon. Gentleman about the value of those arrangements.
The next financial perspective gives us a valuable opportunity to make sure that the future activities and priorities of the EU and the principles on which they are based are right for the Union as a whole and for each of its member states, and right for the EU's relationship with the rest of the world, as we have just been describing. We are determined that that opportunity should be realised. The proposals that have been tabled so far do not meet the bill. We are determined, however, that we will reach a satisfactory conclusion. The European Council aims for political agreement on the 2007–13 financial perspective by June. We would welcome that timetable being achieved, but hon. Members will agree that the priority must be that we end up with the right deal for all member states. We are ready, if need be, to take that work forward in the UK presidency in the second part of the year.
4.27 pm
Mr. Richard Spring (West Suffolk) (Con): I thank the Financial Secretary for his opening remarks and I share his concerns that
However, this is an extremely important debate as it is not only the future nature of the European Union that is at stake, but the impact on Britain's public finances. Last year we paid £11.8 billion gross and £4.8 billion net after the £7 billion rebate. Even with the rebate, Britain has been a disproportionate contributor ever since we joined the European Community.
The Government have problems with that already, without the European Commission's proposals which would increase the amount that the UK must contribute to the EU, even if the Government succeed in defending their own budget. I therefore commend the European Scrutiny Committee for recommending the debate. The Committee recognised the significance of the documents before us.
"The new Financial Perspective for the EU 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. It will in practice be binding on the parties to it for those seven years. It is therefore one of the most crucial forthcoming EU decisions, with important consequences for enlargement and the draft constitutional treaty."
Because of the importance of the issue, we encourage the Government
The Government have been high on rhetoric on this issue in the past. In a similar debate in June last year, the Paymaster General described the message being conveyed to EU Foreign Ministers by the Chancellor of the Exchequer as "uncompromising". She claimed that the Chancellor
"made it clear that, when each member state has to take tough decisions on spending and show fiscal discipline, it is unacceptable and unrealistic for the Commission to propose a 25 per cent. increase in its spending."—[Official Report, 15 June 2004; Vol. 422, c. 704.]
Nine months later, however, the same proposals are on the table in a more advanced form. It is time for the Government to translate their rhetoric into action at the European Commission, which is why we want a robust negotiating position to be spelled out. Words are not enough, because the matter is extremely important from a financial point of view.
To illustrate how little progress has been made—we seem to have travelled backwards since the issue was first debated in June last year—I shall briefly examine the history of EU financing. In the 1980s, tension between the two budgetary authorities within the Community, the European Parliament and the Council, disrupted the annual budgetary procedure, which led to a series of budget crises. The result was negotiations between the Community institutions, which led to the first financial perspective in 1988.
The framework lays down a maximum ceiling for spending under different expenditure headings. The current financial perspective, agenda 2000, covers the period from 2000 to 2006, so a new perspective is required. The European Union website states:
"Since the European Union's public finances underwent major reform in 1988 and the financial perspective was created, there has been little change: the financial framework has simply been carried over with a few alterations to accommodate new priorities. It was time to start afresh and think hard about the Union's policies and the nature and number of instruments at its disposal".
Since 1988, the EU has expanded, with the accession of 10 new member states on 1 May last year. Enlargement, a policy instigated by Baroness Thatcher and John Major, and, to their credit, continued by the current Government, was an historic moment. Like the Government, we object to the nature of the reforms proposed by the Commission. The Commission's first proposals were published in February 2004 in the Commission's communication, "Building our common future—policy challenges and budgetary means of the enlarged Union, 2007–2013", which was debated on the Floor of the House on 15 June last year.
In "Building our common future", the Commission considers the enlargement of the Union, rather than proposing a reduction in the maximum size of the EU budget from 1.24 per cent. of gross EU income to 1 per cent., which is the figure that the Government and the
7 Mar 2005 : Column 1306
Opposition want to see. The Commission proposes that the ceiling should remain at 1.24 per cent., and it cites commitments that have already been made, such as payments in the agricultural sector, cohesion policies in the accession states and accommodating Bulgaria and Romania, as an excuse.
In June, the Paymaster General told us that the Commission's proposals were "politically unrealistic and unacceptable". She said:
"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." —[Official Report, 15 June 2004; Vol. 422, c. 704.]
We agreed. My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) stated:
"motion, especially on limiting total spending and on the 'unrealistic and unacceptable' proposals for future spending priorities."—[Official Report, 15 June 2004; Vol. 422, c. 718.]
We can, and do, oppose and improve on the Government's mistakes in the UK Parliament, but by definition, as the Opposition, we cannot formally oppose or improve the European Commission's proposals in Brussels.
The Government promised that they would fight the Commission's proposals on EU financing:
"It is the Government's strongly held view that the Commission's current proposals are not a basis for . . . negotiation. The Government are working with other member states that share many of our principles and areas of common interest".—[Official Report, 15 June 2004; Vol. 422, c. 712.]
What was the outcome of that work? Were the proposals deemed to be not even a basis for negotiation, and scrapped? No—they have been built on. The Government were forced to admit that the Commission's new communication
"fails to respond to the diversity of views held by Member States, including the group of six Member States, including the UK, that wrote to President Prodi calling for the budget to be stabilised at 1 per cent. of EU GNI. It also fails to recognise the need for reprioritisation, so that funds are redirected where they will have most effect."
We now have four documents before us. Two are reports—one on the EU's financial perspective for 2007–13 and one on altering the own resources decision—but two go a step further than mere reports. They are draft proposals. The European Commission is proposing a clear programme for a change that goes against the grain of thinking in Britain and on both sides of the House. Is that what the Government mean by "Forward, not back"? I hope not.
I would like the Minister to explain. Now that we have actual proposals before us, rather than the less concrete plans of "Building our common future", how does the Commission intend to take those proposals forward? What room for negotiation is there in the proposals? How long is the period for negotiation likely to be? When does the Commission plan to issue what I hope will, by then, be substantially altered proposals for agreement? To put it another way, what is the deadline for an agreement to be reached? Can the Minister confirm that, if the worst comes to the worst, the UK or
7 Mar 2005 : Column 1307
any other member state will have the right to veto the proposals? I sincerely hope that that scenario will not come about, but if a member state used a veto, where would that leave the framework for financing the EU? Is there a fall-back position of annual negotiation of the EU budget? I hope he can provide us with answers to those questions. If not, I hope that the Minister will undertake to write to me.
| Next Section | Index | Home Page |