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House of Commons

Tuesday 1 November 2005

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

EU Rebate

1. Daniel Kawczynski (Shrewsbury and Atcham) (Con): If he will make a statement on the Government's position in the budget negotiations on the United Kingdom's rebate from the European Union. [23241]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): We are committed to working for a deal at the December European Council. Our position on the abatement remains as set out by my right hon. Friend the Prime Minister in this House on 20 June.

Daniel Kawczynski: I thank the Secretary of State for that answer. Does he agree that securing the rebate was a tremendous achievement by Mrs. Thatcher and that it would be incorrect to give it up, as certain Cabinet members have suggested in the press, while fraud accounts for between 7 and 10 per cent. of the EU budget? Does he agree that if we gave up the rebate, every penny piece, which should go to our schools and hospitals, would go on fraud in the European Union?

Mr. Straw: I was in the House when the then Prime Minister, Margaret Thatcher, explained what she had done, and we were very unimpressed. She had to go for a rebate because of the consequences of her disastrous economic policies, which plunged Britain into recession, put 3 million people on the dole and made the United Kingdom one of the poorest countries in the whole of the European Union. [Interruption.] I am surprised that Conservative Members are laughing about 3 million people being unemployed. That was the reality 20 years ago, and many of our constituents remember it, which is why they have refused to return a Conservative Government since 1997. Thanks to this Government, far from being one of the poorest nations in Europe, we are now one of the most prosperous, so the context for negotiation has changed.

Mr. Doug Henderson (Newcastle upon Tyne, North) (Lab): I know that my right hon. Friend needs little encouragement to argue the British case both in this
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House and when he meets European colleagues. Will he raise the profile of the fairness of the budget distribution within the European Union and emphasise that the issue concerns not only an abatement or budget rebate, but finding a fair system that allows us to pay our fair share, which is no more and no less than our major partners?

Mr. Straw: We intend to have detailed discussions for the first time since the June Council at the General Affairs Council, which will meet next Monday 7 November. My hon. Friend is right that fairness is the issue. The current abatement is an anomaly, but it is an anomaly on an anomaly, and the most profound anomaly is the structure and funding of the common agricultural policy. That is the reason why we are seeking a review mechanism within the next financial perspective to ensure major and significant reforms of the CAP and a better distribution of the funding of the overall EU budget.

Mr. Eric Forth (Bromley and Chislehurst) (Con): Will   the Foreign Secretary tell us whether the rebate is non-negotiable in those terms? Alternatively, will he reassure the House and the people of this country that if there is no reform of the CAP, there is no question of renegotiating the British rebate? Will he please answer those questions unequivocally?

Mr. Straw: What I can tell the House unequivocally is that, as my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) has said, the rebate is currently fully justified. We are seeking a fairer system of funding, and if the reason for the rebate—the unfairness over time of the CAP—were to fall away, the case for the abatement would fall away. However, I will not anticipate the consequence of the discussions that will take place over the next two months.

Mr. John McFall (West Dunbartonshire) (Lab/Co-op): May I support the right hon. Member for Bromley and Chislehurst (Mr. Forth) by asking the Foreign Secretary to dismiss any suggestions that the rebate should be discussed before the bloated CAP programme is rectified? There should be a common EU-US policy on the Doha round in Hong Kong to allow developing countries at least half a chance of getting their goods into the rich man's network. It is only after those things have been achieved that we can even begin to discuss the rebate.

Mr. Straw: We are bound to discuss the rebate in the context of the future financing arrangements for 2007–13. That is unavoidable, because the current arrangements are on the table, where they have been since last June. I fully share my right hon. Friend's concerns about the structure and fairness of the budget, which is why we refused to reach a deal at the June Council and have clearly set out what we regard as an acceptable context for a deal in December.

Mr. Graham Brady (Altrincham and Sale, West) (Con): We are four months into a presidency that lasts six months—two thirds of the way through—yet last week I was told in a written answer that the Government have yet to present any presidency proposals for the 2007–13 budget. When the first ministerial discussion is
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held on 7 November, will the Foreign Secretary at least make it clear that the UK will make no concessions, including on the rebate, merely on the promise of a review of farm spending in 2008–09?

Mr. Straw: We set out the circumstances in which we are willing to reach an agreement. The House has the reassurance of not only what I promise here but our refusal to do a deal in June because the offer from the Luxembourg presidency was not acceptable. We need a budget that is fair to all, takes account of the changed circumstances—happily, the UK is a much more prosperous nation now than it was 20 years ago—looks forward and shifts more funding towards the future of Europe, especially research and development, rather than its past, namely, agricultural spending. No responsible Government would anticipate the precise nature of any deal, or outline it until it was done.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab): My right hon. Friend knows that the EU budget was set in accordance with the strategic objectives that were identified, one of which was prosperity. In identifying that, the need for investment in training and education, small and medium-sized businesses and research and development was also recognised. If the spat on the rebate ends with the budget not being signed over in December, what will be the effect on that objective? Is it likely to have a detrimental impact on growth in the EU?

Mr. Straw: If there is no deal on the budget this or even next December, under the treaties, existing budgets are simply rolled over so that the budget's current structure is frozen, including the disproportionate amount that is spent on the common agricultural policy. We want a more significant proportion of spending to be devoted to research and development. I am pleased to   say that we have the support of the president of the EU Commission, President Barroso, but we have a long way to go before we convince all our EU partners, especially France and other countries that are heavily dependent on agricultural subsidies, that that is the way forward. That is the purpose of the negotiations in the next seven weeks.

Mr. John Redwood (Wokingham) (Con): Will the Foreign Secretary hold urgent talks with our French partners about the matter? Does he agree that, unless we can remove the French obstacle on the agricultural budget, the EU can make no sensible proposal through the trade commissioner to help the Doha talks, and that we will therefore do nothing to help the struggling third world, which needs to export into our markets?

Mr. Straw: I have urgent talks all the time with our French colleagues—that is the easy part. It is more difficult to get them to agree with the position that we and other member states have taken. Agricultural subsidies and the Doha round were discussed at the special meeting of the General Affairs Council two weeks ago today. France sought a change in the negotiating mandate for the Commission and it was not   successful. The existing mandate was confirmed. We realise—and others in Europe would do better to realise—that the level of subsidy for farming is proportionately higher in Europe than in the United States.
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