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The truth is that, after all the posturing and grandstanding, and all that sabre-rattling about non-negotiable rebates, the Government simply did not negotiate hard enough; they were not hard-headed enough. We hope later today to give back to the Government some of the negotiating leverage that they so carelessly threw away.

As we enter 2008 with a slowing economy and a very difficult fiscal picture, with climbing borrowing that must sooner or later be repaid, inflationary pressures getting stronger and the squeeze on public service financing mounting, does the Chief Secretary accept that the priorities of the British people are to address those problems here at home, not to throw billions of extra pounds of our hard-earned rebate, which the Prime Minister told us was fully justified, into the EU’s pot?

This evening will be our last opportunity to secure fundamental reform of the European Union budget. As the British rebate is eroded, our leverage becomes less and less—and that leverage to secure reform is in the UK’s interest and in the interest of some of the poorest countries in the world. Indeed, the Prime Minister told us that if we were to make poverty history, we needed to make the excesses of the common agricultural policy history. Our partners in Europe may
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think that they have put one over on Tony Blair, but we need to send a message to them that this Parliament is made of sterner stuff.

7.30 pm

It would be possible for us to vote against clause 1 stand part, but given the nature of the Bill, we would like to argue the case for new clause 1 in due course, in the hope that it will make the Bill acceptable as a way forward. If we fail to succeed in our argument for new clause 1, I shall ask my right hon. and hon. Friends to vote against the Bill on Third Reading. I say that because voting against clause 1 stand part at this point would essentially have the same effect as voting against the Bill on Third Reading. Therefore, I do not intend to divide the House on clause 1 stand part.

Mr. Austin Mitchell (Great Grimsby) (Lab): I have a dreadful feeling that this discussion, which should be about value for money and whether we are paying over the odds to belong to the European Union, is degenerating into the old pro or anti-Europe argument, with those who are enthusiastic about Europe saying, “Pay up—give ‘em the money, Barney!”, while those who are more critical and sceptical, such as my hon. Friend the Member for Glasgow, South-West (Mr. Davidson), say that this is a bad deal. And it is a bad deal.

The meat of the discussion is in clause 1. That is the meat of the Bill, unless we are going to fight over the short title, which would seem a rather pointless exercise. It is important to recognise that the meat of this debate on the calculation of the European correction is the generosity shown towards Europe by our previous Prime Minister, who seems to have ended his period in office with extraordinarily generous impulses towards Europe, one of which was detailed in the newspapers this morning: a commitment to provide 60 per cent. of energy generation through renewables in accord with European totals. It is a total that we cannot reach, and it is going to be incredibly expensive even to move towards reaching it, but he committed himself to it.

That is irrelevant to this Bill, as I am sure that you are about to tell me, Mrs. Heal, but what is relevant is his generosity over the rebate. Until that point, we had been told that it was inviolate and sacred, and that it would be there for ever to recognise Britain’s unique situation and contribution, but suddenly it was breached. The interesting question for me is what made our previous Prime Minister so generous on his long march to the Union pour un Mouvement Populaire, fighting against the Socialist candidates in the municipal elections. Was that breach agreed by the Cabinet before the Prime Minister negotiated it? Did the Cabinet authorise the Prime Minister to make that concession? Was it told about it later, or did it authorise it before the negotiations started? We need to know that, and we also need to know what the cost will be.

I was delighted to hear the Chief Secretary say that the figures will be published. I hope that they will be published annually, because the British people need to know what they are contributing towards Europe and what this institution is costing them. We are told that the money is to pay for enlargement. We already pay over the odds to belong to the club in the first place. There have been certain disagreements about the scale
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of the figures, but those I have had calculated for me show that we are now paying £10 billion a year gross—not euros—and £4 billion a year net. Money comes back to us for projects approved and supported by the EU that we would not necessarily want in the first place, but we do get a return. By 2013, under clause 1, we will be paying £20 billion a year gross under clause 1, and £6 billion a year net.

We are talking about billions here, and an increased contribution of up to £3 billion chucked in just like that. We are fighting the police for a measly £30 million, but we are giving away, on this generous impulse of our previous Prime Minister, up to £3 billion by 2013. My right hon. Friend the Chief Secretary told us that that was for enlargement, and part of it is, but it is also for a lot of other purposes decided by the European Community and not by us. It is only partially for enlargement in any case. If we accept this breach in the rebate, to which we agreed to sustain the enlargement of the European Community that we want—wider, not deeper—are we preparing to say, when the enlargement includes Turkey, that we must agree to another reduction and carving of the rebate? I do not want to say that, and we should not be committed to saying it.

It is a question of money. I think that my figures are accurate, but I hope that the figures will be published annually so that people know what the Bill means to this country, and so that they know how much they as taxpayers are paying to sustain membership of this institution. It is not our only contribution, of course; we are paying £1.8 billion for other programmes. The Organisation for Economic Co-operation and Development calculates that we pay £15 billion to belong to the common agricultural policy—a policy that at every election every party has said will be fundamentally reformed, but it never has been. That policy was to be reformed fundamentally as a condition of our agreeing to the reduction of the rebate, but it cannot be reformed until 2013 in any case, when I have no doubt it will be sustained.

Those are the sorts of contributions we make, and if we add the cost of regulations, we find that membership of this institution costs us about £40 billion to £50 billion a year. I would like those calculations to be made public every year so that we know what is going on, and what we are paying. I would also like them to be calculated in terms of the effect on GDP. The contribution is going to be about 0.5 per cent. of GDP. We are struggling as a party to get an increase in GDP up from a measly 2.5 per cent. This year it will be substantially lower than 2 per cent. but we are accepting an increase in the 0.5 per cent. of GDP contribution we pay to belong to the EU. We need to know the figures because any loss to GDP is cumulative; it goes up all the time. The payment is also a payment across the exchanges. I know that the previous Prime Minister is making a magnificent effort to close the balance of payments through his earnings in the United States, but that will not be enough to deal with the fact that the deficit is now running at about 5 per cent. of GDP. We are adding to it through this increase in the contributions set out in the Bill.

The question we face tonight is one of whether the increase is worth the money. Should we support this increase in contributions to the EU? The new clause
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proposed by the Conservatives, which we shall discuss later, is worthy and well worth accepting. At this stage, I can say only that we are not getting value for money, and that the contribution is not worth making. We are paying over the odds to belong to a club that is doing serious damage to us anyway, and we should not agree to this contribution. I certainly cannot vote for it.

Dr. Cable: Like the hon. Member for Runnymede and Weybridge (Mr. Hammond), I had not intended to speak in the stand part debate and was waiting for the interesting discussion of the new clause. However, unlike him, I do not intend to spend 25 minutes saying what I had not otherwise thought it necessary to say.

I shall make a few brief comments on our position. I was provoked by the Financial Secretary, who came in with all guns blazing, telling us that it was make-up-your-mind time. The implication of his remarks was that anybody who wanted to exercise parliamentary scrutiny or was critical of the budget settlement was somehow anti-Europe or anti-enlargement. That is clearly wrong. Liberal Democrats are greatly in favour of the European project, greater participation and enlargement. However, we believe that the settlement that the Government reached is not good and we do not understand why we should vote for it.

I do not agree with many of the things that the hon. Member for Glasgow, South-West (Mr. Davidson) says about the European Union, but he succinctly summarised the issue in an intervention. It is possible to believe that enlargement is necessary, desirable and in the British interest, and that economic and financial consequences are necessary, which means accepting that countries should not continue to support the UK, yet be critical of other aspects of the European budget settlement.

The key point, to which we shall revert when we debate the new clause, is that the previous Prime Minister either did not perceive or would not act on the link between the British rebate and future negotiations on the agricultural budget. The reason for that is a mystery. Doubtless, historians will tell us why he was unable to use that link and that leverage. Not only those on Opposition Benches but the current Prime Minister was unhappy about the previous Prime Minister’s actions. Leaks from the Treasury made it clear that the current Prime Minister was furious that proper, tough financial negotiation was not taking place. It is important to stress that.

We will ascertain shortly whether new clause 1 makes it technically possible to retrieve the position. I do not know—I have an open mind and I will listen to the debate. I simply wanted to intervene now to make it clear that being pro-Europe and in favour of enlargement and of Britain’s adjusting its contribution to take account of that does not mean that we support the Bill and the settlement. It was a bad deal and, unless something happens during the debate on the new clause, we will vote against it.

Mr. Davidson: I welcome the Chief Secretary’s willingness to take so many interventions because that allowed us to hear more about the Government’s position. I was concerned about his saying at the beginning of the debate that, if we did not accept the proposals, it would lead to “a complete breakdown of
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our relationship with Europe”. If, every time Ministers go off on our behalf to discuss matters in Europe and come back with a deal that is presented to Parliament for a decision, we cannot reject it because it would result in a complete breakdown of our relationship, we have effectively no parliamentary scrutiny and Ministers are self-employed. We should not accept such a line for a moment.

The fact that the previous Prime Minister agreed the settlement does not necessarily bind us for all time. Had I known that he had aspirations to be president of Europe on his way to being president of the world, I would have believed that agreeing the settlement represented an inappropriate conflict of interest and that he should not have been allowed to go on his own.

I agree with the hon. Member for Twickenham (Dr. Cable) when he agreed with me—not an unreasonable position—that it is possible to be in favour of enlargement but unwilling to accept other elements of the budget, such as the common agricultural policy with its obscene overspending and all the waste and extravagance. Let us take the monthly commute between Brussels and Strasbourg, with all the boxes in the lorries and so on. We do not have to accept that as the price of enlargement. We could have enlargement without the continuation of those elements. The Government’s inability to negotiate them away is a cause for condemnation.

7.45 pm

The Government defended their position by saying that, if they had left matters to the Commission, they would have been worse. That is probably true. However, I do not know whether the Chief Secretary or his advisers have ever been negotiators, but I suspect that the Commission was adopting the old stance of trying for 10 per cent. and being prepared to settle for 5 per cent. The Commission’s asking for more money and the Government’s beating it down a bit is not an enormous cause for self-congratulation. The Commission made a bid for more money—that is what commissions do. Of course, the Commission wants more money—it is a self-aggrandising organisation. The fact that it is spendthrift and extravagant does not mean that we must accept everything it proposes.

The Chief Secretary tells us that the Government made the best possible deal. Oh no they didn’t. Of course, a better deal was possible. We tend to get movement from the European Union only in times of crisis and difficulty. Rejecting the budget and showing that we are not prepared to accept what the Government have accepted is for the Government’s own good. Everything that I propose to the Government is for their own good, even if they do not always recognise it at the time.

Ministerial positions would be enormously strengthened if the budget were rejected, because Ministers could negotiate much more strongly next time. I wonder what sort of advice the Chief Secretary has been getting from the Foreign Office and elsewhere. Foreign Office officials are so insecure that they are seen outside the building only in groups of eight because they are unwilling to travel anywhere on their
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own. In those circumstances, we must tell the Chief Secretary, “You’ve done reasonably well, but not well enough.” We ought to send

Rob Marris: My hon. Friend says that a better deal was possible. I agree with the intellectual construct, just as I believe that it is possible for my hon. Friend to become leader of the Labour party. However, I think it unlikely that my hon. Friend will become leader of the Labour party and, outside the Chamber I will, if he wishes, adduce some evidence to that effect. He says that a better deal was possible; will he adduce some evidence to that effect?

Mr. Davidson: My hon. Friend deserves some credit for being hyperactive in defence of the Chief Secretary. It is noticeable that the Chief Secretary has more officials than Members supporting him. Only one Member and a part-time Member support him—that shows the support that he enjoys on the Labour Benches. The enthusiasm for the proposals among Labour Members is not high—they will vote for them simply out of loyalty to the Government. The vast majority recognise that it is a poor deal.

Britain clearly went into the negotiations with the slogan, “We surrender” and progressed from there. Britain’s essential core position was to get an agreement. It was not willing to countenance circumstances in which it would stand out against the majority.

Rob Marris: What is the evidence?

Mr. Davidson: The evidence is in the reports that we have read. I am sure that my hon. Friend accepts that it is always difficult to prove a negative. Let us consider the French position. The French have always been much more resolute in standing up for the French position than the United Kingdom has been in defending the UK position.

Andy Burnham: My hon. Friend compares what the UK Government did in the negotiations with the French Government’s actions. Does he accept that French net contributions will grow significantly more quickly during the current financial perspective than those of the UK?

Mr. Davidson: Yes, I do accept that France’s net contribution will grow more quickly than the UK’s, but I also accept that France’s net contribution per head is less than the UK’s. Furthermore, I am aware that France is the largest recipient of EU largesse, albeit not in terms of the balance between incomings and outgoings, but in terms of the amount that it receives. We should also recognise that EU funding is a transfer of money to particular groups from particular groups. One of the reasons I am so hostile to the way in which the EU budget is currently constructed is that the money comes from people in my constituency, who pay higher food prices than they would otherwise, and goes to wealthy farmers who neither need nor deserve it. The deal that we are discussing does nothing to address that. That is why I intend to vote against it.

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Andy Burnham: Again, however, would my hon. Friend not accept that spending on the common agricultural policy will fall as a percentage of the overall cake during this financial perspective?

Mr. Davidson: I return to my original point: the deal is not nearly as bad as it could have been, but it is not as good as it should be. I did not join the Labour party to settle for second best. I wanted to see the best that was possible, both for my people and for the area that I represent. I do not believe that what we have been offered is a good deal: rejecting it is the way to a better deal, which is why I intend to do so.

Mr. Redwood: I shall keep my remarks brief, because once again the Government are not allowing us proper time to deal with the matters before us—clause 1 and the very important new clause 1, which we hope will be moved shortly. However, I cannot let the Chief Secretary get away with the disgraceful arguments that he has produced this evening.

The Chief Secretary first suggested that Mrs. Thatcher used to negotiate and reach compromises, and that that was entirely comparable to the negotiation, sell-out and giveaway that he has again announced to the House. Let us compare the two negotiations. Mrs. Thatcher went to a Community in which the other 11 countries had no interest in letting us keep more of our money. Any one of them could have vetoed her proposal that we should have a rebate. She managed to talk them round from 11-one down to 12-nil in favour, because she had to win by a unanimous vote.

All that the current Government had to do when they went to Brussels was say, “We have a veto and we are not going to give away what Margaret Thatcher so wisely and brilliantly won for the United Kingdom,” but they could not even do that. They gave in under pressure and said, “Oh deary me, no, it would be quite wrong of us to use our veto. We’d love to shell out €10.5 billion over the first period and much more over subsequent periods, because we now realise that we shouldn’t use the veto and we’re here to give in.” The Opposition are delighted that the Chief Secretary gave way so much in this debate, but we are unhappy that Mr. Blair and others gave way so much when they completely mishandled the negotiations.

Labour colleagues of the Chief Secretary are present who believe that the sterling equivalent of that €10.5 billion would be much better spent on public services, which they greatly revere. There are also those on the Conservative Benches, such as me, who believe that, in the light of all the money wasted in public services, that €10.5 billion should be given back to British taxpayers, who have paid all too dearly for the Government’s inefficiency and their bad negotiations in Europe.

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