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Chris Bryant: She is still alive.

Mr. Spring: Yes, and I hope that she will remain in blessed memory in hon. Members' minds for ever, whether she is alive or whatever, in the future.

Mr. Bercow: My intervention might be only tangentially related to the future of European Union finance, but before my hon. Friend digs himself in any deeper, may I assert that, in the minds of many, Lady Thatcher will never die?

Mr. Spring: I could not agree more with my hon. Friend. Indeed, as always, he has expressed so much better than I did what I was trying, however inadequately, to say.

The UK deserves the rebate, as it is ill suited to funding the EU through the current mechanisms. The Commission disagrees, however. Its report on "Financing the European Union" claims that

"in any event, granting a correction on an exclusive basis to one Member State appears to be unjustified, especially when taking into account the expected evolution of the net budgetary balances in the enlarged Union under unchanged conditions."

As a result, the Commission proposes to scrap the rebate, and to replace it with a general correction mechanism. As I understand it, that system would be available to any member state making what the Commission describes as "excessive budgetary contributions", but, unlike the current system, it would be entirely conditional on the application of what is called "the threshold" and all member states would be required to contribute.

I am glad that the Government claim not to accept that. As the Secretary of State for Education and Skills said when she was Financial Secretary:

"The Government believes that the current UK abatement remains justified and necessary to correct for the UK's disproportionate budgetary imbalance."

Likewise, the Chancellor of the Exchequer has commented:

"The abatement rebate is fully justified. We made that clear in Berlin in 1999 when the last EU budget was fixed and that continues to be the British position."

Mrs. Dunwoody: I am grateful to the hon. Gentleman for allowing me to intervene. If the UK was unable to obtain a suitable arrangement whereby it retained exactly the same size of rebate, would he—if he were in government—cease to pay into the Community budgets money over and above the agreed sum? Can he make that clear?

Mr. Spring: I can assure the hon. Lady that this situation will not arise—I am confident, and I return to what will happen in a few weeks' time—because such will be the clear message from the British Government on these matters that it will be known that any attempt to move beyond this will be firmly and utterly rejected.
 
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Most recently, the Financial Secretary stated:

"In terms of the Commission proposal for a new Own Resources Decision, the Government's view is that the proposals are unrealistic and unacceptable. The continuing inefficiencies and inequities on the expenditure side of the budget, and the resulting unfairness of the UK position, mean that the abatement remains fully justified and is not up for negotiation."

But these are all words. The Commission's proposals are still on the table. Nothing seems to have been achieved.

Recently, there have been worrying reports that the Government have secured a deal with European leaders to postpone negotiations on the rebate until after the general election. Why is this? What have the Government got to hide? It seems to me that the only possible reason for putting this off until after the election is that the Government are preparing for yet another possible surrender of British interests in Europe. I hope not. It may well be that Britain, holding the EU presidency, may have to take the leading role in resolving this issue, if, as seems likely, Luxembourg is unable to secure agreement by June.

In the unhappy event of Labour winning the election, British taxpayers will be landed with a bill not only for the black hole in the public finances, but potentially, although I certainly hope not, for the loss of the rebate. The Conservative party is as totally and absolutely committed to defending the rebate as a previous Conservative Government were to winning it in the first place.

5.2 pm

Mr. Doug Henderson (Newcastle upon Tyne, North) (Lab): Many of our colleagues in the House probably think that the relevant documents are somewhat esoteric. I am not one who would say that they are necessarily completely wrong on that matter, but, even if they are esoteric, that should not diminish their importance. I rather think that the issues contained in those documents and the policy outlined in the Government motion are central to the important debate that the country will have on the European constitution and, perhaps one day, on the euro itself.

There are more fundamental issues in those documents as to the size of the European Union budget and how the budget is spent than in all the constitutional changes, which I have always seen as methodological. I do not see them as fundamental to how the EU runs and what it does. Not just in Britain, but throughout the EU, people always say, "What are we going to get out of it?" In a way, we are all to blame in that respect, and I concede that I am as guilty as others, or I certainly was in the past.

I recall the public discussion in 1975 on whether Britain should remain in the European Union. In a sense, the earlier vote in 1972 on whether we should be in the EU was more honest. The issue got distorted in 1975 by the question of a little bit of money or a little bit of authority here or there. As a consequence, the British public—we are not unique, as other countries also have this approach—thought that the case for the European Union was wholly dependent on how much money we could get out of the organisation by belonging to it. Before the nationalist parties pursue their amendment, they should think a little more carefully about that. I shall perhaps mention later the importance of the EU to
 
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Scotland and Wales. We need to be cautious, however, about arguing for the European Union on the basis of how much money we get out of it.

In my view, the European Union is about doing things together, not subsidising each other. Clearly, there must be an exchange of resources as different issues are tackled in different eras in the development of the European Union. As I think that the Financial Secretary said in response to an intervention, however, it is not about rich countries cross-subsidising each other so that the poorer parts of Germany subsidise the poorer parts of Britain and vice versa. That makes no sense at all. When considering the EU budget, we need to identify more clearly what are the priorities of the EU. We need to ask what the EU is for as we move forward in the 21st century. Until we do that, our arguments about the financing of the EU will be rather sterile. I shall mention later the context of public opinion, in which finances are important.

Before the public are asked to judge on the finances, however, they should be aware—we all have a responsibility to encourage that awareness—of what the European Union is. I believe that the most important thing for which the European Union stands is the binding together of European countries to protect, to bring stability and security in Europe and to contribute to world security and stability. That is why I am in favour of the European Union—it is absolutely essential that the countries of Europe bind themselves together, and there is no other organisation to do that.

The second argument, in my view, is that a large international organisation, which claims to have, and should have, a major security and stability role, cannot do that without having an important economic role, as the two go together. That is why the European Union must have a major economic role, too. That major role does not need to cost a lot of money, however. Some of the things that the European Union does are costly. Stability and security involve costs, but not colossal ones, because most of the contributions in that area are made by individual members. Some countries in the Union might be better at naval interventions, some at troop interventions, and some, in certain parts of the world—for example, the French in Africa and Britain in some other areas—at contributing to aid programmes and so on. A lot of the resources for that come directly from member countries, but those countries cannot work together unless they are bound by as common a policy as possible. We will not get international security and stability at all if the European Union cannot even agree on priorities in a relatively rich area of the world. Therefore, there are costs in relation to security.

Economic policy can have costs, depending on how it is designed. As long as there is agricultural support, whether in the current common agricultural policy or some other regime, common funds will need to be raised to be disbursed according to rules and regulations agreed by everyone. So there will always have to be discussions about the size of the agriculture budget. Other measures, however—such as the economic initiatives of which, perhaps, a few more should have resulted from the Lisbon agreements—do not involve much cost, apart from a measure of administrative cost. They involve no huge subsidies.
 
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If the enlargement of the European Union is to fulfil the hope of many of us throughout the House that the countries that entered in the last wave will establish values and standards similar to those in existing EU countries, and will aspire to the same economic conditions—if they are to be brought into the house, as it were—there will be some costs to the rest of us. As one who represents a relatively poor part of the United Kingdom, I can say that there will be costs even to areas such as the north-east of England. The structural fund regime that we in the north-east may have expected in the past cannot continue for ever, because of other important priorities in some of the new EU countries.

Some may ask, "What is the point of our being in the EU if we in Tyneside are not getting the deal that we used to get?" They should bear in mind the importance to Tyneside's electrical and manufacturing industries not just of inward investment following active participation in the EU, but of defence contracts for such things as aircraft carriers, which are largely dependent on European security and stability. I do not believe that those contracts depend solely on NATO, although I am a strong supporter of NATO; I think that, in today's world, the EU must play a major role.

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