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20 Jun 2008 : Column 1222

Mr. Cash: I am chairman of a number of committees in the field of international development. Does the hon. Gentleman agree that my Bill to do with an anti-corruption audit, which involves looking at what the EU does, and at what other bodies such as the World Bank and the International Monetary Fund do, demonstrates that he has a point: in order to evaluate the kind of analysis that this Bill would provide for, it would be necessary to address international development issues, because a lot of that money is spent through the European Union, but that needs to be properly monitored and at present is not?

Mr. Davey: Although I have not read the hon. Gentleman’s Bill, from his description of it I think I probably would be able to support it. I am concerned that any money spent by the EU should be spent properly. On financial scrutiny of EU budgets, let me first say that I enjoyed the speech of the hon. Member for Gainsborough. The EU budget represents just over 1 per cent. of gross national income across the EU, and slightly less than 2 per cent. of UK public expenditure. Although we should make sure that every single penny is properly audited and scrutinised, the idea that that should be the only focus of corruption analysis or value-for-money analysis does not bear much scrutiny. There are many other examples of wasted money, and they are far greater than the examples of wasted money in the European Union. They occur in Whitehall and in local government, and as elected representatives, it is our job to hunt down such waste.

Another factor that the commission would find it quite difficult to get its head around, and that shows the nature and benefits of the European Union, is the freedom to move. It is a core freedom in the European Union—the freedom to travel on holiday, to work, to live and to set up a business anywhere throughout the EU. All those freedoms are crucial, and millions of UK citizens benefit from them. We all know about the UK citizens who live in France and in Spain, but when I holidayed in Bulgaria last year, I was impressed by the estate agents in Plovdiv, who advertised all their properties in English with the price in sterling, not just in euros, which I am sure will please the hon. Member for Christchurch.

That situation shows both the number of British people who want to buy property and land in Bulgaria, and some of the protections, safeguards and freedoms that come from the European Union, because the flow of British people to Bulgaria has increased substantially since Bulgaria joined the European Union. I should be interested to know how the hon. Gentleman’s commission would take account of the value to Britain and to British people of those extra freedoms. Clearly, it would have to assess whether those people could have followed that course without Bulgaria having joined the European Union, and there would have to be some very complicated analysis. It is important that we examine the value to individuals of the freedom to move, because my concern is that if we were to leave the EU and there were restrictions on the movement of individual British people, there might be a cost to every single person.

The issue of trade is more about a narrow financial and commercial analysis, which was the original intention behind the hon. Gentleman’s Bill. There is the vexed question of whether the EU has increased trade and
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how many jobs that in turn creates. There are many different estimates. The hon. Gentleman quoted Civitas’s estimates, but there have been estimates from the National Institute of Economic and Social Research and many others, and surprise, surprise, they all disagree with each other, so a properly constituted body may need to look more deeply at the analysis of trade. However, we in this House are all concerned about the unnecessary cost of regulations, and his audit will have to be rather careful about how it examines the European Union’s role in that area.

I always like quoting the regulation on strawberries, because it says what a strawberry is and is not. The hon. Gentleman may find it outrageous that the EU has a regulation on strawberries, and I am sure that the popular press would like to pillory the situation, too, but the truth is that before the EU had a single regulation throughout the single market, every single, individual member state, almost without exception, had a regulation on what a strawberry was. The EU regulation on a strawberry resulted in all the other individual regulations on strawberries being torn up. So if one is going to analyse the costs and benefits of regulations in the European Union, one must work out how many extra regulations pulling out of the EU would impose, because we might have to go back to a series of individual member states’ regulations on what a strawberry is, and heaven forbid that we go that way.

That makes my point: the idea that we will not have regulations if we are outside the EU is nonsense. We had regulations before we went into the EU.

Mr. Cash: The hon. Gentleman is moving into territory that I regard as extremely dangerous. When the European regulations impose burdens on business, the real question is: how does one manage to get rid of them and/or modify them? The only means by which one can achieve that is either negotiation, which requires a majority vote that is not regarded as feasible because of the number of member states involved, or getting the individual member states, particularly this country and its Parliament, to take a decision to modify and/or to remove the burden through their own parliamentary processes. That is the way one must do it, and there is no way around it.

Mr. Davey: I am delighted that the hon. Gentleman took me up on that point, although I must say that I did not realise that I was moving into dangerous territory by talking about strawberries. The idea of soft fruit being dangerous is an interesting one.

I am afraid that the hon. Gentleman’s intervention just shows some of the problems that the commission would have and that his argument has always had. If Britain were to pull out of the European Union, the European Union would still exist and make regulations on strawberries and on many other things. British exporters who wanted to export to EU member states would still face those regulations. This Parliament by itself is not able to wish away EU regulations, so it is very easy for the hon. Gentleman to suggest that if we left the EU, those regulations would not hit our businesses, but I am afraid that they would, because the EU would remain in existence.

Mr. Cash: I was not actually arguing about the case for withdrawal. I said in the debate only the day before yesterday that that is where we may end up going, but it
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is not one of my specific objectives. The real question is whether one can reduce the burdens on business in order to achieve economic competitiveness. The only basis on which one would have to pass unilaterally a law in this country in our vital interests would be other member states simply refusing to do anything about the issue. That is the crucial point. I am interested in the impact, as the Bill provides for it, on the United Kingdom, although I recognise that other member states can be foolish and unwise if they wish.

Mr. Davey: I still think that the hon. Gentleman has not answered the fundamental question. Presumably, the cost-benefit audit in the Bill, which we all support, would have to take into account the cost to the UK of withdrawing from the European Union. My point—

Mr. Cash: rose—

Mr. Davey: If the hon. Gentleman will just hold on and let me finish, I shall be very happy to let him in before he goes to the wedding.

The audit would have to analyse the cost of the regulations, but it would also have to admit that those costs would not go away if we left the EU. If we were to leave, our exporters would still face those costs, but the Government would not have been around the table when the regulations were being decided, and they would not have been able to have an influence or to try to ensure that the cost of compliance had been lessened. Indeed, if we were not at the table, other EU countries could ensure that the cost of those regulations was higher to people who were not in the European Union, so there would be some fundamental problems.

Mr. Cash: We could be in danger of developing a completely separate argument on a separate Bill, but if I may say so to the hon. Gentleman, we must decide what kind of regulations we want our businesses to have to comply with. The other member states must work out, in relation to the global marketplace, the extent of the burdens, including the £600 billion to which Mr. Verheugen referred in respect of the European Union, that they can afford to have inflicted on their businesses.

That is the key question. I think that the hon. Gentleman will find that the result would be that if the evaluation was a proper one of the kind that my hon. Friend the Member for Christchurch suggests, and the other member states were prepared to listen, we would end up with a more comprehensive reduction in burdens on business all round.

Mr. Davey: Let me be absolutely clear about this. I agree, my party agrees and Liberal Democrats in the European Parliament agree that we need to reduce the regulatory burden that comes out of Brussels and to simplify the administrative arrangements so that the cost of compliance is reduced. The hon. Gentleman will know that there are programmes in place to try to do that. [ Interruption. ] He says from a sedentary position that they will not do that. I remind him that it is the job of MEPs elected from this country to the European Parliament to hold the Commission to account in doing that. Indeed, it is the job of Ministers who go to Brussels to ensure that the Commission does it, because they are pledged to reduce the costs of the regulatory
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burden. My fundamental point to the hon. Gentleman is that if we were not in the European Union we could not try to reduce the costs of these things—we would have no influence on them—but we would still be hit by the regulations. If the proposed cost and benefit analysis were carried out on regulations, I cannot see how it could conclude anything but that there is a benefit to Britain being in the EU because it can influence the regulations.

Mr. Francois: I do not want to intrude in the debate between the hon. Gentleman and my hon. Friend the Member for Stone (Mr. Cash), but as my hon. Friend is just about to go to the wedding—for all I know, there may be strawberries there—I should like to take the opportunity from our Front Bench also to wish his nephew and nephew’s wife-to-be all the very best for the future. I hope that it is a wonderful day, that the weather is good to them and that they have a happy life together.

Mr. Davey rose—

Mr. Evans rose—

Mr. Davey: I give way to the hon. Gentleman, because I do not think that I need to reply to the hon. Member for Rayleigh (Mr. Francois).

Mr. Evans: We are moving into Wimbledon fortnight, and a lot of strawberries will be eaten there. I am sure that the regulations run to many pages as to what is and is not a strawberry. However, there is one benefit to having the European Union working on our behalf, in this respect: if one were having Cornish clotted cream with the strawberries, one would be having a brand that is now protected so that that cream has to come from Cornwall and cannot be produced somewhere else.

Mr. Davey: I do not know what the hon. Gentleman’s hon. Friends will think about that, but he makes a strong case for the advantages to many parts of Britain and British business of our membership of the European Union. I hope that the audit would take into account the extra protection given to UK brands that the European Union provides.

I want to touch briefly on the competition regime. In recent years, the UK Government have rightly toughened up the competition regime as it applies within the UK. Of course, UK competition authorities cannot exercise any influence on any other country. However, through our membership of the European Union we can ensure that the EU’s competition authorities, working with member states’ national competition authorities, can pursue the important objective, which is in this country’s national interests, of liberalising markets across the EU. In the case of the telecoms market across the EU, it is estimated that cost of making international telephone calls has fallen by 80 per cent. in the past 25 years. It is difficult to think that that would have happened through technology alone; the European Union has been a very important factor in making it happen. We have seen a recent example of the EU cutting the mobile phone costs of roaming across the EU. That has a massive benefit to individual consumers.

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I ask the hon. Member for Christchurch how his audit would take account of the reduction in prices that consumers have seen in many markets because of the liberalisation that has been driven by the European Union, following a very British, Anglo-Saxon agenda. One of the reasons why the French and Monsieur Sarkozy get so uptight is that they think that the European Commission is following a British agenda of liberalised markets, market forces and competition—and I think that it is. We have had a huge influence, and that brings massive benefits to our own people. His audit would have to take that into account.

Let me give another example. The cost of air travel has fallen by about 40 per cent. in the past decade. That is also to do with Europe-wide measures that would not have been possible without the institutions of the European Union. The hon. Gentleman’s audit would have to take account of all the potential future liberalisations that the European Union may well be able to bring about, particularly in the energy sector, that might not be possible if Britain were not in the EU. Britain is one of the driving forces behind the push towards energy liberalisation, and I would hazard a guess that if we were not a member of the European Union, that would not move forward. Again, I hope that the hon. Gentleman’s audit will take account of that.

I have spoken for far longer than I had intended, partly because we have had an enjoyable debate about strawberries, weddings and the accounts. There is merit in the Bill, as long as the audit is as thorough and comprehensive as it should be.

11.54 am

Mr. Robert Syms (Poole) (Con): I congratulate my hon. Friend the Member for Christchurch (Mr. Chope) on the measured and reasonable way in which he introduced the Bill. A lot of figures are bandied about, and a decent study would help to inform public debate.

Going back to first principles always creates the best debates, and one would have hoped that the Government would do as a matter of course what my hon. Friend wants the proposed committee to do. Indeed, the reason why we marched out of a lot of the world, including Africa, after the independence of India, Burma and other countries was that the Treasury and the Foreign Office examined the costs and benefits of the British empire. They were overcome not by democracy but by the fact that a lot of the states in question cost us money. That was why, throughout the 1950s, Britain allowed a lot of countries in Africa to become independent—they did not pay. Ultimately, we as a nation must examine our associations, including our membership of the EU, and constantly keep under review their various benefits or disbenefits.

The task that the Bill would set the commission is particularly difficult, as this wide-ranging debate has shown. The assessment is difficult, and I suspect that if the commission came up with any figures, they would have to be in ranges and based on a rough model. I suspect that given currency movements and terms of trade, the benefits would change over time. However, the Bill is a good and sensible way of moving forward and leaves to the commission how it would conduct its review. I would guess that taking evidence would be a very good way. Many public bodies and organisations,
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both supporters and opponents of the European institutions, would want to give evidence and put their views on record to form part of the public debate.

I am particularly pleased that my hon. Friend has included national security and defence in the terms of reference. As the hon. Member for Kingston and Surbiton (Mr. Davey) pointed out, there are much broader reasons for being in the EU than purely economic arrangements. It is largely about not trade but the French and the Germans living together. They have had three wars in the past century, if we include the French occupation of the Ruhr in the 1920s. They have had a fraught history, and politicians from both those states determined in the post-war period that they wanted to trade, live together and form new institutions. That was logical in two countries where millions of people had died and there had been massive struggle.

That is largely what the EU is about. After all, Germany has invaded every one of its neighbours in either its Prussian or German incarnation, except Switzerland. The Swiss were largely part of the greater German economy supply in the last war. Clearly, living with a Germany of 80 million is difficult. All those who live close to Germany have a fear of the Germans, and ironically German politicians have a fear of the Germans because of their recent history. When we consider German politics, and the CDU and the CSU, there is an element of fear because there have been some awful events in recent history. The Bill must therefore go far wider than purely economic benefits.

The EU posed a particular challenge to us as a nation. Historically, we have always tried to divide and rule in Europe. We have always opposed the existence of one strong power source on the continent, whether it be a Napoleon or a Hitler. The challenge of the 1950s and 1960s, with the creation of the EU, was how to deal with a peaceful bloc, which had great influence on our trade, trying to work together. Our joining has always been a means of trying to influence what happens over the channel. It is no accident, considering the locations of Waterloo and the battlefields of Flanders—the Scheldt estuary is probably the shortest route for an invasion—that we have a legitimate public, political, military and economic interest in what happens over the channel. It is good that that element is included in the Bill. The hon. Member for Kingston and Surbiton made a good point about the broader issues.

To finish that point, John Major said that we ought to be at the heart of Europe. I strongly disagreed with him, because there are different motives for different people in the EU. Being at the heart of the EU is clearly more important for the French and the Germans than it is for us, who will inevitably be on the periphery. Our worldwide trading patterns, including with US, our open economy and our Anglo-Saxon attitudes do not always fit so comfortably into what the EU does. The hon. Gentleman made a good point, which is that some of those characteristics, which we take to the European debate, should make the EU a much more open, free trade organisation than it is.

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