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Chris Bryant: Will my hon. Friend give way?
Mr. Davidson: Yes! I am happy to give way to my colleague.
Chris Bryant: How much precisely would my hon. Friend like to spend on the common agricultural policy, in either absolute or percentage terms?
Mr. Davidson:
I welcome that question and I am prepared to give my hon. Friend a straight and unequivocal answer: nil. I am in favour of the abolition of the common agricultural policy. If there is to be support for areas with a substantial element of agriculture or for areas with regional needs, it should be given through a regional policy. The agriculture and food production industry does not require, and should not receive, subsidy, for all the reasons that we have discussed in other debates, such as the CAP's impact on and destruction of the third world, and the extent to which the policy acts to transfer money from poor
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consumers in my area, whose food is priced up, to wealthy landowners and farmers in other parts of the country while depriving the third world of the valuable income that it needs.
Mr. Hendrick: Over what period would my hon. Friend expect expenditure on the CAP to fall to zero? If it did not fall to zero over that period, would he be in favour of withdrawing the UK from the European Union? [Interruption.]
Mr. Davidson: A suggestion has been made that it should happen in 10 minutes, but that seems unrealistically speedy. We should go into negotiations with our European colleagues and see what progress can be made towards that goal. It would be unreasonable in the circumstances to set a finite timetable. We should not bog ourselves down in that kind of discussion. I suspect that, like many others, my hon. Friend believes that the CAP is effectively unreformable, that we simply have to put up with it, and that it must remain a bottomless pit into which money is poured. I do not take that view; I believe that drastic reform is needed.
Mr. Doug Henderson: I know that my hon. Friend is an experienced political negotiator. What kind of response would he expect his views to receive from European countries, particularly France and countries dominated by parties socialistes?
Mr. Davidson: My hon. Friend is too kind; his negotiating skills are probably far greater than mine, since he honed them in the back rooms of the GMB and elsewhere. But when did he ever go to an employer with a demand for an increase in anything that was beneficial to his members without initially being met with a refusal? It is the process of negotiation that leads to breakthroughs and brings us together.
Further to my points on the extravagance and misallocation of EU budgets, we have discussed the question of good governance in relation to trade and aid—aid in particular. If we applied to the European Union the standards of good governance that we seek to apply to the third world, we clearly would not continue to pour enormous amounts of money into the European Union in the way that we do. We must start to apply standards of good governance to the European Union as well. We ought to say, "No more money until there is reform."
As I said earlier, I support the Government's policy with a skip in my step and joy in my heart. I very much welcome the Minister's statement that—as I understood it—the British Government were in favour of stabilising the EU budget at no more than 1 per cent. and that they would veto the proposal unilaterally if that position could not be agreed. It was noticeable that the main Opposition party also agreed with that. I regret, however, that the Liberal policy on this issue—as on so many others—was entirely unclear to me. The Liberals need to make it clear whether they are prepared to see the EU budget rise by more than 1 per cent. I am waiting to see whether there is any flicker of life on the Liberal Benches; I see that there is not. I regret also that the nationalists tabled an amendment that would have deleted the 1 per cent. stricture on the Government. I waited to hear whether they supported that policy, but
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I was disappointed. I recognise that they perhaps made an error in the way in which they phrased their amendment, but they could have covered the issue in their speeches. However, we are left to presume that they are quite happy to see the EU budget grow and grow, a bit like Topsy.
The Government were perhaps not as clear as I might have wished on the question of protecting the rebate. I understand the general principle that they will be willing to use the veto if the rebate is not protected, but I was unclear as to the scale of the rebate that was being sought. Many of us remember, from our days working in local authorities and elsewhere, the various skills associated with creative accountancy. I would not wish to hear the Government argue that they had preserved the form of the rebate when the figure had in fact been whittled away completely. It is clear that, at present, we are the largest net contributor to the EU budget—that has been the case for a number of years, as far as I can see from recent figures—and on the basis of the EU Commission's proposals, that would continue to be the case. The Government need to tell us what their bottom line is, and to reveal the figure beyond which they are not prepared to go.
My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) talked about the need for co-operation and joint spending. His key point related to whether the EU adds value. There seems to be a whole range of areas in which it does add value to spending by individual countries, and in which it adds value to working together through its structures. However, in a whole range of areas, such as aid and the CAP, the EU actually destroys value. For example, when we compare the amount of money that goes into the EU for third-world aid with the benefits that flow out in terms of spending on the ground, we see that the output is less than the input. In those circumstances, the Government ought to be much more vigorous in arguing our case than they have been until now. This debate has tended to be about absolute figures, but it ought also to be about best value, and about whether value is being added by the EU. It is clear that, in too much of its expenditure and in too many of its areas of interest, higher value is not being added. In those circumstances, the Government should seek to reduce, minimise or eliminate expenditure entirely.
7 pm
The Financial Secretary to the Treasury (Mr. Stephen Timms): We have had an interesting debate that has shown the significance of the next financial perspective for the future direction of the European Union. I have been heartened by the wide support expressed for my contention that a 1 per cent. budget is realistic and affordable, and—with reform and reprioritisation—more than enough to meet fully the needs of an enlarged EU.
The continued inefficiencies and inequities on the expenditure side of the EU budget and the resulting unfairness of the UK position mean that the UK abatement remains fully justified. It is not up for negotiation; we are not proposing changes to the way it is calculated. Without the abatement, UK contributions since 1995 would have been at least 12 times more than
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those of countries of comparable wealth. We reject also the Commission proposals for a general correction mechanism, and for a 34 per cent. increase in the EU budget at a time when member states are having to take pretty tough fiscal decisions about their own spending at home.
A number of Members asked me about the timing for decisions on all this. Negotiations so far have shown increasing support for the position that the UK, among a range of member states, has taken. I think we will gather more support as the negotiations progress, and I am confident that we will secure our priorities in the best interests of the whole EU.
Specifically on the question about the timetable and the deadline asked by the hon. Member for West Suffolk (Mr. Spring), we are happy to work towards a June political agreement—that is, at the end of the Luxembourg presidency—but getting the right deal for us is more important than hitting any particular date, so we are certainly ready to take this work forward in our own presidency if no deal is agreed in June.
The hon. Gentleman gave the impression that ground had been lost since last year's debate, but I do not think that that is true at all. Indeed, the reverse is the case and we have gathered growing support for the position we have taken. He referred to some figures and suggested that the Commission, after the initial proposal of about 1.26 per cent. of EU GNI, came forward with an even higher figure of 1.3 per cent. That is not correct. I think he has misunderstood some figures—I do not blame him for misunderstanding some of the detail—that appear on page 167 of the bundle of documents. They indeed include the figure of 1.3 per cent., but he needs to know what that is.
That figure refers to a maximum budget drawn from the suggestions of all the member states in responding to the Commission's proposals. So, those proposals come from member states, not the Commission. The same table shows the minimum budget drawn from the same source, which is 0.82 per cent. of EU GNI. We see there the suggestions coming from the member states, which lead to a range of budget values between 0.82 and 1.3 per cent. That underlines the fact that our 1 per cent. package is perfectly credible in view of the concerns of the member states, as well as affordable.
There has been some discussion of the common agricultural policy. An agreement was reached at the October 2002 European Council, which provided for a slight real-terms cut in CAP expenditure. We regard those ceilings as maximums, not targets. We want to continue to work to ensure that CAP spending comes below the ceilings. My hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) will agree with last July's trade and investment White Paper, where we said that
"there is no logical reason why agricultural products must be treated in a different way from industrial goods. Our long-term goal will be to abolish progressively, as for industrial goods, all trade-distorting agricultural subsidies".
The hon. Member for North Cornwall (Mr. Tyler) asked where we were when CAP reform was being debated. Of course, we were, as always, playing a key role in an important decision, which was breaking the link between tax-funded subsidies through the CAP and production. That decision on decoupling was a big step forward.
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There has been a good deal said in the debate about the future of EU regional policy. Our approach to EU structural and cohesion funds would provide for greater solidarity and better effectiveness by focusing funds on the least well-off member states, where they would have the greatest effect. My hon. Friend the Member for Luton, North (Mr. Hopkins) suggested that only previous Labour Governments had taken this position, but we are strongly committed to a vigorous regional policy. However, three quarters of all regional regeneration funding already comes from this Government, rather than from the EU, so we have made the commitment that if our reform proposals are agreed, domestic regional policy spending will be increased so that the UK's nations and regions do not lose out.
I say to the hon. Member for East Carmarthen and Dinefwr (Adam Price) that we pay €1.60 for every euro of structural funds we receive. In any scenario, the amounts coming to the UK are bound to be less in future, but his argument seemed to be that it is necessary to keep EU structural funds in place to protect his constituents from the danger of a future Conservative Government. The logic is that he should be urging people to vote Labour to avoid that disastrous outcome.
The hon. Member for North Cornwall made an interesting speech that was undermined for me by his suggestion that the Government are not interested in Cornwall. Anyone who has seen the benefits of objective 1 funding in Cornwall knows that this Government have made the case for Cornwall and promoted the programme whose benefits are being experienced.
My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) made an excellent speech, setting out the value of the EU and the need for budgetary discipline within it—not assuming that every need that arises requires extra EU spending. As he said, we gain enormous benefits from our EU membership. I agree with what today's Financial Times quotes Sir Digby Jones as saying—that we should
He also criticises the Tories' policy on Europe as
Sound budget management, clear focus on objectives and priorities—those can only improve the value of the EU's work. I commend the motion to the House.
Question put, That the amendment be made:—
The House divided: Ayes 2, Noes 360.
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