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7.9 pm

Mr. Graham Brady (Altrincham and Sale, West) (Con): I realised, slightly to my surprise, that I had been missing EU debates over the past few months, so I could not resist the opportunity to participate in the first of what will probably be three opportunities to discuss EU-related business in the next few months. It has been a pleasure to listen to at least some of the contributions, perhaps most especially that of the hon. Member for Luton, North (Kelvin Hopkins). I frequently come to the same conclusions as he does: for instance, his conclusions on repatriating agriculture and regional policy are eminently sensible. I usually come to those conclusions for opposite reasons; none the less I strongly commend the courage that he showed by making it clear that he will vote with his conscience this evening, rather than being cowed into going along with the party line.

Kelvin Hopkins: I should have said that when we talk about such issues, it is a matter of not left or right, but democracy. We might agree on that.

Mr. Brady: The hon. Gentleman makes his point well, as ever.

We are debating a small, defined Bill that will implement an agreement that was made in December 2005. The House last had an opportunity to debate the deal on 8 May 2006. It does little credit to the way in which we deal with EU business in the House and in this country that the Bill simply gives legal force to an arrangement that has been in effect since 1 January. Now, 11 months later, the House has the chance to debate a Bill that will implement the deal that was made by the former Prime Minister, Mr. Blair, nearly two years ago.

The Bill and the deal that it will implement are bad measures, but they are also bad because of what they say about the state of the EU and of Britain’s ability to negotiate a better arrangement and a better deal within the EU. The Bill is bad not least because this is a time of tightening public finances, when the Treasury and the Government face more difficult decisions about funding and public services in this country. The situation could become considerably more difficult in the year ahead, and even worse in the year after that.

The Bill represents a change in our financing commitments to the EU that, according to the excellent Library note produced for the debate, will contribute to a net increase in the UK’s contribution of £2.3 billion every year. That is a cause of considerable concern. The Chief Secretary seemed to try to justify it on the grounds that although it might cost us more, that was okay because it would also cost France more. I am not sure that that explanation would cut much ice with my constituents or with his.

The Chief Secretary went on to say that the rebate had not been cut, but rather that parts of it had been disapplied—as far as I can see, that amounts to the
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same thing. The rebate applies to fewer aspects of EU funding than it used to. Even though the absolute amount of the rebate may rise in line with our rising contribution—that point was made earlier—we will effectively see a cut in the scope of the rebate, which will contribute to an overall substantial increase in the net contribution from this country to an unreformed EU.

A number of Members have already well made the point that the Prime Minister at the time, Mr. Blair, went to Brussels with an absolute commitment that he would achieve radical reform of the CAP and that only in those circumstances would it be acceptable to negotiate away part of our rebate. Instead, he returned with nothing.

My good friend the right hon. Member for Rotherham (Mr. MacShane), a former Europe Minister, is no longer in the Chamber. One of the pleasures of participating in European business—although you are looking a little sceptical, Mr. Deputy Speaker, if I may say so—

Mr. Deputy Speaker: Order. All the speeches I hear in this House are a pleasure.

Mr. Brady: I shall try not to end that state of affairs.

It is a pleasure that we tend to attract the same cast list to participate in such debates and we occasionally see the spectres of former Ministers for Europe. Only one such former Minister has made a speech so far this evening, but, as a former shadow Minister for Europe, I might be falling into the same habit.

The right hon. Member for Rotherham seemed to suggest that CAP reform would require endless negotiations. He talked about networks and even suggested that the Government should create a new fund to pay the Conservative party to lobby in Europe in favour of CAP reform. I do not support state funding of political parties, so I would find that rather difficult to justify, but I can see that his logic is such that after the woeful inability of the Labour Government to negotiate CAP reform, he is even prepared to accept the job being subcontracted to the Opposition instead.

David Wright (Telford) (Lab): You have no one to talk to in Europe.

Mr. Brady: The right hon. Member for Rotherham talked a great deal, but he missed out one key possibility that was available to Mr. Blair two years ago: to use the strongest card that we had, which was won by Lady Thatcher in 1984—the British rebate. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said in his opening speech, we always made it clear that we would support sensible measures to negotiate the reduction and CAP reform balanced against a reform of the British rebate. Instead, we got a hopelessly one-sided deal.

So, what is the upside to the deal that was secured and the arrangements that we are considering? Mr. Blair certainly failed to secure the prize of his key objective of CAP reform. Not only did he give up billions of pounds of British taxpayers’ money but, more shamefully, he gave up a key bargaining point. He was wholly culpable for the fact that we conceded that crucial part of the British rebate while getting nothing in return. We should not readily forgive or forget that.

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It should not be a surprise to right hon. and hon. Members of any party that the deal is so unpopular, but that could easily have been missed. The Chief Secretary is an affable, likeable man. It would have been easy to draw the conclusion from the tone and demeanour of his lengthy opening speech—I accept he was generous in giving way—that the Government were presenting a great triumph. One might expect Her Majesty’s Opposition to be most dismayed by the sacrifice of such an important part of the British budget rebate and cross about the Government’s failure in Brussels in 2005, but I was delighted that the hon. Member for Falmouth and Camborne (Julia Goldsworthy) confirmed that her party would vote against the Bill. The Liberal Democrats are the most Europhile and federalist party in the House of Commons—

Mr. Walker: The smallest as well.

Mr. Brady: And the smallest— [ Interruption. ] They are not quite the smallest; we should give credit to one or two others who are in the Chamber.

When we debated the matter in May 2006, the hon. Member for Twickenham (Dr. Cable), who led for the Liberal Democrats, made his position clear. He said that the deal was bad and that it had come about because the Government had failed to secure their negotiating objectives. I am therefore delighted that the hon. Member for Falmouth and Camborne maintains that position, under the leadership of the hon. Member for Twickenham. Given that he has given such a strong lead on the matter, perhaps the Liberal Democrats should consider keeping him.

Mr. MacNeil: Does the hon. Gentleman agree that, for a United Kingdom that faces a £39.6 billion deficit in the next six years in the public sector borrowing requirement, to give up the rebate—or at least part of it—is puzzling?

Mr. Brady: It is puzzling at the very least—incomprehensible is how most of our constituents would view it.

The deal that Mr. Blair made is therefore unpopular with Conservatives, Liberal Democrats, and, it has just been confirmed, Scottish nationalists.

Daniel Kawczynski: And a few good Labour men.

Mr. Brady: Indeed—and a few good men and true on the Labour Benches.

As my hon. Friend the Member for Runnymede and Weybridge reminded us, not only Opposition parties were unhappy with the deal. The then Chancellor of the Exchequer, now Prime Minister, was reported to be quietly fuming. There was considerable press comment, clearly stimulated by Treasury briefings. Several newspapers reported that “Mr. Brown was unhappy” that the deal would cost the UK an extra £1 billion a year and that he had not taken part in final negotiations. Attempts were clearly made to distance the then Chancellor from the deal that Mr. Blair had made. Unattributed briefings on 18 December 2005 stated that Mr. Blair had “freelanced” to strike a deal on Friday night and early Saturday morning, without speaking directly to his Chancellor. It was also reported that the disclosures threatened to open up a fresh and damaging rift between the two men and that, under the deal that followed 17 hours of
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intensive talks, Mr. Blair promised to surrender a further £1.7 billion of the rebate first secured by Margaret Thatcher in 1984. My maths is not that good, but I believe that that is £100 million given up for every hour of the negotiations.

The then Prime Minister, who had set himself such a clear target and easily identified goal, suffered a remarkable defeat in the negotiations. There was further criticism that the way in which the deal was structured would lead to costs being “back-loaded”. It was suggested that a time bomb had been left for the new Prime Minister who would take office in the next year or two. It was reported that the costs would gradually rise from zero in 2008-09 to £1.9 billion a year by 2013.

This Second Reading debate and the Bill, however short, are allegories of everything that brings the House’s dealings with EU business into disrepute. We are being asked to approve another £2.3 billion a year after, not before, the event. We all know that the deal was bad. Conservatives, Liberal Democrats and even the Prime Minister, when he was Chancellor, opposed it. As the right hon. Member for Rotherham told The Daily Telegraph shortly before the deal was made:

Mr. MacNeil: Where is he?

Mr. Brady: The right hon. Gentleman is not here at the moment, but we will watch carefully to ascertain whether he makes it difficult to get the deal through by joining us in voting against the Bill. The Government are indeed trying to force through a one-sided deal under which they have given up the rebate and achieved nothing in return.

Today, the Chief Secretary assured us that the Government believe that the deal is good, and suggested that it has the Prime Minister’s support. That is why they will try to force it through. The debate is welcome because it is an opportunity for all hon. Members to nail their colours to the mast. On the one side are our constituents’ interests, and our need to defend their hard-earned money and to stand up for the important case for reforming the CAP to reduce food prices in the UK and remedy the damage that it does in the developing world. On the other side is the Labour Government’s need to maintain face. Even though the previous Prime Minister was responsible for the failed negotiations, we are being asked to believe that the current Prime Minister now supports something to which he clearly objected violently at the time.

Today is the first of several opportunities to debate EU matters in the coming months—in some ways, it is the most fundamental opportunity. Only if the UK is prepared to use its negotiating hand, stand firm and, even at the risk of unpopularity from time to time, stand up for the national interest will we achieve the right deal for Britain and the right reforms in the EU. The Government, in presenting the deal and introducing the Bill, not only surrender £2.3 billion of British taxpayers’ money but give up our strongest hand in EU budget negotiations in future.

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7.26 pm

Mr. Quentin Davies (Grantham and Stamford) (Lab): I rarely agreed with the hon. Member for Altrincham and Sale, West (Mr. Brady) when I sat on the same Benches as he. Judging by his speech, it is no more likely that I shall agree with him in future, on the subject of our debate. However, he is an honest and able man. He is always courteous in debate and in private discussion. It is therefore a pleasure to follow him in the debate. Doubtless we shall both take part in other debates on the subject in future—in the near future if we are so lucky as to catch your eye, Mr. Deputy Speaker.

Let me say at the outset that I believe that the settlement is superb and I am unambiguously delighted that we have secured it. I shall vote for the Bill with enthusiasm. Indeed, it would be unedifying—to use a stronger word, obscene—if we enforced against much poorer countries in eastern Europe the rebate that we secured in the 1980s under Margaret Thatcher against countries that were much richer than us at the time, such as France, Germany, the Benelux countries and the Nordic members of the Union. It would be taking money from someone who was much poorer.

The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) sincerely regards himself as a great advocate for Poland—a country for which, although I do not have his family connections, I have always had the greatest admiration, for a host of reasons, and I am delighted to have so many young Poles in my constituency doing such a good job and being such good citizens. I find it extraordinary that the hon. Gentleman, given that he honourably and naturally takes that position, should say that we should enforce against Poland the mechanism that we secured to defend our interests when we were much poorer than the average member of the Community, as it was then called. I hope that he will reconsider the matter, although I do not know whether he will do that in time to change his vote tonight.

Daniel Kawczynski: The hon. Gentleman knows that this is only the start. Further waves of relatively poor countries will enter the EU. Is he claiming that he is prepared for Britain to have even less money in future, when those other waves of poor countries join the EU from the Balkans and beyond? The Foreign Secretary made a speech this week in which he said that he looked forward to an EU of which countries from north Africa and the middle east were also members.

Mr. Davies: I did not listen to that speech, but I do not think for a moment that the Foreign Secretary suggested that north African countries should join the European Union. He was taking about a free trade agreement, which is a different matter, and something that we already have with a number of countries outside the European Union. The hon. Gentleman has got that speech wrong; perhaps he would like to look at the record again and get it right.

As for further enlargement, the only country for which that is more or less established is Croatia, a small country that will create minimal and insignificant strains on the budget. Beyond that, Serbia and Moldova are possibilities. There is great scepticism about going much further than that. That is a different point, however, and
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you will correct me, Mr. Deputy Speaker, if I get dragged down into discussion of the natural limits of enlargement.

When I left the Conservative party, I said that it had become irretrievably cynical and opportunistic, and this evening’s debate has shown how true that judgment was. There are only two possibilities: either the Conservative party is engaged in deliberate obfuscation or it is extremely confused. Its policies on the European Union generally, and enlargement specifically, completely lack coherence. It says that it is in favour of enlargement, but it is not prepared to pay for it.

Mr. Redwood: At the next election the hon. Gentleman might wish to fight a seat representing people in a much poorer part of the country than he currently represents—for example, a seat in the inner cities. How much extra tax should such people have to contribute to pay to Poland?

Mr. Davies: The hon. Gentleman knows something about economics, and about something called a dynamic model, in which the indirect and subsequent consequences of any action must be taken into account. I believe that the settlement will result in enhanced revenues for the European Union as a whole: we will all have more money to play with.

That point has already been made this evening, using the example of Ireland. It is wonderful for us that Ireland has become so prosperous. I do not say for a moment that Ireland has become prosperous only because it has been in receipt of cohesion and structural funds. The Irish are extraordinarily enterprising people, and once released from the autarky pursued by their Governments in the initial generations after independence, some take-off was likely. Since the Whitaker report in the 1960s, they have invested in education in a big way. As Members on both sides of the debate have said, they have pursued sensible and attractive tax policies. It must be a matter of delight to us that not just Ireland but Portugal and Spain have been completely transformed since they joined the European Union, because it contributes to our prosperity.

Mr. MacNeil rose—

Mr. Davies: I shall give way to the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) who is going to ask me, of course, whether Scotland would do better in the European Union if it were independent.

Mr. MacNeil: If the hon. Gentleman chooses to answer his own question, he is more than welcome to do so. I was going to ask him to what he attributes Iceland’s success. He has said X, Y and Z about the European Union and Ireland, but Iceland has come from exactly the same baseline and has done just as well, if not better in some sectors.

Mr. Davies: Having been shadow Secretary of State for Northern Ireland for three years, I know a little about Ireland, but I must make the terrible confession that I have never made a study of Iceland. I hope that the hon. Gentleman will forgive me if I do not embark on an analysis of Iceland’s economic experience now.

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