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We then heard from the Liberal Democrat spokesman, the hon. Member for Kingston and Surbiton (Mr. Davey). I confess that I have not read the pamphlet that he mentioned on parliamentary control of the budget; I hope that he will forgive me for that. He spent about half an hour discussing in detail the provisions of the Bill, and we thank him for his speech. My hon. Friend the Member for Poole (Mr. Syms) made a number of points about the history and evolution of the European Union, and I took careful note of them. We also heard from my hon. Friend the Member for Ribble Valley (Mr. Evans), who described himself as a bitter man. I think that he was referring to what he drinks, rather than to his character. Certainly, no bitterness was evidenced in his speech. So, there have been a number of good contributions on the Bill today.
The Bill seeks to establish a committee of seven members to inquire into the costs and benefits of Britain’s continued membership of the European Union, with regard to the economy, national security, defence and the constitution. The committee would report back to the Chancellor of the Exchequer and, through him, to Parliament, in a manner that would allow for scrutiny by the National Audit Office. That is quite an interesting idea for a number of reasons.
First, the EU accounts for a large and growing amount of money spent by our taxpayers, and that spending needs to be scrutinised properly. Secondly, as any small businessman can attest, a growing amount of red tape and bureaucracy comes from the European Union, and it needs to be controlled. Helping to quantify it, not least in financial terms, would be a good first step in undertaking that process.
The United Kingdom is the second largest net contributor to the European Union after Germany. We made a gross contribution of £8.5 billion in 2006. Even allowing for European Union spending in the UK, we still made a net contribution of £2.9 billion in 2006; I hope that we would all agree that that is a significant amount of money. The Liberal Democrat spokesman challenged me on whether the figure was not actually higher. To clear things up, I was using the 2006 contribution figure included in the NAO’s April 2008 report “Financial Management in the European Union”, but I understand that the figure has increased since then. In addition, the calculation is complicated by the fact that one may use current or historical exchange rates. However, I think that we can all agree that the UK’s contribution is now in excess of £3 billion. The figure is rising, and it will rise further because of the Government’s poor negotiations, which led to reductions to the UK rebate.
Mr. Davey: I was reading from a House of Commons Library note prepared for this debate. It quotes a Treasury source, “European Union Finances”, which was last published in May 2007, and which gives for 2007 a net contribution figure for the UK of £4.699 billion.
Mr. Francois: I thank the hon. Gentleman for his clarification. As he knows, Members hardly ever challenge Library figures; we generally regard them as authoritative. From what he has said, I think we can agree that the figure for 2006 was about £3 billion and the figure for 2007 was in excess of £4 billion—and I reiterate the point that because of the reduction in the EU rebate, that net contribution per annum is likely to increase still further.
That is an important point to make. We had thought that the budget rebate won at Fontainebleau in 1984 by Margaret Thatcher was safe, not least because the former Prime Minister, Tony Blair, said very clearly in 2005:
“The UK rebate will remain and we will not negotiate it away. Period.”—[ Official Report, 8 June 2005; Vol. 434, c. 1234.]
He said that at Prime Minister’s questions in response to a question from my hon. Friend the Member for West Chelmsford (Mr. Burns), who has been present for part of our debate this morning. Unfortunately, however, like many of that former Prime Minister’s sayings, that did not stand the test of time. Within a year, the Government had agreed to sign away £7.2 billion of British taxpayers’ money in return for a non-binding commitment to have a review of the common agricultural policy. Therefore, one area this Bill should allow to be investigated in detail is the former Prime Minister’s surrender of our rebate, since endorsed by the new Prime Minister, and whether that represented value for money for our taxpayers. I am of the clear opinion that it did not.
However, the EU is more than just a balance sheet of payments and receipts. The main advantage the UK gains from the EU is access to the single market. We benefit both in terms of access to continental markets and from the foreign investment that comes here in order to benefit from our place in the market. However, access to the market comes with the price of regulation, and that cost has been rising. The British Chambers of Commerce “burdens barometer”, which measures the cost of regulation to business, has shown that the cost of regulation to British business is now £66 billion a year, compared with an estimated cost of £10 million in 2001. A large proportion of that has been caused by EU regulation, and in particular the estimated £1.8 billion cost of the working time directive—that issue has been raised a number of times in this House. One benefit of an audit of the costs and benefits of our EU membership could be to highlight where the Government are failing to reduce the costs to British business, and thus give a much-needed impetus to reform.
Mr. Chope: Does my hon. Friend agree that one of the issues the commission under the Bill could look at is the costs to the UK of judge-made law in the European Court of Justice? Everybody—including the Prime Minister at the time, John Major—thought that we had secured an opt-out from the social chapter, but then we found that article 118 of the treaty establishing the European Community was being used to undermine that opt-out.
Mr. Francois: My hon. Friend makes a good point. I am sure that the commission proposed under the Bill would want to take into account the effect of jurisprudence in terms of costs on British business, although ultimately that would be a matter for the commission itself.
Unfortunately, in many areas the reform agenda in Europe is going backwards, notably in the area of competition. Under French pressure, not only has energy unbundling faltered, thereby failing to deliver the lower energy prices consumers across Europe desperately demand—not least at present—but the wording of the treaty of Lisbon relating to competition has been so downgraded that further liberalisation is in danger.
This is yet another reason to thank the good people of Ireland for voting against it.
The common agricultural policy would also benefit from an audit of benefits and costs. This country has repeatedly said it wishes to reform the CAP. The Prime Minister has stated:
“Let us seek to make the excesses of the CAP history.”
However, he has done very little in practice to push that forward, other than to use warm words. The cost of the CAP to farmers and consumers in this country would be an obvious area in which the commission would want to undertake much detailed work.
The Bill does not provide for the commission to cover in detail the benefits or otherwise of the Lisbon treaty itself. However, others have tried to sum up its effect on business. A writer in the business comment section of The Independent on 15 June said of the Irish no vote:
“I think that short-term the effect will be small but long-term it may turn out to be beneficial not just for Ireland but for the European Union economy as a whole.”
Such objective analysis of the damage that the Lisbon treaty would do to business might help inform the Government and perhaps help them come to the correct decision, which is to scrap the treaty for good. In a simple phrase—
Madam Deputy Speaker: Order. We are not actually debating the Lisbon treaty but the Bill that is currently before the House.
Mr. Francois: Thank you, Madam Deputy Speaker. We believe that Lisbon is dead, but if somehow it were to be revived, it would have costs for British business.
Madam Deputy Speaker: Order. I have already ruled that we are not debating the Lisbon treaty but the Bill that is currently before the House.
Mr. Francois: So, in conclusion, Madam Deputy Speaker, there is much that is worthy of support in the Bill, not least because it raises the question of whether certain benefits of EU membership are quantifiable. For instance, how can we quantify the benefits of working together to tackle environmental problems such as climate change, or intergovernmentally on foreign policy issues, such as responding to Iran’s nuclear weapons programme or in respect of Russia’s relations with its neighbours? Can we quantify the benefits of enlargement and its help in rooting democracy and the rule of law throughout the continent? Those questions could be discussed in considerable detail in Committee and, if the Bill were to become law, ultimately by the commission itself.
Finally, this country pays a great deal of money in net terms to the European Union. Not all of that money is well spent; some of it is subject to fraud. Perhaps it is about time that that was audited in more detail, so that the British people could take a calculated look at how the money is spent and at the scale of their contribution. In that respect, I hope that the Minister will be able to support the Bill.
12.57 pm
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Meg Munn):
I am pleased to respond on behalf of the Government to what has been a wide-ranging debate. It has contained the usual
hyperbole that we hear from Opposition Members when they get talking about the European Union, and a great deal of claims have been made for the process in the Bill.
When I read the detail of the Bill, I was somewhat surprised. First, I am not sure how the Bill’s suggested commission would do its job. We have explored in detail the problems with it. Most notably, the hon. Member for Kingston and Surbiton (Mr. Davey), who speaks for the Liberal Democrats, raised some issues, and I shall return to them in due course. I am also intrigued by the proposed process: how the commission—the committee of inquiry—would be set up, its costs, and why Opposition Members seem so wedded to such a bureaucratic process for something that could be extremely wide-ranging and take a considerable amount of time.
The Government strongly believe that the benefits of European Union membership clearly outweigh the costs. I am delighted to be able to set out in more detail some of the reasons why and, in doing so, to demonstrate why I believe that such a committee would face an impossible task, as was ably demonstrated this morning.
UK membership of the European Union is central to the pursuit of stability, growth and employment. It is firmly in our national interests, both economically and in a wider political and strategic context. Our membership of the European Union has brought real benefits in jobs, peace and security. Through it, we belong to the world’s biggest trading bloc, with a single market of more than 490 million people. It is a unique organisation that is looked at from around the world with great interest. With the development of regional organisations in other parts of the world, people are looking to the European Union, not necessarily to follow exactly the same route, but because they are interested in the wide range of benefits that come from co-operating with one’s immediate neighbours.
Half the UK’s trade is now within the European Union, with an estimated 3.5 million British jobs linked to it directly and indirectly. Fifty-seven per cent. of total British trade in goods is with the European Union, and 53 per cent. of our total exports go to the European Union. In 2005, British investment in the European Union totalled over £17 billion. However, the benefits are not limited to the rights of British companies to buy and sell across the single market. Our European Union membership allows our citizens to live, work, study and travel across Europe and entitles us to receive free medical care if we fall sick on holiday. These are all clearly benefits, and it would be interesting to understand in more detail how such a committee of inquiry would begin to quantify them.
We know that many Opposition Members have for a long time opposed the benefits that have accrued to our citizens through the social chapter; indeed, it has been reiterated this morning that the Opposition intend to pull out of it. The social chapter initially brought about the improved maternity benefits for women in the United Kingdom; before it came in, we were in a parlous state. I am delighted to say that this Government have gone a great deal further, not only on maternity benefits but on paternity benefits. Those benefits would need to be quantified as well. The right to paid holidays is enormously important, but was not seen as such by the Opposition when they were in power. The hon. Member for Kingston and Surbiton referred to the reduction in the cost of
mobile phone calls when abroad. These are just a few of the practical benefits that the European Union has helped to deliver.
Mr. Francois: May I refer the Minister to the Bill? If she looks at clause 2, she will see that the terms of reference would include
“national security and defence, and...constitutional arrangements”.
As a Foreign Office Minister, she will know that national security and defence are fundamentally altered by article 28 of the Lisbon treaty. As the time has just turned 1 o’clock, can she tell us if she will be making a statement to this House, and if not, why not?
Madam Deputy Speaker: Order. I have already ruled on that. A point of order was raised with the previous occupant of the Chair, and a response was given.
Meg Munn: As consumers, we also benefit from competition across the single market. The European Union outlaws price fixing and stops companies agreeing with each other to restrict competition. Is that an issue that the committee would look into? Cartels in industries as diverse as vitamins, banking, airlines and energy have been examined by the European Union in recent years to ensure that the benefits of the single market are passed on to consumers.
Mr. Chope: On a point of order, Madam Deputy Speaker. I am sorry, but I am a bit confused. I drafted this Bill and presented it to the House, and it is called the European Union (Audit of Benefits and Costs of UK Membership) Bill. In my opening remarks, I quoted a paragraph from last week’s article in The Sunday Telegraph headed, “If the EU will not listen, it risks popular revolt”. Do I understand rightly the ruling that you made in response to the intervention by my hon. Friend the Member for Rayleigh (Mr. Francois)? Is it not possible to discuss anything under the terms of my Bill that is related to the treaty of Lisbon and its implementation, notwithstanding the fact that now that the treaty has been approved by the House, it must be regarded as a potential benefit or cost of the United Kingdom’s membership of the European Union?
Madam Deputy Speaker: The comment that I made was actually in connection with the furtherance of a point of order that had been raised and then dealt with by the previous occupant of the Chair. I stand by it. If a Minister is to come to the Dispatch Box and make any comment about anything that may have happened in some other place, I am sure that the Chair will be notified and that that will be passed to Back Benchers.
Meg Munn: Thank you, Madam Deputy Speaker.
I was talking about the benefits to consumers, and I wanted to say a little more about trade. British firms are benefiting significantly from the enlargement of the EU. Exports to the 10 countries that joined in 2004 rose from £4.6 billion then to nearly £8 billion in 2006. That represents almost a doubling in just two years—not quite, but a significant change.
In the Government’s view, it is unlikely that those benefits would be available to the UK on the same terms, or even more favourable terms, if we were to leave the EU and negotiate our own deal from outside.
British goods would be subject to customs controls, and we would need export certificates and certificates of origin for our goods. Tariffs would be payable on some of our goods, and our agricultural exports would be subject to them. The abolition of customs duties has saved British businesses an estimated £135 million a year. We know, as has been discussed in the debate, that businesses have concerns about red tape and regulation. I shall say a little more about that later, but we can see from the case that I have mentioned that the bureaucratic problems that would otherwise go with trading no longer exist, because we are in the single market.
Of course, hon. Members are quite right that we could no doubt negotiate some access to the single market for our goods and services. We know that that is what Norway and Switzerland have done, and a number of hon. Members have mentioned them. However, we are not Norway or Switzerland. We have one of the largest economies in the world, and it is bigger and more diverse.
We should be clear about the likely terms of such a deal. We would have to accept many of the EU laws that govern the operation of the single market to ensure access for our goods and services. Indeed, Norway and Switzerland have to accept them. A regularly quoted figure is that Norway accepts 85 per cent. of single market legislation. Of course, it is not party to the negotiations at which the content of those laws is decided. Whether to agree a deal with the EU along the lines of the Norwegian or Swiss model would be for the UK to decide, but the terms of the deal would have to be agreed by every remaining member state. That is not a route that I want this country to go down.
Mr. Chope: The Minister has spoken for a long time about the benefits of EU membership. Will she come to what she sees as its costs?
Meg Munn: The hon. Gentleman spoke for a long time, as did many hon. Members. I have plenty to say, and I have no doubt that he will sit here throughout as we talk about the matter. We could discuss what we think are the various costs, and we have already identified the financial contribution that we make. I am happy to debate in greater detail what he sees as the costs. However, at this point, it is enormously important that I put on record what the Government believe, and are able to demonstrate, are the benefits of EU membership.
Mr. Chope: I hear what the Minister says about the benefits, but why is she so reluctant to have an independent audit to see whether her assessment of those benefits is correct?
Meg Munn: I thought that I was quite clear and up front. I did not want to keep hon. Members waiting in suspense to hear what the Government’s position is. We can see no benefit—indeed, we can see lots of costs—to setting up an inquiry, and then having the report of a commission, into what we are discussing today. I honestly struggle to see how an inquiry could accurately quantify the wide range of issues that we have debated, and I shall be happy to talk about that a little later.
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