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I am concerned that it would be a retrograde move to allow local authorities in London to reintroduce turnstiles. Not long ago, a short debate was held in the other place in which Baroness Greengross asked Baroness Andrews, who was then an Under-Secretary at the Department
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for Communities and Local Government, about extending the provisions of the Public Lavatories (Turnstiles) Act 1963 to railway premises. The answer was that it would not be desirable because a lot of railway premises were having their loos and the access to them modernised. However, it was implicit in the answer that the then Government did not believe that the law needed to be changed and that they thought it desirable that we should not need turnstiles in order to gain access to public toilet facilities. This is a particular issue for disabled people, because they find it most difficult, although others may wish to gain access to a public toilet as quickly as possible and they do not want to have their progress impeded. I do not think that we need to spell out the point at any greater length, Mr Deputy Speaker.

Mr Greg Knight: May I put it gently to my hon. Friend that he has the argument the wrong way round? Surely we should be applauding this measure, because if local authorities are allowed to introduce turnstiles and thereby charge people an exorbitant rate to use the lavatory, the people of London will have far more lavatories to use as more and more councils seek to tap into this revenue raising idea.

Mr Chope: I do not know whether my right hon. Friend had his tongue firmly in his cheek when he was making that observation, but I suspect that he did. If he did not, he is living on another planet. In the City of Westminster, for example, the council raises an enormous surplus in parking charges, many of which are paid by people who do not reside in the borough. The original idea was that those fees should be reinvested to improve public facilities in Westminster, but that has not happened in practice. The idea that if local authorities can impose more charges for access to public toilets, the quality and availability of those toilets will improve is pie in the sky.

Philip Davies: Does my hon. Friend accept that this could be argued the other way round? He says that turnstiles are not desirable, and that is a perfectly legitimate view. Even if someone would argue that they are legitimate, surely any local authority should be able to introduce them in their local toilets, not just London boroughs. Why would we just extend this privilege to London, and why would the Government not extend it to every local authority that so chooses to use it? I hope that he would accept that such an approach would be pure localism, as opposed to giving localism only to London.

Mr Chope: My hon. Friend makes another very good point. I am sure that if the coalition Government are short of new policies to enact they will think seriously about my hon. Friend's suggestion. Before they do so, however, they might look at the document produced a couple of years ago by the Department for Communities and Local Government, which set out a strategic guide, spread over the best part of 100 pages, on "Improving Public Access to Better Quality Toilets". Nowhere in that strategic guide was anything that suggested that the answer to all the problems was to reintroduce turnstiles, which were outlawed in an enlightened moment in 1963. They should probably remain outlawed and I do not think that the case for reintroducing them has been made.

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I am also very concerned about the Bill's provisions on pedlars and street trading, to which I have already referred-my hon. Friend the Member for Shipley engaged in a short exchange with me on that point. Those powers go far in excess of what is reasonable. I am sorry that my hon. Friend the Member for Finchley and Golders Green did not consider them when he introduced the Bill. In a sense, this is a warning shot, because a number of us have been jealous of the rights of small groups to be able to carry on their activities and not to find themselves subject to harassment by officialdom. The wide powers that are given under the Bill to Westminster city council and to Camden borough council are a licence for harassment. They give tremendous powers to local authorities to harass the people they wish to drive out of business because it does not suit their purposes and because they find it rather difficult to try to enforce the law as it stands nationally. They want to give themselves extra powers to impose penalties on the grounds of suspicion, and I think that that is wrong.

One is left asking whether anything in the Bill is worth saving, or whether it would be much better to put the promoters out of their misery and not give it a Second Reading. My hon. Friend the Minister thinks that we should give the promoters the benefit of the doubt. For my part, I think that they have had three years in which to try to get their tackle in order and they have manifestly failed so to do. They have not really come to terms with the change in the mood out there, which is very much against interference and regulation by local authorities, pettifogging bureaucracy, penalties, putting pressure on people and making it very difficult for them to argue against penalties, which makes them have to go along and pay another fine or penalty. The promoters misunderstand the mood and there is a great demand for some consistency in our criminal law across the whole country rather than having special regimes for licensing in the London area, as proposed in clause 23, or special regimes for penalties for street trading, as found in the clauses that promote powers for Westminster and Camden.

I obviously support my hon. Friend the Minister as regards the parts of the Bill to which he is opposed. There is so much wrong with the Bill that there is a danger that if we allow it a Second Reading, an enormous amount of our colleagues' time will be taken up in the Opposed Private Bill Committee. If the promoters are as reluctant to compromise as they appear to have been in the other place, we will end up taking up a lot of time on the Floor of the House on Report and Third Reading. It might be better to put the promoters out of their misery at this stage and force them to go back to the drawing board and propose a fresh Bill that is more in tune with current thinking.

Mr Knight: I hear my hon. Friend's argument, but all what he says could be put right in Committee. If he feels that the Bill is too pettifogging in some areas, amendments could be moved in Committee to improve it to such a state that only reasonable actions could be taken by local authorities to deal with what is a very real problem. The argument he is developing is not against the Bill per se but against its current drafting. Is it not then for us to amend it in Committee?

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Mr Chope: My right hon. Friend makes a perfectly fair point, but he and I will in our time in this place have been confronted many times with Bills that we disliked so much that, although parts of them were not so bad, we felt obliged to vote against them on Second Reading to make a point. This Bill has not arrived here de novo, but has already been through the other place. We have to look on the past as a guide to the future unless we are otherwise advised. The Bill has not been subject to voluntary amendment by its promoters despite the petitions against it from the London theatres, the British Beer and Pub Association and others. If the promoters did not listen to those petitions in the other place, what guarantee is there that they will listen to petitions now? We have not heard anything from my hon. Friend the Member for Finchley and Golders Green to the effect that they will accept amendments. If, when he sums up the debate, he says that he feels, on behalf of the promoters, slightly chastened by the criticisms that have been made, and if he says that they will introduce amendments to meet some of those concerns, I might have a different attitude. Currently, however, I fear that there is so much wrong with the Bill that it does not deserve a Second Reading.

4.47 pm

Jacob Rees-Mogg (North East Somerset) (Con): The Bill is deeply disagreeable and it is remarkable that the House of Commons should spend so much time considering something that would take freedoms from law-abiding people in London, particularly in the City of Westminster.

What is the purpose of the Bill's opening part? It is to give to borough officials powers that are normally reserved for policemen. One might go out of this House and some person employed by Westminster city council, with or without a peaked cap, might come up and say that he does not like what one is doing because one is selling a car over the internet or doing some other desperately evil activity. That employee will then levy a fine and will levy a second fine if the person does not tell him their name and address. I thought it was no right of anybody's to demand the names and addresses of people going about their lawful business, but, under the Bill, someone who refuses to give it to some official from Westminster city council will commit an offence. I do not want to tell officials from Westminster city council my address-they could look it up on the electoral register, which would not take them very long. That is an initial intrusion on freedoms that we ought to value and that ought to be at the forefront of what the House does.

Having dealt with clauses 4 and 5, let me address clause 8, which is one of the meanest-minded measures we have seen recently. A few years ago, Westminster city council was all for a café culture: "Let's have people putting chairs out on the pavement and have people drinking in the street", it said. "Let's have them pretending they are in Venice or Florence; in spite of the weather, they can think that the sun is shining because they are out on the street." Now, having persuaded a few restaurants and cafés to put out some tables and chairs, the self-same council wants to say, "You've done what we asked and we are very pleased with this charming and delightful café culture"-otherwise known as binge drinking-"and because of that we want to charge you for it." Does that
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seem a reasonable way for a council to behave, and is it proper for us as a Parliament to give it a special bit of law to make itself obnoxious to a free people?

My hon. Friend the Member for Christchurch (Mr Chope) has gone through the hygiene aspects, but I thought I was elected on a platform of deregulation. The Labour Government, for all their virtues, were great ones for regulating and for insisting that everything should be signed, sealed and delivered. Even in a church, there has to be a sign saying that people are not allowed to smoke to deter all those who used to go into a church just to roll a cigarette, light up and smoke away.

There are signs everywhere and the mass of bureaucracy is upon us. Now, the Conservative Government want to ensure that when someone wanders into a café for a small cup of coffee, tea or whatever his preference happens to be, there must be a sign saying the café is hygienic. Otherwise, he might be poisoned by whatever desperate thing it is that the café puts in its tea. Is this necessary? Is it proportionate? Is it a sensible use of the money of business to spend it on putting up signs when people who go into restaurants know that there are forms of regulation and whether the food is any good. If they do not like it, they can have an argument with the restaurateur, say that they are not paying and tell all their friends not to go there. The free market copes here much more adequately than increased regulation.

I am glad to say that the Minister is against all the stuff on housing. Those proposals concern me because they are broadly an attack on private property, which is one of the mainstays of our constitutional settlement. The rights of private property are that which underpins a free society-the right for people to own their own home or to let it out to somebody else-as opposed to what is in clause 21, whereby the self-same peaked-capped man who was fining me for refusing to tell him my name and address then barges into somebody's house just to check that they are complying with regulations.

As I understood it, the aim of Her Majesty's Government was to ensure that the right to enter houses applied only when a warrant had been issued-a warrant duly signed by a magistrate-so as to protect us from aggressive officialdom. On the one hand, there will be warrants; on the other, officials from particular and peculiar councils will barge in on people in their homes or in houses that have been let out, telling them what they may or may not do.

I shall finish by referring to the trading of cars on the internet. The absurdity here is palpable. Why can I not put a little sticker in my car, offering to sell it? If somebody wanders past and says, "That's worth £100," and I accept it, surely that is commerce at its most basic and simple level. Surely it is what gets people into the culture of trading and activity, and leads to the prosperity of a capitalist society.

Tom Brake (Carshalton and Wallington) (LD): Will the hon. Gentleman give way?

Jacob Rees-Mogg: It would be an honour.

Tom Brake: I thank the hon. Gentleman for giving way. Does he make a distinction between a single vehicle being sold on a street and seven, eight or 10 vehicles being sold, which often happens on Bishopsford road in my constituency?

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Jacob Rees-Mogg: There are all sorts of rules and regulations on planning that affect how someone may trade as a business. I do not think that there is a feeling that that area is not covered. What is not covered is people doing small amounts of personal trading, but the whole approach is so unnecessarily draconian. Indeed, Draco would be rather embarrassed about the harshness of some of the measures being proposed on people doing little bits and pieces-selling a few Christmas cards on the side of the street, selling their car, running a restaurant without having to put up 27 stickers or wandering about without giving their name and address to every peaked-capped official who comes up to them and issues them with a fixed penalty notice.

Why are we even considering giving this Bill a Second Reading? It is against everything Conservatives stand for. It is against what a lot of Liberal Democrats stand for, and I think many socialists as well. We want a free and prosperous society. We do not want, through localism, to have local authorities barging into our lives at every opportunity. As I understand the forms of the House, the Bill will not be thrown out today. More's the pity.

4.54 pm

Philip Davies (Shipley) (Con): I am rather nervous about contributing to the debate, following my hon. Friends the Members for Christchurch (Mr Chope) and for North East Somerset (Jacob Rees-Mogg), who expertly filleted the Bill in a way that I could not possibly do. I shall not spend a great deal of time adding to their comments, but I shall make a few brief points

My hon. Friend the Member for North East Somerset is right to say that the Bill is disagreeable, but I do not doubt the intentions of my hon. Friend the Member for Finchley and Golders Green (Mike Freer), who wishes to do what he sees as in the best interests of his local area and other parts of London. I hope he listened carefully to the points made by my hon. Friends the Members for Christchurch and for North East Somerset and that he will reflect on them at length. Both speeches made it abundantly clear why the Bill should be unacceptable to anybody with a Conservative philosophy. It strikes at the heart of the values that Conservatives should believe in.

I have no doubt that Opposition Members will think that many of the provisions are marvellous. The Bill represents the state running riot. It is a charter for bossy local authorities. That is what brought many of those on the Opposition Benches into politics in the first place. Surely, as Conservatives, we should protect the public from bossy local authorities and over-zealous bureaucrats. We have all seen in our own lives that the moment local authority staff put on their car park warden's jacket, they think they have become something akin to Hitler, and take great pleasure in ordering everybody about and telling people what to do. We should be guarding against that, not expanding their powers and giving them a charter to go even further.

As my hon. Friend the Member for North East Somerset said, the first part of the Bill, which deals with penalty charges and gives local authority bureaucrats powers that we would normally reserve for the police, is deeply disturbing. We should not countenance such a proposal. We saw such freedoms undermined during the 13 years of the previous Government. The last thing
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we want under the new coalition Government, particularly a coalition that incorporates the word "liberal", is to go further, giving the state more power over individuals to impinge on personal freedoms. As my hon. Friend the Member for North East Somerset so ably said, the right of officials to demand people's names and addresses is something that we might have expected to see in the Soviet Union or Nazi Germany, not in a free country. I hope my hon. Friend the Member for Finchley and Golders Green will think about that again.

I agree with the points made by my hon. Friend the Member for North East Somerset about street furniture on the highway. Presumably local authorities will agree to let businesses have street furniture on the highway because they think it is a good thing for their local residents. If so, why do they not let those businesses get on with it? Why would they want to take money off businesses that are trying to provide a service that the local authority presumably thinks is a good one, which is why they gave them the permission in the first place?

One of my major problems with the Bill is that it is intended to damage small businesses. Such bureaucracy is meat and drink to large businesses. I used to work for a large multinational company. Although we may occasionally have been irritated by the volume of regulation and unnecessary bureaucracy, we could afford to employ teams of people to deal with it. We could afford to put up with the extra costs sometimes incurred. Many small businesses, which are struggling enough, especially in the current economic climate, do not have the financial capability to deal with the powers that the Bill would give local authorities.

The Bill reflects the mindset that running a small business is a licence to print money, that everybody who has a small business must have millions of pounds in the bank, that they are unscrupulously ripping off their customers in order to make an unhealthy profit, and that it is the duty of the local authority to get some of that nasty wealth off them. What sort of Conservative would want to promote a Bill with such an attitude behind it?

The only way businesses make money is by looking after their customers and giving them a good service. Anybody who does not do so does not have a business for very long. Businesses are some of the most acutely aware organisations when it comes to social responsibility and contributing to local communities. Local businesses often have a better record of making a positive contribution to their local community than do many local authorities, which are given power after power by such Bills. We should be deeply suspicious of attempts to give local authorities more powers to trample all over small businesses-the many people who are trying their best to earn a living and to put back into this country the entrepreneurial spirit that we have lost.

I cannot really add a great deal to the Scores on the Doors scheme, because my hon. Friend the Member for Christchurch made it abundantly clear that it is an absolutely ludicrous provision. When even the Scores on the Doors people themselves claim that their ratings cannot be relied on as a decent guide to the food hygiene of premises, why on earth should we make it mandatory for customers to see such information and for businesses to display something in which the people who promote it do not have confidence?

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If the voluntary scheme works well, and that seems to be the consensus, why on earth would we want to make it statutory? Why not just allow the voluntary scheme to flourish? As I said in a brief intervention on my hon. Friend, if a star scheme is so important to customers, and if it is the be-all and end-all of the information that they want in order to judge a premises, any business that does not display it basically invites people to walk past and go somewhere else. The market will sort those things out. If the scheme is so important to customers, all premises will want to display it anyway. That is what the free market is about. Surely my hon. Friend the Member for Finchley and Golders Green understands the principle of the free market and how it works. He should want it to flourish, rather than having such little faith in it. That is what we have seen for the past 13 years, with a Labour Government and the mess that that got us into.

Nick de Bois (Enfield North) (Con): Unfortunately, I do not know my hon. Friend's constituency well, but in my constituency, where there is a tremendous number of takeaway shops and licensed restaurants, we have tried to encourage some responsible behaviour, because many customers have been leaving areas that one sometimes has to tread through with great care. The voluntary approach has not quite worked, so does my hon. Friend not accept that, where it has not worked so well, some legislation should be introduced to encourage a better neighbourhood and environment?

Philip Davies: No, I absolutely do not, because I do not want unnecessary regulation. My hon. Friend's point of view is that the voluntary scheme has not worked, but his colleagues have not expressed that view. Even if it has not worked, however, I reiterate the point that if such information is so important to customers, they will presumably give their trade only to premises that already display it. If they do not like the fact that it is not displayed, they do not have to go to such places; they can go somewhere else. That is how the free market operates, and it is the free market that I believe in. I am sorry that my hon. Friend has such little faith in the free market and the principles upon which it works.

Mr David Burrowes (Enfield, Southgate) (Con): My hon. Friend makes a characteristically good case in support of his argument, and I join him in supporting-

Mr Deputy Speaker Mr Lindsay Hoyle): Order. Some hon. Gentlemen have just come into the Chamber, but in fairness they ought to have been here for most of the debate. I am being quite lenient, but I really do think that we ought to think about that in future.

Philip Davies: Thank you, Mr Deputy Speaker. I will continue. I will have a chat outside with my hon. Friend; we can resolve our potential differences outside the Chamber.

Stephen Pound (Ealing North) (Lab): "See you outside."

Philip Davies: My hon. Friend is much bigger than I am, so I would not want to get into an argument with him.

I accept absolutely the points that my hon. Friend the Member for North East Somerset made about selling cars on the street and via the internet. I came into politics because I wanted to try to encourage people to
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be entrepreneurs, to believe in the free market, to sell their goods and to be buyers and sellers. I do not want the Government or local government sticking their noses into every aspect of people's lives. If people want to sell a car and somebody wants to buy it, and they are both happy with the price, why not let them get on with it? Why do we need government, either local or central, interfering in every aspect of people's lives? Surely we should try to encourage people to do things themselves, so that they do not have to go to big car dealerships. Why do we not just let them get on with it and stop interfering?

Tom Brake: I wonder whether the hon. Gentleman would be quite so keen on that free enterprise and all those cars for sale if they were repeatedly parked outside his front door.

Philip Davies: If somebody is legally able to park their vehicle on a particular part of the street, it does not matter to me whether it is my next-door neighbour's car, a car somebody is selling, or an ice cream van. My suggested solution to the hon. Gentleman, to which he may not have given any consideration, is that if he does not think that cars should be parked in a particular location, his local authority should put down double yellow lines so that people are not allowed to park there. If people are allowed to park at a particular point, what on earth does it matter whether it is my next-door neighbour's car or somebody else's car with a small sticker saying, "For sale: £500". It seems to make a big difference to the hon. Gentleman, but I cannot see why. I ask him to reflect on why he decides that he is a Liberal when he has such an illiberal approach towards people selling their property.

I wish to concentrate on the licensing aspects of the Bill. My hon. Friend the Minister made a perfectly good point about clause 23, which is wholly unnecessary. A couple of years ago, the Culture, Media and Sport Committee, on which I serve, undertook a report on the Licensing Act 2003. We took evidence about certain clubs, including lap-dancing clubs, and we made recommendations about how best they might be licensed. As my hon. Friend made clear, the previous Government, in the last throes of the last Parliament, created new legislation enabling lap-dancing clubs to be licensed as sex encounter establishments-something that people may or may not agree with. As he said, the job has been done. The last thing anybody needs is a London Local Authorities Bill to start trampling all over the licensing regime dealt with by the previous Government and which does much of what the Bill seeks to do. I seek confirmation from him that he will strike out clause 23, which even the biggest supporters of the Bill would concede is completely and utterly unnecessary.

My main point concerns the seizure of goods. I cannot emphasise enough how absolutely outrageous the Bill's provisions are in this regard. The only fair way to do this is to quote a small section of the explanatory notes. I would be astonished if people who read it were not completely outraged by what is proposed. It says:

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So the provision is already in statute. It continues:

The London local authorities are complaining that they cannot exercise their powers of seizure unless they suspect that a street trading offence has been committed. That is not good enough for them: they want to be able to seize these goods even when they do not suspect that an offence has been committed. They say that Westminster city council officers already

to deal with

But they complain:

That is not good enough for the poor local authorities-they cannot seize these things until an offence has been committed and somebody actually trades. So they want, through the Bill, to

pettifogging bureaucrats in the local authority with, no doubt, as my hon. Friend the Member for North East Somerset said, their peaked caps-

Can Members imagine where we would be if the police started arresting everybody who was walking down the street because they might go into the nearest shop and start shoplifting? We are giving such a power to council officers, which is totally unacceptable. Any hon. Member who supports a Bill that provides such powers should be ashamed of themselves if they believe that they support freedoms in this country.

Mr Bone: I have to make my mind up whether to support the Bill if there is a Division. Is my hon. Friend suggesting that we should vote against it?

Philip Davies: I certainly am. I would urge any right-minded person, particularly with a conservative philosophy, to do so, because nothing in it supports such a philosophy.

It gets worse than local authorities wanting the power to seize things they have reasonable cause to suspect are intended for some kind of offence. Let us imagine that I am walking down the streets of Westminster trying to take home a hot-dog trolley that I had just bought. What would I do if a local council bureaucrat came along and said, "Hold on, you might use that to sell hot-dogs illegally, so I'm going to take it off you"? Is that really the type of country we want to live in, and are we happy to pass such legislation? Not only would local authorities be able to seize the hot-dog trolley that I had bought legitimately and was transporting home, but they would be able to seize any vehicle used to transport it where they found it in the street. Are we going to give council officers that power? We must be stark raving mad even to think about giving the Bill a Second Reading.

The Minister and the shadow Minister say casually, "Oh, well, of course there are some deficiencies in the Bill, but let's just iron them out in Committee." On that
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basis we may as well not bother with the Second Reading of any Bill. If we are saying, "We all know the Bill's a load of drivel, but we'll pass it now so we look as if we're being supportive and then fillet it in Committee", we might as well just let every Bill go into Committee and see what we can do from there on.

The point of Second Readings is that Members may not like certain legislation in principle. I do not like this Bill or the philosophy behind it, which is anti-small business and anti-freedom, and I do not like the draconian powers that some council officers seem to think are theirs by right-not in the country that I want to live in.

Mike Freer claimed to move the closure (Standing Order No. 36).

Mr Deputy Speaker (Mr Lindsay Hoyle): I am not going to take the closure motion at this point. I have another speaker on my list, and I think it only right that he is called to speak.

5.13 pm

Mr Peter Bone (Wellingborough) (Con): I congratulate my hon. Friend the Member for Finchley and Golders Green (Mike Freer) on the admirable way in which he moved Second Reading. I found it very helpful.

I am pleased to follow my hon. Friend the Member for Shipley (Philip Davies), who has certainly enticed me to vote against Second Reading. Many people see this whole process as a waste of time, and I think the business managers would like the Bill to go through straight away. However, we have an important role to play in examining and scrutinising private business. When I came into the House after being a local councillor, I did not expect to be worrying about turnstiles in public lavatories-I thought I had left all that behind. However, we do spend hours scrutinising private Bills, even though only a few Members come to the House to do so. That is what we are here to do, and it is definitely not a waste of time.

In deciding how to vote, we must ask whether a local borough or council has a particular need that is different from the needs of the rest of the country. If it can prove that it does, I am inclined to support it. What concerns me is the tens of thousands of pounds of council tax payers' money that local authorities spend bringing Bills such as this to the House.

Mr Greg Knight: In fairness to the Bill's promoters, is it not the case that the Bill originated when we had a Government who revelled in red tape, and that the Bill has reached this House when we now have a new Government who are committed to slashing red tape?

Mr Bone: I am grateful to my right hon. Friend, but I was just about to discuss that dilemma. However, I shall quickly digress, because what concerned me most was that the Minister had so many reservations. I have never heard a Minister at the Dispatch Box with so many reservations about private business, but the shadow Minister, whom I welcome to the Dispatch Box and who did exceptionally well today, welcomed every measure with great glee. As a Conservative, the principle of that position worries me.

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However, to return to why we are here today, we must decide whether there is merit in the Bill proceeding and whether there are only one or two measures that need to be addressed in Committee. On Second Reading, every Member of the House can come to the Chamber, but in Committee only a few will examine the Bill. The advantage is that if the House flags up issues on Second Reading, members of the Committee can take them into account.

I was slightly encouraged by the Minister, who is a most excellent Minister, because he ruled out certain things, but I have a dilemma to do with localism. I like the idea of local boroughs and local councils making their own decisions, but there must be an overall cap on that. I am looking forward to what the Government do on localism. The more we allow councils to do, the less necessary it will be to consider Bills such as this in the House.

I am still undecided. Perhaps the Bill's sponsor will have a few words to say and perhaps he will persuade me that because there are many good things in the Bill, I should let it go through. However, I am of the view that I will oppose it.

Question put, That the Bill be now read a Second time.

The House divided: Ayes 293, Noes 21.
Division No. 74]
[5.17 pm


Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, Heidi
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Tony
Barclay, Stephen
Barker, Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Bottomley, Peter
Brake, Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Mr Steve
Brooke, Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burrowes, Mr David
Burstow, Paul
Burt, Alistair
Burt, Lorely
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, Mr Alistair
Carmichael, Neil
Chishti, Rehman
Clark, rh Greg
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, Mr Edward
Davidson, Mr Ian
Davies, David T. C. (Monmouth)
Davies, Glyn
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Donaldson, rh Mr Jeffrey M.
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Dromey, Jack
Duddridge, James
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, Michael
Farron, Tim

Featherstone, Lynne
Field, Mr Mark
Flint, rh Caroline
Foster, Mr Don
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Gapes, Mike
Garnier, Mr Edward
Garnier, Mark
Gauke, Mr David
Gilbert, Stephen
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Graham, Richard
Grant, Mrs Helen
Green, Damian
Green, Kate
Greening, Justine
Grieve, rh Mr Dominic
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hart, Simon
Haselhurst, rh Sir Alan
Hayes, Mr John
Heald, Mr Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hollingbery, George
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Mr Gerald
Howell, John
Hughes, Simon
Huhne, rh Chris
Hunt, rh Mr Jeremy
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Latham, Pauline
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leigh, Mr Edward
Letwin, rh Mr Oliver
Lewis, Brandon
Liddell-Grainger, Mr Ian
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Lumley, Karen
Mactaggart, Fiona
Main, Mrs Anne
Mann, John
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, Esther
Mearns, Ian
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, Maria
Mills, Nigel
Milton, Anne
Mitchell, Austin
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, Grahame M.
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newton, Sarah
Norman, Jesse
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, Mr James
Parish, Neil
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew

Perry, Claire
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Pritchard, Mark
Pugh, Dr John
Raab, Mr Dominic
Reckless, Mark
Reevell, Simon
Reid, Mr Alan
Robertson, Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Roy, Lindsay
Ruffley, Mr David
Russell, Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Seabeck, Alison
Selous, Andrew
Shannon, Jim
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Shepherd, Mr Richard
Shuker, Gavin
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Skinner, Mr Dennis
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Soames, Nicholas
Soubry, Anna
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stunell, Andrew
Sturdy, Julian
Swales, Ian
Swayne, Mr Desmond
Swinson, Jo
Swire, Mr Hugo
Tapsell, Sir Peter
Thurso, John
Tomlinson, Justin
Truss, Elizabeth
Turner, Mr Andrew
Vara, Mr Shailesh
Vaz, Valerie
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Watkinson, Angela
Weatherley, Mike
Webb, Steve
Wharton, James
White, Chris
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Chris
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Tellers for the Ayes:

Mr Matthew Offord and
John Stevenson

Binley, Mr Brian
Brady, Mr Graham
Cash, Mr William
Clappison, Mr James
Davies, Philip
Griffiths, Andrew
Harrington, Richard
Henderson, Gordon
Hollobone, Mr Philip
Jones, Mr Marcus
Knight, rh Mr Greg
McCrea, Dr William
Morris, David
Percy, Andrew
Phillips, Stephen
Redwood, rh Mr John
Rees-Mogg, Jacob
Simpson, David
Smith, Sir Robert
Syms, Mr Robert
Tyrie, Mr Andrew
Tellers for the Noes:

Mr Christopher Chope and
Mr Peter Bone
Question accordingly agreed to.
13 Oct 2010 : Column 407

13 Oct 2010 : Column 408

Bill read a Second time and committed.

13 Oct 2010 : Column 409

Draft EU Budget 2011

[Relevant document: European Union document No. SEC(2010)473: Statement of Estimates of the European Commission for the financial year 2011 (Preparation of the 2011 Draft Budget).]

Mr Deputy Speaker (Mr Lindsay Hoyle): The Speaker has selected amendments (b) and (a), to be debated together.

5.32 pm

The Economic Secretary to the Treasury (Justine Greening): I beg to move,

I very much welcome the fact that this debate is taking place in this Chamber for the first time in several years. The debate demonstrates the importance that the House attaches to scrutiny of the EU budget, to the UK's contribution to it, and to the value for money of EU expenditure.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): I am grateful to the Minister for giving way. She says that this debate demonstrates the importance that the Government attach to giving the House a say. Can she tell us whether a vote on the matter, either way, would make the slightest bit of difference?

Justine Greening: The hon. Lady is assuming that those Members who have tabled amendments will press them to a vote. Perhaps she is prejudging the outcome of the debate. We welcome the debate because, tomorrow, I shall be in Brussels pressing our case in respect of the European Union budget, and it is vital that we are able to say that we have scrutinised the document thoroughly in our European Parliament.

In regard to the European Union, matters such as the single market, enlargement and environmental standards have seen real progress, but the EU budget does not have pride of place among the EU's achievements. I will not hide from the House the Government's frustration that some of our partners-and those in EU institutions-do not seem to understand how bizarre it is, when national budgets are under such extraordinary pressure, that the EU should be immune from that. So here in the UK, the week before a very tough spending review, it is only right that we should subject the EU's budget for 2011 to the same level of scrutiny as our own national accounts.

As I said to the hon. Member for Birmingham, Edgbaston (Ms Stuart), I will be in Brussels tomorrow, holding discussions with Commissioner Semeta, the Belgian presidency and MEPs on this very subject, pressing them to take the close, objective, pragmatic and responsible look at the EU budget that is long overdue, just as we are doing in the House today. I will, of course, come later to the previous Government's giveaway of the rebate, which is one of the main reasons why we will see our contributions rising over coming years, but let me begin by summarising this Government's approach to the Commission's EU budget proposals.

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At the beginning of the debate, let me also clarify our response to the amendments: I absolutely agree with the sentiments of both. Amendment (a) was tabled by my hon. Friend the Member for Stone (Mr Cash) and I would like to take this opportunity to pay tribute to the time, effort and work he has put into scrutinising not just the EU budget but a whole range of areas in which the EU has become involved. His persistence has certainly paid dividends in ensuring that this matter has maintained the prominence in the UK Parliament that it absolutely deserves.

Kelvin Hopkins (Luton North) (Lab): I agree with much of what the hon. Lady has said, particularly about the splendid work done by the Chairman of the European Scrutiny Committee, of which I am also a member. The Government now have the power to do something about the budget. Having complained about it for so long-I agree with those sentiments-is it not time for the Government to say no to the European Union on these matters?

Justine Greening: In fact, we are doing just that. I will come on to more detail about what we are doing now and what we plan to do, clarifying the arguments that we are putting to the European Commission.

Let me be clear that the Government will support the amendment tabled by my hon. Friend the Member for Stone. We very much welcome the pressure applied to the European Parliament to reject the proposed rise. We will do our bit as Ministers and as a Government to put pressure on that Parliament, and particularly on our MEPs, to reject any proposed rise. When the shadow Minister, the hon. Member for Bristol East (Kerry McCarthy) makes her speech following mine, I very much hope that she will confirm that the Opposition will press their MEPs to oppose any rises in the EU budget. Perhaps my hon. Friend the Member for Stone will want to press her further on that.

Amendment (b) was tabled by my hon. Friend the Member for Clacton (Mr Carswell) who, despite spending less time in this House than my hon. Friend the Member for Stone, has also clearly established his role as one of those MPs who scrutinises all EU matters carefully in a way that adds quality to our debates. I want to make it clear to him that we absolutely agree with the sentiments behind his amendment. We want to see the 2011 budget cut. The problem with the amendment is that if we withdrew our money from the EU, under its terms that would be illegal. We cannot support an amendment that would make our action illegal, so we will have to reject it, but I can tell my hon. Friend that if he had worded the provision slightly differently, we might well have been able to support both amendments. It is with regret that we have to reject his amendment, despite agreeing with its sentiments.

Let us talk about our concerns over the EU budget. It is not just the size of the draft EU budget but its effectiveness that is an important matter of concern.

Mr Andrew Tyrie (Chichester) (Con): Many aspects of the EU budget are, of course, deeply pernicious. Does the Minister agree that a particular shocker is the fact that the original budget had written into its baseline a 4.4% increase in administration costs alone? It would be utterly appalling if we found increases in administration
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budgets taking place at a time when economies are having to be found right across Europe. What proposals do the Government have to get that increase down substantially? Will we be able to make a saving and secure a reduction in administration budgets as a result of the negotiations?

Justine Greening: My hon. Friend is absolutely right that it is shocking and untenable for the EU to propose a 4.4% rise in heading 5 administration at a time when countries across the EU are struggling with extremely difficult and challenging fiscal deficit reduction plans. We have already voted against that rise and we will continue to take the opportunity to vote against it. More than that, I will explain what we are doing to ensure that the next time we have the chance to vote against it in Council, rather than have a minority of countries with us that is just short of a blocking minority, we can actually achieve a majority and make a difference.

If we look at the size of the EU budget, we see that there is a marked disparity between the Commission's proposed budget increase and the substantial reductions in public spending that countries across the EU are having to make. The Governments of, among others, France, Germany, Greece, Spain and Romania, as well as our own, have all announced sizeable austerity measures¸ and the EU as a whole has taken unprecedented action to secure economic stability. Yet the Commission has proposed that the EU budget should increase by nearly 6% in 2011. The Commission's draft budget explains that the proposed increase is driven primarily by pre-planned rises in the financial framework, and by large spending programmes such as the research framework programme. As we have heard, however, it is impossible to ignore other elements, such as the startling 4.4% increase in the cost of running the EU institutions themselves.

I think all Members are aware that, arguably, the level of the EU annual budget is to some extent already determined by the overall financial framework, but the Government firmly believe that 2011 cannot be a "business as usual" year for the EU budget. That is simply no longer tenable. As a result of the global financial crisis, Governments across the EU have had to reassess their spending plans, and the EU budget should not be immune to the same pressures. My right hon. Friend the Chancellor of the Exchequer has been very clear about that. We are committed to securing a cut in the 2011 budget. Indeed, at a meeting of EU Finance Ministers on 18 May, my right hon. Friend the Chancellor proposed a freeze in the budget at 2010 levels. He said:

That was in marked contrast to the previous Government's approach, which saw year-on-year rises effectively unchallenged, and, most damagingly, saw Britain lose part of our valuable rebate-a rebate that had been won by a Conservative Government. This is not strictly within the scope of today's debate, but as we turn our attention later to the next financial framework, we will do so with our UK contribution rising purely as a result of the previous Government's catastrophic decision to give away part of our rebate. That amounts to a £2 billion a year hit for taxpayers-£10 billion over the course of a Parliament-and for what? A reform of the common agricultural policy that has simply never taken place.

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Kelvin Hopkins: I am sure that it is of interest to the House that the amount to which the Minister has referred is twice the amount that the Government propose to save by cutting child benefit.

Justine Greening: That is the sort of argument that I have been presenting to other European countries, including the French Minister who was in London a few weeks ago. As the hon. Gentleman says, it is simply untenable for the EU budget to remain unchallenged when across Europe we are making incredibly difficult decisions on our national budgets. The way in which the hon. Gentleman phrased his argument is exactly the same as the way in which I have been pitching ours to our European partners. We are hopeful that, over time, there will continue to be a growing sense among them that we do indeed need to start challenging the European budget that is currently proposed.

David T. C. Davies (Monmouth) (Con): My hon. Friend is presenting a powerful argument to encourage us to support her. Does she accept that all the Members who have put their names to the amendments, however they vote tonight, are helping her and her colleagues in Europe by demonstrating the strength of feeling and the anger that exist throughout the House?

Justine Greening: My hon. Friend is absolutely right. That is one of the reasons why I welcome tonight's debate. I believe that it underlines the concern that we feel, not just as a Government but as a Parliament. The value that we can gain from the debate is our ability to show that we are united as a Parliament in standing up to the rise in 2011, and in wanting to see it cut.

The Chancellor, Ministers and officials have been working with member states, the Commission and the European Parliament to make our case. As members of the European Scrutiny Committee will know, at a time of fiscal consolidation the EU simply cannot afford to budget for more than it can realistically spend. Therefore, we have also maintained a firm focus on realistic implementation rates, because implementation of the EU budget has long been a cause of concern with a combined surplus and underspend in 2009 of almost €5 billion.

As I have said, the Government will focus not only on the size of the EU budget. We also want to focus on its priorities for spending, because it is clear that certain areas of the EU budget simply do not offer the best possible value for money that we should be able to expect. The common agricultural policy, citizenship spending in some areas and spending on the EU's own administration are foremost among them. There is also, of course, the perennial question of why the EU is based in both Brussels and Strasbourg. Critically, we want an EU budget that prioritises economic growth and recovery across the EU and worldwide, just as we are doing with our fiscal consolidation measures here in the UK. We want a budget that is focused on prioritising poverty reduction, promoting stability and addressing the challenges of climate change. The Government will therefore work to ensure that funding for activities is focused on areas that offer the best value for money and that offer the best deal for the British taxpayer.

Mr John Redwood (Wokingham) (Con): Why does the Foreign Secretary seem to favour increasing expenditure on the common External Action Service so that we have
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duplicated embassies, with those at EU level undercutting our own and charging us double?

Justine Greening: I have no doubt that other Members will refer to that in their contributions. As my right hon. Friend will be aware, we did not support the setting up of the European External Action Service, but as it is now in place our aim is to ensure that it does not duplicate in the way that he says, and that instead it has a role that has some value. We have been concerned about the increased budget because when the EEAS was set up, a key aspect of the conditions was that there would be fiscal neutrality and that is already being challenged. That is one reason why we have been pressing for that to be explicitly put into the terms of the EEAS remit. We have been successful in that, and we are pressing Cathy Ashton to make 10% savings immediately. Discussions on this are continuing in the EU right now. My right hon. Friend is absolutely right, therefore.

To make a broader point on the EU budget, it is vital that decisions taken on budgeting are stuck to. There is an underlying problem that I talked about in respect of implementation: in too many projects there is a gap between what has been budgeted for and what ends up being spent. It is quite a basic financial management problem, but it needs to be addressed.

Turning to the background to today's debate and what has happened so far, in August the Council adopted its first reading position on the Commission's draft budget. We should bear in mind that this draft budget proposed an increase of 6% in the 2011 budget. That first reading position saw the Council reduce the budget level proposed by the Commission by €788 million in commitment appropriations and by just over €3.5 billion in payment appropriations. However, although the Council reduced the payment levels in the Commission's proposal, the reductions would still have meant an increase of almost 3% in EU budget spending from 2010 to 2011. Also, although the Council's position was to reduce spend in the administration budget by more than €160 million and to cut the total budget for the EU's regulatory agencies by almost €12 million, even that would have left a rise in administration of 2.5%.

I should remind the House that when we had the opportunity in the European Parliament to vote against the rise in the Parliament's 2010 budget, we took it. Although the Council had battened down the rise proposed by the Commission, the Government could not accept the proposed level of budget increase and we therefore voted against the Council's first reading. In fact, six other member states joined us: our Nordic partners-Finland, Sweden and Denmark; and the great brewing nations of Austria, the Netherlands and the Czech Republic. The Council's position was, however, adopted by a qualified majority, although I just remind the House that we were very close to achieving a blocking minority on that vote; we were just three votes away from doing so-we got 29 votes when we needed 32. That is why we have been working so hard with our European partners to put our case, because we want, at the minimum, to be in a position to have a blocking minority. We really want to aim for a majority, and that is what we are working towards.

I know that, as we have just heard, the European Scrutiny Committee is considering the Council's first
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reading position and the Commission's first amending letter. However, I thought it would be helpful for Members taking part in this debate to be given an outline of that developing position. I referred to this briefly in response to my right hon. Friend the Member for Wokingham (Mr Redwood), but I can say that more than 90% of the 2011 budget for the EEAS is transferred from the existing budgets of the Commission and Council. As he points out, an additional €34.5 million is requested to fund new staff posts and other start-up costs.

Overall, the proposal includes the following: first, the establishment plan of more than 1,600 posts-this includes 100 newly created in 2010, and 18 requested for 2011, carrying a remuneration cost of just under €19 million; secondly, just over 2,000 other staff, 70 of whom are newly recruited this year, costing an extra €2.5 million in 2011; thirdly, other staff-related spending, of which less than €2 million would be additional; and, fourthly, spending on buildings and other operational spending amounting to just over €157 million, less than €4 million of which would be additional.

The amending letter stated that cost-efficiency, budget neutrality and efficient management should guide the EEAS, and, as I said, it set a target of 10% efficiency savings in headquarters. Although the Government acknowledge that some additional funding is required in the EEAS's first full year, it is essential that the EEAS demonstrates not only value for money, but budget discipline in its funding bids and a firm commitment to substantial cost efficiencies. It is vital that the aim of budget neutrality is respected, so we are pushing for immediate cost savings and stressing the importance of achieving cost efficiencies, including in decisions over the EEAS's premises.

We have also pushed, thus far successfully, for the Council to state on the record that the term "budget neutrality" for the EEAS applies solely to the context of the EU budget. We pressed for that so that we can counter unhelpful suggestions from the Commission in the future that additional spending at EU level could be offset by savings in member states' diplomatic services. Such suggestions are completely unacceptable to the UK.

Mr James Clappison (Hertsmere) (Con): I am extremely heartened by the proposition that my hon. Friend has put before the House this evening on this matter, but will she examine this very carefully indeed? I know that the EEAS was opposed by Conservative Members and is the legacy of those on the Labour Benches. As she would say, we are where we are, but on this point of budget neutrality will she make it her business to look carefully at any further proposals to increase expenditure on the EEAS? Budget neutrality has already been breached by the European Commission and it is likely that further attempts will be made to breach it in future.

Justine Greening: I assure my hon. Friend that we are looking across the piece to challenge rises in all areas of the EU budget, including the EEAS. As he points out, only months ago we were given an assurance that there would be fiscal neutrality and that has already been broken. We are challenging that and I believe we are doing so successfully. I assure him that we are making our case very strongly within the EU to challenge those sorts of spends when they are bad value for money and when the money is spent in an unplanned way that has not been agreed and was not passed in the original
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proposal that was signed up to. As he points out, that proposal was signed up to by the Labour party when it was in government.

So, let me wrap up. Although the annual budget negotiations are not the usual forum to achieve major budget reform, we have still set out our stance. We will be looking for a cash freeze in 2011 and, in this time of austerity, Europe needs to be looking to make the same efficiency savings that we are making in the UK.

I know that the House is interested in this topic, so I shall touch on it briefly. The European Parliament's Budgets Committee has voted on this budget and the European Parliament in plenary will be voting next week on the European Parliament's position on the 2011 budget. We have done our best to ensure that our Government's position on the 2011 budget has well and truly got through to MEPs. We sent a lobbying note to the UK MEPs in September clearly setting out our position.

Ms Gisela Stuart: Would the Minister care to comment on press reports that the European Parliament said that it would make concessions on its budgetary demands only in exchange for concessions by member states on direct resources financing?

Justine Greening: I cannot confirm those reports, but I can tell the hon. Lady that the European Parliament is now considering in detail its response to the European Union 2011 budget. It might well decide to take a position that has a broader perspective than purely the size of the European budget and the split of that budget across the headings. As she will be aware, if there is no agreement, the conciliation process will take place, and of course I cannot prejudge how the European Parliament will approach that and whether it will seek a broader negotiation process than just that on the budget. She is right to flag up the fact that the Parliament might choose to do that, which is why it is all the more important that Ministers and the Chancellor are out making our case with the European Parliament and MEPs as to why we believe that saying no to the totally unacceptable 6% rise is absolutely vital for all MEPs. I hope that the Opposition will play their role with their MEPs in ensuring that the European Parliament takes the right position on the European Union budget. I have spoken with James Elles, an MEP who is on the Budgets Committee. As I have said, I will be in Brussels tomorrow to reiterate our position.

We anticipate that the long-overdue budget review paper from the Commission will be published in the next 10 days. We then expect the Commission to present proposals for the next seven-year framework for the EU budget in the first half of next year. I can assure hon. Members that the Government will strongly defend the UK's national interests in the forthcoming EU budget negotiations. We are clear about what matters to the UK. We will defend the UK's abatement, which is fully justified owing to distortions in EU spending, and we want the EU budget to be smaller, so that our domestic efforts to cut the deficit are not undermined by growth in EU commitments.

Mr Christopher Chope (Christchurch) (Con): What my hon. Friend is saying in her feisty way is very encouraging. Will she assure us that if the European budget proposal is for something other than a reduction, the Government will veto it?

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Justine Greening: The process clearly does not end there. It will go to conciliation and there will be further negotiation within the Council. We are aiming to have a majority in the Council standing against the European Parliament's proposal for a higher budget.

Mr Chope: I think that my hon. Friend misunderstood my question. I was referring to the next seven-year budget, where we have a veto. I was asking whether we will be exercising that veto if we do not get our way in having the budget reduced.

Justine Greening: I will not pre-empt where we will be for the financial framework, but my hon. Friend is right to point out that this debate is incredibly important because it sets out the context for that next financial framework-

Mr Speaker: Order. I understand that the Minister is looking backwards in the direction of her hon. Friend who intervened, but perhaps she could look towards the House.

Justine Greening: So, my hon. Friend is right to raise that issue.

In conclusion-

Kelvin Hopkins: Will the hon. Lady give way?

Justine Greening: No, I think I need to wrap up.

We are absolutely committed to pressing for the EU budget to be smaller. We will not have rises in the EU budget undermining our attempts and our desire to tackle our fiscal deficit. We will challenge the 2011 budget, which does just that.

I welcome the support of this House in sending a common view to Europe. I hope that we will be able to do that later tonight and I look forward to seeing whether we get support from the main Opposition party on this matter, too.

Mr Philip Hollobone (Kettering) (Con): On a point of order, Mr Speaker. My hon. Friend the Minister said that the amendment in the name of my hon. Friend the Member for Clacton (Mr Carswell) would commit the Government to an illegal act. Am I right in saying that any amendment accepted by the House for debate is in order and that it would be quite improper for any amendment to commit Her Majesty's Government to anything illegal? Were not the Minister's remarks a matter of debate rather than a statement of fact?

Mr Speaker: I am very grateful to the hon. Member for Kettering (Mr Hollobone) for his point of order. Certainly, from my reading of amendment (b), I am not aware of any exhortation to illegality. The hon. Gentleman will understand, and the House will appreciate, that it is not for me to become enmeshed in an argument between hon. Members as to the merits or demerits of a particular amendment. What I can say to the hon. Gentleman, whose concern for propriety is unsurpassed in any part of the House, is quite simply that the amendment is not improper. If it were improper, I would not have selected it; it is perfectly proper. On the subject of propriety, therefore, he and others need have no cause whatever for concern. I hope that is helpful to the House.

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6.1 pm

Kerry McCarthy (Bristol East) (Lab): The Minister certainly talks very tough talk about the current EU budget negotiations, but I have several questions about how she intends to turn that talk into action. She has given a very clear exposition of the negotiations to date-the Commission originally proposed an increase of getting on for 6% in the payment appropriations; the Council then discussed reducing those appropriations; and the UK failed, at that meeting, to persuade a significant number of member states to accept the EU's position that there should be substantial cuts. We are now at a halfway house, which means that there will still be an increase in the budget. I understand that the EU Parliament will vote next week, on 20 October, on whether to reinstate all the budget lines. Why does the Minister think that the UK Government failed in that way at the meeting and why, when the Chancellor went to ECOFIN in May to propose a cash freeze, was he unable to win a consensus?

Chris Heaton-Harris (Daventry) (Con): The hon. Lady talks about failure. Will she remind the House how many times in the 13 years of the previous Labour Government Ministers raised one question about the fact that the European Commission's accounts were not being signed off by the European Court of Auditors?

Kerry McCarthy: That is completely irrelevant to the subject that we are debating. The matter has been discussed in the House on many occasions and has been raised by many of the hon. Gentleman's colleagues. I understand that, as a new Member, he was not in the House then, but it has been discussed many times.

Andrew Percy (Brigg and Goole) (Con): Will the hon. Lady give way?

Kerry McCarthy: No; I want to make a little progress. I have not started saying what I intended to say.

I am slightly confused by the Minister's stance on the motion and the amendments. The motion states that the Government support

in other words, a freeze. The hon. Member for Stone (Mr Cash) argues that there should be no increase in the EU's budget, which is pretty much the same position. Although the Minister implied through everything she said that she wants the budget to be smaller, that is not what the motion states. Will she clarify whether the Government are arguing for a freeze, or whether they support the 34 Back Benchers who have signed amendment (b) calling for cuts in the budget? Will she also clarify what she meant when she said that it would be illegal to support amendment (b)? I would be very happy for her to intervene on me to explain the element of illegality. If there were not that illegality, would she call for cuts? If so, why does not the Government's motion say that there should be cuts?

Justine Greening: On the legalities, we are part of the EU-I am sure that some hon. Members wish that we were not, but we are-and we are under a treaty obligation to make payments. If we were to stop making payments, we would breach our treaty obligations, which we are not able to do under law. If we went down that route,
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presumably any other European country could do anything it liked against any particular treaty obligation it thought inappropriate, which would not be conducive to good diplomatic relationships or to progressing the case that we want to make for a cut in the 2011 budget. I hope that that has clarified matters for the hon. Lady. Perhaps I can press her to confirm whether Labour MEPs will support our Government's policy stance for a cash freeze in the 2011 budget.

Kerry McCarthy: I am here to put the questions to the Minister and to find out what her stance is. She is trying to placate Conservative Back Benchers, who are clearly unhappy about the lack of progress being made by the Government. It is tough talk, but it is all talk and there is no action. When she goes to Brussels tomorrow, what will she see as success in those negotiations? What is she aiming for?

Robert Halfon (Harlow) (Con): Does the hon. Lady's party support a cash cut in the EU budget?

Kerry McCarthy: Again, we are not here to answer questions. We are here to put the questions and to get- [Interruption.] The Minister should accept that the Conservatives are now in government. She cannot just do what she did in opposition and talk tough-

Mrs Anne Main (St Albans) (Con): Will the hon. Lady give way?

Kerry McCarthy: I want to make progress. The Minister cannot just talk tough on European issues and pander to people who want to take us out of the EU. She is here to make progress in negotiations and to fight Britain's corner. I have asked her what she would see as success in doing that.

On the specifics, we are here to debate whether, when EU member states and regions are all engaged in belt tightening, the EU itself should engage in a similar exercise. The Minister has said that sizeable austerity measures are being implemented across the EU. Does that not in itself prove that this economic situation is a global phenomenon that affects all EU member states and not, as the Government say every time Ministers get to their feet in the Chamber, the result of profligate public spending by the previous Government?

Mr Redwood: Will the hon. Lady tell us whether she now thinks it regrettable that the previous Government gave away our rebate and got no reform at all of the common agricultural policy, which is why this is such a big budget?

Kerry McCarthy: The CAP represented 71% of the EU budget, but it is now down to 40%, so that is significant progress, although I agree that there is more work to be done on that front. I shall come to that.

Henry Smith (Crawley) (Con): If this truly is a global circumstance, how come, apart from the Republic of Ireland, this country has the largest deficit of any in the EU and the largest of any in the G20?

Kerry McCarthy: That is obviously partly related to the fact that the UK has probably the largest financial centre globally-it is certainly far and away the largest financial services sector in the EU. There is a more significant impact on the UK economy, London being as it is, as opposed to other countries.

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To return to my speech, I shall not take any more interventions for a while. Labour Members believe, as we have always done, that the EU should always scrutinise its expenditure carefully and closely in cutting waste. We want to ensure that the budget is spent wisely and well, and that there is demonstrable added value for the member states and regions as a result of such expenditure.

We welcome the fact that the EU Parliament has chosen, for the first time, not to go above the ceiling set out in the budget at a time when member states face economic hardship. That demonstrates that the Parliament has at least gone some way to appreciating the challenges, but the issue today is whether we should go further. The Government, despite all their talk and bluster, seem to be singularly failing in their aim of putting a lid on what the EU Parliament wants to spend.

Labour Members fully support the principle that the EU budget needs to play its part in an era of fiscal consolidation, and we do not think it right that there should be significant real increases next year, but we should avoid throwing the baby out with the bathwater. The EU has key roles to play, and it was noticeable in the Minister's speech that she made only passing reference to the good things that come out of working with our European partners. In particular, it is important that the EU continues to foster growth and recovery, which is the priority for us here in Britain. As Europe is our largest export partner, growth in Europe is an essential precondition for our recovery.

We welcome the stated key objectives for the draft 2011 budget, which are to support the EU economy and recovery from the economic and financial crisis, and to help EU citizens by reinforcing economic growth and employment opportunities. It is somewhat ironic that as the European Parliament debates and votes on the draft budget on Wednesday 20 October, when it will focus on the admirable and important objectives of supporting recovery and growth, we in the UK Parliament will hear a statement on the comprehensive spending review from the Chancellor, who clearly rejects an active role for the Government in securing such objectives and believes that cuts, cuts and cuts alone are the way forward.

Ms Gisela Stuart: Will my hon. Friend take on board two observations? On an earlier intervention about the Commission's budget not having been signed off for the past 10 years, is she aware that neither has that of the Department for Work and Pensions? On a much more practical point, if the great ambition is to make us economically successful, will my hon. Friend reflect on the Lisbon agenda, which was supposed to make us the most competitive and technologically advanced economy in 2010 and has singularly failed to do so? Why does she have so much faith in the 2011 aspirations?

Kerry McCarthy: There was also the 2010 strategy. In the flagship initiatives set out in the documents before us today, there are some good programmes that we should support, to the extent that they have demonstrable outcomes and that they make a difference, rather than being fine words that do not achieve what they set out to do.

Let me go briefly through the headings in the budget. The Minister was unspecific. She spoke generally in favour of a cash freeze, but did not specify in which areas. [Interruption.] Perhaps the hon. Member for
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Devizes (Claire Perry) will refrain from heckling me quite so much. She is a near neighbour of mine, and we get to talk rather a lot on the television cameras outside the Chamber. It is extremely distracting, and she will get a chance to contribute later if she wishes. That is fair.

Under sub-heading 1a in the budget, on competitiveness for growth and employment, we support funding that encourages the effective operation of the single market, including addressing transport challenges, such as the greening of transport systems, and promoting sustainable, low-carbon economic recovery and growth. It is important to continue to support innovation and research and development on, for example, the environment, clean energy, energy efficiency and promoting a knowledge-based economy. Europe has a key role to play in that.

On structural and cohesion funding, which is included under sub-heading 1b, much of that spending is key to EU enlargement. Sensible steps to ensure that that money is well spent, which we agree should be taken, should not be allowed to slip into undermining the important principle that enlargement is in the UK's long-term interest.

Andrew Percy: I hope that the shadow Minister will be gentle with me-I am a new Member, after all. We keep going back to the same point, which is that for all the good that she says the European Union does-she has highlighted several areas of spending-we still do not know whether that money has been spent, because the accounts are never signed off.

Kerry McCarthy: I will not repeat the point about the hon. Gentleman not being in the Chamber on many occasions when we have had similar debates. As with any public spending, it is important that there is some measure of outcomes, so that we can be sure that there are demonstrable changes and that objectives will be achieved as a result of the spending programmes. We are committed to that. To use the argument about the accounts not being signed off to dismiss everything good that the EU has done and all the initiatives on which we are working with our European partners is tantamount to throwing the baby out with the bathwater, as I said earlier. The argument is used as a red herring by those who are against the entire European project.

Guy Opperman (Hexham) (Con): The hon. Lady has referred to many good things about the European budget. Is she, in her shadow ministerial role, able to identify anything that she would cut?

Kerry McCarthy: I shall come on to that point, if the hon. Gentleman will bear with me.

We support some of the structural and cohesion funding, but we agree with the Government that budget levels should be realistic and reflect absorption capacity. In certain areas throughout the EU budget, planned spending levels are indefensible, and, in response to the question that was just asked, we believe that spending under heading 2 on the preservation and management of natural resources should not be a priority in the current economic climate. We do not support that scale of spending on agricultural intervention, and we will support the Government's close scrutiny of it.

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We very much welcome, however, the Government's statement that there should be an increased emphasis on development objectives, including on reaching the millennium development goals in poorer countries, and we believe that adequate funding is necessary to achieve those aims.

Finally, we also support the Government in pushing for reductions in the administration budget.

Mr Peter Bone (Wellingborough) (Con): Will the hon. Lady give way?

Kerry McCarthy: No. I am coming to a conclusion, and the hon. Gentleman will have his chance to speak in a moment. Where efficiency savings can be found, they should be found, and there are significant savings to be made in that area. I can see that many Members want to speak, so I do not intend to delay the House any longer. I look forward to hearing the rest of the debate.

6.16 pm

Mr William Cash (Stone) (Con): We heard a very interesting and comprehensive analysis from the Minister, and I intend to press my amendment (a) to a vote. I agree very much with the sentiments that lie behind the amendment tabled by my hon. Friend the Member for Clacton (Mr Carswell). I wish only that, before tabling it, he had had a word with me about its wording, because I suspect that we would then have been able to arrive at an agreement. For some reason that completely escapes me, however, he decided to go ahead with his wording.

I went ahead with my amendment, because I have to recognise that the Government are about to engage in some incredibly important negotiations. They have to achieve a blocking minority, which I shall explain in a moment. That is not just a technical question, but a question of whether the Government can, first, get enough people to vote on the conciliation agreement, assuming that we reach such a point, and then achieve a blocking minority so that the Commission has to propose a new budget. That is what we are fighting for.

Mr Denis MacShane (Rotherham) (Lab): Does the hon. Gentleman agree that to secure such leverage in the conciliation process, it is not helpful if the main Government party is in alliance with those whom the Deputy Prime Minister calls nutters, homophobes and anti-Semites from extreme fringe parties in east Europe, and not in the same family as Mrs Merkel, Mr Sarkozy and other centre-right leaders?

Mr Cash rose-

Mr Speaker: Order. May I gently say, with reference to the right hon. Gentleman's intervention, and as an encouragement and a cautionary note to the hon. Member for Stone (Mr Cash), that I know the hon. Gentleman's response will very much focus on matters relating to the European budget?

Mr Cash: It will, indeed. I shall make no response to that absurd intervention.

We must achieve our objectives, which are not only to prevent any increase in the budget, but to reduce it. I say that to my hon. Friends as one who, I think, can
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undoubtedly claim to have fought these battles relentlessly, persistently and consistently for the best part of 25 years-and, if I may say so, with some degree of success in establishing the parameters within which we are now able to address the European issue. In a moment I shall mention what happened at the European Scrutiny Committee this afternoon, merely to illustrate the progress that we have already made in the few weeks that I have had the honour of being the Committee's Chairman. The whole process has to be conducted in an effective and orderly manner. Otherwise, it plays into the hands of those such as the right hon. Member for Rotherham (Mr MacShane), who want to pretend that somehow there is no justification for our adopting the position that we need to adopt. Tortuous and tedious as it is, the most important thing is to get it right. We have to get the blocking minority if we want to move from wanting to stop the increase to achieving the reduction that follows from it. Let us be responsible about this.

I do not have the slightest objection to the sentiments that lie behind the other amendment. It bothers me, however, that we have two amendments that appear to compete with one another, but in fact convey the same ideas, yet one is orderly while the other is disorderly. I leave it at that; it is for my hon. Friends to judge.

Mr Geoffrey Cox (Torridge and West Devon) (Con): Does my hon. Friend accept that Mr Speaker has already said that the amendment in the name of my hon. Friend the Member for Clacton (Mr Carswell) is in order; that there is nothing inherently unlawful about it; that there is no reason, based on either law or principle, why Members of this House should not vote for it; and that it is therefore perfectly in order?

Mr Cash: When I say that the amendment is disorderly, I mean that it would, in my judgment, make it more difficult for us to achieve our objectives. I was not referring to it as being disorderly within the framework of the procedures of the House. I make that distinction very clear.

Our net contribution to the European Union is rising from £6.4 billion this year to £8.3 billion in 2011-12 and £10.3 billion in 2015, and our gross contribution is rising from £14 billion to £19 billion. The Budgets Committee is placing a demand on member states to open negotiations on new own resources; the hon. Member for Birmingham, Edgbaston (Ms Stuart) says that that is a

It is reported in the Financial Times that MEPs are even considering an amendment to

On top of the budget, the European Parliament is shortly expected to vote on proposals to extend maternity rights to 20 weeks at full pay, which will cost the British Government an extra £2.5 billion a year.

It will be well understood in the House that I am gravely concerned about the developments in this direction. I merely want to be sure that the Government, as well as being able to negotiate this particular, rather difficult round, are able to get stuck into reducing not only the budget itself but the functions that lead to that budget, because the two run together-it is like Parkinson's law.

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Mr Bone: My hon. Friend is making a powerful speech on something about which he knows more than anybody else in the House. His amendment would freeze the budget, while the other amendment calls for a reduction. That may be difficult to achieve, but would it not be helpful, rather than a hindrance to the Minister, as she flies off tomorrow, to know that a certain number of Members want a cut?

Mr Cash: That has to be a judgment for Members in deciding which way they will vote on these amendments. In my view, because of the complexity of this problem and the uncertainties about whether we will be able to achieve a blocking minority in the Council of Ministers-I shall explain the procedure in a minute-we must do nothing that would play into the hands of the Eurofanatics in some of the other member states who want to go down the same route as the European Parliament by endorsing this increase and increasing the budget resources, which is what they are intent on doing in the wake of the Lisbon treaty. That is the problem. It is a matter of judgment, but it is also one of analysis, which is why I take the position that I do.

I may say that I had no discussions whatever with the Government on this issue. I simply tabled my amendment last night because it struck me that in the light of the discussions in the European Parliament-and not in light of the amendment tabled by my hon. Friend the Member for Clacton, which I had not seen-the European Parliament was being thoroughly irresponsible, or at any rate the Budgets Committee was. We have yet to discover whether the European Parliament will persist in the same view.

On top of the proposal for the European budget, there is one to extend maternity rights. It is now clear that it is intended to have a £3 billion increase in the European budget for that reason. The 27 member states will be snubbed if the European Parliament votes in line with the European Commission's proposal. Recent increases do not include the already agreed, and grossly extravagant, €1 billion increase in the European budget for 2010, which was caused largely by the Lisbon treaty.

On the subject of austerity and responsible measures, according to Government figures the collective budget deficit of the EU's 27 member states will reach the staggering sum of €868 billion this year, which is more than 7% of the bloc's gross domestic product. That, of course, is because the European financial crisis is real. One need only look at the countries otherwise known as PIGS-Portugal, Italy, Greece and Spain-not to mention France, which must be included in a lot of the analysis, to see the real implications of that for the individual lives of voters in this country. The governing economic and financial framework established by the EU must be not only revised but radically curtailed.

The budget increase also relates to the extensive bureaucracy that we are having to pay for, such as the European External Action Service, as my right hon. Friend the Member for Wokingham (Mr Redwood) rightly pointed out. Members, including me, raised the gravest objections to the proposals for that body that were made a few weeks ago.

While Westminster and Whitehall, and the country at large, are quite rightly being asked to make savings, what is happening in Brussels? The European Parliament adopted a resolution on 18 May proposing a budget of
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€1.707 billion, which is a 5.5% increase on the amended 2010 budget and represents 20.28% of the EU's administration budget.

Kwasi Kwarteng (Spelthorne) (Con): Many Conservative Members would broadly agree with my hon. Friend's sentiments; I do not believe there is much division among us on the matter. What practical steps does he think Her Majesty's Government can take to stop the grotesque expansion in the budget?

Mr Cash: The budget is part and parcel of the issue of parliamentary sovereignty, which I shall come on to in a moment. If we are to act properly and responsibly in our own Parliament, we shall have to deal with this Parliament's relationship with the EU as a whole. If we get that right, we can proceed in an orderly manner to the questions that we must ask in the political environment that we now experience. That will ensure that we are not subject to further increases in European functions or to the assertions of the European Court and other European institutions on the sovereignty of this House.

Robert Halfon: Although I accept what my hon. Friend says, does he not agree that by the time all that has been done, the budget increase will have gone through?

Mr Cash: With great respect to my hon. Friend, with whom I have had many useful discussions on this matter over the years, I do not agree for the reason that I have already given. It all depends on whether, as a result of the forthcoming negotiations, we achieve a blocking minority in the vote on the conciliation agreement. That agreement has not yet been mentioned, but regrettably it is integral to the procedures that we now face.

I fear that there might be a slight misunderstanding, because I suspect that all Members on the Government side of the House-or even all those in the Chamber-and many people in the Conservative party and the country at large, would agree with both amendments. The distinction I am drawing between them is simply that in the real world we must address such matters in a certain fashion. I do not want to advance my amendment simply because it is mine. It will not do any good if we go too far in merely expressing a sentiment with which everyone agrees, if the consequence of doing so is a counter-productive result. That is why I am taking the position outlined in amendment (a). I urge my hon. Friends-not for my sake, but simply for the sake of ensuring that we get things right-to support it.

Mark Tami (Alyn and Deeside) (Lab): The hon. Gentleman is part of a coalition Government-or at least part of a coalition. What discussions has he had with his Lib Dem colleagues on the grand plan that he is setting out to skewer the EU budget?

Mr Cash: As a matter of fact, it is pretty obvious that I am not a member of the coalition Government, so let us dispense with that idea straight away. In my votes over the past few weeks, I have probably demonstrated that I have certain reservations about the situation, but I am not going further down that path now.

If the European Parliament is allowed to get away with this, it will add fuel to fire of the riots and demonstrations that are already sweeping many cities in different countries throughout Europe. Those countries
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face problems of immigration, economic stress and high unemployment, and wilfully to attempt to increase the EU budget when the whole thing needs to be rejected is, to my mind, irresponsible. If the EU Parliament persists, it cannot be regarded as a serious and responsible Parliament. That is my concern.

Mr Nigel Dodds (Belfast North) (DUP) rose -

Michael Connarty (Linlithgow and East Falkirk) (Lab) rose -

Mr Cash: I will give way to my predecessor on the European Scrutiny Committee.

Michael Connarty: I am grateful to my ESC colleague, who is now Chair of the Committee. I do not disagree with his facts and many of his criticisms are fundamental to the approach of the European Commission compared with that of the UK Government and this Parliament, particularly on the proposal for a tax. However, on trying to achieve a blocking minority, would it not be better in fact to support the Government's proposal than to take an absolutist approach such as the one he proposes in amendment (a) and, quite frankly, the one that is proposed in amendment (b)?

Mr Cash: Mine is not an absolutist position in the sense in which the hon. Gentleman puts it. My amendment (a) says that an increase is simply not justifiable. What is justifiable could also be described as what is fair and right. I have just described what I suspect will happen throughout Europe if people continue to increase the budget irrespective not only of our spending review, but of the crisis in Greece and of the situations in other member states, including very high levels of unemployment, the rise of nationalism that goes with that, and the populism that will emerge from those who want to agitate and create trouble. We want a stable Europe and a stable United Kingdom, which is precisely why I take the view that we need to act responsibly and ensure that the UK Government have every opportunity to achieve their objectives. I assure the House that nobody can accuse me of being in any way reluctant to speak my mind on matters relating to the EU, and I am sure that no one would presume to do so.

Mr Dodds: I commend the hon. Gentleman for his long years of campaigning on this issue and his work as Chairman of the ESC. Given the provocative behaviour of the European Parliament and its attitude to a budget increase, which he outlined, should this House not put down an equally strong marker by strengthening the Minister's negotiating hand and saying, "Far from increasing or freezing the budget, we want a reduction"?

Mr Cash: I do not want to enter into an unnecessary altercation about this with my hon. Friend the Member for Clacton, but if the wording had been put to me, I would have included the words "and if the European Parliament and its committee persist in the behaviour that they are now engaged in, we would have to call for a reduction in the budget." It would be on that basis, not on the basis of requiring the Government to respond when they are in the process of negotiations. Perhaps the distinction comes at that point, although I agree with my hon. Friend's sentiments.

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Mr MacShane: Will the hon. Gentleman give way?

Mr Cash: No, I have heard enough from the right hon. Gentleman. All he does is repeat his old mantras- [ Interruption. ] I do not accept that: I simply need to get to the next point that I wish to make about the procedure that is to be followed.

It is clear in the light of the current state of affairs that the Government should adopt my amendment and reject the increase. The European Parliament, in the current austerity conditions, is wilfully affecting the economies of the 27 member states, and of the United Kingdom in particular. My European Scrutiny Committee has today agreed to have a full inquiry reaffirming the sovereignty of the United Kingdom Parliament in relation to the assertions of the European Court of Justice on such matters. The Government have agreed to the Committee's demand for pre-legislative scrutiny, and I am happy to announce that the Minister for Europe will give evidence in public on these critical matters-and that will have an impact on the issues that we are discussing in this debate-as will other experts on the compatibility of Britain's membership of the European Union with the doctrine of parliamentary sovereignty in the light of the European Union's own assertions that the parliamentary sovereignty of this Parliament has been overtaken.

The Government have announced that they will introduce a clause to address the question of parliamentary sovereignty, but our Committee will examine the implications of this in the light of the declaration of primacy of European law by the European Court of Justice and as contained in the Lisbon treaty. All these matters require the closest analysis for the sake of our democracy and the electors of the United Kingdom on questions relating to taxation, spending, the European budget, our contributions and all the functions of the European Union. We have an absolute requirement to get this right and we will have a full examination of the issue of parliamentary sovereignty, including the subject matter of this debate.

Mr Philip Hollobone (Kettering) (Con): Does my hon. Friend believe that it would have been helpful if the Minister for Europe had been in his place for this debate?

Mr Cash: It is always helpful when the Minister for Europe is present, and I endorse my hon. Friend's view. However, the Economic Secretary has set out the Government's view and their determination to get the negotiations right. They will have to succeed in that aim, because there is a huge amount at stake.

The Commission submitted its draft budget to the Council of Ministers and the European Parliament, but the Council rejected the Commission's proposals by qualified majority vote. The proposals then passed to the European Parliament. In the next few days, it is expected that the European Parliament will adopt the amendments to increase the budget and forward the amended draft to the Council of Ministers and the Commission. The European Parliament and the Council will then convene a conciliation committee to seek to resolve their differences, if any. It is essential that the Government negotiate a blocking minority of 91 within
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the Council of Ministers to stop the increase at that point. The decisions will be taken by a majority of 14 out of 27 MEPs on that conciliation committee, together with a majority of the 27 member states on the Council of Ministers. That is why it is vital that the Government have the strongest possible mandate to negotiate a blocking minority to determine whether there is agreement in the conciliation committee on the joint text-as I am sure is the intention. If both the MEPs and the Council of Ministers, through their respective procedures, reject the joint text, or if one rejects it and the other fails to take a decision-this point is crucial, and that is why this is such a delicate matter-the European Commission is bound to propose and submit a new budget that will deal with the problem properly.

That is why I take the position that I do in my amendment. I am in no way detracting from the sentiments expressed by my hon. Friend the Member for Clacton. I absolutely endorse those objectives; indeed, I have advocated them repeatedly-relentlessly-over the past 20 years. However, there comes a moment in the tide of man, as they say, when it is essential to get the responsible procedures working in an orderly manner. I do not in any way want to find the Government's position compromised by a vote that could take place this evening, the effect of which would be to put the Government position into reverse.

We are at a crucial moment. I very much respect my hon. Friend's objectives, but in this context it is important to get things right. On this occasion, I would strongly urge my hon. Friends to accept my amendment and allow the Government to proceed on that basis, rather than on the basis of something based on a hypothesis.

Several hon. Members rose -

Madam Deputy Speaker (Dawn Primarolo): Order. As hon. Members will see, there is a great deal of interest in today's debate. Some 10 Members have indicated that they wish to speak, and as this is a time-limited debate I will ask each of them to consider how long they will speak for, so as to ensure that every Member who wants to make a contribution can do so before the time elapses.

6.42 pm

Kelvin Hopkins (Luton North) (Lab): It is a great pleasure to speak in this important debate, although I will not detain hon. Members for long. First, I commend the Chair of the European Scrutiny Committee for what he said. It is interesting to see him as a restraining voice in Euroscepticism. What he said is common sense. The Government have to go to Brussels or Strasbourg-or wherever they meet-with, one would hope, the united backing of the House or, if not, at least the united backing of those on the Government Benches. I will certainly be supporting the hon. Gentleman's amendment; indeed, I will support both amendments if they are put to a vote.

I have been a member of European Standing Committees for some 13 years. Over those years I have debated European budgets countless times, yet in all that time none of them has been approved by the European Court of Auditors. We just seem to nod through the fact that a budget costing the countries of Europe billions
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every year is not approved by auditors. We just accept it. One cannot imagine the British Government doing that-not having their Budget approved by auditors-every year.

There has been a significant increase in our net contribution, and that will continue. Attention was drawn to the problem yesterday-very well, I thought-by the hon. Member for Bury St Edmunds (Mr Ruffley) in Treasury questions. Indeed, I have spoken many times about the Blair deal-the deal made that December night a few years ago when, apparently without consulting very many people, he arbitrarily gave away a significant proportion of our rebate. The Economist-not a supporter of left-wing Eurosceptics such as myself-said that no deal would have been better than that deal, and it was right. I shall therefore be supporting the amendments.

The budget is fundamentally flawed and has been so since its inception. Throughout that time, the core of the problem has been the common agricultural policy. I have called many times for the common agricultural policy to be abandoned and for agriculture policy to be returned to member states. Member states have different agricultural industries, and each of us would choose what to subsidise and how to subsidise it. Our own agricultural sector needs some subsidies, particularly in certain areas-an example would be Welsh hill farmers-to preserve our rural heritage and industries; it is sometimes necessary for them to be sustained by subsidy. The way the CAP operates is nonsense, however. We have changed it over time, but it has not been properly dealt with.

Another problem is that the net redistributive effect of the budget acts in an arbitrary way, in that some relatively rich countries are net recipients, whereas some relatively poor ones are, unjustly, net contributors. We have a smaller agricultural sector than many other countries, and we have, unfairly, been a net contributor. I would not agree with Mrs Thatcher on many things, but I thought it was right that she negotiated a rebate. [Hon. Members: "Hear, hear!"]

I shall differ from Conservative Members now, however, by saying that I should like a socialist approach to Europe, whereby the redistributive effects of the budget are balanced in such a way that the poorest countries are net recipients and the richest are net contributors, in proportion to their relative living standards and the success of their economies. As one of the richer countries, we would no doubt be a net contributor, but such a system would be rational and fair. The budget as it stands is neither rational nor fair.

We ought to return to the Blair agreement. If we are to negotiate a more sensible budget with our European colleagues, we should start to look at contributions again. If our own contributions had been negotiated in sterling cash terms, rather than euro cash terms, we might not have suffered so much as a result of depreciation. We are paying more because we necessarily depreciated our currency, although I am glad that we kept our own currency and that we are able to flex it according to our own needs.

Other countries have suffered terribly through being unable to do that-Ireland is a case in point. In real terms, it is part of the sterling economy, not the euro economy, and it has suffered as a result of our depreciation, because it has been unable to depreciate its currency. I have told Irish colleagues whom I have met through the European Scrutiny Committee that the logical thing for
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them to do would be to recreate the punt and devalue against the euro to come into line with sterling. That would be very beneficial for the Irish, and I hope that they will consider doing it at some point. It would be fairer for us if contributions were measured as a proportion of gross domestic product, because they would not be subject to change as a result of depreciation.

I have spoken many times on the European budget, and I believe that it is nonsense. I am waiting for common sense to appear on the horizon, but it has not done so yet. I hope that, if we have to have net fiscal transfers in the future, they will be considerably smaller because there will not be a CAP. I also hope that they will be related to the relative prosperity of the member states, so that the poorer nations benefit and the richer ones contribute.

Michael Connarty: I respect my hon. Friend's logic, even though I do not support his conclusions on the European Union. He has a background as a trade union negotiator, and I cannot understand why he thinks we should tell the Government that they cannot have a negotiating position and that they must adopt the position that they are given. Surely they need to be able to negotiate what they are looking for-namely the cash equivalent-regardless of how it is balanced within the budget. They will be negotiating with 27 other countries, along with the Council and the Parliament. Is not my hon. Friend's instinct as a trade unionist to give the negotiators the flexibility to come out with a deal, rather than to given them strict instructions on what they must come out with at the end of the negotiations?

Kelvin Hopkins: I thank my hon. Friend for his intervention, but I believe that all negotiators need to have something in their back pocket-something to argue with. If the Government go into the negotiations saying, "My members will not tolerate an agreement unless it is satisfactory", that will give them some strength. I hope this House will provide that kind of support to negotiators. I would much prefer to be on the Government than the Opposition side, but I hope that the Government will stand up and do the right thing.

Finally, the Minister spoke about standing up for British interests, but that sort of nationalistic approach does not go far enough. What we need is an arrangement that will secure the support of other member states. We have to persuade them that we need a more rational and sensible approach to the budget that is also fair to all concerned-and, indeed, considerably smaller in view of the need to abolish the CAP. If we can get others on our side, we might start to make progress, but if we argue simply in nationalistic terms, I do not think we will.

That said, Britain has a strong negotiating position. If we were in a position to push hard, we would know that the EU needs our membership more than we need to be a member of it. We have a massive trade deficit with the rest of the EU, which gives us a strong negotiating position. If we were challenged by other strong states, they would know that their economies would suffer if we were no longer part of the EU. If we had trade barriers between member states, they would suffer much more than we would. The point has been made many times.

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I have some figures with me. Our trade deficit with the rest of the EU in July-the last month for which figures are available-was £3.9 billion. That is for one month, so we need to multiply that by 12 to get an idea of the annual figure. That amount was an increase on the £3.2 billion of the previous month. The EU needs Britain, so let us try to make an EU that is looser, more democratic and leaves greater powers to member states. Let us have an EU that has not a nonsensical budget, but one that is fair and beneficial to all concerned.

6.52 pm

Mr Douglas Carswell (Clacton) (Con): I am grateful to my hon. Friend the Member for Stone (Mr Cash), who has done as much as any Member to encourage this House over many years to consider its duties in a wider European context. He is the best kind of Committee Chairman-one who never forgets that the role of his Committee is to hold the Executive to account, regardless of which party is in government. I thank him.

All hon. Members face spending cuts in their constituencies-cuts that none of us wanted and cuts made all the more painful by the economic downturn. With the exceptions of health care and overseas aid, every Government Department is looking for budget reductions of between 25% and 40%. At the same time, however, our net contributions to the EU are rising by 60% over the next two years-from £6.4 billion this year to £8.3 billion in 2011-12 and to £10.3 billion in 2015.

Our gross contributions, of course, are higher still. Currently £13.3 billion, they are scheduled to rise to £19 billion. Although it is true that some of that money is spent in the United Kingdom, it is by no means always spent on projects that we ourselves would have chosen to spend it on. In any case, normal practice in politics is to measure what people actually pay rather than to deduct the notional cost of services they receive in return. Would any Member argue that the basic rate of income tax is not 20p in the pound but zero, on the grounds that the entire sum is given back in the form of roads, schools, hospitals and so forth?

The sum of £19 billion is, of course, colossal-enough to give the entire country a 50% rebate on council tax in perpetuity or to pay off our Olympic debt in a single year. The scope of amendment (b), however, is not nearly so ambitious. It would not strike out the entire EU budget-it is not about that-and it would not even strike out the increase in the year-on-year EU budget. All this modest proposal is designed to do is to reject the additional sum that the European Commission demanded over and above the increases already built into the 2011 budget.

At a time when every one of the 27 member state Governments are struggling to find savings, the EU must show some willingness if not to reduce its budget, at the very least to be satisfied by the increases we have already given it. Why has the EU come back on 15 September and asked for more resources? The Commission has been admirably frank that the additional funds are earmarked for three institutions: the European External Action Service, Europol, and the three supervisory agencies that will regulate financial services. I remind Members that the European External Action Service is the EU's diplomatic corps. It already has about 20 times the budget of our Foreign and Commonwealth Office.
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Europol is the EU's police agency, and the three new supervisory agencies have been widely denounced as likely to drive revenue away from the City of London to non-EU financial centres.

In other words, we are being asked for this extra money to fund three projects that are not in the interests of this country to start with. How much is the bill? To be precise, the EU has awarded itself a €3.6 billion budget increase this year, and Britain's share of that increase-not its share of the budget-is £380 million. The bail-outs and the financial stimuli around the world have, of course, recalibrated our sense of monetary value, but even by today's standards we are talking about significant sums. Given this morning's headlines about the pressure on public sector jobs, it might be helpful to calculate how that £380 million could be translated into Government spending. It would pay for 6,022 NHS doctors, 12,666 NHS nurses, 14,600 police constables, or 22,332 Army privates.

The purpose of the legislature is to control the Executive. In the last analysis, that is why we are all here. The additional work that we do in scrutinising laws, taking up cases for our constituents and participating in debates is valuable, but essentially supplementary. When we strip it down, we see that Parliament exists to ensure that the Government do not spend our money wrong-headedly. That has been the elementary function of our predecessors since the Tudors, if not the Plantagenets.

Mrs Main: I will support the amendment, because I could not look the people of St Albans in the eye if I asked them to make economies and explain why cuts are necessary, and then voted for a measure that would mean the EU's sucking out more and more of our money. I do not think other Members could explain that to their constituents either.

Mr Carswell: I am grateful to my hon. Friend, and to the other 32 hon. Members-many of whom are present-who supported the amendment. The £380 million increase comes at a time when there will be costly cuts in my hon. Friend's constituency and in others-cuts that none of us wants to see-and when it is surely wrong to reduce spending on public services in order to increase the money that we give to EU institutions.

Mr Dodds: The hon. Gentleman said that some of the increase would fund the External Action Service. Does he recall that when the service was debated in the House, it was promised that it would be budget-neutral? That was bad enough-there should have been a decrease-but can the hon. Gentleman explain why we are now being asked to finance an increase in its funding?

Mr Carswell: I cannot. I wish that I could, and I should have liked to hear an answer from the Minister. I am perplexed and puzzled about why we are now being asked for an additional increase in funding for a measure that we were told was budget-neutral.

The issue before us is indeed one of supply. It is a question of whether we think that our constituents' money is being well and wisely spent. Do Members believe that, in our current financial circumstances, we should find more resources to pay for, among other things, high commissioners' entertainment allowances and additional staff for Members of the European
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Parliament? Is that really the best possible use for this money? Is it better to spend it on that than on the 13,000 nurses whose jobs we might otherwise save, or on 22,000 servicemen? I do not think it necessary to be either Eurosceptic or fiscally conservative to believe that there are better ways to allocate our finite resources. When all the Governments in Europe are cutting their budgets, it cannot be right for the EU bureaucracy to be expanding.

If we do not think that this is the best use we can make of our constituents' tax contributions, our duty is clear: we should support the amendment and reject the increase. Our predecessors fought a long and bloody civil war to establish that only this House might raise revenue for central Government through taxation. We are the inheritors of a sublime tradition, but also of a heavy duty. It is not for any outside agency, either our own Ministers or overseas Commissioners, to tell us how to dispose of this nation's resources. We shall make that decision guided by our consciences, and in the interests of those for whom we speak.

I respectfully seek to press the amendment to a vote. Others have signed it, and I hope that they will speak in its support tonight.

7 pm

Mr Denis MacShane (Rotherham) (Lab): I rise to cast a protective arm over the Economic Secretary as she confronts the massed ranks of well-argued opposition from those on the Benches behind her. The hon. Member for Stone (Mr Cash) gave a masterclass on why the amendment of the hon. Member for Clacton (Mr Carswell) should not be pressed to a Division, but we will see what happens.

This debate is part of a long process of changing our relationship with our partners in Europe, and I do not know where it may end. The hon. Member for Clacton emotionally talked about the nursing jobs that could be saved and the extra soldiers who would not need to be relieved of their duties, but the problem here is not the fault of the European Union. Rather, it is a consequence of a set of decisions that the Conservative and Liberal Democrat coalition has taken. It is seeking to reduce the deficit over four years, much as if I could abolish my mortgage deficit over that period. I wish I could do that-by starving my children, perhaps, or cutting back on other spending. That is the Government's decision. It is nothing to do with Europe itself. At the end of the day it must never be forgotten that the EU budget represents just 1% of Europe's gross national product.

Mr Redwood rose -

Mr MacShane: That proportion is less than when the right hon. Gentleman was a member of the previous Conservative Government.

Mr Redwood: Given that the EU is urging all member states to cut their budgets in order to cut their deficits, why does it not show the way by giving a lead in cutting its own?

Mr MacShane: I have absolutely no objection to that point. The right hon. Gentleman is right. If he wants to advance that argument, however, he does not have to persuade me, and the hon. Member for Clacton does
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not have to persuade the fellow signatories to his amendment. We have to link up with others, in the right hon. Gentleman's case with fellow conservatives and centre-right politicians across the rest of Europe.

The hon. Member for Stone brushed aside my earlier intervention, but the plain fact is that a fortnight tomorrow the leaders of Europe-the vast majority of European Governments including those of Mr Reinfeldt, who has just been confirmed in Sweden, and the new conservative-liberal coalition being formed in the Netherlands- [Interruption.] I am so sorry for the disturbance caused by my mobile phone ringing. I shall make a donation to any charity you wish, Madam Deputy Speaker. Those leaders in Europe will sit down to dinner and discuss precisely the points raised here tonight, but there will be a Banquo at that feast: the British Prime Minister.

I am not going to tell the Prime Minister what to do. He did not quite win the election, but he has settled in well as Prime Minister. He has to decide whether his collegial dining comrades at European feasts where decisions are taken should include rather interesting gentlemen from Latvia, Poland and elsewhere. I can quote the Deputy Prime Minister's description if it helps, but I think most Members have it in their mind.

The other point that we have to consider is that 20 years ago the EU was largely financed by what is called own resources, such as VAT and duty. I know tax is anonymous but some taxes are less in the payer's face than others. There has been a massive change in the past 20 years in that the EU budget now comes from direct Government contributions. Therefore these arguments are now deeply sensitive in all nations. People in the poorer-perhaps the east European-countries ask why they are signing a big cheque for the British rebate. I am prepared to defend it, but we would be in a much stronger position if more Members were networking across the continent, making the points they are making today and finding allies and friends of weight and seriousness. Frankly, the Conservatives are not doing that at present. I try to make that point more in terms of political science; at this time in the evening, there is no point in seeking controversy.

This is the first of a serious set of debates, and the Government will have to decide. My estimate is that the Economic Secretary to the Treasury, is speaking just as if there had been no change of Government. The European policy of the coalition is no whit different from that of the previous Government in its broad approach to European issues. That may change, but the Conservative party will have to decide whether it wants to confront the deep national interests of this country that have never opted for protectionism or isolationism, no matter how seductively those positions have been put-they have certainly been put that way tonight.

7.5 pm

Mr James Clappison (Hertsmere) (Con): I congratulate the Economic Secretary to the Treasury on an excellent and most competent speech. I listened to her and to the right hon. Member for Rotherham (Mr MacShane), so may I say to him that the last thing she needs is his protective arm around her? He could do worse than to put his arm around himself, because the end of his speech contradicted its beginning. At the end he told us
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that now, more than ever, our contribution to the European Union budget comes from general Government expenditure. Therefore, if our contribution increases, we have to increase taxation, cut expenditure or run up a bigger deficit, at a time when we are trying to reduce the one we have. He would do well to reflect on that.

I noted that in all the advice the right hon. Gentleman and the Opposition Front-Bench spokesperson, the hon. Member for Bristol East (Kerry McCarthy), gave us, neither of them told us-we will be watching this-how they would advise MEPs to vote when this matter comes before the European Parliament once again, under its procedures. Will MEPs vote in favour of the Council to keep the budget down or are they going to vote in favour of the Commission and for more spending on the European Union? The hon. Member for Bristol East may not want to answer the question tonight, but her MEPs will have to vote or abstain in the European Parliament. They will be watched as to how they vote and we will remind them of the effects that this measure would have in this country.

I was a member of the European Scrutiny Committee and I wholeheartedly supported recommending this document for debate, because it is precisely the sort of thing that this House ought to debate. Something caught my eye in the figures that the Economic Secretary put before the House: the European Commission was seeking in its budget this year an increase of 5.8% or £7 billion in payment appropriations-at this of all times. That comes after increases in the past three years of 3.9%, 1.6% and 2.3%. That raised a question in my mind: how on earth at a time like this, when this country and other member states are facing such stringency in their public expenditure and are seeking to reduce their deficits, could the European Commission have the instinct to seek an increase in its spending? A cynical mind might say that the European Commission made proposals to increase spending on such a scale thinking that they might be trimmed back and that it was aiming for what it would get when those were trimmed back.

Be that as it may, the Economic Secretary is doing exactly the right thing, exercising her powers and this country's influence to the utmost. I would like those powers to be greater, but they are what they are and they are being used to restrain the European budget, to seek alliances with other member states and to seek to bring about the reductions that she has talked about. It is in this country's interest that she should do that, and I am sure that all hon. Members on the Government Benches wish her good luck in her endeavours.

Reference has been made to the rebate, so I do not propose to dwell on that. However, because this country's rebate has been abated in part-in 2005, somewhat inexplicably, when this country had a veto and could have prevented any such abatement-we must have to bear a higher proportion of any increase in European expenditure than would otherwise have been the case. As has been rightly said, that means that our net contribution to the European budget is set to rise progressively from £3 billion in 2008-09 up to £9.5 billion in 2014. That is a substantial increase, which is inexplicable. Historians will have an interesting time examining the motivations of those who took part in the relevant discussions in 2005, when the case for this country was put by the previous Prime Minister but one.

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The thing that strikes me more than anything else as I peruse this document and the various budget headings is how little attempt seems to have been made to economise on the part of the European Union-and not only that, but how little attempt has been made to cut back on planned expenditure. It seems that the European Union is ploughing on as though nothing had changed in the world.

Talking of planned expenditure, one of the worst examples, I am afraid to say, is the European External Action Service. We were promised originally-I remember taking part in the debate with the right hon. Member for Belfast North (Mr Dodds)-that it would be budget-neutral and the rumour was that nobody in the European institutions believed that. Surprise, surprise, after we were told that it would be budget-neutral and given a solemn assurance to that effect by the European Commissioner, the European Commission started coming back for more increases in expenditure. So far, in the brief time that has elapsed since it started to put that organisation into place, it has already breached the principle of budget neutrality twice, with increasing amounts being sought-the most recent was an increase of £35 billion for an extra 190 posts.

Mark Reckless (Rochester and Strood) (Con): Does my hon. Friend agree that in the current financial circumstances we should be talking not about budget increases or even budget neutrality but about reductions in the EU budget, as proposed in the excellent amendment (b)?

Mr Clappison: If there were a search for economies in the European budget, one of the best places to start would be the External Action Service. I have a suspicion that although some of its activities might be worth while, the prime motivating force behind the establishment of what is in effect a diplomatic service is the promotion of the European Union itself rather than the interests of member states or their citizens. I suspect that there might be scope for economies.

Let us be clear that what is being sought is planned increases in the External Action Service. Let us spell out the facts of what it will cost so far as it stands-as the Economic Secretary made clear. So far, the cost of the External Action Service, which is on the record under the so-called budget neutrality, is €400 billion. The diplomatic service has 3,700 employees and posts in about 130 nations in the world, many of which already have British diplomatic representation. Spending of that magnitude compares, I am afraid, with the search for economies that is being made in our Foreign Office, where savings of much smaller amounts of money are sought all the time in the face of the demands that have been made to try to economise. It would be sad to see the Union flag taken down in some countries in the world while the European flag was run up. I would regret that, as I think our Foreign Office does a good job in the world and represents the interests of our country. Its prime consideration is to represent this country and our citizens' interests, rather than searching for exterior political objectives to do with the European Union.

This has been a very good debate. I commend the line that has been taken by the Economic Secretary. The facts are stark and anybody who reads these budget documents will be shocked that such increases are sought
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by the European Union at this of all times. It also prompts a question about the relationship between the European Union institutions, the Commission of the European Union, our constituents and the man on the street in every European state. What must be the attitude at a time when there is so much concern about the economy, when people are suffering and when cuts are being made if the European Union somehow feels that it is immune from those pressures and can go on increasing its expenditure?

Kelvin Hopkins: Let me reinforce that point. When referendums have been held in a number of countries, the people have voted against the European Union, in essence. That has happened in France and Holland, and in Sweden when they voted against having the euro. The hon. Gentleman is absolutely right.

Mr Clappison: I am grateful to the hon. Gentleman for that contribution. He has a very consistent record on this issue.

An increasing proportion of our laws, certainly as a result of the past 13 years, are being passed in the European Union, which searches constantly for new fields over which to exercise authority. It has made its way into home affairs and justice and it has huge ambitions regarding security and criminal justice. It also seeks to have an increasing influence over foreign affairs, with the establishment of a Foreign Minister and a diplomatic service. We know that it has all those great ambitions and we would do well to reflect, in the House, on what the increases in the budget say about the EU's attitude toward individual citizens and its accountability to them.

7.15 pm

Chris Heaton-Harris (Daventry) (Con): I thank my hon. Friend the Economic Secretary for her comments. I shall raise a couple of issues because I should like a tiny bit of clarification on a couple of matters.

I welcome the shadow Minister to her role. Obviously, I am very new here, but what she probably does not know is that, alas, I have had to follow the European budget for 10 years as a Member of the European Parliament. In that time, I followed the abject failure of Labour Ministers who came to Brussels, gave away money and powers and did not care for this country. They did not bother to raise any questions when we were looking at the accounts and whether or not they were signed off. The hon. Lady might have forgotten the failure of a former Prime Minister who went and tried, when he was Chancellor, to get back money from structural funds but failed and then went quiet on the issue. I very much doubt that the hon. Lady has yet, in her new job, read the European budget line by line and page by page. Alas, I did that nine times out of 10: the 10th time, I found a fantastic new doorstop.

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