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8 May 2006 : Column 124

Mr. David: With all respect to my hon. Friend, that is not the case. In some areas, there has been an increased pooling of sovereignty by common consent, which is a positive development. However, over the last few months, not least due to pressure from the British Government, the European Commission has withdrawn a number of draft directives and said that they will not be enforced. In certain key sectors, such as immigration, justice and home affairs, where greater co-ordination is needed, it has taken place, but elsewhere there has been a reduction in the amount of EU red tape and bureaucracy.

Mark Pritchard: Come on.

Mr. David: The facts speak for themselves.

In the context of this debate, my main point is that democracy is fragile and frail in the new countries that are joining the EU, so it must be properly supported by mature democracies such as ours. As a socialist who believes in the redistribution of wealth, I think that Labour Members should be proud of the fact that we are prepared to help countries entering the new European family by giving material support in terms of the budget agreement. We should not be ashamed of that.

Mark Pritchard: On material support, and regional grants in particular, does the hon. Gentleman share my concern that, unfortunately, many of those grants tend to disappear and that there is too much corruption in some quarters, which has a bearing on how British taxpayers’ money might be spent in those new EU countries?

Mr. David: I share that concern to some extent, but the important thing is that support from the EU through regional funding is of enormous assistance not only in helping to develop democracies but also in ensuring that they have fully functioning market economies. Such changes do not just happen, so it is laudable that the UK has led the way in the EU negotiations and has said that to make the market work as effectively in central and eastern Europe, as it does, largely, in western Europe, we should be prepared to ensure that there is assistance so that there can be full transition from Soviet-style command economies.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): By and large, I agree with the sentiments that the hon. Gentleman is expressing about our duty to support the countries of eastern Europe that have entered the EU. But does he agree that the provision of European regional funding is also of great importance to some of the poorer parts of the UK and does he share the disappointment of people in the highlands and islands because the amount of funding that our area is receiving, as a transition area, is falling dramatically? Would not it have been better for the Government to have negotiated as strongly in favour of the highlands and islands as of the eastern European countries that he described?

Mr. David: The hon. Gentleman pre-empts me, as that would have been the next point in my speech. However, he should realise that earlier the Liberal Democrat
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spokesman spoke against any kind of agreement because he did not think that the Government’s position was fair. The Liberal Democrats should sort out their own line, before they make interventions in the House.

Angus Robertson: May I add to the hon. Gentleman’s background on this subject? Does he not think it odd that, in Scotland, where the Liberal Democrats are in government, they take no responsibility for the failure of Government, but they come down here and blame the Labour party, although they are in bed together in government in relation to that important loss of funding to the highlands and islands?

Mr. David: I am certain that the hon. Gentleman has made a very good point indeed, and I certainly bow to his knowledge on the matter, given his involvement in Scottish politics.

My final point on support for central and eastern Europe is that we have a moral responsibility to ensure that those democracies grow and flourish, but it is not only in the interests of those countries that have recently joined the EU that they are fully functioning market economies, it is in our interests as well. One of the things that I hope that we will see over the next few years is British business taking effective cognisance of the fact that we have developed new market economies in central and eastern Europe and exporting to and engaging with those economies in a way that has so far not happened.

Philip Davies: Does the hon. Gentleman not accept that this country’s future prosperity depends on developing markets in Africa and with the Commonwealth and China, that the EU is 20 or 30 years out of date in terms of prosperity and that what we are being asked to do is wrong? We are being asked to fund an ever-increasing amount of money for a backward-looking, inward-looking protection racket.

Mr. David: With all due respect, the hon. Gentleman is very good at soundbites, but the important thing to recognise is that, by our active engagement inside the EU, we are not putting all our eggs in one basket. Yes, we can be effective Europeans and help to develop that economy to our own advantage, but that does not stop us trading with the rest of the world. It is not an either/or situation. Let us do both. Let us recognise that we are an international nation. What concerns me about Opposition Members is that, all too often, what they are saying, when we scrape away all the economic veneer is basically a very crude form of xenophobia. [Hon. Members: “Oh, come on.] Yes, it is. When weget down to basics, what they are really saying isthat they do not like Europeans. The economic arguments objectively speaking are for Britain’s positive engagement in the EU, and for an EU that embraces the free market and makes ever-deeper the single European market. We should be arguing for its completion, not for some kind of semi-detachment or even withdrawal, as some hon. Members would like. That is the real agenda that we must get to grips with in the future.

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The second point that I should like to make in my brief contribution is that I believe that the Government negotiated a good deal for Britain back in December last year. Undoubtedly, some hon. Members who represent certain regions are not particularly happy with the budgetary settlement as negotiated, but let me say quite honestly, as a representative of Caerphilly in south Wales, that we were absolutely delighted that the Government negotiated an effective continuation of objective 1 status for cohesion funding, so that some £1.2 billion will come into our region over the next financial perspective. The first tranche of that money has been put to very good use in tackling economic inactivity and developing economic infrastructure, training and so on, and there is no doubt in my mind that the good situation in south Wales, where more people are in work than ever before in history, will continue and we will be pleased—indeed, we will be singing in the valleys—when the new strand of funding comes through.

Mark Pritchard: I am slightly perplexed by the hon. Gentleman’s comment on objective 1 being given to his constituency. Part of the criteria for objective 1 is high unemployment, yet the part-time Secretary of State for Wales tells us from the Dispatch Box that unemployment is decreasing in his area. Is unemployment going up or down?

Mr. David: Unemployment is going down; gross domestic product is going up, but the important thing to recognise is that, in the Government’s extremely skilful negotiations, they were able to ensure that the figures used by the European Commission were a little out of date —[ Interruption. ] That is true. They do not show effectively the tremendous improvement in the south Wales economy. I am pleased to say that we are having our cake and eating it. Our Government can be criticised for many things, but they cannot be criticised for not being adept at negotiations. That is a practical, material, down-to-earth example that highlights clearly how effective the Government have been in ensuring the continuing development of areas such as the south Wales valleys.

Mr. Bone: Will the hon. Gentleman reconsider his answer to my earlier intervention? He said that the UK Government have not been involved in matters relating to fraud; it sounds like what he has just been talking about is fraud.

Mr. David: I do not think that that intervention is worth answering and I can see Members all around me nodding to that effect. As far as the structural funds are concerned, the Government have acted strongly not just in the British interests or the interests of Europe as a whole, but in the interests of areas that have experienced tremendous trauma with the decline of the steel industry and the coal industry.

Bob Spink (Castle Point) (Con): May I provide an intervention to which the hon. Gentleman might be able to respond? Does he accept that, good as things are in Caerphilly, they could be even better? Every member of the European Free Trade Area has a higher level of GDP than the low average of the EU members,
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and exports more to European countries than we do. If we were outside the EU, we could be sustaining even more economic growth, even more per capita GDP and even more per capita exports and therefore jobs in Caerphilly.

Mr. David: I hear the true voice of Conservatism being expressed with the utmost clarity: let us get out of the European Union and recreate the European Free Trade Association as it was. If that is not turning the clock back, what on earth is? Let us be honest and frank. I am glad that the hon. Gentleman has been that frank. I hope that the hon. Member for Altrincham and Sale, West (Mr. Brady), who is smiling, will take up his lead and articulate that point as clearly and precisely. That goes back to my earlier point. The debate is about whether we turn the clock back and somehow pretend that we can disengage, have associate member status or withdraw—Members can call it what they like. It is about whether we can somehow separate ourselves from mainland Europe and develop mythical new relations with the rest of Europe. That is not the real world and we all know it in our heart of hearts.

Mr. Davidson: Will my hon. Friend give way?

Mr. David: No, I will not.

The real agenda is how on earth we make this effective single market even more effective. How can we expand the European Union and deepen the economic integration that is to our advantage and in the interests of the people I represent. The hon. Member for Castle Point (Bob Spink) mentioned my constituency of Caerphilly. I speak regularly to industrialists and, unanimously, they say to me, “For goodness sake, let’s not go down this crazy road of separating ourselves from the European Union.” Both the employers and the employees recognise fully that this country exports more to the European Union than to any other part of the world. To cut ourselves off from that and see the imposition, once again, of all the impediments to trade that used to exist, would be catastrophic to the economy of this country.

Mr. Robert Goodwill (Scarborough and Whitby) (Con) rose—

Mr. David: I have given way many times already.

In conclusion, I believe that this country negotiated a good deal all around. Of course, if one looks at the Government’s opening negotiating position, they did not achieve everything that they set out—one never does in negotiations. The European Union is all about achieving a progressive consensus. When we look back at the British presidency of the European Union, I am proud that we can say that it was a great success. Two of the great things that stand out are: first, the fact that we have ensured a start date for negotiations with Turkey and that negotiations are continuing for Turkey eventually to join the European Union, and, secondly, that we have had a budget deal that is good for the people of this country and of the continent as a whole. We should be proud of that. It is something that we should be celebrating, and certainly not denigrating.

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9.49 pm

Angus Robertson (Moray) (SNP): I am not keen to enter into the very public grief of the Government at the time of the reshuffle, but want to put on the record some sadness that the Minister for Europe is no longer the Leader of the House, albeit not because I do not think that he has many talents that he will offer in his new post. Those of us who are members of the European Scrutiny Committee will remember a discussion that we had with the right hon. Gentleman several months ago in which he had innovative ideas about improving the scrutiny of European business in the House. I hope very much that his successor as Leader of the House will take those suggestions forward. I have no doubt that the Minister for Europe will bring his great experience to European matters, not least as a former Member of the European Parliament, and we in the Scottish National party and Plaid Cymru wish him well.

Speaking as someone who represents a constituency that has benefited greatly from EU funding, I wish to make a point about EU finances that has been sadly lacking from much of tonight’s debate. In Moray and the other areas of the highlands and islands, there is tremendous appreciation for the support of the European Union over the past decades. Many of us well remember the cash-starved situation in our communities in the dark 18 years in which the Conservatives were in government. It is ironic to think that throughout that time, Brussels was seen as much more benign whenit came to governance than was—perhaps still is—Westminster. It is with great regret that the highlands and islands has lost objective 1 funding.

We have heard much about fraud, mismanagement and the inappropriate use of statistics, but the loss of objective 1 support for the highlands and islands was home-grown. It did not happen because of Brussels, or other dastardly EU member states. Scotland’s national wealth was overstated by £21 billion throughout the 1990s owing to a catalogue of flawed assumptions that were used to compile the UK’s accounts. Newspaper coverage in The Scotsman at the time said that the UK

That blunder deprived the highlands and islands of £200 million of EU grants. I hope that hon. Members who have driven through the highlands and islands and are aware how many infrastructure projects were completed only because of the support of the European Union will appreciate that the blunder with which we now have to live, as the recipients of only transitional funding, not objective 1 funding, was severe.

It is important that we all accept that the loss of EU funding is not of itself a bad thing. As economies throughout the European Union grow and countries become wealthier, surely those of us in the wealthier parts of Europe have to bear part of the burden so that we can ensure that other parts of the EU catch upwith us. The argument that I will deploy is thus not motivated by a lack of appreciation for our paying our fair share. We should do that, but it is key that we consider the transitional arrangements betweenthe outgoing funding period and the funding period agreed recently.

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Under the budget deal agreed at the December Council under the UK presidency, the global overall total for European social fund spending was reduced substantially, which will have an impact on communities the length and breadth of the land. Some €308 billion has been allocated for EU funding. The Department of Trade and Industry estimates that the UK will receive€9.4 billion, of which €2.6 billion will be allocated to convergence funding for Cornwall, west Wales and the valleys, and the highlands and islands. Approximately €6.2 billion will be allocated to competitiveness funding for other regions.

In December 2004, the Scottish Executive—the devolved Government comprising the Labour party and the Liberal Democrats—estimated that the highlands and islands would get €460 million and the rest of Scotland€721 million. That is a significant amount, and it is important for planning the growth of our economy in the years ahead. Only two short years later, in January 2006, the Executive said that Scotland could receive up to 45 per cent. of the sum we will receive in the current programming period. The highlands and islands would receive £105 million as a so-called statistical effect region under convergence, which is only 60 per cent. of the amount that they currently receive. Basically, the Scottish Executive’s estimates have been chopped by two thirds, and the remaining sum is considerably less than they were expecting. Some hon. Members have asked what is being done, but I want to know what the Scottish Executive were doing. What did the Enterprise Minister, Nicol Stephen—a Liberal Democrat—do when he realised that the Scottish economy will lose hundreds of millions of pounds of funding? Why did the Liberal Democrat Transport Minister not bemoan publicly the loss of significant funds to improve road transport, not least throughout the highlands and islands?

Mr. Goodwill: Does the hon. Gentleman not agree that it is bizarre that our Ministers go to Brussels and accept the importance of structural funding in peripheral regions such as Spain and Poland but do not recognise its effect in areas such as Scotland and Wales?

Angus Robertson: That is not the only problem. Devolved Ministers have the right to attend Council of Ministers meetings, and it would be interesting to compare and contrast their attendance records, which can be downloaded from the Council of Ministers website, for those important discussions on key resources, so that we can see how Liberal Democrat Ministers in the Scottish Executive defended the national interest.

Mark Pritchard: Does the hon. Gentleman not agree that while the Scottish Executive have played a part in the problem, Scottish local authorities failed to spend money from the last round, so their budgets were cut? In effect, they were penalised for not coming up with the goods and delivering projects on the ground.

Angus Robertson: I very much hope that local authorities, devolved Administrations and Governments everywhere make the most of EU funding. I do not believe in moaning about EU funding, because I have seen the positive benefits that it can bring. I encourage Administrations of all political colours to make the
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most of it. I cannot stand political cant. We hear that things should be done, but people with political responsibility who could do something about them do not even turn up to important meetings to discussthem. [ Interruption. ] The hon. Members for Alyn and Deeside (Mark Tami) and for Glasgow, North-West (John Robertson) say that I should name them. I shall be happy to forward the attendance list for Council of Ministers meetings, so that they can compare and contrast the attendance record of Liberal Democrat Ministers at key EU meetings.

Time is running out, and at least one other Back-Bench Member is keen to speak. The Department of Trade and Industry is consulting on the UK national strategic reference framework, which sets out general principles for governing ESF spending in the UK as a whole. The Scottish Executive, including the Liberal Democrats, have drafted a Scottish chapter, but it does not specify priorities in future Scottish programmes and does not indicate the resources required for each priority or programme. That is not good enough, because we go on about disconnection and a lack of faith or belief in what the EU can offer, but if we are to re-engage with the public we need to talk more positively about the projects that have delivered on the ground. I very much hope that the Minister will not just defend the UK Government’s negotiating position in December—we will hear that anyway—but explain what much of the funding can do on the ground. I hope that in the months ahead there is action from the Scottish Executive and Ministers from both parties, who should live up to their rhetoric about what is vital for communities the length and breadth of Scotland.

9.59 pm

Mrs. Theresa Villiers (Chipping Barnet) (Con): We should all be grateful to the European Standing Committee for forcing the Government to put this enormously important issue on the agenda this evening.

We have heard a number of thoughtful and informed contributions to the debate. We began with the hon. Member for Leicester, East (Keith Vaz), who thought the budget was a good deal. As if to prove that he lives in a sunnier and happier world than the rest of us, he also thought that Europe was making progress on the Lisbon agenda. The hon. Member for Twickenham (Dr. Cable) sounded a note of reality. He criticised the Government’s sell-out on the common agricultural policy in 2002. I agree that that concession hobbledthe Government’s negotiating position in the 2005 negotiations, to devastating effect.

The hon. Member for Luton, North (Kelvin Hopkins) told us that he believed the EU budget was a running sore and called for the repatriation of aid policy, agriculture and fisheries from the European Union. My hon. Friend the Member for Stone (Mr. Cash) spoke with huge insight on the issue on which he has spent so many years campaigning. In particular, he challenged Labour Members to vote against the Bill needed to put the new budget into effect. The hon. Member for Moray (Angus Robertson), as we have just heard, protested at what he saw as flawed assumptions which have overstated Scotland’s income, with the resulting impact on its entitlement to regional funding. He launched a devastating attack on the record of the Liberal and Labour coalition in the Scottish Executive and its record on regional funding.

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