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Like many other hon. Members present, I thought that the hon. Member for Gainsborough (Mr. Leigh) made an extremely interesting contribution about the financial aspects and the need for better auditing, transparency and accountability. I will say a little more about that later. I have absolutely no problem with the assessment of how we spend our money or with looking into a wide range of issues relating to the European Union. Indeed, the information that I am providing today demonstrates that a great deal of work is already being done to assess the benefits and the costs of European Union membership.
However, I am arguing that the mechanism that the hon. Member for Christchurch (Mr. Chope) proposes is not the right way to do that, and that the costs and the bureaucracy involved are not things that we should support. In addition, I question, as have other hon. Members, how such a mechanism could effectively do the job that the hon. Gentleman has set out, because there are not only so many tangible benefits—for example, we talked about the peace that now exists in Europe, which all of us welcome—but many intangible benefits from being part of the European Union.
I want to focus in more detail on the trade benefits of European Union membership. In 2006, British companies exported about £150 billion worth of goods to European Union countries. Exports from the UK service sector to the EU—we know that that sector is an enormously important part of our economy—were worth more than £45 billion in 2005, which is an increase from £30 billion in 1995. Year on year, decade on decade, we see increasing growth in those areas, which benefits our economy. Approximately 70 per cent. of UK employment is in services. Economic analysts estimate that the services directive could be worth approximately £5 billion annually to the UK economy and could deliver around 600,000 new jobs.
Meg Munn: I am glad that the hon. Gentleman, like me, sees that as impressive. Exports to Poland alone rose between by 89 per cent. between 2003 and 2006, which coincided with Poland’s accession in May 2004. The hon. Member for, I think, Poole (Mr. Syms)—a number of hon. Members from the south coast are in the Chamber, so I am trying to get the right place—talked about Polish people in the UK. Exports and trade are important, but there are much wider benefits from the contact between us and the Polish people who came here and are now returning to Poland, where the benefits of being in the European Union are only too visible.
That 89 per cent. increase in exports between 2003 and 2006 compares with an increase over the previous three years of only 11 per cent. We can therefore see that the benefits for our companies up and down the country of having access to those markets have been huge over time.
As I have already said, the abolition of customs duties has given a tremendous bonus to British businesses—an estimated £135 million a year. Before the frontiers came down, the tax system alone required 60 million customs clearance documents annually. They are no longer needed. Opposition Members are always talking about the need to reduce bureaucracy, paperwork
and form filling. That not only saves people’s time; it is also good for the environment that 60 million fewer documents are now required.
Mr. Chope: The Minister is talking about 60 million documents for all UK trade, but, to put that in context, 1 million documents will have to be produced by the House in response to freedom of information requests to Members of Parliament.
Meg Munn: The hon. Gentleman is tempting me into a discussion on freedom of information requests to Members of Parliament, but I am sure that you would have a view on that, Madam Deputy Speaker. I certainly have a view on the subject, but I am not going to enter into that debate today.
Membership of the European Union also brings benefits for the UK when negotiating external trade agreements. As the world’s largest trading bloc, the European Union has a leading role in World Trade Organisation negotiations. By negotiating with a single voice, the EU can make a stronger contribution to global trade negotiations than each member state could on its own.
People are concerned, quite rightly, about administrative burdens. It was therefore welcome that, at the spring Council last year, European Union leaders agreed to cut administrative burdens arising from EU legislation by 25 per cent. by 2012. That could be worth £150 million in efficiency savings.
Mr. Chope: Can the Minister give us a progress report on how much has been saved so far?
Meg Munn: I cannot, at this point in time. However, I would be very happy to look into the details. I should like to clarify for the hon. Gentleman that I am in no way against his desire to understand the benefits, or the costs, of the European Union. Debates about the European Union are important. Indeed, we have had a great many of them recently—even this week. I have absolutely no problem with that. My concern is that the mechanism that he is proposing is bureaucratic and unlikely to be able to fulfil the tasks that he would like it to fulfil. However, I am sure that we can return to the issue of how far we have got with the savings on administrative burdens. The aim is to cut those burdens by 25 per cent. by 2012. We shall need a process for monitoring how far we have gone towards reaching that target. So far, we are only a year into what will be a five-year process.
Mr. Chope: The Minister will have heard the hon. Member for Kingston and Surbiton (Mr. Davey) drawing a comparison between my Bill and the Stern report. That report covered issues that will stretch almost a century ahead in relation to global climate change and its impact on our economy. Is she saying that it is possible to calculate all that and publish it in the form of a report, but that it is not possible to produce a report on the simple issue of the costs and benefits of our membership of the European Union?
Meg Munn:
There we have the problem, and the fundamental basis of our disagreement. The hon. Gentleman says that this is a simple issue, but I am arguing that it is not, because of the wide range of
benefits involved, even within the three areas that he has set out for the commission to look at. Of course, the Stern report looked into the environment and had much to deal with. There could well be early agreement on what constitutes climate change and associated issues, but what I am arguing is that the economic, national security and defence benefits of EU are extremely wide-ranging.
Let me make some more progress and discuss trade issues. EU anti-trust laws prohibit activities that stifle competition in Europe, and the Commission is upping its game. In February 2007, it imposed a record fine of €992 million on four lift manufacturers for price fixing. That was followed in April by the break-up of a cartel operated by Heineken, Grolsch and Bavaria brewers. I am sure that the hon. Member for Ribble Valley (Mr. Evans), who demonstrated his interest in beers earlier today, would think that that was a good thing. Hon. Members have asked about the effectiveness of the EU in respect of a wide range of matters, so here is one area where we can see that action is indeed being taken.
Let us look in more detail into the issues surrounding investment to and from the UK. In 2005, British companies invested €25.8 billion in the EU, up from €17.1 billion on the year before. In 2005, the 25 EU member states, as they were then, received €70 billion in foreign direct investment from outside the EU. Of that, the UK received 24 per cent. That is a further demonstration of what I am saying about the real benefits not just for the UK, but for the whole of Europe in its trading with the wider world. Also in 2005, foreign direct investment inflows into the UK from the EU 25 amounted in and of themselves to €115.4 billion.
The EU is unique in providing a forum in which member countries can share best practice and learn from others’ experiences, helping to ensure that European businesses can compete effectively in global markets and develop the right infrastructure for a successful modern economy.
In 2006, the UK had a trade deficit with the EU of £11 billion or 3.5 per cent. of total trade. With non-EU countries, however, the trade deficit was £84 billion, or 21 per cent. of total trade. We can see that a great deal of trade is going on.
Let me deal with the issue of better regulation, which was raised by a number of hon. Members who were particularly concerned about it, including the hon. Member for Stone (Mr. Cash), who at this moment is probably seeing his nephew get married. As I have already demonstrated, the UK Government are, of course, committed to reducing any unnecessary burdens on businesses, charities and the voluntary sector that arise from EU directives and regulations. We are seeking to enshrine the principles of better regulation, which we are working so hard on for our national legislation, across the work of EU institutions. Those principles are proportionality, accountability, consistency, transparency and targeting.
Our aim is not to reduce social and environmental protections. Hon. Members will already have noted that I am keen on those and want to them to continue in Europe. The Government, unlike the Opposition on the social chapter, are firmly committed to such protections and we want to ensure that we do not lose them through deregulation. We want to get rid of unnecessary
bureaucracy, which stifles European business, and to remove, recast or modify outdated policies and laws that no longer serve their purpose.
With the strong support of the UK Government, the current European Commission has shown real commitment to improving the quality of European regulation. I can give some examples of significant progress. An EU-wide commitment could cut red tape resulting from EU law by 25 per cent. by 2012. A detailed five-year programme aims to save businesses across the EU £100 billion by 2012 by rationalising rules that generate paperwork. New EU draft legislation is now subject to an impact assessment process, and since 2003 the European Commission has completed 284 impact assessments. Proposals that have been rejected on the basis of cost-benefit analyses include an EU witness protection law and a new law on voting rights for shareholders.
The hon. Members for Kingston and Surbiton and for Gainsborough (Mr. Leigh) discussed the budget process earlier. Surely all Members would agree that it is better to consider the costs and benefits of EU legislation before, rather than after, something happens.
The European Commission has a rolling programme to simplify and modernise existing European Union legislation, and I expect it to command general support. The Commission has already proposed or adopted 92 simplification measures, and will present 45 new measures in 2008. Examples include simpler packaging rules: pre-packaging requirements applying to some 70 consumer products have been repealed. The rules for the registering and selling of motor vehicles in the European Union have been simplified, while maintaining safety standards. Again, I expect that to command all Members’ support. A more efficient and competitive payments market will make cross-border financial payments as easy, cheap and secure as payments within a member state.
Mr. Chope: The Minister has spent half an hour talking about the benefits of United Kingdom membership of the European Union, but has not yet got on to the issue of the costs, which was addressed by my hon. Friend the Member for Rayleigh (Mr. Francois). When will she deal with the costs, or does she deny that there are any?
Meg Munn: Of course not. I am sorry that the hon. Gentleman has not been listening closely to my speech. If he had been listening just now, he would know that I recognise that the regulation involves costs. I made it clear, however, that the Government wants those costs to be reduced. We support steps that have been taken to reduce them, and will continue to do so.
I feel that the issues raised by the hon. Member for Gainsborough, who is sadly unable to be present at this point, are worthy of a rather more detailed response. He dealt with the issue of the accounts in great detail, and it is right for that issue to concern us. The United Kingdom has always been determined to ensure that European Union funds are used properly and efficiently. We were instrumental in setting up the EU’s anti-fraud office, and strongly supported the establishment of the European Commission’s internal audit service as an independent unit. The financial rules have also been
strengthened following the introduction in 2003 of a new financial regulation, amended in 2007, which sets out clear rules for officials who are able to authorise spending. They are similar to the rules for accounting officers in the UK.
As the hon. Member for Kingston and Surbiton pointed out, much of the European Court of Auditors’ difficulty in providing a positive statement of assurance arises from areas of spending that are managed jointly by the European Commission and member states. In 2006, that amounted to nearly 80 per cent. of European Union budget spending. The UK will continue to press member states, as well as the Commission, to take further action in supporting sound implementation of the Commission’s budget. We are determined to take the lead in demonstrating how European Union funds can be managed to the highest standard.
I have spent a while concentrating on economic benefits, but before I finish I want to talk a little about national security and defence, to which the Bill refers. European Union co-operation is also vital in the field of justice and home affairs: working with EU partners on issues such as terrorism, illegal migration and organised crime provides a real opportunity to improve the security of UK citizens.
Mr. Evans: We are not part of the United States of America, but we co-operate with it on all those issues, as well. Before the Minister finishes, can she at least say something about the balance of costs versus benefits as far as she sees the EU?
Meg Munn: I will certainly try to do that. On the benefit of the European Union as opposed to, say, co-operation with the United States, the European arrest warrant has shown its worth. It was agreed in 2004 and was used to extradite Hussain Osman, one of those who attempted to bomb the London underground on 21 July 2005, to the UK from Italy within weeks. I think that the hon. Gentleman would see that as a positive thing, and it was a significant improvement on previous procedures.
The UK and Ireland play a proactive role with other member states in working to tackle illegal immigration and abuse of the asylum system. Member nations are also co-ordinating the co-operation of police and courts to pursue criminals across the EU and enforce penalties imposed on them.
Enlargement has made Europe more secure and more prosperous. The enlargement process promotes democracy, the rule of law and respect for human rights in candidate countries, and the EU is already driving positive change beyond its borders, for example, in Ukraine. By negotiating with a single voice on trade, the EU can make a stronger contribution to global trade negotiations than each member state could alone. We believe that that gives us a stronger voice in the world.
The hon. Member for Ribble Valley asked how that affects our situation in relation to the US. The fact that the EU can speak together is really important. As I said earlier, I think that we will increasingly see regional groupings coming together around the world over the next few years. Working with our neighbours, thereby being able to speak to other regional blocs, is a way to achieve a securer and stronger world.
I want to mention the importance of EU funds in supporting many poorer regions in the UK. Such programmes work through direct spending on transport and other infrastructure, and on training people and helping them to learn new skills. I have seen this over many years in my own constituency of Sheffield, Heeley and throughout south Yorkshire; however, it has benefited not just those areas but Northern Ireland, the highlands and islands of Scotland, Cornwall and the Scilly Isles, Merseyside, west Wales and the valleys. Many well-known projects, such as Cornwall’s Eden project, have been assisted by EU aid. I hope that Members recognise the importance of that, and see that it is yet another area that such a commission and report would need to cover.
Members might also not be aware of the importance of EU funds to overseas territories. As the Minister with responsibility for overseas territories, I increasingly see projects that are of great benefit to those territories. Indeed, for some of them they can really make the difference between viability and their continuing to need aid and support from the UK Government, thereby continuing to be a cost to and a drain on our citizens.
Hon. Members were concerned about the situation in relation to the judicial review of the Lisbon treaty. I can tell them that my right hon. Friend the Prime Minister will make a statement to the House on Monday, following the European Council discussion, and there will be ample opportunity for them to raise this issue. The way forward on the Lisbon treaty is, of course, an important issue, and it is being discussed at the European Council in Brussels.
I could say a great deal more. For example, I have not spoken about the importance of peace, which the hon. Member for Kingston and Surbiton discussed. I grew up with a great deal of understanding about peace. In my household, I was brought up to understand the benefits of the countries of Europe no longer being at war with each other. Other greatly important things include the freedom to move about; the ability to buy properties overseas more easily; and the benefits for our citizens from overseas territories.
Finally, the Government strongly believe that the benefits of EU membership far outweigh the costs. I was asked what I see as the costs, and a figure has been outlined. We have also talked about regulation, on which we are continuing to press, so that it gets reduced. This issue has been raised a number of times in Parliament and the Government continue to address it fully in written and oral parliamentary questions. Moreover, there have been opportunities for full consideration of these matters during parliamentary scrutiny of, among other things, the European Union (Amendment) Act 2008, which received 25 days of debate. There is also plenty of time to examine EU issues widely in all the scrutiny Committees that exist. On that basis, I have decided that a requirement for the Government to produce an economic cost-benefit analysis of the UK’s membership of the European Union is entirely unnecessary.
1.37 pm
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