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The second item that will repay more attention than hon. Members have so far given it is one of the new innovations in the European budget—the globalisation fund. At first sight it is an attractive idea, and it may prove to be a useful innovation, if it heads off some of the European countries that are moving in the direction of economic nationalism. If the measure persuades
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those countries to be less protectionist by providing funding for worker retraining, it is surely desirable, but we must be a little bit cautious.

There have been attempts to set up trade adjustment funds in different countries over the past 30 years. I conducted some work on that point in the late 1970s and early 1980s, with particular regard to the United States, where a similar fund was set up in the mid-1970s. That fund ran into all kinds of problems, not least because some workers asked, “Why should people be compensated because of trade competition, whereas other workers who have suffered from technological change or a collapse in markets should not be compensated?” The political problems and problems of equity that arose were serious. There was some extremely unhelpful gaming behaviour, whereby industrial pressure groups secured trade protection in order to negotiate it off against money from the trade adjustment fund, and it is possible to envisage that kind of behaviour creeping into the European Union. The globalisation fund needs to be watched careful, although on balance it should be given an opportunity to prove itself.

John Bercow: How is the globalisation fund consistent with the general prohibition on the use of state aid? I know that that prohibition is honoured more often in the breach than in the observance, but it is nevertheless part of existing practice.

Dr. Cable: If the fund were part of state aid, I would agree with the hon. Gentleman. However, I understand that the new fund is specifically to help the labour force, rather than to help companies reinvest or otherwise protect themselves against competition. If that is the case, it is difficult to see how it could have the negative effects implied by the hon. Gentleman—but it remains to be seen whether it works as a support for adjustment or against adjustment.

There is one more element of spending about which some questions need to be asked. There is a lot of enthusiasm in the Commission, particularly from the President and others—again, the enthusiasm has been generated for the best of reasons—to set up a European science university as part of the move towards support for integration in the world economy. I support that principle, but last week I participated in an Adjournment debate on science in British universities, and it is clear that British universities are at best sceptical about the concept, because although they have funding problems of their own, they are looking to collaborate across the world, in particular with the United States. They are also interested in securing a better funding formula in the UK, and see little advantage in having a specifically European project concerned with science. At some stage, we need to hear a fuller justification of how the new initiative will add value.

We shall oppose the motion, because we feel thatthe fundamental negotiating objectives were not achieved—although, as I have stressed throughout, we are and always have been a pro-European party. We want the European Union project to succeed, and the best way to make it succeed is to ensure that agriculture and the other defective features of the European Union are fundamentally reformed.

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8.49 pm

Kelvin Hopkins (Luton, North) (Lab): I welcome an opportunity yet again to debate European Union finances. Before doing so, I want to comment on my right hon. Friend the Minister for Europe, who is not in his place at the moment, but whom I have already welcomed. I hope that he is going to prove to be more of a pragmatist than a zealot in these matters. We will probably never agree on European matters, at least publicly, but I hope that he will look at the European Union in a practical way and will not be blinded by the dream of a European federal state, which some people say that they are against although they are really in favour, while some of us are genuinely opposed to it.

The budget remains a running sore in the EU. In December, we lost a serious opportunity to do something about it at a time when we had the leverage to stop a deal and get some fundamental change. It is nonsense to suggest that we are doing well on the common agricultural policy. I have been looking at the figures in the documents before us today. The table under “Heading 2” shows the billions that are spent on agriculture, direct aid and market support. Over the next seven years, that is going to reduce by just under 1 per cent. a year. That means that we will extinguish the CAP over the next 100 years, or slightly more. I suspect that even then the European Court of Auditors will still be failing to sign off the accounts, but I probably will not be there to see it. We are still in the mire as regards the European budget.

My hon. Friend the Member for Leicester, East (Keith Vaz) said that this is nothing to do with the constitution. I am afraid that that is wrong. In fact, what happened in December arose because of the splendid decision and success of the French people in defeating the proposal for a constitution. That did not please President Chirac, who, to deflect attention from his own apparent failure, lashed out at the British rebate in the European budget. I modestly suggested in a previous debate that if he wants to question our rebate, let us throw the CAP into the melting pot. If there is no CAP, there is no need for a rebate. Interestingly, the Prime Minister took precisely that case to Europe and debated it with colleagues. One would have hoped that we would say, “You want to change our rebate—fine, but only the basis of the abolition or very serious and fundamental reform of the CAP.” That did not happen, we lost that opportunity, and now we are going to trundle on for 100 years, with perhaps a 1 per cent. cut a year. That is not acceptable, certainly not to the third world, which suffers terribly from the effects of heavy subsidies in the developed world, particularly in Europe.

Agriculture policies should be repatriated in the first instance so that each country determines its own approach, because every country’s agriculture is different. We can have international agreements about reducing subsidies—that is fine—but in the end it should be down to the decisions of democratically elected member states’ Governments.

Daniel Kawczynski: Does the hon. Gentleman agree that to take forward the negotiations over CAP, it is vital that every country, including us, should have its own Secretary of State for agriculture? With the Department for Environment, Food and Rural Affairs as it is, the Secretary of State does not have enough time to focus solely on agricultural issues.

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Kelvin Hopkins: That sounds like a sensible suggestion. I may say that my constituency is the only one in the eastern region of England that has no agriculture at all—it is purely urban, with not a single field.

David Howarth (Cambridge) (LD): So is mine.

Kelvin Hopkins: I am surprised that there is another. Nevertheless, I take an interest in agricultural policy because it affects us all. I believe that every country should decide its own agriculture policy in a democratic way.

John Bercow: I welcome the hon. Gentleman’s lamentation on the iniquities of the CAP. Will he take this opportunity to underline the crucial point that this is not a question simply of an accidentally damaging by-product of EU agriculture policy, but of the knowing, deliberate and calculated policy of the European Union to subsidise in a way that damages even more the most destitute people on the planet? That is the reality.

Kelvin Hopkins: The hon. Gentleman is right—that is the only conclusion that one can draw. It is utterly cynical to continue to subsidise agriculture, especially exports. Until recently, one could buy European-produced sugar in Malawi at a lower price than that at which the Malawians could produce it simply because it is dumped.

Angus Robertson (Moray) (SNP): Given that the hon. Gentleman is considering agriculture, will hetake the opportunity briefly to mention fisheries? The fleets of Norway or the Faroe islands manage tofish the same waters and sustain fisheries but UK policy, supported by the Labour party and the Liberal Democrats, of remaining in the common fisheries policy will mean a disaster for our coastal communities.

Kelvin Hopkins: The hon. Gentleman was just ahead of me. I was coming to that point but perhaps he makes it more eloquently than me. I fear that there is nosea fishing in Luton, but I have a view about the common fisheries policy and the hon. Gentleman is right. I am a member of the Norway group and I recently visited that country. I asked whether the Norwegians genuinely wanted to include their fishing waters in the EU CFP because they would have few fish left after a few years. We must restore fisheries to member states and get rid of the nonsensical CFP. Having landlocked countries voting on the CFP is to our disadvantage because we have the largest coast line.

Mr. Davidson: Does my hon. Friend agree thatthe road towards repatriating fishing and, indeed, agriculture, is taken by rejecting the budget so that we can place road blocks in the way of further accretion of power to the centre as a prelude to rolling powers back to individual countries?

Kelvin Hopkins: As always, I agree with my hon. Friend. I want the EU as it should be—a voluntary association of independent democratic member states, co-operating for mutual benefit and that of the world.

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Mr. Cash: The hon. Member for Leicester, East (Keith Vaz) mentioned my birthday earlier. I was born on the day when Winston Churchill took over as Prime Minister and rejected the appeasement that had characterised the conduct of British foreign policy for a long time. He said, in line with the words of the hon. Member for Luton, North (Kelvin Hopkins), that we should be associated but not absorbed.

Kelvin Hopkins: Indeed. I would have thought that other member states felt that. In fact, they are becoming more aware of it. As enthusiasm for the EU declines, people want to assert their independent democratic rights without being nationalistic. The problem with the current arrangement is that it is likely to increase the unpleasant sort of nationalism because people feel that their democracy is somehow being weakened. To decide as free member states, confident in their democracy, to work voluntarily with other member states, is a recipe for genuine co-operation and internationalism. That would remove or at least reduce the amount of unpleasant nationalism that exists in member states, including Britain to some extent. There are dangers in such nationalism, as we know from European history.

Let us consider what happened in December. Britain was guilt-tripped into doing a deal because, without it, the poorer, newer member states would be disadvantaged. They are disadvantaged because the budget is overwhelmingly dominated by agriculture spending in richer member states. We should simply have a budget arrangement without the CAP and the CFP.

Aid policy, too, should be repatriated because it is inefficiently managed in Europe and goes to the wrong places. We do well on aid and have a good reputation and we could even operate on an agency basis forthe EU through the Department for International Development. That would be much better than operating through the EU. Nevertheless, we could have an agreement to spend a proportion of our gross domestic product on aid but to administer it ourselves or on an agency basis, without going through the European Commission, which is notoriously inefficient in administering it.

We were guilt-tripped into the decision about the newer member states. However, if all the other aspects of the budget were reduced or eliminated, we could have a budget that could be administered in an absolutely fair way. Contributions and receipts could be exactly proportional to the levels of prosperity in the different member states. The rich states could pay in according to their prosperity, and the poorer ones would derive benefit from the budget according to their relative poverty. That would be a fair and moral way of implementing a redistributive budget. The fiscal transfers would be precisely fair. I might even suggest that it would be a socialist approach, involving redistribution from the rich to the poor. I would be very happy indeed with such an arrangement.

Daniel Kawczynski: The hon. Gentleman talks about the state aid that we have given through the budget to poorer eastern European countries such as Poland. Does he agree, however, that the British private sector has also invested a great deal in those countriesover the past decade? I only have to travel through downtown Warsaw to see that many of the new business set-ups have been funded by British capital investment.

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Kelvin Hopkins: I am sure that that is true, but the hon. Gentleman has the advantage of me in that area, in which I do not specialise, and I do not have any figures to hand on investment in eastern Europe.

The way in which the budget operates is said to be beneficial to Britain because we have a trading advantage, but in fact we do not have such an advantage with the European Union at the moment. The great majority of our exports go outside the European Union. We are very different from Germany in that regard, in that the proportion of trade that goes to the European Union from Germany is about seven times greater than the proportion that goes to the EU from Britain. Germany has a massive export surplus with the rest of the European Union; it is very much greater than the relatively small amount that we export to the EU. We import a lot from the EU, but we do not export a great deal to it.

John Bercow: Statistically, the hon. Gentleman is absolutely right to say that the preponderance of our exports goes outside the European Union. In reflecting on the EU budget, would he agree that it is unsatisfactory that, in presenting their arguments about trade, Ministers consistently get it wrong—they must know that they are doing so—through the ancient and discredited practice of double counting that which goes through Rotterdam? It really is not good enough.

Kelvin Hopkins: I thank the hon. Gentleman for his helpful intervention. Governments of both colours talk about exports rather than about the balance of trade. The concept of exports net of imports is very different from that of exports alone. Exports increasing by 1 or2 per cent. a year might sound splendid, but if imports are increasing by 5 per cent. a year at the same time, it would create a big deficit, which would not be particularly advantageous. We should look at trade balances, rather than simply at exports.

That also says something about the level of a country’s currency, relative to other currencies. One of the reasons why I believe that we should retain our own currency is that it enables us to have a sensible macro-economic policy and to adjust our currency to an appropriate level. That is necessary for trade.

As I was saying, we were guilt-tripped into the decision to go for this budget. It was suggested that, without agreement on it, we would somehow deprive the less fortunate newer member states of the European Union, but in fact the people who went laughing all the way to the bank afterwards were the rich countries that benefit most from the common agricultural policy. The full CAP benefits do not accrue to the newer member states, because they are being tapered in over several years. So the CAP budget is still going to the richer member states that have larger agricultural sectors, such as Denmark, Ireland and France. Those countries arguably have higher living standards than ours; they are certainly very prosperous. And good luck to them—I am very pleased that they are, but we should not subsidise them to the disbenefit of the poorer member states of the European Union.

My final point about net contributions has perhaps already been made. Our net contributions have multiplied substantially in the deal and, according to
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calculations from Global Britain, we will contribute net more than £10 billion a year for the next seven years. If that money was simply going to the poorer nations of Europe, there might be an arguable case for providing it. However, it is not, and £10 billion is a significant sum. It is roughly 12 times the deficit in the NHS this year and 10 times more than we would have to pay for free long-term care, in which I passionately believe. Such a sum would enable every pensioner in Britain to have a £20 a week increase in the basic state pension. Although £10 billion as a proportion of GDP may not be that much, it is a lot of money if one considers it in terms of what it could provide.

If we reduced our net contribution to a level that was appropriate to help the poorer member states of Europe on a moral and socialist basis, that would be fine. However, our net contribution is too big and there are other things in our country that we should spend the money on, such as redistribution to the poor. We still have significant poverty in Britain, particularly among the elderly, and I would like to see an increase in the basic state pension that could be paid for by cutting our contribution. There are better things that we could do with our money.

In short, we still have to campaign for the abandonment of the CAP and the common fisheries policy and for structural fund spending to be used to redistribute income to the poorer member states, and we should let them decide what to spend the money on rather than having that determined in Brussels. The aid budget should be repatriated and, in future, we should focus on redistributing simply according to the relative degrees of poverty and prosperity in the European Union. That is the way forward for a friendly, co-operative and truly internationalist Europe.

9.7 pm

Mr. William Cash (Stone) (Con): It is always a pleasure to follow the hon. Member for Luton, North (Kelvin Hopkins).

I am sorry that the Minister for Europe is no longer present, and has not been present for some time. When he opened the debate, we recalled that we were the main protagonists in the debates on the Maastricht treaty back in the early 1990s. He was a new Member of Parliament and the late John Smith gave him the job for the Labour party of dealing with the nuts and bolts of the treaty. I tabled about 150 amendments and, because in those days we did not have extravagant parliamentary devices, at least on the scale that we have now, we were able to force debates, and we did so resolutely. I pick out my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) as a veteran of those days, and many would say that we set out a series of arguments that have proved to be correct.

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