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It is important that we retain membership of the EU. I am pleased to see that the Conservative party has decided to appoint a shadow Secretary of State for Business, Enterprise and Regulatory Reform who is a
20 Jan 2009 : Column 674
wholesale enthusiast for Europe. I look forward to debating the issue of Europe with him in due course in my other role as a Minister in the Department for Business, Enterprise and Regulatory Reform.

A number of Members raised the issue of the UK’s abatement. I want to make it clear that the 2005 budget agreement preserved the British rebate in full on agricultural spending and all spending in the EU15. The UK abatement will be disapplied by a maximum of €10.5 billion on spending for economic development in the new member states. That will not change, but we believe that it is right that we should pay our share of the costs of EU enlargement, which benefits the UK economy. The year 2010 will be the first full year of disapplication of some spending in new member states from the calculation of the abatement, resulting in the higher net contribution that has been referred to, which was published in the pre-Budget report. It is important that the UK should pay its share of the enlargement costs.

Mr. Gauke: I am grateful to the Minister for confirming that the cost of the renegotiation of the rebate and the surrender of an element of the rebate is valued at €10.5 billion. When that matter was debated in the House, during our discussions of the Bill that formalised that partial surrender, the figure of £7.4 billion was used. Will the Minister update us as to what that €10.5 billion now means in sterling?

Ian Pearson: My understanding is that the €10.5 billion figure was derived from and based on 2004 prices, and that will remain the case. The hon. Gentleman will understand that exchange rates go up and down and he will be able to do the calculations himself. I want to reinforce the point that I was making earlier, however. There is a complete misconception that the recent deterioration in the euro-sterling exchange rate in the euro’s favour will mean that the UK will have to pay significantly more in contributions. That is emphatically not the case, for the reasons that I outlined earlier.

I want to refer briefly to the comments made by the hon. Member for Taunton (Mr. Browne). I agree with him that it is disappointing that there has been an increase in the level of irregularities. The figures that he quotes mostly relate to the fact that there is a larger EU following the accession of Bulgaria and Romania. Overall, the levels of fraud that were found by the European Court of Auditors are, as I said earlier, around 0.2 per cent., which is a similar level to that in 2006.

We do not name and shame, but we do push for political recognition of member state responsibility as well as Commission responsibility. We also lead the way by taking the initiative and publishing our own statement on the use of EU funds in the United Kingdom. We believe that we have been instrumental in encouraging others to do the same.

A number of hon. Members specifically mentioned the UK’s position. The hon. Member for South-West Hertfordshire (Mr. Gauke) referred to the UK with particular regard to the subject of the European regional development fund in Merseyside. The Government office for the north-west sent an interim response to the European Court of Auditors in July 2007. It then sent a full response in July 2008 and a further response in September 2008. A reply from the Commission at the
20 Jan 2009 : Column 675
end of November 2008 reduced the ineligible amount from £21 million to £2.2 million. Following advice from the Department for Communities and Local Government external legal counsel, a further response rebutting the outstanding issues was sent on 9 January this year and, if accepted, would reduce the ineligible amount to about £1 million, which would be reclaimed from project applicants. I think that that gives an idea of the complexity of some of the existing rules and of how they are interpreted—another point raised by the hon. Gentleman. It also shows our rigorous approach to the recommendations and views of the European Court of Auditors, and to administering ERDF funds.

The hon. Member for South-West Hertfordshire also asked some questions about the Commission’s integrated control framework. He will be aware that, during our EU presidency, the UK took significant action to create the environment that would ensure that the plan could be success. Measures have already been taken to ensure better propriety and more effective spending, but the programme needs to continue and we shall support that.

Several hon. Members asked about international development. I can tell them that the Commission is working very closely with OLAF and taking on board recommendations where fraud is found. We place particular importance on that and, where possible, we have been quick to work through the various European Council committees. We have zero tolerance in respect of fraud, and work closely with the Commission’s audit department.

I want to reassure the House that we are not weary with this matter. We are certainly not satisfied with the progress that has been made, but there has been some. We believe that a clear need for action remains, and that greater efforts are required from all concerned. The Commission must implement its action plan in full and member states must take more responsibility, especially in the areas of agriculture and structural funds, and budget authority would benefit from making greater use of the ECA’s performance reports. We will continue to lead on these matters, and I look forward to the upcoming publication of the second consolidated statement on the use of EU funds in the UK.

Question put.

The House divided: Ayes 287, Noes 213.
Division No. 15]
[6.52 pm


Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Allen, Mr. Graham
Anderson, Mr. David
Anderson, Janet
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Austin, John
Bailey, Mr. Adrian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Bell, Sir Stuart
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Bryant, Chris
Buck, Ms Karen

Burden, Richard
Burgon, Colin
Burnham, rh Andy
Butler, Ms Dawn
Byrne, rh Mr. Liam
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Chapman, Ben
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Charles
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Connarty, Michael
Cook, Frank
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Creagh, Mary
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Dai
Dean, Mrs. Janet
Devine, Mr. Jim
Dismore, Mr. Andrew
Dobbin, Jim
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Eagle, Angela
Eagle, Maria
Ellman, Mrs. Louise
Engel, Natascha
Ennis, Jeff
Etherington, Bill
Farrelly, Paul
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, rh Caroline
Flynn, Paul
Follett, Barbara
Foster, Mr. Michael (Worcester)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goggins, Paul
Goodman, Helen
Griffith, Nia
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Havard, Mr. Dai
Healey, rh John
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Heyes, David
Hill, rh Keith
Hodgson, Mrs. Sharon
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
James, Mrs. Siân C.
Jenkins, Mr. Brian
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeley, Barbara
Keen, Alan
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Khan, Mr. Sadiq
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, rh Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Laxton, Mr. Bob
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
Mackinlay, Andrew
MacShane, rh Mr. Denis
Mactaggart, Fiona
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marshall-Andrews, Mr. Robert
McAvoy, rh Mr. Thomas
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McFadden, rh Mr. Pat
McFall, rh John

McGovern, Mr. Jim
McGuire, rh Mrs. Anne
McIsaac, Shona
McKechin, Ann
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morgan, Julie
Morley, rh Mr. Elliot
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, rh Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Raynsford, rh Mr. Nick
Reed, Mr. Jamie
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Roy, Mr. Frank
Roy, Lindsay
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Salter, Martin
Sarwar, Mr. Mohammad
Seabeck, Alison
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, rh Jacqui
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Straw, rh Mr. Jack
Stringer, Graham
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, David
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Truswell, Mr. Paul
Turner, Mr. Neil
Twigg, Derek
Vaz, rh Keith
Vis, Dr. Rudi
Waltho, Lynda
Wareing, Mr. Robert N.
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, rh Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, rh Mr. Michael
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, rh Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Ayes:

Claire Ward and
Ms Diana R. Johnson

Afriyie, Adam
Amess, Mr. David
Ancram, rh Mr. Michael
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baker, Norman
Baldry, Tony
Baron, Mr. John
Barrett, John
Beith, rh Sir Alan
Bellingham, Mr. Henry
Benyon, Mr. Richard
Bercow, John
Blunt, Mr. Crispin
Bone, Mr. Peter
Boswell, Mr. Tim
Bottomley, Peter
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Brokenshire, James
Brooke, Annette
Browne, Mr. Jeremy

Browning, Angela
Bruce, rh Malcolm
Burns, Mr. Simon
Burstow, Mr. Paul
Burt, Alistair
Burt, Lorely
Butterfill, Sir John
Cameron, rh Mr. David
Campbell, Mr. Gregory
Campbell, rh Sir Menzies
Carswell, Mr. Douglas
Cash, Mr. William
Chope, Mr. Christopher
Clappison, Mr. James
Clark, Greg
Clarke, rh Mr. Kenneth
Clifton-Brown, Mr. Geoffrey
Cormack, Sir Patrick
Cox, Mr. Geoffrey
Crabb, Mr. Stephen
Curry, rh Mr. David
Davey, Mr. Edward
Davies, Philip
Davis, rh David
Djanogly, Mr. Jonathan
Dorrell, rh Mr. Stephen
Dorries, Mrs. Nadine
Duncan, Alan
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evans, Mr. Nigel
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Field, Mr. Mark
Foster, Mr. Don
Francois, Mr. Mark
Fraser, Christopher
Gale, Mr. Roger
Garnier, Mr. Edward
Gauke, Mr. David
Gibb, Mr. Nick
Gidley, Sandra
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gove, Michael
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Greenway, Mr. John
Grieve, Mr. Dominic
Hammond, Mr. Philip
Hammond, Stephen
Hancock, Mr. Mike
Hands, Mr. Greg
Harris, Dr. Evan
Harvey, Nick
Hayes, Mr. John
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Hoban, Mr. Mark
Hollobone, Mr. Philip
Holloway, Mr. Adam
Holmes, Paul
Horwood, Martin
Howarth, David
Huhne, Chris
Hunt, Mr. Jeremy
Hunter, Mark
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Kawczynski, Daniel
Kennedy, rh Mr. Charles
Key, Robert
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Lait, Mrs. Jacqui
Lancaster, Mr. Mark
Laws, Mr. David
Leech, Mr. John
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Lilley, rh Mr. Peter
Llwyd, Mr. Elfyn
Loughton, Tim
Mackay, rh Mr. Andrew
Maclean, rh David
MacNeil, Mr. Angus
Main, Anne
Malins, Mr. Humfrey
Maples, Mr. John
Mason, John
Mates, rh Mr. Michael
Maude, rh Mr. Francis
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Milton, Anne
Mitchell, Mr. Andrew
Moore, Mr. Michael
Moss, Mr. Malcolm
Mundell, David
Murrison, Dr. Andrew
Neill, Robert
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Oaten, Mr. Mark
Öpik, Lembit
Osborne, Mr. George
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Pelling, Mr. Andrew
Penning, Mike
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Robathan, Mr. Andrew
Robertson, Angus
Robertson, Hugh
Robertson, Mr. Laurence
Rogerson, Dan
Rosindell, Andrew
Rowen, Paul
Ruffley, Mr. David
Russell, Bob
Sanders, Mr. Adrian

Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Simmonds, Mark
Simpson, Mr. Keith
Smith, Sir Robert
Spelman, Mrs. Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Stanley, rh Sir John
Steen, Mr. Anthony
Stuart, Mr. Graham
Stunell, Andrew
Swire, Mr. Hugo
Syms, Mr. Robert
Taylor, Mr. Ian
Timpson, Mr. Edward
Tredinnick, David
Turner, Mr. Andrew
Tyrie, Mr. Andrew
Vaizey, Mr. Edward
Vara, Mr. Shailesh
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Walter, Mr. Robert
Waterson, Mr. Nigel
Watkinson, Angela
Webb, Steve
Weir, Mr. Mike
Whittingdale, Mr. John
Widdecombe, rh Miss Ann
Wiggin, Bill
Willetts, Mr. David
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willott, Jenny
Wilshire, Mr. David
Wilson, Mr. Rob
Winterton, Ann
Winterton, Sir Nicholas
Wishart, Pete
Younger-Ross, Richard
Tellers for the Noes:

James Duddridge and
Jeremy Wright
Question accordingly agreed to.
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Resolved ,

20 Jan 2009 : Column 680

EU-Russia Relations

7.8 pm

The Minister for Europe (Caroline Flint): I beg to move,

That this House takes note of European Union Documents No. 15299/08, Commission Communication Review of EU-Russia Relations and No. 15300/08, Commission Staff Working Document accompanying the Commission Communication Review of EU-Russia Relations; and supports the Government’s policy on the future of the relationship in view of recent developments.

At the start of my contribution, I congratulate the hon. Member for Rayleigh (Mr. Francois) on his promotion. I have heard of carbon offsetting, but Clarke offsetting is new to me.

We are here this evening to discuss the relationship with Russia, and I shall deal with the eastern partnership as well. The year 2008 was an eventful and often a difficult one for EU-Russia relations. I shall begin the debate by reflecting on the past year, putting it in its wider context, and looking to the future.

The start of the year saw Russian action against the British Council in St. Petersburg and Ekaterinburg, and an EU statement was forthcoming in support of the United Kingdom. In June, the EU launched negotiations for a new partnership and co-operation agreement with Russia, only to suspend them just a few months later following Russia’s disproportionate actions against Georgia. There followed a comprehensive review of EU-Russia relations—the EU-Russia “audit”—that gave the EU a clear account of the range and depth of its relationship with Russia. In November, the EU decided on the basis of that review to resume the PCA negotiations. The House has already discussed the resumption of the PCA negotiations in detail. However, it is important to reflect on why we took the decision to resume.

We would agree across the House that it is in no one’s interests for Russia to be isolated. The EU and Russia face many common challenges, and share many common interests. We need to work together in tackling climate change; ensuring reliable energy supplies to the European market, an issue known to us now more than ever; enhancing trade and investment; promoting peace in the middle east; and combating the threat of a nuclear Iran. The best way to make progress on these issues is for Europe to talk to Russia honestly and openly. Structured, regular dialogue will help develop greater understanding and a more predictable, rules-based relationship. That is good for Russian and European business and investors, for our energy companies and consumers, and—importantly—for Russian and European civil society.

This is why we took the decision to resume negotiations. The mandate, agreed by all member states, ranges across the spectrum of EU-Russia relations, including justice and home affairs, human rights, science and education, as well as trade and investment issues. We have been clear that this is in no way a return to business as usual. EU Ministers agreed that the pace and tone of the negotiations would be informed both by the review itself and by Russia’s fulfilment of its obligations under the ceasefire agreements.

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