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and said that

It expressed the view that the Commission and member states needed to make much greater efforts

That applies not just to member states, but to the Commission.

Mr. Quentin Davies: Will the hon. Gentleman give way?

Mr. Gauke: I will, but I hope that the hon. Gentleman will not get too excited, as he did during his speech.

Mr. Davies: If the hon. Gentleman simply checks the Court of Auditors’ report, he will find that there is no reserve on the Commission’s accounts. They have been signed off unconditionally.

Mr. Gauke: I was quoting from the report of the European Scrutiny Committee, which summarised exactly what the Court of Auditors’ report had said in criticising the Commission.

Mr. Simon: Will the hon. Gentleman give way?

Mr. Gauke: I want to make a little bit of progress. We are short of time, and the hon. Gentleman has not been present for much of the debate.

The Government have made a great deal of the fact that we are closing the gap with France. What they have not acknowledged is that the United Kingdom will pay more than 20 per cent. more net per head of population than the French will. We also hear the argument that the rebate will rise, an argument that was advanced by the Chief Secretary. But why will the rebate rise? Again, the hon. Member for Glasgow, South-West summarised it very neatly. Why do we have a rebate? Because we contribute more than we receive, and the rebate reduces the disparity to some extent. The bigger the disparity, the bigger the rebate.

The deal agreed by Tony Blair in December 2005 means that the disparity will get worse. Overall EU spending in cash terms is going up, but in the UK it is going down. Our net contributions increase, so our rebate increases. That is not a triumph for UK diplomacy;
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it is because our negotiating objectives were not achieved that the rebate is increasing.

The other argument that we heard, advanced by Tony Blair when he returned to the House of Commons following the Brussels summit, was that we would see reform of the common agricultural policy. Mr Blair said that President Barroso would begin a review of the EU’s budget, including the CAP. He told the House of Commons that this would mean that

However, when the consultation document for the review was published in December 2006, there was no suggestion that we would see any budget changes by 2013; in fact, quite the contrary. The document stated:

Not only will the review not address the budget structure for this financing period, as Tony Blair promised; it will not address the next one, either, which takes us to 2020. Indeed, the failure to reform the CAP in 2005 will make it harder to reform it in future because, in the course of the next seven years, dependency on the CAP will increase in the accession states, and the desire to reform will be reduced. To repeat a point made by my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady), it was not just the press, the Conservative party or Labour Back Benchers who were critical of this deal, but the then Chancellor and current Prime Minister was also very critical. The Sunday Times reported how he was “quietly fuming”. It said:

Mr. Simon: Will the hon. Gentleman give way?

Mr. Gauke: No, I am going to finish. I think we know how that was understood.

The report continued by stating:

Mr. Simon: They make that stuff up.

Mr. Gauke: Well, let us not then just take the words of The Sunday Times; why do we not take the words of the then Economic Secretary to the Treasury, now the Secretary of State for Children, Schools and Families—and probably next week the Chancellor? He told BBC radio about how the then Chancellor was going to flex his muscles. He said:

He went on to praise Baroness Thatcher:

He also said:

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So what happened when that tough negotiator and change maker—the Prime Minister—went to Brussels to claim back some of the rebate? What did he achieve banging the table in order to get a fairer outcome? Nothing. The preparations had been made, the Secretary of State for Children, Schools and Families was urging him on, battle was set to commence, and at the first sign of difficulty the Prime Minister bottled it—not for the last time. The fact is that for all his talk of being a tough defender of Britain’s interests in Europe, this is just an excuse for briefing against the previous Prime Minister and now the current Foreign Secretary. He might invite Baroness Thatcher around to No. 10 and he might invoke her name before negotiations, but when it comes to defending British interests he is not fit to pour her tea.

This Parliament can defend our interests by voting down the Bill. We would save the country £7.4 billion, which is almost £11.5 million for every constituency in the country. Every Member who votes for the Bill tonight should remember that statistic; they might be reminded of it from time to time. Some have said that this is a done deal and that Parliament should not have a say. They are the same people who say that the European reform treaty should be debated fully in Parliament and that the people should not have a say. We are entitled—

Mr. Simon: Will the hon. Gentleman give way?

Mr. Gauke: No. We are entitled—

Mr. Simon: Will the hon. Gentleman give way?

Mr. Gauke: No. We are entitled to vote this down. Under article 269 of the European Union treaty this deal constitutes a recommendation, which then needs to be adopted by member states. It is a bad deal for Britain: it loses us part of our rebate, it fails to reform the common agricultural policy, and it weakens our negotiating position for the next time. Tonight, we should take the opportunity to reject this recommendation and to defend Britain’s interests by voting against the Bill.

9.43 pm

The Economic Secretary to the Treasury (Kitty Ussher): We have had an interesting debate in which several Members, not least the hon. Member for South-West Hertfordshire (Mr. Gauke), have shown their true prejudices for all to see. I feel that we have been here before and that no doubt we will be here again. The highlight for me was the contribution of our new friend, my hon. Friend the Member for Grantham and Stamford (Mr. Davies), who gave an excellent speech. Opposition Members said they would not take him back; we are not letting him go as he is able, in a way that no one else is, to speak with inside knowledge about the Conservative party’s sheer hypocrisy on European Union matters. He
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said that the Opposition parties’ purpose was to defeat this Bill in order specifically to cause a constitutional crisis in Europe, which is what they want.

We have heard a lot of facts and figures this evening, so let me start by explaining the true ones. This is a good package for Britain. The abatement is preserved —[Interruption.] Of course it is; it is in writing in the own resources decision, which states:

I have it here in black and white. It continues:

The rebate as a whole will remain. It has not been signed away and will remain in full on the common agricultural policy across old and new EU member states and on all spending in the EU 15. It is right that we pay our share towards reconstruction in eastern Europe and it is in our national interest to do so. Not only that, our abatement is worth more in this budget round than in the previous one. We will get back €40 billion, which is an increase on the €34.5 billion in the previous round. Over the period, Britain and France will contribute roughly the same, which Conservative negotiators never achieved. The net contributions of France and Italy will rise twice as fast as ours.

Under this deal, the EU budget as a whole has fallen below 1 per cent. of European Union gross national income, which is a saving of €160 billion compared with the Commission’s original proposal. The deal that we agreed is 20 per cent. less than the last budget agreed when Conservatives were attempting to negotiate for the Government. In 1988, the then Government signed up to a deal that saw the budget grow by 17 per cent. over five years, and in 1994 they signed up to a budget that was shown to grow by 22 per cent. We have signed up to a budget for an enlarged EU that will grow by a mere 7 per cent., working in the national interest.

We have secured a commitment to a fundamental review of the budget. The CAP, which was two thirds of the budget in the mid-1980s, will no longer be the largest part of the EU budget. The value of the CAP will start to fall in real terms from this year, from €55 billion to €51 billion by 2013. That has been negotiated by this Government. The budget now gives help to the new member states of eastern Europe, which need it most. It is in the national interest to pay our fair share of the cost of enlargement.

I want to refer to some of the questions and contributions in this evening’s debate. The hon. Member for Falmouth and Camborne (Julia Goldsworthy), who speaks for the Liberal Democrats, said that she wanted a debate on EU membership. She accepted that CAP reform was going the right way, but then she confirmed that she will vote against the Bill. The Liberal Democrats are, as always, trying to face two ways at the same time. She said that it would have been better to have had no agreement than to have the agreement reached in 2005, and other Opposition Members tried to make the same point.

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It was essential to have a December 2005 deal to allow the new member states to start preparing to use EU funds and to avoid the European Parliament, in the absence of such a deal, setting annual budgets under existing funding arrangements that, just to give one example, would have cost Poland about two thirds of its EU funds. Reaching no deal would have betrayed our support for enlargement. Perhaps the Opposition parties’ support for no deal betrays their lack of support for enlargement.

The hon. Member for Falmouth and Camborne said that Cornwall is still a very poor area. We are happy that it will continue to be supported. Cornwall and the Isles of Scilly will receive €430 million in convergence expenditure in the current financial perspective.

My hon. Friend the Member for Luton, North (Kelvin Hopkins) made a number of points. I do not agree with all of them, but I was grateful for his contribution. He said that the CAP and structural and cohesion funds should be nationalised. On the CAP, the Government’s policy is the abolition of market support and direct payments. On structural and cohesion funds, as set out in 2003, it is our policy that wealthier countries should be responsible for their own regional policies. SCFs should be targeted on the poorest and, as a result of the deal that we secured in December 2005, 250 per cent. of structural and cohesion funding expenditure will go to new member states.

The hon. Member for Altrincham and Sale, West (Mr. Brady) succeeded in emptying the Public Gallery, and I lost the will to live at some points in his speech. He said that the House was having the chance to debate the Bill only as the deal comes into force. That is not the case: the own resources decision will not come into force until it is ratified by all member states, and I hope we will do so very shortly.

Mr. Brady: The Economic Secretary says that the deal is good for Britain, so why did the then Chancellor—now Prime Minister—seek to reopen the arrangements that had been reached once the deal had been agreed?

Kitty Ussher: He did not do that. The own resources negotiations that took place after December 2005 implemented the deal. The hon. Gentleman should not believe everything that he reads in the newspapers.

The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) asked why the UK should bail out countries including those in the Balkans, Ukraine and Georgia. Why should we give up the abatement, he asked, when public finances are stretched? I support enlargement—I am not sure whether Opposition parties do—and I am clear that the investment in new member states will be to the economic benefit of the UK. It will facilitate trade. In 2006, British exports to the countries that acceded in 2004 had risen by 36 per cent. in the first full year after accession. That means jobs and growth in the constituencies of all hon. Members.

I listened with respect and interest, as always, to my hon. Friend the Member for Great Grimsby (Mr. Mitchell), although I did not agree with everything he said. He made the point that the CAP would increase in real terms, but that is not the case. A lot of erroneous numbers have been flying around this evening. As I have just said, in 2007 the CAP will be worth €55 billion, but
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it will reduce to €51 billion by 2013 in the prices of that year. I also do not agree with my hon. Friend that we would be better off out. With 55 per cent. of our total trade being with the EU—3 million jobs and inward investment—being in the EU gives us peace, prosperity and productivity growth.

The hon. Member for Wokingham (Mr. Redwood)—

Mr. Redwood: Right hon.

Kitty Ussher: I do apologise. The right hon. Gentleman made, as always, an eloquent speech, but one that was economical with the facts. He said that there would be an additional £70 billion cost to the UK in this budget period, and the hon. Member for Wellingborough (Mr. Bone) made the same error. That is not the case. The numbers that the right hon. Gentleman mentioned are the total gross costs—our total contribution—and they do not account for budget receipts, and they certainly are not the additional costs of this agreement. The right hon. Gentleman tried to imply that the cost would be double the actual figure.

The hon. Member for Wellingborough also said that UK trade with the EU has declined from 35 per cent. to 25 per cent. No, 55 per cent. of British trade is now with the EU.

Mr. Gauke: The Economic Secretary disputes the figures given by my right hon. and hon. Friends for the additional cost of the changes to the rebate. What is her estimate of the additional cost as a consequence of the agreement deal?

Kitty Ussher: The deal is as set out by my right hon. Friend the then Chancellor, which is that the UK abatement will be disapplied by a maximum of €10.5 billion. There has been no change to that. I set out the estimated extra costs of the December 2005 agreement in an answer to a question from my right hon. Friend the Member for West Dunbartonshire (John McFall) on 20 December 2005.

Mr. Redwood: Will the hon. Lady give way?

Kitty Ussher: I cannot give way. I have already responded to the right hon. Gentleman’s points. I listened—[Hon. Members: “Give way”.]

Mr. Speaker: Order. The hon. Lady is not giving way.

Kitty Ussher: I listened to the speech made by the right hon. Member for Wokingham. I have responded to the points he made and I have only six minutes to answer everything else.

As always, I listened with interest to my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). He asked why Luxembourg and Belgium came out well in the figures: that question was also put by Opposition Members. It is mostly due to administration spending; the EU institutions are physically located in those member states so they receive what looks like a larger share, but it is not comparable to the other figures.

I was grateful to my hon. Friend the Member for Llanelli (Nia Griffith) for her good and well-rounded speech. Given the points made by Opposition Members, I think we should have had a few more such speeches.

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