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Overall, the single European market has created an additional 2.75 million jobs across the EU in the 15 years since it was established, and increased gross domestic product by 2.2 per cent. or €225 billion.
Enlargement is strengthening and widening that single market: it is now half a billion consumers strong, and the largest market in the world. That helps our partners to grow, and helps make Europe more prosperous. It is not to our cost, but to our benefit.
Let us look at the facts of earlier enlargements. After the 1986 enlargement, United Kingdom exports to Spain increased by a quarter. After 1995, exports to Sweden rose by a similar amount. The benefits that EU membership can have are demonstrated by the fact that since our closest neighbour, the Republic of Ireland, joined the EU it has received almost €53.5 billion from the EU budget. Between 1993 and 2003, the EU supported more than 120 major infrastructure projects. That has helped Ireland’s exports rise from €1.1 billion in 1973 to €88.4 billion by 2005. In 2003, gross national product per capita was more than three times its 1973 level in real terms.
Ireland also demonstrates that the economic development of our partners is good for Britain, a point entirely lost on Conservative Members. It increases trade, and creates new opportunities and new jobs. Between 1998 and 2006 alone, UK exports to Ireland have doubled. Such development has particularly benefited Merseyside, which is one of this country’s poorest regions and receives objective 1 funding.
The Conservative party’s claim that the Bill secures us nothing in return is self-centred and narrow-minded, but also wrong. As I have said, the Bill will disapply structural and cohesion funding, and in time that spending will benefit Britain. Just as development funding in Ireland helped Britain to increase trade from a buoyant Irish economy, we will gain the long-term benefits of a prosperous eastern Europe.
Already British firms are making the most of the opportunities that the recent accessions have brought. In 2006, UK exports to the A8 countries amounted to £8.8 billion, a 36 per cent. increase in the first full year after accession. Tesco, Unilever, Vodafone, BP and International Power are already investing in our new single-market partners, and UK foreign direct investment in the A8, which averaged just over £860 million in the three years before accession, was more than twice that amount—nearly £2 billion—in 2005, the year after accession. Enlargement is good for those economies, and provides economic opportunities for our largest companies.
Rob Marris: I think that my right hon. Friend is being a little unfair to the Conservative party. After all, widening rather than deepening was John Major’s policy, and he was absolutely right in that regard.
I believe that some Conservative Members recognise that the enlargement of the European Union is good for the UK economy. What they do not understand are negotiations. I spent a great deal of my professional life negotiating in business, in the private sector, and I know that if one obtains all that one wants in negotiations with a partner with whom one frequently negotiates, that partner will get back at one next time. The Conservatives do not understand that there is wave upon wave of negotiations in an entity such as the European Union, and that if one pushes too hard for something on one occasion, one will not obtain it on the next. They do not understand the need to play it for the long term.
Andy Burnham: My hon. Friend is absolutely right, and what we have witnessed this afternoon provides ample illustration of the very point he makes. Conservative Members will make knee-jerk statements to please the newspapers and party members in their constituencies. They will come out with such rhetoric because they know it will be good for their personal standing within their local Conservative party when they next return to their constituency for a meeting—they will probably pass around the relevant volume of Hansard. What that does not do, however, is show any understanding of proper negotiation in Europe—of how to get a good deal for Britain and be a constructively engaged partner in EU discussions. They have not learned anything from their previous failures in this area.
Mr. Davidson: The Minister is displaying a degree of cruelty that I had not expected. Being nasty to the Conservatives on this matter is too easy; the phrase “fish in a barrel” springs to mind. Does he agree that simply because the Conservatives are bad, it does not necessarily mean that we have to accept everything that the European Union puts in front of us? Does he not agree that this is, in fact, not a particularly good deal for us? [Interruption.] Does he not agree that while we are in favour of expanding the EU there is no reason why we should pay for it disproportionately, and that we have effectively been taken to the cleaners and— [Interruption.]
Mr. Davidson: Thank you, Madam Deputy Speaker. There are times when support from the Opposition Benches is not helpful.
Does my right hon. Friend agree that simply because something is good for the EU as a whole, that does not necessarily mean that it is automatically fully good for us? Will he also remind us whether he and his colleagues were in favour of joining the euro, and—
Madam Deputy Speaker: Order. The hon. Member has made his point.
Andy Burnham: Interestingly, on that last point, in fact I was not; I am happy to put that on the record today.
I say to my hon. Friend that I am just making a positive case for Europe and for our engagement in it. Opposition Members might think that someone such as me might be defensive on these matters, but that is not the case at all. I have come to the Chamber today to say that the deal was not perfect in every respect but it serves our interests and moves us forward, and it moves the EU forward. I am quite happy and comfortable to be standing at the Dispatch Box making that case.
There are wider economic benefits. Migration from central and eastern Europe is much discussed and I recognise the challenges it poses to some of our communities, but there are indisputable benefits to British business and the British economy. A8 migration contributed about £6 billion a year to the British economy between autumn 2001 and the middle of last year, and those workers from central and eastern
Europe who have come to Britain taking advantage of the free movement of labour are likely to make a stronger net contribution to public finances. The Bank of England reported last year that overseas workers have played a significant role in boosting the pool of available labour and helping to ease labour shortages. Britain is experiencing direct and immediate benefits in increased trade, extra jobs and the benefits of migration from enlargement—a process that the December 2005 agreement consolidates.
Britain has also benefited, and will continue to do so, from structural and cohesion funding. Between 2000 and 2006, the UK received about €15 billion of those funds, going to projects that benefit constituencies in all parts of the country. That has contributed to the economic development of some of our poorest regions. Merseyside alone has received more than £300 million of European social fund investment, and Cornwall has also received a significant sum—the hon. Member for Falmouth and Camborne mentioned that. UK regions that still need funding will continue to receive it—to answer a point made by the hon. Member for Stone, who has now left his place—but as areas such as Merseyside grow stronger it is right that the focus switches to the poorest EU regions, particularly the new member states.
Before I conclude, may I turn to the budget review and the future of Europe? The figures I have been quoting this afternoon support the case that we need to be even more hard-headed in prioritising funding towards the future challenges that Europe faces collectively, if it is to secure value for money. As well as the benefits I have already outlined, we have secured a frank and honest process of challenge and review of the EU budget to ensure that Europe is helping to equip itself to face the challenges of the future. As the Prime Minister and the Foreign Secretary set out in the recent “Global Europe” pamphlet, the EU has spent too long focused on institutional questions. Europe needs to move on from that debate and focus on the issues that matter to its citizens: competitiveness; jobs; migration; the environment; and security. It needs to meet the challenges of globalisation and play its full part in the wider world, and to do that, its budget needs reform.
Some change has been made, as I said to my hon. Friend the Member for Wolverhampton, South-West (Rob Marris), but he is correct in saying that too much expenditure—40 per cent.—still goes on the common agricultural policy, and more than 50 per cent. of economic investment spending continues to go to the richer member states. Without reform, the EU cannot meet its future challenges and we will not see the global Europe that we need. So it is clearly in Britain’s interest—and in Europe’s—that the budget is reformed. The fact that the agreement that this Bill implements provides for a review of the budget, including the CAP, is the third reason why the Bill will implement a good agreement for Britain.
As part of the budget review, the Government will work with their partners to make the case for a reorientation of the budget towards areas such as innovation, tackling climate change, international development and migration. That does not mean any
lessening of our commitment to budget discipline—far from it—and spending resources effectively will remain at the heart of our approach.
The hon. Member for Shipley (Philip Davies) enticed me earlier into talking about the European Court of Auditors’ report, and I told him plainly that much more progress must be made in this area. In addition to the measures that we have championed over recent years, such as the establishment of the European Anti-Fraud Office, former Commissioner Kinnock’s work on Commission reform, the shift to activity-based budgeting and accruals accounting, and the Commission’s 2006 action plan following the UK presidency’s work, we will go further. We have made proposals for increased national parliamentary scrutiny of EU funds through the publication of an annual consolidated statement of EU expenditure, prepared to international accounting standards and audited by the National Audit Office.
Andy Burnham: I shall give way to my hon. Friend —[Interruption.]
Chris Bryant: I am grateful for that round of applause from Conservative Members. Surely the important point about the auditors’ figures is that nearly all the problem areas involve member states’ expenditure rather than the Commission’s. We and the Commission have been trying to argue for some time, although Conservative Members have been opposed, for the Commission to have increased powers to investigate how that money is spent in member states. Is it not incumbent on those who argue against qualified majority voting sometimes to explain what the problems are?
Andy Burnham: My hon. Friend has tempted me on to matters that this House will debate in a few weeks’ or a few months’ time. He is correct in the substance of what he says. That contradiction is so often at the heart of what the Opposition call for. We have been leading the case for the reform of financial transparency and accountability in Europe, and we will continue to do so. We plan to present our consolidated statement in the spring of next year and, as I have said, it will be audited by the NAO. The European Court of Auditors pointed to such examples as being the way to improve standards of financial transparency across the European Union. I am pleased that we are playing a leading role in making that happen.
Andy Burnham: I shall give way, for the last time before I finish, to the hon. Gentleman.
Philip Davies: I am pleased that the Minister acknowledges that work needs to be done. Does he accept that reform is much more likely to take place if we were to withhold our payments until matters have been sorted out and that it is much less likely to happen if we keep paying more and more money and asking the EU whether it minds doing something about it?
Andy Burnham: My hon. Friend the Member for Wolverhampton, South-West made a good point before. He asked whether or not people should just come clean. The hon. Gentleman has not declared this, but he is a member of the “Better off out” group; I believe that six Tory MPs are involved. All his questions need to be understood in that context. I do not think that I could try your indulgence by quoting him at length, Madam Deputy Speaker, although I did promise a quote from him earlier. It would have gone along the lines of how pleased he was that the Leader of the Opposition was now letting him campaign—he is off the leash—as a Back Bencher to make the case for being out of Europe. Is that correct? Does he remember giving such a quote to the BBC website?
Philip Davies indicated assent.
Andy Burnham: He is nodding. If the leader of the Conservative party is allowing Members such as the hon. Gentleman to make the case that we are better off out, is it not time—
Madam Deputy Speaker: Order. The Chief Secretary has made his point, so perhaps we could now proceed with the debate.
Andy Burnham: I shall now proceed to my conclusion, Madam Deputy Speaker—[Hon. Members: “Hooray!”] Well, I have allowed many interventions.
I shall recap the three reasons why hon. Members should give the Bill a Second Reading tonight. First, it secures a rising British rebate within a more disciplined overall budget—fact. Secondly, it serves our national economic interest—more jobs, more exports—by helping the countries of eastern Europe to prosper. Thirdly, it paves the way for a critical look at how we reshape the EU budget to prepare for the big challenge of the future that we face in common with our European partners. The EU has made Europe and Britain more secure and more prosperous. On this side of the House, we are pro-European, but we are not uncritical and we are hard-headed. We are prepared to stand up for Britain’s national interest. We do not posture or grandstand. We will get the reform that Europe needs, but it will be within the context of making the case for engagement with the European Union.
This is a good Bill for the British taxpayer, for the British economy and for Britain’s future, and I commend it to the House.
Mr. Davidson: On a point of order, Madam Deputy Speaker. Would it be in order for me to move a vote of thanks to the comrade Minister, on the basis that, while still partially deluded, he has been generous in taking interventions?
Madam Deputy Speaker: That is not a point of order for the Chair, although the Chief Secretary certainly was generous in taking interventions.
5.36 pm
Mr. Philip Hammond (Runnymede and Weybridge) (Con):
This is a very small Bill, with one operative clause, although after the Chief Secretary’s speech I am
grateful that it does not have 30 clauses. That one operative clause contains, however, the single biggest spending commitment in the whole of the Government’s legislative programme. It is a £7.4 billion bill, addressed to the British taxpayer, and an hour and six minutes of obfuscation from the Chief Secretary has not changed that.
This is a stealth Bill, sneaked in without a mention in the Queen’s Speech and completely ignored in the Prime Minister’s speech in the debate that followed. Far from being something of which the Government are proud, it is a Bill that dare not speak its name. The Prime Minister has done with this Bill exactly what he always does with bad news: he has tried to slip it in under the radar in the hope that nobody will notice it.
It is in order to congratulate the Chief Secretary, who made a valiant attempt to defend the completely indefensible. He gave a fair impression of a man who has been living in a complete vacuum since 1999. He stood here and told us that the own resources decision that the Bill will implement is a great victory for Britain, despite the fact that his own Government told us for years—until they gave way in December 2005—that they would fight tooth and nail to avoid that. The Government are not proud of the Bill, and neither should they be. Incidentally, it is interesting to note that the Chancellor is not in his place to support the Chief Secretary.
The agreement that the Bill implements is a bad deal for Britain, and the Chief Secretary knows it. We know it, too, because when the former Prime Minister signed away Britain’s rebate, the current Prime Minister briefed every journalist he could find that it was a bad deal, that it was all Tony Blair’s doing and that he would never have agreed to it. A Treasury official put it this way at the time:
“We have ended up giving away much more than we expected and with precious little to show for it in return”.
A senior aide to the then Chancellor—no prizes for guessing who—told the press that the sell-out would inevitably lead to public spending cuts. No wonder the Government want to get this Bill out of the way at the very beginning of the Session with as little noise as possible. It is an embarrassment and reminds us again of some of this Government’s serial failings, such as duplicity, in repeatedly breaking their promises on Europe; incompetence, in failing to obtain anything in return for our money at the negotiating table; and fiscal incontinence, in throwing away yet more hard-earned taxpayers’ money for nothing in return.
Chris Bryant: Clearly, the hon. Gentleman does not like this deal, but, as he knows, in negotiating a different one he would have to persuade other countries to sign up to it. Can he name just one other country, or party, in Europe that would support his proposals? Secondly, if there is a Conservative Government, will they renege on the measure if it has already gone through Parliament?
Mr. Hammond: It is not the kind of proposal that I would suggest; it is the kind of proposal that Tony Blair went to Brussels to suggest—that we negotiate a reduction in the British rebate in exchange for sustainable reform of the common agricultural policy, to achieve objectives for this Government and objectives appropriate for the British taxpayer.
Chris Bryant: But what would you do?
Mr. Hammond: I shall address the hon. Gentleman’s point later in my speech.
Hugh Bayley (City of York) (Lab): Will the hon. Gentleman give way?
Mr. Hammond: I do not want to fall into the same trap as the Chief Secretary and extend my remarks beyond an hour, so I will give way to the hon. Gentleman in a moment.
The Chief Secretary said that giving away the rebate was the right thing to do. It was all so different back in 1999, when the then Prime Minister said that the rebate was non-negotiable. He maintained that position as late as June 2005, when he reiterated it to the House of Commons in ringing tones:
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