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The hon. Gentleman will know from the opinion poll that has just been published that support for the European Union has declined among the people of Europe. I think that it is down to 39 per cent. I know that my hon. Friend the Member for Glasgow, South-West will think that that is because of the tenure of a former Minister for Europe, but it is a major problem. In a country such as Latvia, which has just joined, the approval rating is down to 29 per cent. That is a pretty sad state of affairs. It means that we have not effectively communicated with the people of Europe about the benefits of their country being in the European Union. That is why
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publications such as the one that I mentioned are important and why it is important that we spend money on such publications, even if they include a back-of-the-head photograph of the hon. Member for Stone.

Kelvin Hopkins: When a nation disapproves of an institution, could it be that there is something wrong with the institution, and not just that we have not sold it very well?

Keith Vaz: That may be so. My hon. Friend has a very principled position on these issues. He wants to withdraw the United Kingdom from the EU— [ Interruption. ] I am not sure whether that agreement came from the Conservative Front Bench and represents official party policy. My hon. Friend wants to withdraw—

Kelvin Hopkins indicated dissent.

Keith Vaz: I am glad to see that my hon. Friend does not believe that we should withdraw. If he believes that we should remain in the European Union, we should continue to ensure that we use our position to campaign effectively for what is best for the people of this country.

Mr. Davidson: Like my hon. Friend the Member for Luton, North (Kelvin Hopkins), I do not believe that Britain should withdraw from the European Union. I accept the point made by my hon. Friend the Member for Leicester, East (Keith Vaz) that we ought to be campaigning for what we want to see, but does he not accept that the way in which Britain conceded, virtually entirely, on the common agricultural policy was a complete abandonment of our responsibility? He almost suggests that we alone were in favour of enlargement and the only way in which we could get anyone else in continental Europe to accept enlargement was to stuff their mouths with gold. Surely that is not the case. Many others were in favour of enlargement, and we capitulated far too easily.

Keith Vaz: I know that my hon. Friend is speaking in the blunt Glasgow tones that he has always used, but we have stuffed nobody’s mouth with gold. The deal was the one that we entered into as the champions of enlargement. [ Interruption. ] I see that my right hon. Friend the Member for Rotherham (Mr. MacShane), another former Minister for Europe, has just entered the Chamber—we have a former Ministers for Europe club here. Like me, and all who have occupied the position, he pushed the enlargement agenda forward. Many countries wanted to prevent enlargement, as we know from the fact that, even during the presidency, there was an attempt to prevent the opening of negotiations with Turkey. Various deals were done to ensure that that happened.

We did drive the process forward and should be proud of the new countries that joined the European Union on 1 May 2004, because contrary to what Members on the Conservative Front Bench have said—I do not hold the hon. Member for Chipping Barnet (Mrs. Villiers) responsible because she was not an MP at the time, but I do hold the hon. Member for Altrincham and Sale, West responsible—there has not been chaos or a shambles.
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Conservative Front-Bench Members predicted that those who came to this country following 1 May 2004 would clog up our benefits system, but the latest report from Ernst and Young suggests that the arrival of people from the new member states—people similar to the ancestors of the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski)—has benefited the British economy.

Mark Pritchard: The hon. Gentleman is absolutely right to suggest that Britain has benefited from many people from many different European Union countries. However, he refers to the figures. Was is not the case that the Government suggested that there would be 13,000 new entrants to the United Kingdom, when, in fact, the figure is more like 132,000?

Keith Vaz: So what? Those people have contributed enormously to our economy. According to the Ernst and Young report, those who have come from Poland, Hungary, Lithuania, Latvia and all the other countries have contributed to our economy and kept interest rates down. Some can even be found assisting the refurbishment of the property of the leader of the UK Independence party, Mr. Roger Knapman, who wanted to stop them coming into the United Kingdom.

John Bercow: On a point of order, Madam Deputy Speaker. I seek your guidance. It is obviously important that accurate information should be vouchsafed to the House. It seemed to me, in all innocence, inherently improbable that my hon. Friend the Member for Stone (Mr. Cash) would be depicted favourably, or at all, in a publication from the Foreign Office. I have scoured it, hither and yon, and he ain’t there.

Madam Deputy Speaker (Sylvia Heal): I note what the hon. Gentleman says, but he will know that that is not a point of order for the Chair.

Keith Vaz: I accept your ruling, Madam Deputy Speaker. However, I ask the hon. Member for Buckingham (John Bercow) to turn to page 30 of the document. The person must be the twin brother of the hon. Member for Stone since no other Member of the House than he would want to go on that star ship to Mars.

Madam Deputy Speaker: Order. Before we get any further confusion about who is, or is not, on page 30, can we please continue with the debate?

Keith Vaz: I will certainly try to do so, Madam Deputy Speaker.

Daniel Kawczynski rose—

Keith Vaz: I will not give way because I have been generous in giving way to hon. Members on both sides of the House.

Negotiations on budget deals are extraordinarily difficult, and I think that the Prime Minister, the former Foreign Secretary and the former Minister for Europe deserve our thanks for ensuring that there was a deal. Whatever the hon. Member for Altrincham and
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Sale, West says from the Front Bench, there nearly was not a deal, and that would have left the European Union in crisis. The deal was the best that we could get, based on the information available and what the Prime Minister could get out of other countries, because such things are all a question of negotiation.

The way to ensure that there is more wealth in Europe to be shared among the 25 countries—or27 countries, if Romania and Bulgaria join next year or the year after—is by meeting the criteria set down in Lisbon in 2000. As the Financial Secretary to the Treasury will no doubt tell us when he winds up, we have made enormous progress on the Lisbon agenda. The latest report by the Centre for European Reform, which was published only two weeks ago, showed that we are now the fourth-best performing country in Europe as far as the benchmarks for the Lisbon agenda are concerned. However, we heard no praise from the hon. Member for Altrincham and Sale, West, just criticisms about failure and an ability to push forward the reform agenda. France and Germany are eighth and ninth. We have met our targets on employment and are meeting our targets in other areas. The way in which we can ensure that Europe will be more prosperous is not necessarily by taking more money from the countries of the European Union, but by ensuring that we meet the targets set out at Lisbon. If the whole European Union becomes richer and we ensure that we meet our employment targets and that people have jobs in the European Union, the freedom of movement that is essential to the way in which Europe progresses will enable us to make sure that there is even more money available to spend on areas such as south Wales, where my hon. Friend the Member for Caerphilly (Mr. David) is keen to receive European funds to regenerate his constituency.

Let us be honest, fair and truthful on European finance. The deal was the best that we could negotiate in the circumstances. We made the deal because we are the champions of enlargement. If we had failed to do so, the enlargement process would have halted and those countries that, in good faith, relied on our leadership would have been left with less money than was promised. I commend the Government on the deal and hope very much that we will continue to push forward the reform agenda so that we can address the points mentioned by the hon. Member for Buckingham and the agricultural policy, which is in need of absolute reform—no Labour Member pretends otherwise. The deal was important at that stage. Let us now move forward with the economic agenda in the future.

8.31 pm

Dr. Vincent Cable (Twickenham) (LD): It is slightly scary to discover that the hon. Member for Leicester, East (Keith Vaz) is monitoring our birthdays. I will be pleasantly surprised if I wake up in the morning and find that my family is as well informed as him.

I slightly regret that the Minister for Europe is not in the Chamber, because I was planning to say something nice about him. It is probably going a little too farto say that he merits our congratulations on his appointment, but we certainly wish him well. As the hon. Member for Leicester, East quite properly said,
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the Minister for Europe has an important job, so it is important that it is held by a senior Minister and, moreover, someone with a long and commendable pedigree on European affairs. To that extent, I welcome the Minister to his role.

Speaking as a former member of the diplomatic service, however, there is one thing about the Minister’s appointment that has saddened me. The diplomatic service is one of the few Government departments that is not seriously dysfunctional, yet it has suffered the fate, a bit like Caesar’s Gaul, of being divided into three parts. Development was taken out, and now the department has been split into Europe and non-Europe. A perfectly efficient department has been split, while the Home Office and the Department for Work and Pensions continue on their merry way. That is a strange way of managing government.

I approach the European Union and its finances from a very different perspective from that of the hon. Member for Altrincham and Sale, West (Mr. Brady). I basically believe that the European Union is good for the UK, but I agree with his conclusions on the subject of our debate. The deal was very bad, and that came about because the Government utterly failed to secure their negotiating objectives. As I understood it, and as was clearly stated on many occasions, the objective was to make concessions on the budget rebate to secure fundamental reform of the way in which the European Union’s funding was run, especially on agriculture. That was not achieved—indeed, it was not even begun to be achieved. None the less, the objective was right.

It was equally right for the Government to say that to support the process of enlargement, we needed to make concessions on the rebate. The enlargementhas so far been a success. It is now difficult to believe that 15 years ago, the enlargement countries were communist countries. Enlargement is a success story, with rapid growth and liberalisation in stable democracies. It has been successful in much the same way as the expansion of Europe to absorb the former fascist countries of southern Europe was successful. We need to reinforce that success, and we could have done so through the budget process. It would be utterly wrong to continue to defend an arrangement under which we were net recipients from eastern Europe. The Government were therefore right to set themselves the negotiating objective of trading off the rebate against fundamental reform.

There were, however, two failures. Saying that the rebate was non-negotiable throughout most of last year was a presentational failure, as it was clearly negotiable and was, in fact, being negotiated. That position therefore did not make sense, and the Government made themselves look foolish. There was a substantive failure to achieve anything concrete or measurable in agricultural reform. The reason for that goes back three years to the agreement between France and Germany, which Britain apparently endorsed, to settle the European agricultural budget and agricultural policy until 2013.

Historians will be taxed by the question of why the Government accepted that arrangement because, as the hon. Member for Buckingham (John Bercow) and colleagues with different points of view have argued,
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the common agricultural policy is utterly indefensible. It is economic nonsense, it is environmentally damaging, and it does enormous damage to world trade and to developing countries. However, in 2002 the British Government, for whatever reason—perhaps they took their eye off the ball because they were preoccupied with Iraq—accepted an arrangement that cemented the CAP in place.

Daniel Kawczynski: The hon. Gentleman stated that the Government failed to make the European Union see their perspective on EU finances—but why, despite the fact that Britain did so much to help Poland and the other eastern European states, did those countries not support our hopes of securing the rebate?

Dr. Cable: Some of them did. There was a mixed pattern of opinion in the EU, but eastern European countries wanted to secure the best deal possible. It is difficult to understand why, having failed to securea renegotiation of the CAP in 2002, the British Government sailed into negotiations in the belief that they could unpick the whole package. It was clear, however, that the French and the Germans—the French, in particular, were the villains of the piece—would not agree to it.

This is not just an argument about recent history,as it has contemporary relevance. We understandfrom Mr. Mandelson and others that World Trade Organisation negotiations are in serious trouble because of the rigidity of the EU view on agriculture and its unreformability. The British Government’s position is not only damaging but ridiculous, because they have absolutely no negotiating power whatever. Because they signed the agreement in December, and because they did not leave it open, they must accept the lowest possible negotiating position that other European countries adopt on trade policy.

Keith Vaz: I understand the point that the hon. Gentleman is making, but would he prefer not to have had a deal in December, leaving the EU without a budget? Would that be a credible position at the end of the presidency?

Dr. Cable: Yes, it would be absolutely credible. It would be embarrassing for the UK to complete the presidency without an agreement, but it was a perfectly tenable position. The EU would not have collapsed. It is important to get it right; instead, we got it wrong.

Mark Pritchard: I agree with the hon. Gentleman. He suggests that the Government are inconsistent, but is his own party not in danger of being inconsistent on this issue? I agree with all the points that he has made, but in their 2005 manifesto the Liberal Democrats wanted to give more powers away to Europe, particularly in relation to institutions that would mean that, if that party ever came to power, the UK would have less negotiating power.

Dr. Cable: The hon. Gentleman did not read the manifesto carefully enough. We support British membership of the European Union; we always have. We think that it is very good for Britain, but we believe
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that it needs radical reform. One of the key elements of radical reform is subsidiarity—the devolution of power to member states.

Mr. Cash: I, too, am puzzled by what the hon. Gentleman is saying. It was only a short time agothat his party strongly supported the European constitutional treaty. That is not yet disposed of. Everything that we are discussing now is embedded in the existing treaties, which are rolled into the new constitutional treaty, which the Liberal Democrat party strongly supported. It is inconsistent—to be blunt, absurd—for the hon. Gentleman to continue his argument on that basis.

Dr. Cable: The hon. Gentleman misrepresents the position that we took over the treaty. We accepted that there was value in a treaty unifying the various components of the European Union, but we fully accepted the principle of the maximum degree of subsidiarity, and we continue to do so.

Mr. Davidson: Does the hon. Gentleman accept my view that the hon. Member for Stone (Mr. Cash) and some of his colleagues were being a trifle harsh in speaking to him in that way? Surely they should welcome the sinner that repents. Any indication from the Liberals that they are prepared to speak up for Britain against the grab by the EU is greatly to be welcomed. Will the hon. Member for Twickenham(Dr. Cable) give us a commitment that he and his party will vote against the budget, which he described as a bad deal—a very, very bad deal?

Dr. Cable: We certainly intend to vote against the motion this evening; I have no problem with that. There is no question of the sinner that repenteth. We are the only party that has consistently supported British membership of the European Union and consistently supported constructive negotiations to improve its working—unlike colleagues on both sides. Conservative Members were fervent supporters of the EU under an earlier Prime Minister, and then revolted against it. Labour Members were passionately anti-Europeanand have now, with a few exceptions, such as thehon. Member for Glasgow, South-West (Mr. Davidson), become largely sympathetic to it. We have been consistent throughout.

John Bercow: The concept of subsidiarity offers us no succour in relation to EU finance or own resources. Does the hon. Gentleman recall, in that context, that the relevant protocol first of the Amsterdam treaty and then of the Nice treaty clearly states:

That is game, set and match, is it not?

Dr. Cable: I do not recall that protocol, and the hon. Gentleman has an advantage over me on the detail. The central issue is that there was an opportunity to
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reform the Common Market agricultural policy and the Government missed it, but there are other elements in the budget package on which I wish to comment.

Mr. David: I thank the hon. Gentleman. It is kind of him to give way yet again. Before he moves on from his statement that he would have preferred no agreement to have been made by the British Government, rather than the agreement that was made, does he accept that that would have caused great problems for British farmers, and perhaps more importantly, huge problems for local authorities the length and breadth of Britain, particularly in my area? Is he prepared to tell those local authorities that the Liberal Democrats would rather have seen that money dry up completely than support being given?

Dr. Cable: I did not say that that was a desirable outcome. We are dealing with second best. If a postponement was necessary to achieve a better overall negotiation, that would surely have been right—but we wanted to see a resolution. We want to see the European Union move forward, support for the east European countries and reform of the CAP. That is common ground. Members on both sides are enjoying scoring points, but there is a high degree of consensus on that matter.

On the forward-looking items, I agree with the Minister that it is important to have tougher audit constraints in place, and that it is a disgrace that the European Commission has been able to get away with unaudited accounts for many years. Nobody would try to defend that. By way of mitigation, I point out that some UK Departments, such as the Department for Work and Pensions, have an audit trail that makesthe European Commission look positively efficient. Nevertheless, there is a legitimate criticism to bemade, and it is right that tighter procedures should be put in place.

Philip Davies: Given his consistent pro-European stance, does the hon. Gentleman think that it makes sense to give more and more money to the European Union for every year when the auditors fail to sign off the accounts?

Dr. Cable: I do not know what the hon. Gentleman means by “more and more money”. Spending has slightly exceeded the 1 per cent. formula, but not by very much, so we are discussing a consistent pattern of spending. Of course, there needs to be audit controlat the level of both national Governments and the Commission.

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