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I cannot say to the people of Wokingham, “I voted tonight to make sure that you will pay more tax in order to spend another £70 billion over the next EU budgetary period, and some of that money will be wasted, frittered or even spent fraudulently.” As someone who looks at the auditor’s reports from time to time, I cannot satisfy myself that that money will be well spent from now on and that we should relax. The money would be more likely to be well spent with proper investigation and control if it were spent closer
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to the people who paid the tax, rather than if it were to go through the intermediation of a remote and bureaucratic system of government on the continent before coming back here or to other member states to be spent by officials.

One of the myths of the EU is that it has a small and very effective bureaucracy. By remote control, the EU employs hundreds of thousands of bureaucrats throughout EU member states. Those bureaucrats might as well work for the EU, because they are doing the EU’s bidding—I am glad that that is not the case, because they would be asked to do even more things with which many of my hon. Friends and I undoubtedly disagree.

I urge all sensible Labour MPs to vote against the Bill tonight. Those who vote for it will vote for more British taxpayers’ money to be spent in faraway places, sometimes on fraudulent, incompetent or badly run schemes. They will vote for this country to borrow yet more money, which it cannot afford, and to pay yet more interest. They will vote for a further deterioration in the way in which this country’s budgets are run by this Government. They will vote for the results of a negotiation that was so maladroit that our previous Prime Minister gave away a wonderful set of opportunities that another Prime Minister had negotiated for us without getting anything in return.

This is an extremely sad day for the United Kingdom. It is a sad day for this Parliament, and it is a day that Ministers will come to rue. Ministers should understand that they are in a big borrowing hole. They have the black hole of Northern Rock, and they have the black hole of this Bill. Labour Members will find that there is less public spending for their constituencies, and Conservative Members will find that there are fewer opportunities to cut the burden of tax on the British people so that we can prosper more.

8.49 pm

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): “We surrender; now let us negotiate.” That seems to have been the Government’s stance when they went to Brussels. Throughout the discussions—during the original negotiations, subsequently and again today—an entirely false dichotomy has been posed. We supposedly have either to accept anything at all that the European Union proposes, or to leave the EU, which would result in the collapse of civilisation as we know it. Those are not the alternatives— [Interruption.] I am glad to see the Chief Secretary nodding in agreement.

Remember that exactly the same position was put forward when joining the euro was mooted. For a period, people said that if we did not join, the economy would collapse: 10 zillion jobs were going to go, and there would be a wasteland from John O’Groats to Land’s End. Well, we did not join the euro, and lo and behold, the economy has gone from strength to strength, thanks not only to the brilliance of the former Chancellor, who is now the Prime Minister, but to the correctness of that decision.

Nowadays, not only can I not find anybody in favour of Britain joining the euro, but I find it almost impossible to find anybody who was ever in favour of it—such has been the process of re-education.

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Kitty Ussher indicated dissent.

Mr. Davidson: I see the Economic Secretary to the Treasury shaking her head; I presume that she is still one of the true believers, as befits somebody who used to be the chief economist for Britain in Europe—hardly an impartial organisation on such matters.

It would be right for us to reject the proposals and for the Government to stand up for British interests. The budget negotiations were meant to rely on real reform as a quid pro quo for additional payments from the United Kingdom, but it is absolutely clear that there has been no real reform in the EU budget as a result of our conceding a substantial chunk of our rebate.

The Prime Minister and I completely agree on the need to repatriate to the United Kingdom expenditure on structural funds. As has been said, no value whatever is added by the process of passing money to Brussels, handling fees being taken off, and some of the money coming back to us for projects in this country. All that involves is a transfer of political power to Brussels, which allows politicians there to make decisions about which projects should be supported and which should not, and under which rules. Such issues would be far better handled in this country. It would be much better to dispense with the system whereby Brussels handles the structural funding throughout the European Union, and I shall come in a moment to how I think that ought to be done.

I have similar thoughts about the common agricultural policy in the UK. As far as I can see, for a long time there have been very few reforms in the CAP. As has been said, the policy basically operates as a wealth transfer system, whereby poor consumers pay more for their food so that wealthy farmers can benefit. It is an obscenity that, as has been mentioned, people such as the Duke of Westminster receive enormous sums from the CAP, and will continue to do so under this scheme. Under the proposals, the undeserving rich will continue to get richer from the CAP and that financial system.

It is completely false to suggest that I, or many of my hon. Friends who intend to vote against this budget, oppose aid for eastern Europe. I have been in favour of widening the EU for a long time, so that is a calumny that we should in no way be prepared to accept. However, it is not helpful to handle the money that we wish to give to eastern Europe as it is currently being handled. In our relationship with eastern Europe, we should adopt two models from the Department for International Development. First, where we have little confidence in the internal systems of the country involved, we should be prepared to say, “Yes, we’re willing to support this project, but we’ll handle it. We’ll seek your help and assistance, but we will not hand the money over to the local equivalent of the Mafia, so that they can take away a huge proportion of it instead of making sure that those who deserve it receive it.”

The second method is direct budget support. Where we have confidence in the Governments of the recipient countries, it is far better to give them aid in their budgets, as we do with many African countries that have met various good governance standards, so that they, rather than some bureaucrat in Brussels, can determine how that money should be spent. It has always seemed absurd to assume that the European
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Union and its bureaucrats sitting in Brussels know better what is needed in Latvia, Lithuania and other parts of eastern Europe than the people in those countries do. If we support devolution in this country, we should support devolution in the form of direct budget support across the whole of Europe.

Let me turn to some concerns about the detail of the system that the Government have not yet touched on. Does the Minister accept that the Government have, as they confirmed in a written answer, agreed to a last-minute £1 billion increase in the administration budget merely to ease the passage of the proposals in Brussels? Why did we concede an extra £1 billion in sweeteners? That is log-rolling, and I can see no reason why we did it, or why we expect the British public to pay our share of it.

Following the agreement in December 2005, we were told, “That’s it—enough is enough. This is the agreement and this is what we are going to stick to.” Yet two months later the Government agreed to an increase in the European budget of £2.7 billion. Why was that? It seems to display a certain inability to strike even a bad deal and then stick to it. Saying, “We surrender, but if you’re not happy with that, we’ll surrender again later on,” is not the best way of dealing with these matters.

We have been told that the Government are very keen on transferring money to eastern Europe. However, we should be absolutely clear that it remains the position that Ireland and Belgium will be net recipients from the budget, as are Luxembourg and several other wealthy countries, whereas a country such as Cyprus, with a gross domestic product half that size, will end up as a net contributor. That is absurd. Per head, the top three recipients of EU funds will be old member states—Luxembourg, Belgium and Greece. That does not display a transfer of wealth from the EU’s old western members to its new eastern members. France will be the largest single recipient of money from the EU under the negotiated settlement, which is meant to be about transferring money to the east.

I fail to understand how the Government can possibly defend this as a good deal. If this is good deal, I dread to think what a bad deal would have been. It is noticeable that the Government have refused to produce statistics indicating their estimates of how much every other country in the EU will pay in and receive—except for France. If they are prepared to do it for France, I cannot see why they are unwilling to do it for other countries, unless they feel that there is something to be ashamed of.

I mentioned that Luxembourg will get the most in EU spending per person, followed by Belgium and Greece, and I would be grateful if the Minister would justify that to me. This does not strike me as being a reform budget. Spain was previously the largest recipient of funds, but it has been replaced by France, and that transformation does not seem to be a brilliant piece of negotiating. Ireland is the second richest country in the EU, with an income per head 30 per cent. above average, yet it will get more money out of the budget than it puts in. I do not understand the logic of that position.

In fact, the CAP currently transfers money from the poorest states to richer countries such as France and Spain. I am happy to give way on this point if the Minister wants to intervene, but in 2004 the 10 new
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member states paid nearly €1 billion more into the CAP than they got out of it. Perhaps that situation will change over time, but how did we get into that position?

Why are we prepared to accept that the EU’s administration costs alone will rise by 28 per cent. in real terms? At a time when we are trying to squeeze budgetary expenditure and administrative costs, why are we prepared to accept that EU administration costs will go up by 28 per cent.? Is that another brilliant example of hard negotiation?

Mr. Redwood: The hon. Gentleman is making an excellent speech. Did he know that Luxembourg and Belgium—two of the richest countries in the Union—will get the most spending per head?

Mr. Davidson: Indeed, I had already touched on that. Why are we giving more money to Belgium and Luxembourg? If more money has to go on administration, we in this country have a policy of trying to disperse jobs from the rich centre to the poorer periphery. Why is that policy not being adopted by the European Union? That seems an absurdity to me.

I am aware that the cuts in our rebate are going to be end-loaded—compressed into the last year of the seven-year budget. We are not giving up the rebate completely in 2007-08. We give up 20 per cent. in 2009, 70 per cent. in 2010, and we have agreed to give up 100 per cent. of the funds between 2011 and 2013. Why has that process been end-loaded? Presumably they saw us coming, and it is now much more difficult for us to negotiate our way back. We have a far more disadvantageous deal than we would if the rebate were evenly given up over the period in question. At the end, we would end up with a better figure from which to work. I remember from when I was negotiating that if we could manage to get a deal that gave us a certain percentage over a year, but it was end-loaded, we started off in a much better position in the subsequent year. I can only assume that those elementary lessons in negotiating had not been passed on to the British negotiators, and I can only assume that the European Union saw us coming, and decided that taking sweets off children was quite an enjoyable process—but I will not digress.

The difficulties caused by our failure in the negotiations spill over into other areas of interest for the British Government. We have an excellent record in the area of foreign aid. We have worked exceptionally hard, but we ought to be exceedingly concerned about the way in which our commitments to retain CAP spending have locked us into negotiating positions, in the Doha round and so on, that make world trade talks more difficult than they otherwise would have been. The agreement places us in a position that is directly against the interests of the third world in world trade talks. I can see why the French wanted to put us in that position, but I cannot understand why we were willing to accept it. We must do better subsequently.

Mr. Drew: I absolutely agree with that point. My worry is about the current economic partnership agreements, which seem entirely driven by Brussels so
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as to set the terms against the third world, yet are sold on the basis of fairness and justice. Surely they are the opposite.

Mr. Davidson: Indeed they are. Not only are we trying to break the third world by forcing economic partnership agreements on it, we are trying to trap it into a world trade system that was established in the interests of French farmers and the Duke of Westminster. That is an absurd position for a Labour Government to accept for one moment.

I am afraid that I have not been here for the whole debate, because I had other commitments. I therefore apologise if other hon. Members have mentioned the European Parliament and the monthly travelling circus, when its accoutrements, Members, committees and staff are transferred from Brussels to Strasbourg and then back again. That will go on under the budget. The issue has not been tackled, and was not even broached. If we vote for the Bill, we are voting to condone that enormous waste of expenditure on a regular and never-ending basis. That seems absurd.

Mr. MacNeil: Is not the monthly transfer all the more absurd these days, when people are so concerned about their carbon footprints?

Madam Deputy Speaker (Sylvia Heal): Order. I do not want this debate to stray into carbon footprints.

Mr. Davidson: I certainly do not want to stray into carbon footprints either. The hon. Gentleman is entirely correct, but we will move on from there.

We have to see the budget in the context of where the European Union is going. It will be the financial package for the implementation of the rebadged EU constitution, providing ever more centralisation, with money again being unnecessarily sucked into the centre to be spent from the centre. There is absolutely no evidence in the budget of any enthusiasm for subsidiarity, either.

We have heard from the Foreign Secretary that he envisages the European Union expanding into the middle east and north Africa. Presumably with the next set of proposals we will be told that unless we give huge amounts of money to Brussels, we will be against north Africa and the middle east. I have some sympathy for the view that we should expand the common market to those countries in trading terms, in order to help them develop. However, I hope that the Economic Secretary will make it absolutely clear at an early stage that we do not endorse any proposal for the free movement of peoples from north Africa and the middle east, because that is— [ Interruption. ] The Economic Secretary looks sceptical at that, but I hope that she will make it absolutely clear that there is nothing in the agreement to take us towards the free movement of peoples from the middle east and north Africa en masse into the European Union in general, and into the United Kingdom in particular.

It is with some regret that I find myself having to oppose my Government. However, there comes a point when we have to say, “This is an appalling agreement and we should never have signed it.” Those involved in the negotiations were sucked into accepting the assumption that those who do not accept everything
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that comes from Brussels are in favour of withdrawal. I do not accept that those are our only two choices and I never have; nor do I accept the suggestion that those who do not accept the budget are against eastern Europe, and I hope that the House will not accept it, either.

9.9 pm

Mr. Charles Walker (Broxbourne) (Con): Thank you for calling me to speak at the end of this important debate, Madam Deputy Speaker. I shall try to keep my remarks short. This has been an interesting debate, with some varied contributions. I notice that the Government could only get the right hon. Member for Rotherham (Mr. MacShane) and the hon. Member for Grantham and Stamford (Mr. Davies) to speak in favour of their position. The right hon. Member for Rotherham gave a long and—as I said when he was in the Chamber—fairly tedious speech, but he did it with a twinkle in his eye. Too often, however, when we have debates about Europe, we start to throw out words such as “racist” and “xenophobic”, and that does this place no good at all. It brings the whole political class into disrepute. It is perfectly reasonable to be concerned about this country’s relationship, and its future relationship, with Europe without being called a racist or xenophobe. Those terms are thrown around the Chamber far too often, in far too many debates.

The hon. Member for Grantham and Stamford made an excellent contribution. We on the Opposition Benches are now realising that he is far more use to us on the Government Benches than he ever was on ours. I have to tell the Minister that we are really not going to have the hon. Gentleman back; I know that you want him to come back over here, but he is yours for keeps.

One of my concerns about the European Union project and the common agricultural policy is the implications that they have for developing countries, particularly in Africa. Farming is fundamental to those countries’ development and economic growth, yet we weight agricultural subsidies in favour of our own well-heeled farmers, as the hon. Member for Glasgow, South-West (Mr. Davidson) has just pointed out. We make it difficult for African farmers to bring their produce to our markets, yet we think nothing of taking our excess product that no one here or in Europe wants to buy and dumping it on their markets at massively reduced prices, making it impossible for African farmers to compete. I have used this example before, and I will use it again: there are markets in Nigeria that are selling tinned European tomatoes. That is simply madness, and we in the European Union must put an end to it. It is unsustainable for us to subsidise our farmers off the backs of struggling African farmers. If we are really going to demonstrate that we want to improve the outlook for African countries and to strengthen their economies, we must allow them access to our agricultural markets. We must allow them to compete on an even footing.

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