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We need to see the Bill in the context of that wider debate about a constructive approach. Although the Bill is short, it gives effect to the new own resources decision made by the European Council on 7 June 2007. The Bill sets out the new financial framework for the EU for 2007 to 2013, the basis of which was agreed under the UK presidency in Brussels, in December
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2005. We on the Liberal Democrat Benches believe that the EU is good for the UK. We support measures to enable smooth running of the expansion of EU membership, and we believe that it would be wrong to defend an arrangement under which we were recipients of funding from eastern Europe. Those measures were part of the negotiations for a new financial framework—a part that we wholeheartedly supported, because we wish to support the poorer parts of the European Union, which means those in the UK as well as in the new accession states.

The key point is that the negotiating objective was to trade the rebate against fundamental change. The question we must ask is: could the Government have done more in trying to achieve that fundamental negotiating objective? The Minister has not conceded today that the end result was a bad deal for the UK. It was a bad deal because the former Prime Minister totally failed us in the negotiating process during his six-month presidency of the EU. He seemed to think that any deal was better than none at all. The result is a bad deal, caused by the Government failing to identify, let alone secure, their objectives. That result is more the legacy of the former Prime Minister than the vision of the current one, which is probably why he chose not to raise it in the Queen’s Speech.

The former Prime Minister, Tony Blair, liked talking about grand ambition and using radical rhetoric about reforming the EU, but when he had his golden opportunity he failed to deliver. He totally mishandled the negotiating process before it had even started. He spent most of 2005 saying that the rebate was non-negotiable. Clearly, however, it was negotiable, and was actually being negotiated at the time he was saying that it was not. The hon. Member for Wolverhampton, South-West (Rob Marris) spoke earlier about negotiating skills; perhaps he should have shared some of his expertise with the then Prime Minister, who completely failed in that regard.

Such a position resulted not only in the Government looking foolish. It also meant that they could not open up terms of compromise from anyone else. Perhaps it would have been better to say, “Okay, we’ll put our rebate on the table if you’re prepared to talk about the serious reform of the common agricultural policy.” But they did not, so they had absolutely no hope of delivering reform of that kind. The best that they could do was to cave in on the rebate, while giving the pathetic excuse that it related only to the expansion elements, and not to those linked to the CAP.

This was the area of greatest opportunity, and of greatest failure. Too much was given up in return for too little reform. There was an opportunity for a long-term strategy to be put in place, but the former Prime Minister bottled it. Instead of a long-term sustainable solution to CAP reform being found, the issue was effectively kicked into touch, with a full review of EU spending and resources by the Commission scheduled to report in 2008-09. In other words, it will become someone else’s problem.

Today’s debate has highlighted the fact that the urgent need for CAP reform has still not been addressed. We have seen significant reform, but we need to go further. It was good to see the reforms in 2003. Despite the problems that the Government have had with the administration of the single farm payment, it is less
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bureaucratic than its predecessor systems, and it is no longer awarded on the basis of production. However, there is still a need to go further, to increase trading opportunities for developing countries while safeguarding the changing rural economy. The Government should have been more ambitious in what they believed they could achieve.

The Treasury set out its vision, to “stimulate and inform debate”, on 2 December—about the same time as the meeting in Brussels took place. This gave an indication of where it believed the EU needed to be in 10 to15 years’ time. Operating on that time scale, the Brussels Council should have been crucial to taking the first steps, yet that opportunity was missed. The Treasury document highlighted many of the issues that need to be tackled and, yes, tariffs remain one of the key obstacles to further and more fundamental reform. The Government’s position in 2002, in failing to secure a renegotiation of the CAP, not only undermined their position at the summit in Brussels in 2005, but also impacted on the subsequent World Trade Organisation negotiations.

Instead of kicking the issue into the long grass with the review, the Government should have looked much more closely at potential co-financing arrangements and at splitting the responsibility 50-50 between the EU and the national Governments. This would have had a much greater impact on the rebate than the measure that we are debating here today and the sums of money that we are talking about.

The Chief Secretary to the Treasury talked about the way in which resources had been allocated across from pillar one to pillar two of the common agricultural policy. Those are the kinds of issues that really should have been pushed at the Brussels Council. Such an approach at Brussels would have helped to bring decision-making powers—and with them, decisions over resources—back from Brussels to a more local level within the UK. That would have put money back into rural communities, using public money for the delivery of public goods. It would have encouraged food to be produced and sold locally to high animal welfare and environmental standards, which would have cut food miles and ensured sustainability. Fundamentally, it would have made a real difference, but the opportunity to get those changes moving was wasted.

Mr. Brady: I am delighted that the hon. Lady agrees with us that the Bill seeks to implement a bad deal. Will she make it clear that the Liberal Democrats will be joining us in voting against it?

Julia Goldsworthy: The Conservatives will be joining us in opposing the Bill’s Second Reading today. We oppose the Bill not because we object to the principle of what could have been achieved, but because it is being expressed as such a wonderful achievement by the Government. They have not admitted to the failures involved in their negotiation of the deal in December 2005.

People’s concerns revolve around what things cost, and whether they think that they are getting value for money. The Bill deals with the overall cost, and not the effectiveness of the spending. I wonder whether it would be useful to draw those two matters together. Other Members have mentioned the problems with
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the European Union audit process. When the draft documents were debated earlier last year, the Government made it clear that it was important to have tougher audit constraints in place. We support them in their intent— [ Interruption. ]

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Lady. I do not know whether she is being disturbed by her colleague behind her, but I certainly am. Sedentary comments are generally not helping the debate.

Julia Goldsworthy: Thank you very much, Mr. Deputy Speaker.

I was saying that other Members have mentioned the problems with the European Union audit process, and Ministers made it clear, when the draft documents were debated earlier last year, that tougher audit trails and constraints needed to be in place. We support them in their intent, but that will mean national Governments, as well as the EU, taking on responsibilities. Perhaps it will mean taking more responsibility down to national level, as some of the problems are caused by centralising too much of the detail at EU level. This issue was highlighted in the past week or so, when we learned that the EU auditors had refused to sign off the EU’s financial accounts for the 13th year in a row. One of the issues identified by the report was poor knowledge of complex rules.

The applications for structural funding in my constituency involved an incredibly complicated process, but the layers of complication often came not from Europe but from the regional body administering the structural funds. One of the most frustrating things was the fact that the goalposts were moved during the application process. The example that always springs to mind relates to industrial buildings and work spaces, for which funds were available. Because there were a lot of applications going in, however, the Government office for the south-west decided to raise the environmental standards required. That was great, but unfortunately there was no one available to assess those standards.

We can see from that example how these complications can arise. The fact that the Department for Work and Pensions has failed to have its accounts signed off for the past 13 or 14—or is it 17?—years shows us that it is not just the European Union that has difficulty in dealing with these issues. The Government must sort themselves out as well as demanding improvement in Europe. Clearly, there are lessons to be learned at national and Europe-wide level. If we can do that, we shall achieve greater clarity and help to inspire confidence.

The Government should concede where they failed in this set of negotiations. They should admit that it would have been better to have had no agreement under Blair’s presidency, rather than an agreement that was nothing but a bad deal for the UK. If, like us, they want the European project to succeed, aspects of the Union must be fundamentally reformed. They should accept that the greatest failure in this whole process was not on the part of the EU, but on the part of our then Prime Minister in giving up part of the rebate without securing fundamental CAP reform. Achieving that reform would have been a legacy to be proud of, but it is one that this Government have failed to achieve.

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6.57 pm

Kelvin Hopkins (Luton, North) (Lab): I am pleased to be able to speak in a European debate, and in particular to speak on the Bill that will give effect to the deal signed up to by our previous Prime Minister last December. That deal will cost Britain billions in future years and, as has already been pointed out, will bring very little to Britain in return, at least in material terms. The deal was described by The Economist as a very poor one for Britain. The Economist is hardly the kind of Eurosceptic, leftist magazine that I would support, but it said that no deal would have been better than that deal. I certainly agree with that.

The previous Prime Minister negotiated—if that is a fair description—the deal at the last minute, at the end of Britain’s presidency of the EU. It was also done in a rather spontaneous and arbitrary manner that apparently shocked and astonished other politicians, who felt that they would at least have had to refer back to their Cabinets and Governments before making such a dramatic decision. The fact that our then Chancellor of the Exchequer was not with the previous Prime Minister at the time might have made it rather easier for him to do that deal. Perhaps he knew that he was soon to leave office, and that it would be left to his successor to pick up the tab. That is precisely what has happened, and one suspects that, behind the scenes, our new Prime Minister is, unsurprisingly, not happy about the deal.

Daniel Kawczynski: At the time, it was greatly publicised on television that the then Prime Minister, Mr. Blair, was in constant telephone contact with the current Prime Minister and that he ran everything by him. My understanding is that the current Prime Minister was very much aware of what we were signing ourselves up to at the time.

Kelvin Hopkins: I sincerely hope that they were speaking on the telephone, but it may be that they did not have the degree of harmony that one would hope for in taking such a big decision. Perhaps some of this friction between the former and the present Prime Minister that has been talked about in recent days was in evidence. I have never believed those stories myself, but perhaps there is some substance to them after all.

The Government and my right hon. Friend the Chief Secretary have constantly emphasised the importance of giving assistance to the newer member states, which are distinctly poorer than ourselves. That is a noble and respectable objective. However, the debate was really about the common agricultural policy and its genesis was the suggestion by us that the CAP should be reformed and the budget for it reduced. President Chirac was already smarting from his defeat in the referendum on the constitution; he was extremely angry and looking for someone to lash out at. He saw Britain attacking his CAP and there was also the issue of our budget rebate, so it was President Chirac who forced the debate about our rebate on to the agenda.

At that point, we should have responded robustly and said “no deal”—at least until the cost of the CAP was substantially reduced. In my view, of course, we should entirely abolish it. I have said many times here and in Committee that the CAP should simply be abolished and agricultural support returned to member
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states. Member states are best able to judge what their own agricultural industries require and what subsidies, if any, are required. Under that system, they would also be democratically accountable. The subsidies would have to be accounted for in a direct way at elections, which is absolutely right.

Indeed, I would go further. Much has been made of structural cohesion funding, but here again it is an inefficient way of subsidising or trying to help the poorer regions. It would be much better for member states to decide what subsidies were appropriate for their regions and to pay for them out of their own budgets rather than have to go through the circuitous budgetary processes of the EU. Money is lost in inefficiencies—no doubt in fraud and corruption as well—and there is frictional wastage in distributing aid in that way. I am sure that I am not alone in being slightly annoyed when I spot notices around my constituency and elsewhere that are funded by the EU—indicated by the yellow stars on the blue background. That is effectively our money being used, yet it is claimed that it is European money. If we were a poorer nation and we were receiving a net contribution, that would be fine, but we are actually net contributors and only some—certainly not all—of that money is redirected back to Britain.

As a socialist, I am strongly in favour of redistribution from those who can afford it to those who are in need. If we did that in a sensible, fair and non-corrupt way, it would represent a sensible way forward—but we do not do that through the structures of the EU. I have said before and I will keep on saying that a system of simple fiscal transfers from the richer to the poorer nations of Europe would be a much more efficient and much fairer way of doing things. The relevant member states could then decide how to allocate those extra funds to their own peoples, and be democratically accountable to them in doing so. We should repatriate agricultural policy and leave regional and structural funding to member states, not have it allocated through the EU.

Various estimates have been made of the cost of the EU to Britain. This Bill will cost us an extra £7 billion by 2013—

Mr. Colin Breed (South-East Cornwall) (LD): Cheaper than Northern Rock.

Kelvin Hopkins: Certainly in terms of borrowing it is, but that was a debate for earlier today.

Other costs are associated with the CAP, such as higher food prices and market distortions. It is estimated by the OECD that that costs Britain £15 billion a year, so the CAP is not just a matter of subsidies to the budget, but a real further cost in higher food prices as well. The CAP should be abolished, not reformed. Reform can mean many things to many people, but it usually means not very much to anyone. The reality is that reform has been gradual—a bit here, a bit there—and sometimes it is two steps backwards rather than two steps forwards. The reform programme has not been a great success.

We should have used the lever when the budget was being negotiated. We should have refused to agree until serious progress was made towards the eventual abolition of the CAP. We could have argued for that on
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the basis that what was saved could be used directly to help the poorer nations of Europe that are struggling to advance the living standards of their peoples. That would be far preferable.

A number of estimates of the cost of EU membership have been made. There is a Swiss view—Switzerland is outside the EU—set out in a Europe 2006 report. It states that full EU membership would cost the country 1 per cent. of the Swiss national income. Well, 1 per cent. of national income in one year may not seem very much, but if it is compounded over many years or decades, it becomes a very large sum of money indeed. It has been estimated elsewhere that the cost of the European budgetary and economic arrangements to Britain is about 0.5 per cent. of our gross domestic product. Again, that may not sound much in one year, but if we compute it over 40 or 50 years, it becomes a very substantial sum. Many of us have argued that how the EU is constituted at the moment does not actually benefit the peoples of Europe economically, so we would do better to have different economic arrangements—not to break up the EU entirely, but to have different economic arrangements within it, with each member state deciding what is most appropriate for its own economy.

Mr. MacNeil: The hon. Gentleman is making a thoughtful argument about the need to abolish the CAP. Does he have similar views about the common fisheries policy?

Kelvin Hopkins: Indeed. The hon. Gentleman is right to mention that. There may not be a lot of fishing in Luton, North, but we eat fish. I have seen an estimate that if something is not done, all the fish will be fished out of the seas by about 2020, which would be a tragedy for the whole world, as we cannot replace fish stocks. We have to guard fish stocks and I believe that member states would be best at guarding their own fish stocks when they knew that their futures depended on them. When fishing is going on in other people’s fishing waters, far less concern will be expressed than when it is a matter of protecting one’s own waters. Giving each member state responsibility for its own fish stocks in its own fishing waters would be a sensible way of protecting fish stocks for everyone.

I am afraid that I cannot support this Bill tonight. It would be dishonest for me to go through the Aye Lobby on this particular Bill. However, I would like to support what the Foreign Secretary said the other day. He argued that we should not promote the development of Europe as a superstate, but that Europe should be an association of independent and democratic nations. I agree absolutely and I have made that point very strongly in the past. What we are seeing is a constant drift towards that superstate and at some point we have to start saying no. We could start to say no by abolishing the CAP and restoring some of the functions carried out by the EU to member states. We could then work together on a co-operative, fraternal and sororal association of states to everyone’s benefit. That would not only benefit everyone’s living standards in Europe, but would improve our relations with our neighbours as well. We would not have so many arguments with our French neighbours—I must say that I love France very much
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and go there every year for my holidays—if the CAP did not exist. I suggest that we should take a much tougher line next time. Sadly, I cannot support the Bill tonight.

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