The
Chairman: No other Members have indicated that they wish
to speak, so we can now proceed to the debate on the
motion. Motion
made and Question proposed,
That the
Committee takes note of the unnumbered Explanatory Memorandum dated 11
June 2009 from HM Treasury on the Preliminary Draft Budget of the
European Communities for the year 2010; and supports the
Government’s efforts to maintain budget discipline in relation
to the budget of the European Communities. [22nd Report of Session
2008-09, HC 19-xx, Chapter 2.]—(Ian
Pearson.) 5.26
pm
Mr.
Gauke: We have had a useful question and answer session. I
want to begin now on a note of consensus, in that the Minister has
repeatedly made the point that the UK is a net contributor to the EU,
so it is in Britain’s interests to argue for budgetary
restraint. In particular, he has highlighted the need to reduce
expenditure on administration and agriculture. I think that those
objectives would have the support of members of the Committee from all
parties—particularly, I must say, those of us on the
Conservative Benches.
We strongly
support the objective of restraining, indeed reducing, public
expenditure in those areas. First, of course, we believe in ensuring
value for money for the taxpayer. Secondly, we believe that there is a
case for subsidiarity in a number of these areas of expenditure. For
example, in my questions to the Minister I highlighted expenditure on
research and development. That was not an argument against expenditure
on research and development per se, but I wanted to express a concern
that has been raised by people from all parties and with differing
views on the EU. Two years ago, the hon. Member for Twickenham made the
point that very often EU expenditure on research and development is
driven by a certain box-ticking culture, to ensure that there is
cross-border co-operation. Sometimes that is quite artificial and
distorts the need for greater research.
We have
long-standing concerns about the common agricultural policy. We welcome
some of the remarks made by the Minister today. However, the continued
expansion of expenditure on agriculture is deeply disappointing,
particularly given the assurances that were provided to the British
people in 2005 when Tony Blair surrendered part of our rebate. He
promised then that, as part of that process, there would be a
fundamental reform of the CAP. We do not see that
here.
Kelvin
Hopkins: Does the hon. Gentleman recall the comments of
The Economist, which is not known to be Eurosceptic, that that
deal was so bad that
“no deal would
have been better than that deal”?
Mr.
Gauke: I am grateful to the hon. Gentleman, who very often
speaks with much wisdom on this subject, and I agree with the comments
that were made by The Economist about that deal. Indeed, I
remember speaking on the Second Reading of the Bill that implemented
it. It was an appallingly bad deal for the UK. As the years go on, we
see documents such as the one before us which reveal a continued
increase in expenditure on agriculture in a way that is not in the best
interest of UK consumers or, in particular, UK farmers, who do not
benefit from the policies in the way that some do. I think it becomes
clearer by the year that that was an appalling deal, and we see further
evidence of that
today. We
also see that the vanity projects are not about achieving value for
money for the EU, but about demonstrating that the EU is a major
player—that European integration is proceeding to the advantage
of the people. We see that in transport policy, where it is made clear
that one of the objectives of expenditure is to provide tangible
evidence of closer integration. We see it in the Galileo project, which
has been the most appalling waste of money. Only last week, a report by
the European Court of Auditors, as I said earlier, criticised the cost
overruns
involved. We
are also deeply concerned about the continued expansion of
administration costs in the European Commission. My right hon. Friend
the Member for Wells highlighted the increased pension provisions that
apply. That is much of a piece. It is particularly striking, in an era
when public expenditure will have to be restrained, that we are seeing
substantial increases in expenditure.
Mr.
Browne: My understanding is that there are provisions in
the Lisbon treaty that would shrink precisely the administration that
the hon. Gentleman is so concerned about. Should I take his remarks as
indicative of a new-found open-mindedness on the part of the
Conservative party about the Lisbon
treaty?
Mr.
Gauke: The idea that the Lisbon treaty, which would bring
in a new president of the European Council and a new high
representative, and empower the Commission yet further, would reduce
administration is highly dubious.
That brings me
on to a helpful point that was raised by my hon. Friend the Member for
Altrincham and Sale, West. Table 5.1 on page 54 of the statement on
estimates from the European Commission details expenditure not just
over one year, but over many years. The contrast that can be drawn
between what will happen to UK departmental spending over the years
ahead under the Government’s own plans and what will happen with
the EU is striking. Mr. Sheridan, you would not want me to
dwell at length on the Government’s own proposals, but as we
know, in the Red Book, plans for total spending as set out for the
years 2011-12 and 2013-14 show that once one takes into account debt
interest and welfare bills, we will see reductions in departmental
spending of 2.3 per cent. per year for three years, which totals 7 per
cent. Yet, we look at the numbers set out in the multi-annual financial
framework and see substantial increases. Just in administration, there
will be increases of around 30 per cent. from 2007
to 2013. In the period between 2011 and 2013, we will see an increase
not far short of 10 per cent. The further
concern that we have, which has already been touched on, is the fact
that the money is not spent properly. On the number of irregularities,
the Minister referred to progress being made. However, it is worth
noting that in the last year that was audited—the 14th year,
which failed to achieve a statement of assurance—the value of
irregularities increased from €804 million to €1,048
million, and the value of fraud increased from €189 million to
€209 million. Those are substantial sums, but the matter has not
been successfully addressed.
Having said
that we somewhat share the Government’s objectives of obtaining
budgetary restraint—although it is not quite clear whether the
target of 1 per cent. of European GNI is still a Government
objective—it is disappointing to see the numbers in the draft
preliminary budget, given that commitment appropriations rise across
the board by 2.1 per cent and payment appropriations rise by 5.3 per
cent.
Let me focus
for a moment on the two issues on which there is some consensus. Under
heading 2, which relates to the preservation and management of natural
resources, there is a 4 per cent. increase in commitment appropriations
and a 10 per cent. increase in payment appropriations. There is also a
6.4 per cent. increase in market-related expenditure and
direct aid and a 31.3 per cent. increase in rural development
funds.
In the context
of reforming the common agricultural policy—again, the Minister
promised us jam tomorrow in that regard—it has been reported
today that the French Farms Minister, Bruno Le Maire, has drawn a
parallel with the European mobilisation to help the financial sector,
saying that the same should be done to support the agricultural sector.
He said:
“We
must do with the agricultural sector what we have done with the
financial sector. This will be our guiding thread for the reform of the
CAP in
2013”. On
that basis, it does not sound like we will see the sort of reform that
we want in agriculture.
Under heading
5, which relates to administration, there is a 2.1 per cent. increase,
which is at least less than the increase last year, which was 5 per
cent., but it is none the less a substantial increase at a time when it
is surely necessary to focus public expenditure on front-line
services.
I also want to
highlight the issue of the Lisbon treaty. Last year’s
preliminary draft budget was drawn up before the Irish voted no, but
little of that budget was changed as a consequence of that rejection,
and there is little evidence in this budget, which was drawn up after
the no vote, that the vote of the Irish people has been
respected.
The Lisbon
treaty has enhanced the European Union’s role in freedom,
security and justice. If there were no Lisbon treaty, there would be no
need for additional expenditure in that area, but we see a 14.8 per
cent. increase in payments for solidarity and the management of
migration flows. Overall on freedom, security and justice, commitment
appropriations are going up by 13.5 per cent. and payment
appropriations are going up by 16.6 per cent.
Under heading
4, which relates to the EU as a global player, there is no evidence of
savings as a consequence of not having to fund an office for an EU high
representative. Any reductions that do occur are from savings from the
end of programmes relating to pre-accession matters, which were clearly
due to come to an end in any case.
In conclusion,
the European Commission appears to have given us a business-as-usual
budget. More money is being spent on subsidising inefficient European
farmers and on the Brussels bureaucracy, and more money is coming from
hard-pressed UK taxpayers. The budget is inadequate to respond
to the pressures on public finances in the UK, which is a major net
contributor to the EU, and it is a long way from what is in the
UK’s best interests. The Government face an enormous task in
renegotiating the budget. The Opposition are by no means satisfied with
what is in front of
us.
5.40
pm
Mr.
Browne: Thank you, Mr. Sheridan, for allowing
me to contribute to the debate, which has been fairly unbalanced. The
right hon. Member for Rotherham (Mr. MacShane) momentarily
wondered into the room; he has a well-known enthusiasm for many aspects
of the European Union, and I thought that his contribution, whether or
not I agreed with it, was healthy, in that it allowed us to reflect on
the fact that there are two sides to most stories, and that is
certainly true of the European Union. We have had something closer to a
discussion among a sect of Members who have a fanatical Euroscepticism
and would not be satisfied whatever proposals the Minister or any other
political party put
forward.
Kelvin
Hopkins: Will the hon. Gentleman give
way?
Mr.
Browne: I shall give way to a rather good example of my
point.
Kelvin
Hopkins: I object to being described as a member of
a sect or as a fanatic; I just look at the figures, and they are
astonishing. For 40 years the European Court of Auditors has refused to
sign off the European Union budget. That speaks for
itself.
Mr.
Browne: The point that I was making is that some hon.
Members pursue their dislike, even loathing in some cases, of the EU
with a certain zeal—if I can put it that way. One could
congratulate them for their tenacity and persistence but, nevertheless,
we go over the points repeatedly. I will come to the hon.
Gentleman’s comment, but my observation is that although the EU
is an imperfect organisation, there are two sides to every story. Let
me expand on my argument, because I fear that the contributions so far
have given the impression that the EU is an unequivocally bad
organisation and that Britain’s involvement should be minimised.
That is a regrettably unbalanced view.
It is worth
noting that the overall budget is very modest compared with that of,
for example, a large member state such as our own. One could be
forgiven for sometimes thinking when reading newspaper coverage that
the European Union “superstate” had its tentacles
everywhere and had a much greater scope than its nation states. In terms
of budget, that is emphatically not the case. The EU may feel that in
symbolic terms it seeks to be a supranational power, right up there
with China and the United States of America, as the hon. Member for
South-West Hertfordshire said, but that is not true of its budget. In
budgetary terms, it would represent a very modest country, if we looked
for comparisons in terms of the size of Government or number of
employees. We should not lose sight of the fact that it is not the big
sprawling enterprise that its detractors would have us
believe. I happen to
believe that paying some of the costs of enlargement is money well
spent. Enlargement flows from the biggest single foreign policy success
of my adult life—bringing down the iron curtain and bringing
liberalism, democracy, freedom of speech and free markets to countries
such as Poland, the former Czechoslovakia and the many others that are
now members of the EU. They were ranged against us during my childhood
and before I was born. The clash of ideologies between the countries of
the Soviet bloc and the west was the biggest fact of life prior to
1989. The
EU has managed to consolidate the gains made by the citizens of those
countries at the end of the 1980s, although it is not solely
responsible for those, of course. Those countries wanted to join the EU
but were entirely free not to join. Nobody compelled Poland, the Czech
Republic or Hungary to join or is requiring them to stay if they wish
to leave. They all want to be part of the EU. We can consolidate the
values that we hold dear in this country—liberalism, the freedom
of the individual citizen, the freedom to make decisions to vote, free
market economics—and to spread them across our entire continent.
Until 1989 they were a feature of only the western part of our
continent. That is a massive
success. In
politics, in this country and in the media we always dwell on the
failures—the failures of Government, what went wrong, what we
should have been doing. That is one achievement that we should
celebrate. There may be a cost to the British taxpayer, but it is a lot
smaller than it would have been to fight a third world war against the
Soviet bloc. We should acknowledge that, rather than always looking to
do down any of the achievements that have been made over the past 20
years by Governments of all
colour.
Mr.
Brady: I am happy to join the hon. Gentleman in his
warm tribute to Margaret Thatcher and Ronald Reagan for their
tremendous work in bringing the cold war to that appropriate
conclusion. I shall ask the hon. Gentleman the question that I put to
the Minister. Would the Liberal Democrats find it acceptable if the EU
budget were to increase by a greater percentage than the British Budget
in each of the next four
years?
Mr.
Browne: I shall touch on that point, but as I understand
it the Conservative party would find that acceptable. That is what I
was asking the Minister. What recourse would the Government have,
whichever party were in government in the United Kingdom, not to pay up
what was agreed among all 27 states, if we felt the amount to be
excessively large? I knew the answer
before I asked the question, but as I understand it, and as the Minister
appeared to say, we would have no recourse at
all. The
Conservatives will not be able to stand at the general election,
whenever it comes, whether later this year or next year, and say,
“Vote for us and we shall reduce the amount of money that we
give to the European Union.” What the Conservatives will be able
to say is, “Vote for us and we shall give exactly the same
amount of money to the European Union as the Labour party—unless
we are able to persuade the other 26 nation states that the British
contribution should be lowered.” It seems extremely unlikely
that the Conservative party would be able to do that, on the basis that
it has no desire to engage with any of the serious players in the
European Union at
all. On
the hon. Gentleman’s other point about Margaret Thatcher, I
slightly regret only that he sought to make a rather narrow
Conservative point when I was trying to make a more generous and broad
point. I acknowledge that Margaret Thatcher as Prime Minister of the
United Kingdom and others—he cited President Reagan in the
United States, but also the individual citizens of those countries that
I mentioned, and some of the politicians and other people
there—all contributed to the success of the western model over
that of the Soviet model, if one wants to put it in such terms. I
regard that as an unequivocally good development for humankind. If
there is a price to pay financially, and it is a modest price to the
European Union, I regard that almost certainly as some of the best
value for money that the British taxpayer has probably
achieved. There
are other areas of the European Union in which co-operating together as
nation states has a role to play. The Minister mentioned climate
change.
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