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The Chief Secretary tells us that we should regard the deal as a negotiating triumph, because although the Government gave away the veto that had been so brilliantly negotiated by a predecessor Prime Minister, they achieved a smaller rate of increase in the budget than the Chief Secretary apparently thinks we achieved 13 years ago. It may be that the Government achieved a smaller rate of increase, but what matters is that the budget increased so much in the early Labour years, after the end of the Tory years, that any increase would be unacceptable. The Chief Secretary cannot get away
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from the fact that the budget that he is recommending is massively higher than that which was recommended by Mr. Major. For that reason alone I cannot accept it, because it is too big a burden on British taxpayers.

We then heard the myth, which the Government put about, that the proposal is essential for those countries in eastern Europe, which would otherwise be deprived. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) pointed out, however, enlargement was agreed without the new variant. If we had dug in and used our veto, enlargement would still have happened, but we would not have had to make a disproportionately large contribution to that increased spending in the territories entering through enlargement. Some of the other rich countries of western Europe should also have continued to make a bigger contribution relative to ours, for the reasons that my hon. Friends have already set out.

Mr. John Hayes (South Holland and The Deepings) (Con): I hope that my right hon. Friend will not ignore the Chief Secretary’s other two specious arguments. The first was that the deal could have been worse if the Commission had had its way—a suggestion that represents the last resort of the scoundrel. The other was that any objection to what has been negotiated is somehow improper and that the House should not scrutinise the deal that was done. That is the Vichy argument, which has been used by malevolent or misguided Ministers for years in selling this country short.

Mr. Redwood: I am grateful for those extra points. I should like to make some additional ones, to finalise my critique of the Chief Secretary’s position.

The Chief Secretary implied that eastern European countries would be short-changed. That is not true. He also assumed that all the EU spending in those countries will be worth while, but as we know, much of it has been shown to be inefficient, wasteful or even fraudulent by the accounts or by the auditors’ assessment of them. I fear that there will be more such instances in future years. I am sure that the Chief Secretary will be unable to say now that there will be no more such practices, so we may find ourselves financing more unsatisfactory, unnecessary, inefficient or even fraudulent programmes, which my electors are decreasingly in favour of doing.

Finally, the Chief Secretary said that we must understand that we will get more trade for British companies out of enlargement and the greater prosperity of eastern European countries. Of course we will, but that is not contingent on giving away our veto and our budget position. Indeed, I would argue that the main reasons for getting more trade from those countries will apply to non-EU members as well as to EU members. Those reasons are the free trade in the world as a whole, through the general agreement on tariffs and trade, and the fact that some of those eastern European states have wisely decided to set much lower tax rates and create a much more favourable climate for enterprise than this Government are creating for the British companies that have to compete with them.

The Chief Secretary should not suggest that what was negotiated is a great triumph. It was a disgraceful sell-out, and in contrast to the excellent negotiations
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that my party carried forward when we first won the rebate, it marked an extremely sad day for Britain. Voters of all kinds will know that that goes along with the money wasted on Northern Rock, ID cards and all the other things, as a symbol of what is wrong with this Government.

Andy Burnham: I shall do my best to respond to some of the points that have been raised, and I shall do so briefly, because there is a desire in the Committee to move on to new clause 1, and I do not want to detain it too long.

I assure the hon. Member for South Holland and The Deepings (Mr. Hayes) that my motivations for putting forward the arguments that I have made do not include malevolence. Nor was it my intention to appear arrogant at the start of the debate, if that is how hon. Members interpreted my contribution. In introducing the discussion, I was simply pointing out that it is not possible to go back and ask for small changes here and there, and for a different own resources decision. Essentially, my point was that there should be proper parliamentary scrutiny of the Government’s actions. However, the way in which business is done is that the Government negotiate on behalf of the country, and the House has the opportunity to accept or reject what they have negotiated. That is the opportunity that hon. Members have this evening, and rightly so. I was simply saying at the beginning that we are not engaged in line-by-line considerations, but deciding whether to give an in-principle endorsement of the deal before us.

My hon. Friend the Member for Great Grimsby (Mr. Mitchell), who is no longer in his place, asked whether the deal was worth the money. I think that he was really asking about our membership of the European Union in overall terms. The tenor of some of the contributions to this debate was that the EU is a one-way street—that the money goes in and nothing comes back the other way. However, it is important to see how this country’s trade with the EU has increased significantly over recent years. That trade now accounts for 56 per cent. of British trade, and it accounted for 63 per cent. of British goods exports in 2006, totalling £150 billion. I could go through a whole range of examples showing that our economy and jobs benefit from this country’s membership of the European Union.

8 pm

I shall go directly to the question of enlargement, as it is a key theme of our proceedings this evening. Each enlargement of the EU has seen prosperity grow further. When Spain joined, and when Sweden joined, we saw our exports to those countries increase by about a quarter. As a result of such accessions, we have seen direct benefits to British business, British jobs and the British economy. Since the accession of the A8 countries, we have also seen a major increase in UK exports to those countries, totalling some £6.4 billion in 2005, which is up 151 per cent. This process benefits the British economy.

Rob Marris: This is not only a question of the financial benefits, which are debated and sometimes disputed. I would expect general agreement in the House that the enlargement of the European Union
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has deepened democracy in countries such as Portugal and Spain, which have emerged from under the yoke of fascism, and in eastern Europe, which has recently emerged from under the yoke of Stalinist communism. That is good not only for the people who live in those countries but for the people of the United Kingdom.

Andy Burnham: I entirely agree. The benefits of the decision that the European Union has taken on helping those economies to grow will have real dividends for this country for many decades to come, following this debate.

I want to respond to a couple of the other points that were raised in the debate. The right hon. Member for Wokingham (Mr. Redwood) made a few rather cruel sideswipes about my financial acumen that I felt were a tad unjust. He questioned whether I had understood the maths relating to a 22 per cent. increase in the overall European budget in 1994. I assure him that I can understand that the budget was significantly smaller when that decision was taken. I accept that; I understand it. Let us put that point beyond doubt and on the record.

The right hon. Gentleman watches and questions public spending in great detail. I read his blog, and I see what he says. Would he ever feel comfortable with a 22 per cent. increase in any public sector budget? That is not the sort of thing that he would normally advocate. My maths are pretty okay, actually, and I want to ask him whether he can recall whether Britain’s net contributions in that period went up by a similar order. Was there not a significant increase, albeit on a smaller base, for Britain? Was not there a significant percentage increase in Britain’s net contributions? [ Interruption. ] He says that he does not know. Perhaps I can help him.

The percentage increase in our contributions from 1994 to 1999 was an increase in gross costs to the UK of—wait for it—73.4 per cent. There is a bit of a difference, really. Okay, they were different times, and it was a smaller European Union and a smaller budget, but let us get some facts on the record. Let us have some long memories in this debate, rather than a few short ones.

Mr. Lilley: On the question of putting facts on the record, the right hon. Gentleman’s Government have already put it on record that the net contribution of the UK as a percentage of its own total managed expenditure is set to rise from 0.64 per cent. to 0.96 per cent. by 2010. That is a 50 per cent. increase in the share of our expenditure that is going to Europe. If he has got a grip on these matters, why is he not keeping that amount down, rather than putting it up?

Andy Burnham: I have referred to these figures before in the debate. The net contribution is published in the pre-Budget report and again in the Budget, and that is a forecast of payments that the country will make. The figures have been set out quite clearly. I do not have the pre-Budget report to hand, but from memory I think that the net contributions over the course of the spending review that we are about to enter are about £5.5 billion, and will stay at roughly that level over the spending period.

My hon. Friend the Member for Glasgow, South-West (Mr. Davidson), who has also left the Chamber, made the point that we had done reasonably well but
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not well enough. I accept much of what he said. It is his right as a Member of the House to believe that this is not a good enough deal for this country. That is his prerogative. I would say, however, that if we consider all the elements of the deal, we see that it does the job.

What are those elements? They include a rebate that will rise rather than fall during this financial perspective. That sounds pretty good to me. That is within the context of an overall budget that is significantly lower than was originally proposed. The amount spent on the common agricultural policy over the period will fall in value from €55 billion to €51 billion in 2004 prices. The British and French net contributions will come into rough parity in that period, which is an important step. As my hon. Friend the Member for Glasgow, South-West acknowledged, the net contributions that France will make will increase at a significantly faster rate in this financial perspective than they have done previously. Furthermore, we have secured a budget review, which the Commissioner has said will open up a consideration in which there will be “no taboos”. Everything will be up for consideration, and we shall be able to secure further progress as part of that review.

The allegation from the hon. Member for Runnymede and Weybridge (Mr. Hammond) was that we had meekly accepted everything that was said and not pressed Britain’s interests. As I have just illustrated, however, Britain has demonstrably secured changes that are in our national interest. All the points that I have just made demonstrate that. It is wrong to suggest, as the hon. Gentleman seemed to do, that we have simply accepted whatever was being put forward by Brussels or by other member states.

Rob Marris: My hon. Friend the Member for Glasgow, South-West (Mr. Davidson) asserted that a better deal was possible. When I asked him for evidence of that, he was unable to produce any. Similarly, neither were the Opposition. Bearing in mind the benefits of this deal, both in economic terms and in terms of the non-economic elements such as furthering democracy, is my right hon. Friend aware of any evidence that a better deal for the United Kingdom was possible, or that one would be possible if this measure were rejected tonight?

Andy Burnham: I am not. Throughout the debate, I have said that this was the best possible deal that we could secure. Opposition Members seem to be interpreting that as my saying that it is an ideal, perfect deal. That is not what I am saying. I am saying that we have had negotiations— [ Interruption. ] The hon. Member for Runnymede and Weybridge is not listening, but I have set out the things that were secured in those negotiations that will benefit this country and that are demonstrably in our national interest. They include a rebate that is worth more to this country over the period, a shift in the amount in percentage terms that we spend on the CAP, and, more than that, reform within the CAP. There is a shift from pillar one to pillar two spending and a voluntary system whereby countries are encouraged to spend more on improving the sustainability of the rural economy rather than just provide subsidies of the sort which my hon. Friend the Member for Glasgow, South-West finds objectionable, so as to help to diversify the regional economy and help people to develop new business opportunities.

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All those things amount to progress. They are the product of good negotiations by a committed British Government who are in there fighting for Britain’s interests. At many points in this debate, the argument has been, “Let us reject the Bill tonight, as that will embolden and strengthen Ministers when you go back”— [Interruption.] I am paraphrasing a point that was put to me about strengthening our hand. It is for each party in the House to decide how it wants to conduct its relationship with our European partners. My argument is that going back now to ask for renegotiation would involve a lot of bad faith.

Rob Marris: It could be worse.

Andy Burnham: Indeed; it could be substantially worse. I believe that the best way to be heard and get constructive dialogue is not always to adopt a confrontational and knee-jerk response. As I have demonstrated, we have not given it all away.

Mr. Hayes: The tragedy of the Minister’s opening remarks failed to impress, so he is now obviously trying comedy instead. Surely he would not have the House believe that the falling cost of the common agricultural policy is the result of these negotiations. The falling cost of CAP was predicted at the mid-term review five years ago and is a direct result of the move away from production-based subsidies. The savings now being made as a result of this deal are no greater than those predicted then.

Andy Burnham: As the hon. Gentleman knows, the reform of CAP did not begin with this own resources decision. These matters were debated at great length by the previous Government and subsequently by this Government. I acknowledge a long-running debate on the structure, shape and size of CAP; the point I was making is that there is CAP reform within this own resources decision. Let us be absolutely clear, however: we believe that a much more radical reform of CAP is necessary if Europe is to be ready to face the challenges of the years to come. That was why we wanted a “no taboos” full budget review, which is what we secured. That is the Government’s position and it is our objective in that review to secure far-reaching CAP reform, which is what we will now argue for in the negotiations. In my view, that is the right way to conduct them.

I hear the points made by colleagues this evening. It is a matter of judgment, but our judgment is that it is right to engage constructively and push the British case. In doing so, we are more likely to be heard. Members can see the evidence for that in the detail of the own resources decision.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

New Clause 1


‘(1) This Act shall come into force on such day as the Treasury shall by order specify.

(2) The day specified in the order made under subsection (1) shall not be earlier than fourteen days after the date on which the condition has been satisfied.

(3) The condition referred to in subsection (2) is that the Treasury shall have laid before both Houses of Parliament a
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report on the review by the European Commission covering all aspects of EU spending, including the CAP, and of resources, including the UK rebate, as provided for at paragraph 80 of the “Financial Perspective 2007-13” issued by the European Council in December 2005, including a certificate that the Treasury considers that the outcome of the review is satisfactory to the interests of the United Kingdom.’.— [Mr. Philip Hammond.]

Brought up, and read the First time.

Mr. Philip Hammond: I beg to move, That the clause be read a Second time.

I can see that the Minister, if he ever gets bored with what he is doing, has a whole new potential career ahead of him—coming in here on a Friday morning and giving the hon. Member for Hendon (Mr. Dismore) a break. I am extremely grateful to my right hon. and hon. Friends for the self-restraint that they displayed, ensuring that we are able to debate new clause 1. I shall seek to be very brief and not to rehearse any of the arguments made in the stand part debate.

The new clause is genuinely designed to help the Government by re-injecting a bit of backbone into their negotiating position. It would delay the implementation of this change in the own resources decision until satisfactory completion of the promised review of the European Union. It makes explicit the conditionality that the Government claimed was the basis of their final negotiating position.

8.15 pm

In the course of the previous debate, the Chief Secretary said that nothing was agreed until everything was agreed. I would suggest, however, that if the new clause were incorporated into the Bill, nothing would be agreed until everything is done. It is about ensuring that what was promised to be done at Brussels in December 2005 is, indeed, delivered. We have already seen that the Government did not go into the negotiations on the basis of having to give away the rebate in order to secure enlargement. That is a spurious argument. What we have emerged with at the end of the negotiations is nothing but the promise of a review. We must now ensure that the promise of the review is turned into a reality.

The Chief Secretary told us earlier that defeating the Bill or substantially amending it, as new clause 1 proposes, would create a political crisis in the EU. I see no reason why that should be the case. If everyone has acted in good faith, our EU partners will know that our Prime Minister gave away a large part of our rebate because he had secured a commitment to a fundamental review—with no red lines and no holds barred—of the EU budget. Presumably, our partners entered into that commitment in good faith. There is no reason whatever why they should find it strange that this Parliament wants to ensure that that review indeed takes place, that it is meaningful and that its outcome is, at least as judged by the Treasury, satisfactory to the UK. This is not an anti-EU position, but a pro-British position. No other Government in the EU believe that there is a contradiction between being pro-EU and being pro their own national interests.

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