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Mr Edward Leigh (Gainsborough) (Con): I am sure that the Financial Secretary heard the Prime Minister’s excellent words today calling for a cut in the budget, so will he resist the blandishments of a very polite gentleman

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who appears to be impersonating the Conservative Chief Whip, and join those patriotic Conservative Members who will be voting for a cut in the budget?

Greg Clark: I have great respect for my hon. Friend, with whom I served on the Public Accounts Committee, and I shall explain why the Prime Minister will indeed be arguing for a cut, and why we have our mandate.

Several hon. Members rose

Greg Clark: Let me make a bit of progress and then I shall, of course, give way to hon. Members on both sides of the House.

Our opposition to the demands of the Commission is more than a matter of headline figures alone. When we dig down into the detail, there is always something repellent to find. For example, let us consider the EU administration costs. Members may not be aware that the pay of employees within the EU bureaucracy increases automatically each year. There is, however, a sensible provision to set this aside at times of economic crisis yet, unbelievably, the EU Commission is taking the EU Council to court to insist that the EU is not experiencing a time of economic crisis and that pay should rise. This is the same Commission that has attended four ordinary and three emergency European Councils during the past 12 months to agree unprecedented measures to bail out member states which have been unable to fund themselves without help. So while some member states face a crisis of solvency, the institutions of the EU face a crisis of credibility.

Chris Bryant (Rhondda) (Lab): I welcome the right hon. Gentleman to his post. I have known him for a long time and he has always been a very good pro-European. One of the elements that determines how much Britain pays towards the EU is VAT. If we increase VAT in this country, it means that we pay more money to the EU. Can he tell us precisely how much more we are paying by virtue of the increase of VAT to 20%?

Greg Clark: The hon. Gentleman may have known me for a long time but he has a faulty memory. It was his Government—he served, I think, as Europe Minister in that Government—who gave away half of our rebate, which caused the increase that we have seen.

Though they are ready to lecture others on fiscal discipline, it is fiscal incontinence that characterises the approach of the European institutions. Administrative costs need to be hammered down to bring them into line with the modern world, yet the response of the Commission’s spokesman has been little short of insolent. The British Government asked the Commission to model cuts of €5 billion, €10 billion and €15 billion to its staffing budget, and the Commission refused. Its spokesman said:

“We declined as it’s a lot of work and a waste of time for our staff who are busy with more urgent matters…we are better educated than national civil servants. We’re high fliers, not burger flippers”.

As the Prime Minister has pointed out, one in every six of the Commission’s employees earns over €100,000 a year. The ordinary working people of this country have run out of patience with the attitude displayed by

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the Commission. The British public are ready to make sacrifices to put Britain back on its feet, but not to featherbed a self-styled elite and its agenda. We are not rolling back wasteful public spending in this country only to see it re-imposed from Brussels.

Charlie Elphicke (Dover) (Con): My right hon. Friend is far too generous to the Labour party on the matter of the rebate. The House will recall that for every one of the 13 years of Labour government, there were above-inflation increases in the European Union.

Greg Clark: My hon. Friend is totally right. The last time the country had the misfortune to be in the hands of a Labour Government, including the shadow Foreign Secretary, who was Europe Minister at the time, far from agreeing even a real-terms freeze or a cut, they increased the budget over seven years by 8%. That is the record of the Opposition.

It is not just the overall total. Once more we see the usual suspects circling round Britain’s budget rebate. That rebate was secured for future generations by Margaret Thatcher at Fontainebleau—the rebate which Tony Blair and his Europe Minister, now the shadow Foreign Secretary, put on the table in 2005, in the negotiation of the current multiannual financial framework. Of course, when I say negotiation, what I mean is unconditional surrender, giving away in perpetuity a large part of the rebate in return for nothing. If seven days is a long time in politics, seven years is even longer. The amendment to the motion would delete all mention of this betrayal. The act would be forgotten, but the consequences have not gone away.

Andrew Percy (Brigg and Goole) (Con): The position of the Opposition is truly incredible, given their record in government. However, the problem that the good people of Brigg and Goole have with the multiannual financial framework is that all we can do is hope for a freeze as potentially the best outcome. Does that not show just how much the European Union has managed to take away the sovereignty of this country?

Greg Clark: Every budget negotiation under the seven-year framework has resulted in an increase. That must now stop. The next seven years must see an end to the perpetual ratcheting up of EU spending. The Prime Minister will be looking to achieve precisely that. As far as the Government are concerned, what remains of the rebate, after the predations of the Labour party, is absolutely non-negotiable. That means that even talking about it is a waste of time. Without it, our net contribution would be by far the largest in the EU, twice as big as that of France and more than one and a half times that of Italy or Germany as a percentage of gross national income.

Kelvin Hopkins (Luton North) (Lab): Earlier in his speech the Minister said that the Government are opposing a real-terms increase. The figure involved would be significantly different from a money-terms increase. Would the Government not do better by asking for a freeze in money terms, not real terms?

Greg Clark: Our position is very clear: we want to see a cut in the EU budget. That is what all of us on the Government side of the House want. I will come on to explain the negotiating mandate that the Prime Minister has agreed with European leaders.

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Mr John Redwood (Wokingham) (Con): I welcome strongly the Government’s wish to have a new relationship with the EU, which is so appropriate now that it is going to integrate for the euro, so why is this not the time to negotiate different arrangements on how much we contribute and how many spending programmes we are part of, as the framework covers such a long period of time?

Greg Clark: That is exactly what we are doing in this multiannual financial framework, and the opportunity we have to veto a settlement that we are not in favour of gives us leverage in that.

Chris Leslie (Nottingham East) (Lab/Co-op): The amendment to the motion

“calls on the Government to strengthen its stance so that the next MFF is reduced in real terms.”

Does the Financial Secretary disagree with the amendment?

Greg Clark: The hon. Gentleman, characteristically, is playing games with the issue. Of course we want to see a reduction. His position is wholly incredible, because this week he has been calling for a cut in the EU budget, which we all want to see, but when asked whether he is prepared to veto the budget, as we have said clearly we are prepared to do, he refuses. How can he take that position if he does not will the means to enforce it?

Chris Leslie rose

Greg Clark: I will not give way, because I want to make progress.

We have touched on a number of themes in the debate already—shamelessness, wastefulness, hypocrisy and betrayal—which leads us neatly to the position of the Labour party. Those sitting on the Opposition Front Bench are the same men who gave away so much of our rebate and who would surely surrender the rest on demand to curry favour with Europe. It is the party that, the last time it was in power and had the opportunity to negotiate an MFF, agreed not to a cut or a freeze, but to an 8% real-terms increase. It is a party whose socialist comrades in the European Parliament declared that the Commission’s proposed 10% increase was

“not sufficient to finance all the EU’s objectives”.

It is a party that nearly bankrupted our country but now claims conversion to the rigours of fiscal rectitude. It is a party whose last act in office was to sign Britain up to the EU stabilisation mechanism when it did not ever have a mandate to govern. It is a party that is so caught up in its cynical political games that it calls for a cut in the budget but at the same time says we should not deploy our veto to secure Britain’s interests. It is not a party that deserves to be taken seriously, as its opportunistic posturing this week shows.

Wayne David (Caerphilly) (Lab): The previous Labour Government argued for the repatriation of regional policy to save money. Do this Government stand by that?

Greg Clark: One of the issues that I hope unites Members of this House is a reflection that the structural funds need to be cut. They are one aspect of the budget that is recycling money from one set of taxpayers to another, often the same taxpayers. If there is no reason for it, it should be cut, and that is part of our negotiations.

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Mark Pritchard (The Wrekin) (Con): Although it might be popular on the Government Benches, I think that the country is getting sick and tired of Eurosceptic words from Ministers but very little action on the ground. Is it not the case that, irrespective of whether or not the Government are successful in negotiating a freeze, in cash terms more money will be given to the European Union? If I am incorrect, will the Financial Secretary please correct me on the record?

Greg Clark: The shape of the budget needs to be negotiated—it has not been settled yet—but it is true to say that as a result of the giveaway of the rebate that the previous Government introduced we lose out from spending that goes to the new member states that previously would have been abated.

Let me address the three main differences between the motion and the amendment. First, the amendment would remove the condemnation of the previous Government for giving away part of our rebate. Despite the talk of fiscal responsibility, the aim is to conceal the loss to this country of £10 billion. That amount, coincidentally, is nearly equal to the whole of Britain’s share in the budget increase proposed by the Commission—an increase to which we are opposed. It is simply not credible to vote for restraint and then to remove from criticism the most wasteful surrender of the British taxpayer’s interest that any Prime Minister has made in Brussels.

The second effect of the amendment would be to delete references to new EU taxes. Yet the tax sovereignty of this country is, or should be, non-negotiable. In particular, this removal would send a signal that this House supports the introduction of a new financial transaction tax which could badly undermine Britain’s economy. By the Commission’s own analysis, the tax would lead to a fall in European GDP of up to 3.5% and nearly half a million job losses.

Thirdly and finally, there is the call simply to cut the EU budget and not, as the Government’s motion has it, to cut or, at the very least, to have a real-terms freeze. Let me address this aspect precisely, as it comes to the crux of the matter. I should like to say this not only to Labour Front Benchers but to all those Members present who are genuinely outraged by the budget proposal. Like them, I believe, very simply, that the EU should cut now, and keep on cutting. The Opposition call on the Government to persuade others and to build alliances with those who share our concerns. On the issue of budgetary restraint, that has been exactly our approach. In 2010, the Prime Minister achieved a historic breakthrough when he agreed with the leaders of Germany, France, Finland and the Netherlands that

“payment appropriations should increase at most, by no more that inflation over the next financial perspective.”

If this position were to be agreed to, then it would be the first time in the history of the EU that the seven-year budget has done anything other than accelerate. No one is pretending that this would represent all the long-term reform required—not a bit of it—but it would be a turning point. Having reached such an agreement, which has been scrutinised in this House in the two years since it was published, it is surely right for the Prime Minister to keep to his commitment rather than have to give backword at the last moment.

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This Prime Minister has been clear, as neither of his two predecessors were, that the remorseless rise in spending in the EU has to stop, and it will stop. If there is no cut, or no real freeze, there is no deal: the framework will be vetoed. The Prime Minister has a formidable task in persuading other countries of this—many of them were looking forward to a seven-year pay-out—but he has made a strong start, and he deserves the support of this House as he goes in to bat for Britain.

Mr Speaker: Before I call the Opposition spokesman, I remind the House that there will be an eight-minute limit on Back-Bench contributions.

4.28 pm

Chris Leslie (Nottingham East) (Lab/Co-op): That was a rather partisan speech from the Minister—[Interruption.] Well, it is the truth—it was rather partisan. May I first place on the record my appreciation to the Leader of the House, who is not in his place, and to the new Chief Whip, for scheduling this debate? Without the Government helpfully timetabling the motion on the report from the European Scrutiny Committee, we would not have had the opportunity to express the view of the House of Commons today.

Our economy has struggled in the past two years. We have stood still while our international competitors have accelerated away, and the flatlining economy has been bad for public finances, with borrowing higher so far this year than in the same six-month period last year. It is therefore clear that all demands on the public purse need to be considered with care, and our contribution to the EU budget can be no exception.

Mr MacShane: My hon. Friend might be a bit young to recall that in 1984 Britain’s contribution to the then European Community was £654 million. Six years later it had risen fourfold to £2.54 billion. Does he remember which Prime Minister sprayed British taxpayers’ money all over Europe, or are we all now post-Thatcherite, because the Conservative party certainly is?

Chris Leslie: The two Government parties have a lot of history to confront, but I do not want to be as partisan as the Financial Secretary, except to say that in a week when 1 million letters are being sent clawing back child benefit, when police budgets are being cut by 20%, when pensioners are having their tax allowances frozen, and when some of the poorest in society are being asked to pay more in tax—[Interruption.] It is a fact. Given all that, would it not be perverse if the European Union were exempt from those cuts?

When times are tough, not only in Britain, but in countries throughout Europe, it is all the more important that the negotiations on the next seven-year EU spending review—the multiannual financial framework—spurn the inflationary tendencies which simply repeat previous settlements plus a nominal price adjustment. Heads of Government need to champion reform, get a grip on the fundamentals of the EU budget and reverse that upward trend. There is a very simple test for the summit on 22 November: will member states just keep rolling forward the EU budget, plus inflation, or can they achieve a real-terms reduction?

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Alun Cairns (Vale of Glamorgan) (Con): I accept the difficulties with public finances and the sincerity with which the hon. Gentleman makes his comments, but does he regret the actions of the previous Labour Government, who gave up the rebate?

Chris Leslie: The rebate has not been given up; it is still there to be defended. This is a task for the Prime Minister and the Chancellor to achieve, and we will see how they do. The last time we discussed these issues was seven years ago and we are now discussing them at a critical moment ahead of the next seven-year period, so this is when they matter most of all.

Several hon. Members rose

Chris Leslie: I want to address the motion and the amendment, if I may. The Government’s motion, for all its rhetoric, has such meagre ambitions. [Interruption.] It is true. The motion implies that the House should be content with business as usual, but that just will not do. A real-terms reduction is possible, but it requires persuasive diplomacy, careful alliance building and, above all, leadership.

Nadhim Zahawi (Stratford-on-Avon) (Con): The hon. Gentleman mentions careful alliance building. As we have heard, two years ago the Prime Minister did exactly that, with Germany, France and the Netherlands backing him to deliver a no real-terms increase. If the Prime Minister has to exercise the veto at the November meeting, will the hon. Gentleman support it? On 29 October, the hon. Gentleman said the opposite by saying that he thought we could avoid a veto, so will he now back it?

Chris Leslie: I hope that we can do better for Britain.

Nadhim Zahawi: Yes or no?

Chris Leslie: If the hon. Gentleman calms down, I will explain. No one should be fooled into thinking that a veto is cost-free. The hon. Gentleman and all other hon. Members should know that the way in which European Union rules work means that last year’s budget will be cut and pasted and become the new budget for 2014, plus the inflationary increase. In other words, if the Prime Minister flounces off again, an extra £310 million will go from the Exchequer to the 2014 budget. That is a fact and we need a negotiation strategy that is going to work.

Greg Clark: Will the hon. Gentleman answer a simple question? Would he back the use of the veto—yes or no?

Chris Leslie: We have three weeks of negotiations. There is a summit on 22 November. [Interruption.] If the Minister has decided today to use the veto, why even bother going to the summit on 22 November? What is the point of the Prime Minister even travelling there? Will he still attend the summit? Surely the path to be pursued is the one that is the best for the taxpayer. I have explained what will happen if the Prime Minister walks away from the talks—it will cost the taxpayer more. Members can look at the Library research paper, which makes it clear for all to see that it will cost £310 million in 2014.

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Chris Bryant: Is not the truth of the matter that literally the only way in which we can ensure that we end up with a less than inflationary increase is by not announcing that we will use the veto and by ensuring that we negotiate all the way through to the end? It is a child who announces on the first day of negotiations that they are going to use the veto, because then the Commission gets its way.

Chris Leslie: My hon. Friend is entirely right, and that is why the Government do not get it. They need a negotiating strategy to get the best deal for the taxpayer. [Interruption.] The Minister laughs, and the Chancellor is next to him puppeting him along in his hilarity, but I say to the Chancellor that this is an incredibly serious issue. It is about taxpayers’ money, and incredibly large sums of it at that. [Interruption.]

Mr Speaker: Order. Mr Zahawi, I am sure that in your own way you mean well, but you are far too excitable. It is no good looking up and around, and at places outside the Chamber, and waving your hands in a bizarre manner. What you need to do is calm down. It will be good for you, good for the House and good for Stratford-on-Avon.

Chris Leslie: I am sure there is some Shakespearian reference about being calm in negotiations, and calm, persuasive diplomacy is the strategy that we need today.

Several hon. Members rose

Chris Leslie: I am sure that Members want to intervene to talk about that strategy.

Dan Byles (North Warwickshire) (Con): I understand the hon. Gentleman’s point, but I do not think any Government Members are saying that we should go into the negotiations saying that we will use the veto. [Interruption.] No, what the Minister said was that he was not ruling it out, and that he was prepared to use it. That is a very different thing. Would the shadow Minister be prepared to use it if necessary?

Chris Leslie: Of course it is a fact that a veto is part of the suite of what is available at the negotiations, but we should try to negotiate a better settlement first. My point is simple: if we go along with the proposals—[Interruption.] Will hon. Members bear with me for a moment? If we go along with the proposals of the Commission and the European Parliament, the Chancellor will be providing significant extra money. Hon. Members need to be aware of what the implications for the taxpayer will be if we walk away, which I am sure the Chancellor will confirm. I am happy to give way to him on the subject. If we walk away and there is no agreement, the budget will roll forward along with an inflationary element, costing the Exchequer an extra £300 million.

Mr Dennis Skinner (Bolsover) (Lab): Does my hon. Friend realise that this discussion is almost a replay of John Smith finding a way to oppose the Maastricht treaty? The result was rebellions lasting several years and a majority of about 190 for Labour. My hon. Friend’s measured response of joining those of us who have voted against most of the treaties is a wonderful idea, and the prospect could be him sitting on the Treasury Bench.

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Chris Leslie: I respect my hon. Friend’s view, but our goal today is to stand up for the taxpayer. That is not just the preserve of Opposition Members, because I know that some Government Members also want to rise above the partisan discussions and ensure that a decision is made that will mean the best thing for the taxpayer.

Several hon. Members rose

Chris Leslie: What an array of Members to choose from. I give way to the right hon. Member for Mid Sussex (Nicholas Soames).

Nicholas Soames (Mid Sussex) (Con): I am grateful. Would not the hon. Gentleman agree that the proposal that the Government have put forward in the face of extraordinary, irrational provocation from the Commission is extremely sensible and deserves the support of the whole House?

Chris Leslie: I respect the right hon. Gentleman’s position, but with the greatest respect, I do not think the Government’s proposal goes far enough. They need to set in train a negotiating stance for the UK that will lead to a real-terms reduction. For all the fine words that we heard from the Minister, if he believes that as well, he should quite simply accept the amendment.

Several hon. Members rose

Chris Leslie: I would like to make progress as we have a limited amount of time.

The next seven years of the EU budget should prioritise jobs, growth, infrastructure and practical programmes that rejuvenate fragile economies. Building up those elements, however, means reducing EU spending elsewhere. Savings can be made on the common agricultural policy, which currently costs European nations £45 billion with the UK contributing about £1 billion a year. The common agricultural policy is a distorting barrier to trade liberalisation, a wasteful programme that is in need of further reform, and it is astonishing that the Government motion does not refer to it.

Savings can be made on aspects of EU structural funds that represent 35% of the budget and are too often committed in a haphazard manner and depend on outdated commitments rather than future priorities. Unless structural funds contribute to positive economic development, they cannot be justified. Savings can also be made on subsidies for tobacco growers, which will be discontinued, on outdated practices such as relocating the European Parliament to Strasbourg for a week each month—that costs €200 million each year—on non-essential projects such as the House of European History museum, which cost a reported £137 million, and on export refunds, which cost millions and disfigure fair trade.

Savings can and must be made, and delivering a real-terms reduction in the EU budget requires a relentless focus on the justification behind detailed expenditure. That is why we need a more effective and independent EU auditor who is able to examine the impact of programmes on the EU economy. The auditor must also improve the accountability of spending on pro-growth activities, which will require the bringing together of disparate Commission priorities under the auspices of a single commissioner for growth, persistently and single-handedly concentrating on that overarching concern.

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How capable is our Prime Minister of delivering real reform in the EU budget? Can he come back with a deal that sees the contribution from the UK Exchequer reduced in real terms? Those are the tests he must now face. We know that his phantom veto last December placed the UK in the margins of influence, just when it mattered most, but today’s debate must be about more than the frailties of the Prime Minister. It boils down to how much we care about taxpayers’ money—money that is hard-earned and needs to be safeguarded.

For every 1% that the Government concede in additional spending on the multiannual financial framework, nearly £1 billion will transfer from UK taxpayers to the EU budget over the seven years of the spending review period. If negotiations fail because a member state walks away from the talks, we will simply see last year’s settlement rolled forward and supplemented by an automatic 2% inflation upgrade which, as I said, will cost our taxpayers at home an extra £310 million in 2014.

Andrea Leadsom (South Northamptonshire) (Con): Perhaps the hon. Gentleman has not realised that trying to negotiate in a calm way on a deal that was agreed two years ago by our Prime Minister is the most sensible way to proceed. If he looks into it, he will find that new member states also have a lot of skin in the game, and they will not want us to use our veto because they will also lose out. This is not just about Britain and Britain’s veto, but about dynamics across the whole EU membership. Using our stated policy over two years in a consistent and calm fashion gives us the best chance of achieving real reductions in cost for the British taxpayer.

Chris Leslie: I have a lot of respect for the hon. Lady and she made a calm and persuasive point. The difficulty is that the Prime Minister has not been calm in these negotiations; indeed, he has deployed the veto almost three weeks before negotiations have even started. It is important to have a consistent and calm strategy, and the window of opportunity must surely be to persuade nations across the EU that their taxpayers also want a spending reduction in real terms. If the Prime Minister ends up at the November summit writing a cheque for hundreds of millions of pounds more, he will surely send an unpalatable message to millions of hard-pressed taxpayers across the country.

Gavin Shuker (Luton South) (Lab/Co-op): Despite his youthful appearance, my hon. Friend has been in this House for many years longer I have. Perhaps he will explain to me why, although the Minister said that the stated ambition of his Government is to reduce the EU budget, Government Members who vote for that lose their positions.

Chris Leslie: The new Chief Whip will have his own strategy for twisting arms and using his powers of persuasion. The amendment is straightforward and similar to the position the Opposition took in July—[Interruption.] I hear what the junior Whip, the hon. Member for Chelsea and Fulham (Greg Hands), says about our position. It would be perverse for Government Members to walk through the Lobby to vote against the position the Minister proclaims he holds—but strange things happen in the House.

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Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Will the shadow Minister confirm that, if the aims of the amendment are implemented, there will be a reduction in payments for Welsh farmers, and a reduction in convergence funding for some of the poorest communities in the EU, such as the one I represent?

Chris Leslie: No, that is not necessarily the case. I do not know what the hon. Gentleman has heard from Government Members or whether they have been trying to persuade him not to vote for the amendment, but my point, which other hon. Members will no doubt make during the debate, is that there is plenty of scope for savings within the EU budget. We need to prioritise jobs, growth and support for economies, but there are plenty of other ways in which we could make savings.

Several hon. Members rose

Chris Leslie: I want to make progress, if I may, because a lot of hon. Members want to speak.

I saw in The Guardian today that the Deputy Prime Minister has made a comment on Labour’s position. Liberal Democrats—there are none on the Treasury Bench, but some are in the Chamber—believe that Labour Members are dishonest and hypocritical simply because we want a real-terms reduction in the EU budget. Let us put to one side the fact that the Deputy Prime Minister, of all people, ought to avoid throwing those epithets. We have been clear on our position for a long period: because of the stagnating economy and the pressures on public finances, a real-terms rise in the EU budget is wrong. We have been saying that for months. The Deputy Prime Minister should figure out his own position before criticising those of us who want to stand up for the taxpayer.

I urge hon. Members to look at the amendment we tabled in the debate on 12 January, which states that the

“UK’s ability to negotiate a satisfactory European Union budget deal has been weakened by the Prime Minister’s failure to secure allies for a more prudent settlement in this qualified majority decision; and so calls on the Government to strengthen its stance so that the 2013 Budget and the forthcoming Multi-Annual Financial Framework are reduced in real terms”.

If the Government had paid attention back then, they might not be in such a weak position today.

George Eustice (Camborne and Redruth) (Con): I understand the hon. Gentleman’s point on the importance of building alliances. Will he update the House on how many leaders of Labour’s EU sister parties he has spoken to in the three days since Labour announced this new policy? Do any of those socialist leaders support his position?

Chris Leslie: If the Minister wants to resign his seat in the negotiations, we would be more than happy to take over—we would be a great deal more successful. We are the Opposition and are not in a position to negotiate, but we are quite ready to take that role to get a better deal for the taxpayer. I only hope Ministers do so.

Several hon. Members rose

Chris Leslie: I will not give way for a moment.

Some people seem to think that querying the size of the EU budget is anti-European, but it is not. For those of us who believe strongly in the benefits of coming together as a community of nations and working jointly

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in the EU, it is our duty to prove that pooled budgets can be spent wisely and effectively, and retain the confidence of taxpayers everywhere. Good relationships with other EU states require a level of diplomatic acumen to persuade our partners that there is an alternative way forward.

The Conservative party in opposition believed in a real-terms cut. We have heard what the Minister has said and the Prime Minister was quoted at Question Time. However, we now hear that sources in No. 10 are backtracking and implying that the proposals are impossible to deliver. It is all very difficult, but what has changed? Frankly, the Prime Minister needs to have his hand strengthened in the negotiations, and it is our duty as a Parliament to fortify him at this critical stage and help him on his way.

The amendment makes it crystal clear that a real-terms reduction should be the goal. It is a position identical to that laid out in our amendment when we last debated this question in the middle of July, and it is a position that we still support today. It is time for the House of Commons to speak with one voice on behalf of the whole nation and say to the Prime Minister, “This is what we expect of you. This is your task. Let’s do the right thing for the taxpayer and have a real-terms reduction in the EU budget.” We support the amendment.

Several hon. Members rose

Mr Speaker: Order. Just before I call the hon. Member for Rochester and Strood (Mark Reckless), it might help the House if I explain that, in accordance with normal practice in these situations, he will have an opportunity formally to move his amendment at the conclusion of the debate. His opportunity now is simply to speak in it.

4.50 pm

Mark Reckless (Rochester and Strood) (Con): We simply cannot afford to agree an inflationary increase to the EU. This country has 13% less income than it had just five years ago, and we are seeing 20% reductions to domestic spending. According to the House of Commons Library, if an inflationary increase is agreed, next year it will amount to £290 million, every penny of which we will have to borrow. Hon. Members will have spoken to constituents on different issues, and police officers have been to my surgery. They understand that their pay is frozen, although they are less happy about changes to their pay and conditions and about not getting their increments, but they do not understand why other elements of the budget, particularly the EU, should be guaranteed inflationary increases, let alone inflationary increases all the way through to 2020.

David T. C. Davies (Monmouth) (Con): I have the utmost respect for my hon. Friend. Does he have the utmost respect for Opposition Members who voted time and time again to give away our powers and our money to the EU but now propose to wrap themselves in the Eurosceptic flag and walk through the Lobby with him this afternoon?

Mark Reckless: No, I do not. Sometimes people do the right thing for the wrong reasons, but if even the Labour party is now arguing for a real-terms cut in the EU budget, I hope that Conservatives will do likewise.

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As well as my police officers, my local council, Medway council, of which I was a member, passed a motion asking Members of Parliament representing that area to vote for a cut in the EU budget. It wrote:

“The Council notes, with indignation, that whilst Medway is facing a massive…reduction in its financial settlement…the UK’s contribution to the European Union is”

getting a massive rise. It continued:

“This Council believes the EU should be treated the same as the other tiers of government and in these austere times should share responsibility…for public spending reductions.”

It argues that that would allow it to protect local services. I could not agree more.

Dr Sarah Wollaston (Totnes) (Con): I am proud to represent a part of Torbay. How will I turn to residents in Brixham in my constituency, who suffered an 11% cut in formula grant last year and are suffering a 6.7% cut this year, and justify our taking the savings that they are making and handing them over to Europe?

Mark Reckless: Many hon. Members will be asking themselves the same question.

We heard from the Financial Secretary what these EU officials are paid. The Prime Minister went to Brussels a week or two ago and said that one in six EU officials earned more than €100,000. He might have understated his case, because we need to compare like with like. Not only do they earn more than €100,000 but they pay a special, incredibly low tax rate that applies only to people who work for the EU. They get an enormous expatriate allowance that shoves on another €15,000 to €20,000. They get a huge housing allowance. And, while a group of people in this country are about to lose child benefit of about £85 a month, EU officials get paid, tax free, another €300 per month per child. They contribute virtually nothing to their pension contributions. Under the arrangement we have in this country, any time a public official earns more than the Prime Minister—£142,500—that has to be signed off by the Chief Secretary to the Treasury. If we had to sign off every time an EU official was, in effect, getting the same take-home pay there as the Prime Minister’s salary here, that would apply to more than 5,000 European Union officials, or more than one in six. The Chief Secretary would be doing nothing but signing off those requests.

Today we have an opportunity to debate and vote on the multiannual financial framework—the long-term budget. This comes round once every seven years. It requires unanimity among member states and primary legislation in this House to implement it.

Chi Onwurah (Newcastle upon Tyne Central) (Lab): Does the hon. Gentleman agree that, despite the agitation among Government Members, the real issue is not the objective—there is a general consensus on the need for cuts to the budget—but the weakness of the Prime Minister in being unable to negotiate and having to threaten a veto?

Mark Reckless: No, and that is not a sensible point at all, because we have a one-off opportunity. It is this House that ultimately votes, so if any Government Members feel uncomfortable—not because of who I will be following through the Lobby, but because of who may be following me, in support of my Conservative

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amendment—I say to them: if we send the Prime Minister to Brussels telling him that it is acceptable to agree an inflationary increase, he may come back to this House having agreed that inflationary increase. We will then have to vote on primary legislation, in Committee and on Report, for that inflationary increase for the EU budget, all the way to 2020. If Members do not want that, they should vote today for my amendment.

The other strong argument for the amendment is this. Some people say, “We’re not going to get a real-terms cut,” but we will certainly not get one if we do not even try. If we use the veto, that is not a bad place to be; in many ways, it is better than where we would be with an agreed inflationary increase. There are two strong reasons for that. First, either we operate within a multiannual financial framework under the old, frozen ceilings carried forward, or we agree new ceilings going up by inflation, allowing higher budgets in future. Each of those budgets is always negotiated under qualified majority voting annually; the question is, where we have unanimity and where we need legislation, do we allow inflationary higher limits to 2020 or not?

Mr Brooks Newmark (Braintree) (Con): Will my hon. Friend give way?

Mark Reckless: If my hon. Friend does not mind, I shall continue, as others may like to come in

The second point is that if there is no agreement on a new MFF, the process of money being transferred from the budget towards the new member states will not continue. What happened, in that disgraceful decision in 2005 when Labour gave away the rebate, is that a process was put in place whereby the new member states do not pay towards our rebate in the way that the old member states do. If the Prime Minister vetoes an MFF package, that process of money shifting to new member states will be suspended; therefore, the process by which the rebate is given away will, at least for that period, be stopped, which is a significant gain for Britain. If there is an inflationary increase, as the Government propose, we will be looking at a net contribution going from £9.2 billion last year to £13.6 billion at the end of the process. We simply cannot afford that.

The European Commission put out its own press release, which asked the question: “What will happen if a new MFF is not agreed?” The press release states that failure to agree a new MFF

“would considerably complicate the adoption of new programmes. And in the absence of new legal bases, including their indicative financial envelopes, no commitments could be made…those multiannual spending programmes…the 2014 budget would probably only cover the agricultural payments and the payments on outstanding commitments,”

and that organisations

“benefiting from EU-funds…would face severe drawbacks.”

If hon. Members are prepared to vote through primary legislation—later, when we get that chance—and if they are happy with an inflationary increase in the EU budget, plus everything else that will happen because of the continued loss of the rebate if that is agreed, they should vote for the Government motion. If hon. Members think that the European Union has too much money and that its budget is too large and needs to be cut, they should support my amendment.

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4.59 pm

Chris Bryant (Rhondda) (Lab): This debate comes at a very particular time in the economic situation in Europe. The debate on this multiannual round did not start a week or a year ago; it started three or four years ago, and it is vital that we give a clear message to the European Union, the Commission and the other member states that, however ludicrously pro-European we might be—as is the case with me—we do not believe that the European Union and the Commission should spend more money at a time when every member state is having to make cuts.

Jonathan Edwards: Will the hon. Gentleman give way?

Chris Bryant: If the hon. Gentleman will forgive me, I will not. A lot of people want to take part in the debate. Perhaps he will catch Mr Speaker’s eye later.

Mr Barroso, in his introduction to the original version of the Commission’s suggestions, said:

“The European budget is the instrument for investment in Europe and growth in Europe.”

That is arrogance of the highest degree. It might be one instrument—a tiny part of the equation that is trying to refocus Europe towards a more competitive economy that is able to fight for jobs and added value against countries such as Russia, China and Mexico—but the biggest instruments must surely be the member states, or even the nations and regions within them. For instance, the factor that will make a difference to the resolution of Spain’s problems will almost certainly be the economic future of Catalunya and whether it invests in IT and future industries. It will not be the EU budget.

I am also convinced that, whatever happens to the EU budget, it will not make a dramatic difference to solving the problems in Greece or in Spain. The issues in those two countries are completely different. In Spain, for instance, the sub-prime mortgage market and the way in which houses were constructed along the coast, often for the British ex-pat market, is the single biggest problem that is dragging down the Spanish economy. So I say to Mr Barroso that, although I am ardently pro-European and I believe that the European Union has been one of the great political success stories of the past 100 years, I do not believe that the EU budget is the way to resolve the problems of those countries.

Government Members have been talking today about the small-ticket items in the EU’s expenditure. The Financial Secretary to the Treasury held rather different views from those he holds today when he was a member of the Social Democratic party. When I was a member of the Conservative party, I held exactly the same views on Europe as those I hold today. The sadness is that the Conservative party has abandoned its past.

Greg Clark: May I again correct the faulty recollection of the hon. Gentleman? The reason that I was a member of the David Owen branch of the SDP, rather than the one that went off in a different direction, was precisely because of its position on Europe, and I held the same views then as I do now.

Chris Bryant: As you know, Mr Speaker, I love apologising to Government Members, and I apologise to the Minister. The point I am making is a serious one, however. He referred to some of the small-ticket items

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in the EU budget, but the big-ticket item is the common agricultural policy. If we do not address that issue in this next round, we will manifestly have failed to deal with the gaping moral and ethical hole at the centre of the European Union.

Andrea Leadsom rose

Harriett Baldwin (West Worcestershire) (Con) rose

Sir Tony Baldry (Banbury) (Con) rose

Chris Bryant: I do not want to give way to lots of people, as that would steal away time from others, but I can never resist the hon. Member for West Worcestershire (Harriett Baldwin).

Harriett Baldwin: On the subject of big-ticket items, will the hon. Gentleman confirm that, when he was Minister for Europe, the previous Government signed up to the euro bail-out mechanism? It was the present Government who had to negotiate us out of that mechanism.

Chris Bryant: The hon. Lady praises me far too much. I was Minister for Europe for about 2.5 seconds. In those 2.5 seconds, however, the one thing that I argued aggressively with my socialist friends and with my European People’s party friends—with whom her party used to be friends—was that the next multiannual round had to be lower than before and should not have an inflationary increase. I am afraid that the hon. Lady is pitching at the wrong person in this particular round.

I believe that there is a role for the EU budget and it should relate to growth, research and development. There are some things where we can do more together as a continent and add value. Unfortunately, however, those are not the issues that grab the attention of the French, the Germans, the Italians and the Spaniards. That is why we have to, and have always had to, build alliances with other countries, particularly the smaller countries.

Andrea Leadsom rose

Chris Bryant: I saw the hon. Lady attempting to intervene earlier. I will give way to her, but then no more.

Andrea Leadsom: I am grateful. Does the hon. Gentleman agree, then, that in order to be able to negotiate successfully on the big-ticket items as he says, we need a sound basis on which to go forward? Supporting an amendment that would simply trash all negotiations with other EU members, such as calling for a cut that is nigh on impossible, would not be the way to progress any decent negotiation on structural reform in the future.

Chris Bryant: To be honest, I do not agree with the hon. Lady. If I take her back to the last debate I had with her on this issue, I do not think that that is the position she was advocating then. In her heart of hearts, she would prefer Parliament to give a strong single voice today, so that the Government have a negotiating position whereby they can go to Brussels, Strasbourg or wherever and say, “Look, we have the whole of Parliament behind us saying, ‘We’ve got to cut’.” That is why I hope she will vote for the amendment today.

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I know that some hon. Members do not like structural funds at all—perhaps this was the issue that the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who has already left the Chamber, wanted to raise—but I believe structural funds have a role to play in trying to make the whole European Union far more competitive in the world economy. That is certainly true for places like the valleys in south Wales. Sometimes the money is not particularly well spent, but if we did not have structural funds and cohesion funds, the danger is that each individual country would end up abusing state aid to protect specific businesses in their own country, thereby undermining countries like our own that choose not to go down that route.

I ask Government Members this: how could we possibly go back to our constituents and say to teachers, fire officers, police officers and all the rest, “We want to give more money to the European Union, but you’ve got to live with a pay freeze, and you’ve got to live with less money, with 19% cuts year on year to local authority funding for the building of hospitals, homes and so forth.”? I just do not see how I could possibly argue that.

Ben Gummer (Ipswich) (Con) rose

Chris Bryant: I am not giving way, as I know that many other Members want to speak.

I resent the Minister’s answer to my earlier question, as I think he simply misunderstood it. When the Government increased VAT in this country to 20%, it increased the amount of money we would have to pay to—[Interruption.] The Minister has probably been inspired by officials at this point, so he may know the answer.

Greg Clark: I am surprised that the hon. Gentleman, as a former Minister for Europe, did not know the answer—that the tax base is notional, so the levies of VAT make no difference whatever. It is irrelevant.

Chris Bryant: I will explain it all to the Minister later; he is wrong.

There are some specific savings that the EU could and should make. One relates to the ludicrous caravanserai between Brussels and Strasbourg. I merely point out to Conservative Members that it was John Major who negotiated that final agreement in the treaty of Amsterdam; I wish we were able to dismantle it. It costs us £180 million a year, and it is a complete and utter waste of time and money. Similarly, we have to tackle the common agricultural policy.

My final point for Conservative Members is this. If they choose to start their negotiating position first by saying that the veto is going to be used, and secondly by saying that there is a long shopping list of things that they want the EU to deliver—the new Margaret Thatcher, the hon. Member for South Northamptonshire (Andrea Leadsom), has often referred to a shopping list—the danger is that when they get to the till, they will have to say how they are going to pay. If they have already said that they want to get out of justice and home affairs policy and all sorts of other European Union policies, they will not have a negotiating leg to stand on. If they have already declared that they are going to use the veto, they will end up with a worse, rather than a better position for the United Kingdom and will be paying more money. That is why I, as a good pro-European, will be supporting the amendment.

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5.10 pm

Mr William Cash (Stone) (Con): The Labour party—the Opposition—will of course vote with us this evening, not the other way round. As the hon. Member for Bolsover (Mr Skinner) correctly pointed out, exactly the same happened with the Maastricht treaty.

The amendment spoken to so ably by my hon. Friend the Member for Rochester and Strood (Mark Reckless) is absolutely right. It deals not just with the mechanics or the technicalities, but with what is really going on under the surface. The real questions are, “Where is the money coming from?” and “What is the object of this multiannual financial framework?”

I have been to many conferences in the past year in my capacity as Chairman of the European Scrutiny Committee—in Cyprus and Denmark, and, before that, elsewhere—and I have attended similar conferences with my right hon. Friend the Member for Aylesbury (Mr Lidington). They are living on another planet: that is the real problem. The main feature of that big landscape is where we are today. This is part of a picture that must be dealt with.

I know that my right hon. Friend the Prime Minister is conscious of that. He knows that Mr Barroso’s speech calling for a federal Europe, which was made only a short time ago, has put us at a crossroads. We cannot continue to assume that what was being considered before that date still applies. We are now on a different journey. They are on one planet, and we are on another. We have to make a stand, and that is what this is all about.

A letter dated 18 December 2011 from the Prime Minister and from the Prime Ministers of several other member states, included the following passage:

“European public spending cannot be exempt from the considerable efforts made by the Member States to bring their public spending under control.”

We are cutting here; we need growth. They are not cutting, but increasing. That is the point.

Chris Kelly (Dudley South) (Con): I know that my hon. Friend has a great deal of empathy with the private sector. The private sector is the engine of growth in our economy and it becomes more efficient every year, but does my hon. Friend agree that in Brussels the only thing that increases is the appetite for our money?

Mr Cash: Absolutely. It is impossible to make any public expenditure—including our contributions to the whole of the public sector: health, education, local government, the lot—unless the money comes from reasonably taxed small and medium-sized enterprises. Yet the whole of the Commission’s paper—which is at the heart of the 2020 strategy and at the heart of why the Commission is asking for this increased amount of money, which it calls an investment for growth—contains only one reference to small and medium-sized businesses, in one line. That is the problem we are up against. We cannot give money to the public sector unless we get it from private enterprise on a reasonably taxed basis.

The Prime Minister’s letter continues:

“The action taken in 2011 to curb”—

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“curb”: that is the word he uses—

“annual growth in European payment appropriations should therefore be stepped up progressively over the remaining years of this financial perspective and payment appropriations should increase, at most, by no more than inflation over the next financial perspectives.”

The situation was wrong then, and it has got worse since. That was in December 2011. We are now in October 2012, and we know what the picture is, and it is getting progressively worse. That is why we had to call for a reduction rather than merely what the Prime Minister describes as an

“increase, at most, by no more than inflation over the next financial perspectives.”

Mr Christopher Chope (Christchurch) (Con): Will my hon. Friend take some support from the fact that on 20 June our right hon. Friend the Foreign Secretary told this House he thought reductions in the EU budget of 20% were “highly desirable”?

Mr Cash: Absolutely; that is a very good point indeed.

I would like to dig a little deeper into what this money is supposed to be used for. It is all set out in the papers laid before the House for the purposes of this debate. They talk about turning the EU into a “smart”—whatever that means—“sustainable and inclusive economy” delivering

“high levels of employment productivity and social cohesion.”

How on earth are they going to achieve that given the measures they think will produce growth? Almost every single aspect of what they want to deliver is based on increasing grants and subsidies, but not on asking where the money is coming from.

The money comes from our constituents. It comes from the taxpayer. It does not grow on trees. That is what they do not understand. Therefore, the entire strategy on which this multiannual financial framework is based is nonsense. It is an Alice in Wonderland fantasy, as I have repeatedly said when I have had the opportunity to meet the other 27 Chairmen of the national scrutiny committees. I have noticed that there is increasing awareness, too. The hon. Member for Luton North (Kelvin Hopkins) was with me only a few weeks ago, and he noticed the degree of response I was getting from the other member states’ national chairmen. They understood that they were in deep trouble.

The money does not grow on trees in Spain; that is why there are demands for independence from Catalonia. The money does not grow on trees in France or Germany either. The fact is that it has to be found.

Wayne David: The hon. Gentleman and I have significant differences about what this country’s approach to the EU should be, but does he agree that the important thing at this moment in time, with every EU member state having to make public expenditure cuts, is that the EU itself should make cuts? That message should go out from both sides of this House.

Mr Cash: The hon. Gentleman is right. I do not think this is just a cynical move, even though there is an element of that. As I find when I go to meetings with those in the presidency, there is a recognition: they know they cannot go on spending money that is not there. That is the truth. That is all this argument is really about. It is about the big landscape of whether, like

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Mr Micawber, we can just hope something will turn up. It will not; it has to be built through real growth policies.

Unfortunately, the report the European Commission produced only a few months ago shows it has not got a clue how to generate that growth. I was also deeply disturbed to see that the amazing report by the European Parliament calling for all these increases was welcomed by the vice-president of the European Commission, Maroš Šefcovic. He said the MFF was “an investment budget” for delivering growth in “the entire EU.” He condemns himself outright simply by endorsing the 150 pages of unadulterated rubbish that came out of the European Parliament in its interim report.

Mark Reckless: Even for those in the House who are genuine Keynesians, if our goal is to stimulate the economy is it possible to think of a worse way to spend money than the way the MFF sets out for the EU?

Mr Cash: I absolutely agree. The real problem is that their answer is to give more money to the public sector and to ventures and projects that, as the Court of Auditors report shows, increasingly fail. The trouble is that the European project is a failing project.

They will not recognise that, so what are they doing? They are saying, “We are going to go off and have a federal Europe.” Well, let them have it. They can have their federal Europe if they want, but we, in this country, cannot possibly be part of it—that is unthinkable. The Prime Minister knows it is unthinkable, and my genuine belief is that he will come to discover that it would be better to veto this and to ensure it does not go through, because he has already been presented with the crossroads. The crossroads was presented by Mr Barroso, and the crossroads is being presented by the other member states. There is no turning back. We therefore have to say no. We say no to this, we say no to the illegal banking regulations that we have just been looking at and we will be saying no to the proposals for any new treaty. If we are prepared to put our money where our mouth is and actually say that we will not accept this, we will be serving the national interest.

5.20 pm

Kate Hoey (Vauxhall) (Lab): I support the amendment standing in the name of the hon. Member for Rochester and Strood (Mark Reckless); as a signatory to it, I am delighted to do so. I am also delighted that members of my Front-Bench team are, for a change, on the same side as me and my hon. Friends the Member for Luton North (Kelvin Hopkins) and Blackley and Broughton (Graham Stringer), among others. It is nice to see so many people in the Chamber.

We sometimes say, “This shows Parliament at its best.” If this amendment is not passed tonight, we will be showing Parliament at its worst, because a lot people here will not be doing what they really want to do. A lot of people here, on both sides of the House, will be doing what their party has asked them to do. I believe, fundamentally, that the issue of Europe has reached the point where party is not as important as the issue. I genuinely believe that we, in this Parliament, are way behind the public on the question of Europe. I am pleased that things seem to be moving in the direction of the Labour Members and the Government Members

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who see things as I do. Many of us have worked together on this for many years, going back as far as the time of the Maastricht treaty, when the same pressure was applied by the Labour Whips to vote on it as is probably being applied to Government Members now.

I do not believe that the public would understand the nuances being used here. I refer to the weeny words of the Minister, who was not prepared to give way to me for some reason—I do not know what I have done to upset him—on the issue of why the Government could not support the amendment. He said that it was because the amendment did not contain any criticism of my party when it was in government. We have made criticisms of my party when it was in government—I have done so, as have my hon. Friend the Member for Luton North and various others. Many Labour Members and many others within the Labour party did not support the rebate being removed.

Kelvin Hopkins: Many of us have been critical of the giving away of the rebate, both publicly before the last election and since. The Government make much of that event, but I have said to them in this Chamber, “If you feel so seriously about it, why haven’t you demanded it back?” They have had two and a half years to do that.

Kate Hoey: I thank my hon. Friend for that intervention. Tonight, we have an opportunity to make it public that there is a united Parliament, for whatever reason and motive. The reality is that we are a united Parliament and we are saying, “We do not want one penny extra spent. We want to see a cut in what the European Union is spending.” I want to see more than that. I want a referendum on our relationship with Europe. I want an end to this nonsense, which we keep putting up with. We could make a decision tonight that says, “We do not want to see an increase—we want to see a cut.” However, come the end of the process, by majority voting, we could be outvoted, no matter how many diplomatic skills we use. I am sure that many hon. Members think that they could do better if they were negotiating, but no matter how good our negotiating skills we may not get what we have asked for. My view is that we should veto at that point and then, when we are sent our bill, we should say no and tell them that we will send what we agreed. We should tell them that we will not send them an increase.

Conor Burns (Bournemouth West) (Con): Given that the Minister and the shadow Minister both said that it is the policy of the Government and Her Majesty’s Opposition that they would wish to see a reduction in the European Union budget and given that there is a motion before the House asking for such a reduction, will not the public find it bizarre if that does not go through tonight?

Kate Hoey: In my simple way, that is what I am trying to say. We are beginning to look really out of touch. It is beginning to look as though we are not interested in the people we were elected to represent. I believe that tonight is the night when we can make that difference and really change things.

I must make an apology. I am very lucky that my constituency is literally five minutes away and I agreed some time ago that at 6 o’clock I would light the bonfire on Hallowe’en night. I shall leave to light the bonfire and I shall come back to vote. I hope that on that

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bonfire there might be something to signify something about the European Union; it would be rather nice if there were. It is not likely, however.

Finally, I ask Members to realise that they should not worry about who is with them in the Lobby tonight. They should not worry about whether they are in the Lobby with people with whom they would rather not be in the Lobby. They should recognise that they are going into that Lobby to represent the people who elected them and should think about what they would want them to do.

Mr Speaker: Order. I appreciate that the hon. Lady has a hectic social schedule, to which we have all become privy, and I understand that she will have to leave at some point, but I know that she will want to hear the next speech.

Kate Hoey indicated assent.

Mr Speaker: I am extremely grateful to her. I call Mr Peter Bone.

5.27 pm

Mr Peter Bone (Wellingborough) (Con): It is a great pleasure to follow the hon. Member for Vauxhall (Kate Hoey). When the House can hear speeches from the hon. Lady, the hon. Member for Rhondda (Chris Bryant) and my hon. Friends the Members for Stone (Mr Cash) and for Rochester and Strood (Mark Reckless) and we all agree, that is when the House is at its best.

I am delighted if Opposition Members want to vote for a Conservative amendment. That shows great credit to them. I hope that all Members on this side will vote for a Conservative amendment. The problem is that the motion is not a Conservative motion but a coalition motion. I am quite convinced that if we were not in coalition with the Liberal Democrats, the Prime Minister would be voting for the amendment.

Chris Huhne (Eastleigh) (LD): It has nothing to do with whether this is a coalition motion or a Conservative amendment. It is about realism versus unreality. As the hon. Gentleman knows, if someone goes into a negotiation telling people exactly what they are going to do, with no room for movement whatsoever, why on earth should they bother talking to them? We heard the reality from the hon. Member for Stone (Mr Cash) and that is that he, like the hon. Member for Vauxhall (Kate Hoey), wants a crisis for the European Union. This has nothing whatsoever to do with these negotiations.

Mr Bone: I must apologise to the Liberal Democrats, because they obviously agree with everything we have said tonight and think that we must strengthen the Prime Minister’s hand in the negotiations. I apologise for giving the false impression that they were going to vote with the Government tonight.

One problem is that this is a Westminster village affair, and I want to know what is happening on the streets in my patch. There is a lady who has been walking the streets of the Corby constituency for eight weeks or so; her name is Christine Emmett and she

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just happens to be the Conservative candidate there. I wondered what the feedback was on the ground in Corby, and she says:

“I voted ‘no’ to the EEC in 1975, as I did not trust the Common Market (as it then was) would not grow into a political alliance which would diminish our control over our own affairs. The British people voted ‘yes’ and we have lost control of some essential legislation”.

She goes on to say:

“The present terms of membership are unacceptable and unaffordable”—

she speaks for the people in my constituency, too.

Several hon. Members rose

Mr Bone: I shall press on because other Members wish to speak and I want to be as brief as possible.

I think that every Member, whether they vote for the Government’s motion or not, wants a reduced budget. We all think that there should be a real reduction in the EU budget, because how can we tell our constituents that they are suffering cuts so that we can give the European Union money to waste? We have a superb Minister at the Dispatch Box listening to the debate. At its conclusion, I genuinely hope that the Government will be able to accept this modest amendment. Would not that be great? The British people, instead of seeing artificial division, would then know that the whole House was in favour of a reduced budget in real terms, albeit perhaps with the exception of Plaid Cymru Members, who might have done a dirty deal somewhere along the line.

The real issue that I want to talk about is the rebate. I shall give Prime Minister Blair the benefit of the doubt, because when he gave up the rebate, he thought that there would also be a massive cut in common agricultural policy payments, meaning that our net contribution would not go up. According to figures from the House of Commons Library, during the following five years of the Labour Government, our net contribution to the EU was £16 billion. That is a lot to pay for membership of the EU, but unfortunately, since Tony Blair left, our rebate has gone down and there has been no reform of the CAP, so over the period of the coalition Government, as things stand—even without a budget reduction—we will be paying £36.4 billion to be a member of this club. How can we say that we will pay £36.4 billion, and then that we will pay some more to allow for inflation?

Mr Aidan Burley (Cannock Chase) (Con): Is my hon. Friend aware that the “more” figure that we will pay under the Government’s inflationary proposals is £1.3 billion over just the next two and a half years? How many nurses, doctors and teachers would that buy?

Mr Bone: I agree entirely.

The issue tonight is not whether I am happy to vote with the hon. Member for Rhondda—

Chris Bryant: You always are.

Mr Bone: There are no two people in the House who disagree more on the European Union than the hon. Gentleman and I. Today, however, we are voting for what the British people want. When I talk to people in Rushden or Wellingborough, they cannot understand why their council services are being cut at the same time as we plan to spend billions more on the European Union.

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Cutting away the rest of the rhetoric, hon. Members must decide whether they will vote for a Conservative amendment calling for a real reduction in the budget, or a coalition motion that effectively calls for an increase, because it allows for inflation. I am sure that, secretly, the Prime Minister would like the whole House to vote for the Conservative amendment, because it would strengthen his hand in the negotiations enormously if he could say, “There is a united House of Commons demanding a reduction in the budget.”

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. To accommodate more Members in the debate, the time limit is being reduced to five minutes, with the usual injury time for interventions.

5.34 pm

Mr Nigel Dodds (Belfast North) (DUP): It is a pleasure to follow the hon. Member for Wellingborough (Mr Bone). I agree with him entirely that the Prime Minister has a wonderful opportunity, if he wishes to grasp it, to use the united stance of the Commons on EU budget cuts to increase his bargaining power in Brussels, but I fear that the Prime Minister’s negotiating position is more about damage limitation than about getting the EU budget reduced. A unique opportunity exists for EU budgetary reform and all due diligence should be directed towards advocating an overall reduction in the EU budget.

The House of Commons Library has set out clearly what the reductions are for each of the Departments over the current comprehensive spending review period. There are reductions of 23% for the Home Office, 27% for the Ministry of Justice, 19% for the Ministry of Defence and 19% for the Department for Work and Pensions. Across the board there is an 11% real reduction in Government spending. In the Northern Ireland Office the reduction is 12%, in the Wales Office 12% and in the Scotland Office 11%. These are real cuts. There is nothing in these figures which allows for a freeze still less an increase to cover inflation.

It is difficult for people in the community, as has been said by previous speakers, to understand why the Prime Minister tells people that in order to get the economy on the right footing, drastic real-terms cuts in the budgets of Government Departments are necessary, affecting front-line services. That message has been sent out by national Governments in the EU, right across the board, yet when it comes to EU expenditure, we are told that the most that we can aspire to is some kind of inflation increase. To the people in the street, to whom the hon. Member for Wellingborough referred, this is not only bizarre, but incomprehensible. They expect the Members whom they send to the House of Commons to stand up for the United Kingdom and for them, and to say that the same rules should apply to spending on the EU as to everybody else.

Mr Cash: Does the right hon. Gentleman know that the European Parliament describes the Commission’s proposal as representing a freeze of the multiannual financial framework between 2014 and 2020, and says that it would not be sufficient to finance the existing policies which come out of the treaty of Lisbon? Is there not something ironic in that, in relation to the Government’s motion?

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Mr Dodds: Absolutely. When it comes to the European Parliament, nothing surprises me. I must speak up in defence of Members of the European Parliament, including the Member from my party, who consistently vote against these federalist ideas and against increases to the budget, and stand up for the people who contact us daily, saying enough is enough.

With reference to what the EU is doing, let us look at some of the areas of expenditure to which this year alone the UK will contribute £15.8 billion and by 2014-15 £19.2 billion, and that is before the increases going forward. A Member referred earlier to the European Parliament and the fact that it does not have a single seat. Ending that wanton inefficiency would equate to £1.26 billion over the seven years of the 2014-20 period, but there seems to be no appetite in the EU to change that.

With respect to quangos and agencies, there are 56 EU quangos, twice the number in operation in 2004. The cost to European taxpayers has increased by 33% in the past two years alone, with an estimated expenditure of €2.48 billion in 2012 alone. We were told that when it came into being, the External Action Service would not cost the British Exchequer any more money, whereas it has done precisely that. If we got rid of that unnecessary body, we would save EU taxpayers more than €480 million every year.

I think the Minister referred to the House of European History, of all things, which, I am told, is aimed at promoting an awareness of European identity since 1946. It will cost £136.5 million by 2015, with British taxpayers contributing £18.6 million. Those are simply a few examples of the absolutely scandalous waste of money towards which our taxpayers are having to contribute year on year through our contributions to the EU budget.

Bob Stewart (Beckenham) (Con): Is this not simply about fairness? It is fair for the European Union to make the same sorts of cuts that we are having to make at home. That is fair and that is what we should pass tonight.

Mr Dodds: The hon. Gentleman is absolutely right that this is about fairness. It is also about being seen to connect with the electorate, the people who send us here, as the hon. Member for Vauxhall (Kate Hoey) said. One of the problems with Parliament and politicians generally is that people do not feel that we have any connection with them or relate to their day-to-day problems. The choice before the House tonight is clear: either we vote to send a clear message that enough is enough, we expect what applies to UK Government expenditure and the national budgets of other member states to apply to the European Union, and our choice is to be on the side of the taxpayer and our people, who are out there suffering daily as a result of the cuts—

Mr Jim Cunningham (Coventry South) (Lab) rose

Mr Dodds: I am sorry, but I have no more time to give way and other Members wish to speak.

The choice is whether or not to vote in favour of the Government’s motion, which has been couched in tough terms by the Minister, and I welcome the progression in Government thinking, because when I listened to the Opposition spokesman I was reminded that it was not

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long ago that we heard representatives of the same party arguing a very different case when it came to European expenditure. I accept that entirely, but the fact of the matter is that there is no reason why this House should not send out a united message saying that what is good enough for Britain and our constituents, for the people we represent, should also be good enough for the European Union and that there should be no special exemption or special rule for it. We must be on the side of taxpayers tonight and vote for the amendment tabled by the hon. Member for Rochester and Strood (Mark Reckless).

5.42 pm

Stephen Williams (Bristol West) (LD): The hon. Member for Vauxhall (Kate Hoey), who I assume has gone to light her bonfire—I am not sure whether Mr Barroso or anyone else will be on top of it, but I hope that she enjoys the heat south of the river—said that the House was at its best when it is united. I entirely agree that the House is at its best when united on an important point of principle in which we all genuinely believe, and some Members are genuinely standing up for what they believe in—the hon. Members for Rochester and Strood (Mark Reckless) and for Wellingborough (Mr Bone), for example, who are genuinely Eurosceptic—but when the public see nakedly opportunistic Opposition motions, that is when the House is at its worst in their eyes, and that is what undermines public confidence in the work of Parliament.

Chris Leslie: Will the hon. Gentleman remind the House what he said about tuition fees before the general election?

Stephen Williams: This is about a debate we are having now on a budget from 2014 to 2020, not about a position we took in 2009 before any of us knew we were going to be in a coalition Government. This is a position we can decide for ourselves, knowing the circumstances we are currently in. They are entirely different situations.

We are essentially discussing a comprehensive spending review of the European Union from 2014 to 2020, for which the European Commission has asked for a budget of €972 billion. That is roughly €100 billion above what would be a real-terms freeze. That is completely unrealistic at a time when EU member states are under real budgetary pressure, and some more so than others. It would be unacceptable for the United Kingdom to agree an increase of that magnitude, because it would represent roughly £10 billion in extra contributions. Therefore, it is absolutely right that the UK Government are going into the negotiations, in concert with many other member states, asking for a real-terms freeze. That is what is important: the position our Government are taking is in agreement with that of many other member states. It is a position that has a realistic prospect of achieving the success that most of us actually want. Undermining the United Kingdom’s position today will blow a hole in that negotiating position and make it much less likely that we will get the outcome many of us wish to achieve.

Andrea Leadsom: Does my hon. Friend agree that it blows a hole in our credibility with our European colleagues regarding not only the budget but other

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reforms where we have a significant, perhaps once in a lifetime, opportunity to create real structural reform of the EU?

Stephen Williams: I absolutely agree, and I will come to that shortly.

The negotiating position of arguing for a real-terms freeze is agreed right across the coalition Government. There is no one more Europhile than the Deputy Prime Minister, who tomorrow is going to make a speech in which he highlights several of the reasonable differences that exist between the coalition parties on our relations with the European Union and makes it absolutely clear that he fully agrees that a real-terms freeze is the right way forward.

My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) mentioned the case for reform. The European Union spends 33.8% of its existing budget, as negotiated in 2005, on the common agricultural policy and 5.7% on a very bloated central administration system, with the caravan moving between Strasbourg and Brussels, and it could make cuts in those areas. Yet it spends only 9.2% of its budget on the competitiveness agenda—on supporting research and development and small and medium-sized enterprises. That is where we want the European Union to spend whatever its agreed budget is in future.

The Government are right to argue against what the European Union calls its “own resources”—in other words, tax revenues directly hypothecated for the EU—and to say that we do not want that to happen with VAT. They are also right to argue against a Europe-wide financial transactions tax. My colleagues and I think that there is a good case to be made for a financial transactions tax across all the global financial centres, but many of those are outside the European Union, most obviously in Switzerland. It is not for the European Union to make the case for an FTT, and it certainly should not be the recipient of any revenues from an FTT should one be imposed in future, because it would then be taking on the personality of a state and a Government, and that is not the vision of the European Union that the Liberal Democrats wish to see. It is also right that the Government should argue for the retention of the British rebate.

Labour’s position is quite extraordinary. The hon. Member for Bolsover (Mr Skinner), who is no longer in his seat, gave the game away by alluding to the Maastricht votes of 20 years ago. Its position is a marriage of genuine Euroscepticism—I accept that—and naked opportunism. We in the coalition Government have waited two and a half years for Labour Front Benchers to tell us which of the cuts that the coalition Government are implementing they agree with, and, if they disagree with all of them, which has been the position thus far, at least to suggest alternatives. There has been total silence. The only cut that they are brave enough to suggest is one that has to be imposed by 26 other member states—they show no bravery at all in suggesting cuts in our own budgets. That is incredible, and for those Labour Members who are Europhiles, it is an embarrassing position in which to find themselves. I can only assume that they have been put there by their more senior Front-Bench colleagues who are not with us at the moment.

Labour Members should know that it is not possible to achieve a real-terms reduction in the MFF. They did

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not manage it in 2005, when they negotiated an increase. The current leader of the Labour party, the current shadow Chancellor and the current shadow Foreign Secretary were leading members of that Government. Liberal Democrat MPs and Conservative MPs voted against an increase in November 2007. In recent years, our Members of the European Parliament, Liberal Democrat and Conservative, have consistently voted against a real-terms increase in the European budget. Labour Members of the European Parliament have voted against a freeze in the EU budget; all they voted for was extra money for the trade unions. We want the EU to spend more on measures that grow the European economy, deepen the single market and make the EU globally competitive.

5.49 pm

Thomas Docherty (Dunfermline and West Fife) (Lab): I welcome the junior Minister of State and hope he will tell us where the senior Minister of State is this evening.

This has been an excellent debate and we have heard principled contributions from Members of all parties, who hold deep, long-held convictions about Europe and the direction of travel. Anyone who is aware of my view will know that I am the co-chairman of the all-party group on European reform and that I believe that Britain is better off in Europe but that the current organisation is not satisfactory.

To give an example, 1 January saw the introduction of a European-wide ban of battery eggs, for which the UK, under the previous Government, and many other countries had campaigned successfully. However, it became clear that a number of eastern and southern European nations would fail to meet the 1 January deadline. The Environment, Food and Rural Affairs Committee took evidence on the issue last year and, when we asked the European Commission what it would do if the UK chose not to allow these illegal eggs into the country, it said that it would prosecute the United Kingdom, which is an obscene and perverse position to adopt. Saying that it would prosecute a country for upholding Europe’s own laws shows that the Commission has got its priorities wrong.

The Minister discussed cutting structural funds, but I disagree. The solution, as explored by the all-party group, is that if we repatriated the structural fund powers and spent the same amount of money as we hand to Brussels, we would have hundreds of millions of pounds more to spend in Wales, Scotland, the south-west and the south-east.

Conor Burns: Given that the hon. Gentleman is going to vote in favour of an amendment calling for spending restraint, does he regret that his party’s Front Benchers did not follow that policy in their 13 years in government?

Thomas Docherty: I am surprised that the hon. Gentleman has not made it on to the Government’s Front Bench yet with that kind of devastating critique.

My hon. Friend the Member for Vauxhall (Kate Hoey) said that we will be voting alongside people whom we do not get on with or whom we do not particularly like, but I have been informed by one or two Conservative colleagues that that occasionally happens in the Government Lobbies anyway. I look forward to seeing which Lobby the hon. Gentleman enters later.

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Mr Jim Cunningham: Does my hon. Friend agree that this is not a debate about whether we should be in or out of Europe? It is about the fact that, on the one hand, the British people have been told to tighten their belts and the Government’s borrowing has gone up, while on the other hand, the Government are leading us into a situation where there will be an increase, one way or another, in the EU budget. That is the real issue and it is not acceptable to the British people.

Thomas Docherty: My hon. Friend is correct. Whether people live in Coventry, Bournemouth, Tunbridge Wells, Ribble Valley, Dunfermline or Cardiff, education budgets, child care, housing budgets and defence of the realm are being cut, yet we are expected to hand more and more money to Brussels bureaucrats to spend on vanity projects that will then attack British industry and British farmers. The British public will not understand if Members of this House, who claim that they want the best for the British taxpayer and that they want to support British industry, do not vote according to their principles and their long-held consciences and allow themselves to be corralled by their Whips into voting for this coalition motion.

It is interesting that this is only the second time that we have seen a large Liberal Democrat turnout in the Chamber since the start of this parliamentary Session. The first time was when we debated House of Lords reform. That says it all about the quality of the motion. I urge hon. Members from all parties to listen to their taxpayers, British industry and their consciences and to vote for the amendment.

5.54 pm

Mr Brooks Newmark (Braintree) (Con): I am delighted to follow the hon. Member for Dunfermline and West Fife (Thomas Docherty). I feel rather uncomfortable with what I am about to say, because I agree with pretty much everything that has been said, particularly by Government Members. Of course we all want a real cut—I am sure the Prime Minister, the Chancellor and the Financial Secretary do. The nub of the debate, however, is what my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) said. It is about how the Prime Minister negotiates, and negotiation is about achieving realistic objectives.

I think that the multiannual financial framework, or EU budget to use a simpler term, is insane. For the European Union to ask for a 10% real-terms increase above inflation is insulting to our constituents and to the people of Spain, Italy, Portugal and Ireland, who are being told to pull in their belts. My hon. Friend the Member for The Wrekin (Mark Pritchard) said—I think I am getting this right—that people are being asked to make painful cuts in their household budgets. Each and every one of us has constituents who are being told to pull in their belts, and we all agree with that.

Mark Pritchard: I am flattered that my hon. Friend has quoted me. One way in which the Prime Minister’s hand can be strengthened is by having a united Parliament rather than a disunited Parliament when he goes to Brussels to negotiate on my birthday, 22 November.

Mr Newmark: I hasten to add that it is my wife’s birthday as well.

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Let us discuss and decide today what message the Prime Minister should be given. Clearly he will read Hansard, and he will know the message that the Whips give him and so on, but do we want to bind his hands when he goes into the negotiations? He has already discussed a real-terms freeze with the Germans, French and Dutch, who are buying into the fact that this is a reasonable prospect. Do we want to push him over the edge and ask for something that we know he can never realistically achieve?

Stewart Hosie (Dundee East) (SNP): The real-terms freeze that the hon. Gentleman says is realistic is of course an inflationary rise. Does he really believe that it is unrealistic that the European Union can find modest efficiencies to deliver even a modest cut? When I am to his right on a subject, he is definitely wrong.

Mr Newmark: If it was the hon. Gentleman and I negotiating, I am sure we could find some realistic efficiencies. The fact is, however, that for the time being—I say this for the benefit of my hon. Friend the Member for Stone (Mr Cash)—we are in something called the European Union. We therefore have to negotiate with more than 25 other countries.

Damian Collins (Folkestone and Hythe) (Con): Will my hon. Friend give way?

Mr Newmark: No, I think I will proceed.

On the Labour party’s chutzpah and hypocrisy, the hon. Members for Rhondda (Chris Bryant) and for Nottingham East (Chris Leslie) argued for more financial restraint and for looking after taxpayers’ interests, but there was a 47% real-terms increase in the EU budget while Labour was in government. What has suddenly changed their minds? We need not take any lectures from them. Their policies are incoherent, opportunistic and completely lacking in credibility.

That brings me to the nub of the argument: which way will we go? Will we ask the Prime Minister for something that he can achieve, which is a real-terms freeze? That does not mean that he will not do better than that, because I believe he will fight our corner for real-terms cuts. I am sure he is listening to everybody who is fighting for real-terms cuts, or at least to Government Members, but what is his bottom line? What is the red line beyond which we should pull out the veto, which the hon. Member for Nottingham East has not admitted he is willing to use? That red line has to be at least a real-terms freeze. That is what today’s debate is really about.

I ask my right hon. and hon. Friends to consider what message we want to give the Prime Minister. It should be that he should negotiate in the best interests of UK plc. That means fighting for a real-terms cut—I want that, and so do all my right hon. and hon. Friends—but the bottom line should be a real-terms freeze, which I believe is achievable in the negotiations.

5.59 pm

Mike Gapes (Ilford South) (Lab/Co-op): You and I, Mr Deputy Speaker, were both Members of this House in 1992-93, when I was one of those pro-Europeans

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who followed my pro-European party leader, John Smith, and the spokesman for foreign affairs, Lord Robertson, into the Lobby with people whom I would never have described as having the same view as me on Europe and its future. The same thing will happen this evening, but I wish to make it clear that I do so not because I agree with the tenor and tone of the many Europhobic speeches we have heard from Government Members—and some, unfortunately, from this side of the House—but because I believe it is wrong for the European Union to increase its spending at a time when national budgets, not just in this country but in Greece, Spain, Portugal and elsewhere, are being reduced.

This is not the most important debate about the future of Europe that we will face, and we must put it into perspective. Although there is talk of billions of pounds and euros, the EU budget is only 1% of the GDP of all member states. In this country, public spending accounts for more than 40% of our GDP each year, and we must put into perspective the fact that the EU’s total spend is very small.

In his introductory remarks, the Minister referred to the size of the Commission. I was unable to intervene at that point, but let me place it on the record that the European Commission has, in total, between 30,000 and 33,000 employees who serve 27 member states. The Minister’s Department in Her Majesty’s Revenue and Customs alone has about 80,000 employees, and we must get such things into perspective. We do not have a gargantuan European Union bureaucracy hoovering up resources; in fact, the UK Government spend five times as much servicing the interest on the national debt each year than they do in European Union contributions.

Henry Smith (Crawley) (Con): The hon. Gentleman is talking about the administration of the European Commission, which at 30,000 employees I think is still too large. The bulk of the EU budget goes on redistributing money, typically from net contributors such as the United Kingdom to other parts of Europe. Does he feel that we need a little more restraint in that respect as well?

Mike Gapes: I agree with that, but I also point out that the UK contribution to the European Union is less than that of Germany. Our net contribution—with the rebate that was retained by the previous Labour Government—is comparable to that made by France, a similar country in terms of size, population and GDP. We are among the net contributors, but the European Union is also about solidarity. One thing that led to the growth of the European Union, and the increased trade and prosperity from which British workers and British companies benefit, is the fact that countries such as Spain and Portugal—and, increasingly, countries such as Slovenia—are growing and benefiting by their membership of the EU.

The EU also makes a contribution to democracy and stability in Europe, for which the Nobel prize committee has rightly—[Interruption.] Oh I see. Here they are; here is the real agenda. The Nobel prize committee has rightly recognised the European Union’s contribution to peace in Europe over the decades. If somebody like Henry Kissinger can get the Nobel peace prize, the European Union certainly deserves it.

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Mr Denis MacShane (Rotherham) (Lab): Does my hon. Friend share my hope that the EU—some time, and perhaps this century—will get the Nobel prize for economics?

Mike Gapes: I would hope that my right hon. Friend and I—we are of a similar age—will live long enough to see that, but I do not think it will happen immediately. It will require the eurozone to become much more tightly organised than it is today.

Last week, I visited Germany and Norway with the Select Committee on Foreign Affairs. We are considering the future of Europe and the implications for this country of different options that might arise. Two or three years ago, the political debate in Germany was about trying to keep Britain on board and to move with Britain. However, the reality, right across the political spectrum, is that Germany has given up on the UK under the coalition Government. The Germans see their future as being with France and Poland, and their priority will be to save the eurozone at all costs.

That means that the UK will be in an uncomfortable position. The Prime Minister might have signed a joint letter with European leaders in 2010, but the reality in 2012-13 is that Germany is not with us. Anybody who thinks that only Germany is not with us should read the remarks of Radek Sikorski, the Polish Foreign Minister, who gave a radical speech in Oxford just a few weeks ago, in which he used phrases such as:

“Poland wants to be with Germany and France as partners”.

He also said:

“You could, if only you wished, lead Europe’s defence policy…Britain’s leaders need to decide once again how best to use their influence in Europe…The EU is an English-speaking power. The Single Market was a British idea. A British commissioner runs our diplomatic service…But if you refuse, please don’t expect us to help you wreck or paralyze the EU.”

Andrew Bridgen (North West Leicestershire) (Con): Will the hon. Gentleman give way?

Mike Gapes: I cannot—I have very little time.

The Polish and German Governments and many others want the UK to stay in the EU as partners, but they will not wreck the EU to keep us. We need to realise that our options are narrowing. The Government are in danger of taking us into an isolationist position.

6.7 pm

Sir Tony Baldry (Banbury) (Con): All Government Members will recognise how deeply shabby Opposition Front Benchers’ behaviour has been. I was a Member of the House when Blair negotiated away a large part of the rebate on the understanding that the common agricultural policy would be reformed. A large part of the rebate disappeared, but the CAP was not reformed, and Labour Members now have the audacity to complain that the CAP needs reform. It is a deeply shabby performance this afternoon by the Labour party and the official Opposition.

I want to address my comments in the short time I have to my hon. Friends. On the specific motion, hon. Members will agree that, if the Prime Minister manages to negotiate a real-terms freeze in the EU budget, it will

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be the toughest financial negotiated settlement the EU has seen. If he achieves that, he will have achieved something that no one has achieved before. That is a matter of fact.

As the hon. Member for Ilford South (Mike Gapes), who used to chair the Foreign Affairs Committee, said, we are talking about part of an overall picture of negotiations that the Prime Minister will have to undertake over the next few years when renegotiating our position on Europe. As many countries become closer in the eurozone, where will that put us? We must renegotiate.

Colleagues on the Government side of the House have a choice: we either support the Prime Minister or we do not. If colleagues are not prepared to support him, every time they go into a different Lobby from him, they weaken his negotiating hand in Europe. Please let us not accept the blandishments from some that the Prime Minister has a negotiating strategy that he is not willing to show us. I can assure the House that the Prime Minister is perfectly capable at the Dispatch Box of telling the House what he wants to do, what he wants to achieve and where he wants to be supported.

I was a Minister throughout every day of John Major’s Government, and I know just how much that Government were weakened by colleagues persistently going into the Division Lobby voting against the 1992-97 Conservative Government.

Nadhim Zahawi: My hon. Friend and the Front-Bench team have articulated the challenge of achieving even a settlement that allows for no increase other than one in line with inflation, and part of that challenge involves building a coalition. It would be completely counter-productive, having got the agreement of Germany, France and the Netherlands, to go back to those countries and say, “Actually, our Parliament’s changed its mind. We want a bit more”, and force their hand even further.

Sir Tony Baldry: I agree entirely with my hon. Friend. It is time we started to be grown up. I am sorry if I sound like an old stager but, having lived through the Major years, I must say to my Conservative colleagues that we simply cannot carry on with the sort of self-indulgence that we see on the Order Paper today. [Hon. Members: “Oh!”] No, no. We cannot continue with this self-indulgence.

The reason Blair was able to give away the rebate was largely because we lost the general election in 1997, and one reason we lost the general election was because the nation was not prepared to vote for a party and a Government that they saw as being deeply divided. [Interruption.] The hon. Member for Bishop Auckland (Helen Goodman) might think that amusing, but I do not think that the country thought it amusing that the Labour party was in a position to give away a large part of this nation’s rebate.

The Conservative party has a responsibility to do the best it can for the country, and I have every confidence that the Prime Minister is seeking to do that. He has to renegotiate the whole of the UK’s position within the EU. That will take considerable tact and diplomacy, and he is entitled to consider that he has the support of Conservative Members when he does so.

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Dr Wollaston: Does my hon. Friend accept that, although in the past the Conservative party was divided on Europe, it is now united? We are all opposed to the budget increase and want to strengthen the hand of the Prime Minister, whom I support absolutely?

Sir Tony Baldry: In all honesty, if the hon. Lady goes into a different Division Lobby from the Prime Minister this evening, she will not be helping the Prime Minister or our party. It is as simple as that. The Prime Minister has made it clear what he wants to achieve. If he achieves a freeze in the EU budget, he will have done something that no other Prime Minister has ever managed.

Mr Burley: Will my hon. Friend give way?

Sir Tony Baldry: No, I am not going to give way.

All that happens on these Benches, whenever the Prime Minister says he is going to achieve something, is that those who are somewhat self-indulgent seek to set him an even higher hurdle—

Several hon. Members rose

Sir Tony Baldry: No, no. They seek to set him an even higher hurdle to jump over. It is unreasonable and unfair. If this party hopes to be in government after the next general election, it has got to get a grip and start supporting the Prime Minister.

6.13 pm

Mark Hendrick (Preston) (Lab/Co-op): I am pleased to follow the hon. Member for Banbury (Sir Tony Baldry), although I took exception to some of his comments about the Opposition’s view.

I have served in Parliament for 12 years, and I supported increases to the EU budget, but this time, with the depth of the recession and a double-dip that was predicted before the general election, clearly the economic conditions are very different. Although the case is being made for a cut on the grounds that the economy is doing badly, I wonder how many Government Members would make the case for an increase when there is growth in the economy and Europe is doing well, as it has in the past.

In times of austerity, it is clear that there is no popular mandate for an above-inflation increase in the multiannual financial framework. The Opposition have outlined the need for a real-terms cut in the budget for 2014 to 2020. I will not revisit the arguments—they have already been articulated by my colleagues—but on the question of the veto, the Prime Minister has no friends in Europe. I was on the Select Committee on Foreign Affairs visit to Berlin; I have spoken to the Germans and others from elsewhere in Europe in recent months. The Prime Minister was bragging today that he has a veto and is not afraid to use it. That is like the madman with a gun—“I’ve got a gun and I’m not afraid to use it”—but the trouble is that the gun is pointing at the Prime Minister’s feet, and he will isolate himself even more as he goes into those important negotiations in November.

I would like to address the need to look at budget reform, particularly the pressing need to retain and strengthen the aid budget delivered through the general EU budget, which is about 70% of the EU’s total spending on aid. The EU institutions are the world’s second largest aid donor behind the US, disbursing

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$12.6 billion of development assistance in 2011. Combined with the aid provided by each member state, the EU is responsible for some 60% of the world’s official development assistance. That is something to be commended. I am sure I do not need to remind the Financial Secretary, but the coalition agreement states:

“The Government believes that even in these difficult economic times, the UK has a moral responsibility to help the poorest people in the world. We will honour our aid commitments, but at the same time will ensure much greater transparency and scrutiny of aid spending to deliver value for money for British taxpayers and to maximise the impact of our aid budget.”

The European Commission’s “Proposals on external action instruments”, published in June last year, provided the basis for negotiations on development assistance in the multiannual financial framework. The European Commission proposes a 19% real-terms increase in the EU budget-financed development co-operation instrument. I am all for us cutting the contribution for this country; at the same time, I do not think that we as a developed nation should neglect the poorest people in the world. I hope that the Financial Secretary and the Prime Minister, when he goes into those negotiations, will support the Commission in securing a well above-inflation increase in the development co-operation instrument. That would mean an increase from €17.2 billion in 2007 to 2013 to €20.6 billion. I would also like to see budgetisation of the European development fund, which for a number of reasons is outside the European Union budget, in addition to major reform of the common agricultural policy. The CAP amounts to about £45 billion, with the UK contributing around £1 billion. In relation to aid policy, the CAP undermines international trade liberalisation and distorts trade, running counter to the objectives of the aid budget.

It is easy to lose sight of the human tragedy of poverty—the inability to pay for medicines to help a sick child; not knowing where one’s next meal will come from; war-torn countries without the basic infrastructure to support communities. Britain has moral authority in this area, but we can retain it only if we remain committed to a real-terms increase in the EU aid budget and a real-terms decrease in Britain’s contribution to the EU budget.

6.18 pm

Mr Bernard Jenkin (Harwich and North Essex) (Con): The speech by the hon. Member for Preston (Mark Hendrick) sounded more like a speech in favour of an increase in the European budget, albeit disguised as a speech in favour of a cut, because that happens to be what he is being asked to vote for today.

I note that passions are high in this debate, not least among my hon. Friend the Member for Banbury (Sir Tony Baldry) and the hon. Member for Ilford South (Mike Gapes). Let me assure them both—because I think they come from the same European stable—that the last thing those of us who support the amendment want to do is wreck Europe or to wreck our relationship with our European partners.

But something very big is happening in British politics—much bigger than this debate. We are debating the European multiannual financial framework, but there is something rather familiar about the positions being adopted by those on the two Front Benches. One could almost imagine that, if they were to change places, each

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would be making the other’s speech. Indeed, in the last Parliament, one felt that that was exactly what was happening. There is something deeply disconnected about the debates that we have been having in the House about our future relationship with the European Union, and about the aspirations of the British people and what they want that relationship to be.

I would caution my right hon. and hon. Friends against taunting Labour Members over their volte face on this issue. I have no doubt that they have made a volte face on the question of European spending, but for us to accuse them of doing so will cut absolutely no ice with the voters. I would note, however, that the Labour party’s volte face represents a big shift in the politics of this country and in the politics of our relationship with the European Union. Labour is an opposition party that is hungry for power. Even Labour Members can now sense the tide of opinion that is flowing against the European Union among our voters. They are picking up the vibrations from their constituents and from the voters they need in order to get elected, and they have discovered a new principle in order to reflect that: they now want to cut the European budget.

Mr MacShane rose

Mr Jenkin: I give way to my newly Eurosceptic colleague.

Mr MacShane: I am deeply grateful to the hon. Gentleman. Whether this is a volte face or a volte farce I am not quite sure, but he is quite right to say that the tide is flowing; it is flowing to Labour and away from the Conservatives.

Mr Jenkin: I believe that the Labour party is picking up the anger of the British people about the idea of spending more money on European policies when we are having to cut back on policies of our own.

There is something rather chilling about the exchanges between those on the Front Benches, which tacitly suggest that a veto is a defeat and that it could lead to a worse budgetary outcome for the United Kingdom than could a negotiated settlement. That seemed to be the burden of the argument put by the hon. Member for Nottingham East (Chris Leslie). I should just like to point out to him what that says about the relationship that we now have with the European institutions. Those institutions are so overpowering and so powerful that even the veto of the Prime Minister of the United Kingdom cannot stop the European train on its way to its destination. The British people feel that something has gone wrong with that relationship. This was not the basis on which we were sold membership of the institution, and it was not the basis on which all the assurances were given by successive Governments that each treaty represented no substantial change and was just a “tidying-up exercise”.

Jacob Rees-Mogg: My hon. Friend is absolutely right to say that the veto does not really work. Ought we not therefore to be looking to amend the European Communities Act 1972, while recognising that this motion is dealing with the system as it is?

Mr Jenkin: I would just point out that we should not try to make ourselves too important in this debate. This is a take-note motion. I have spoken in many debates on such motions. The amendment expresses an opinion on

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whether the Prime Minister should adopt this little bit of body language or that little bit of body language. It will not make a blind bit of difference to what he does when he goes to the Council of Ministers. The amendment is simply a cry of despair from the British people who want their elected representatives to say something to the Front Benchers of both parties, who have betrayed the British people on the question of our relationship with our European partners throughout the 20 years I have been in Parliament.

The problem in this country is that the governing class is now so out of line with our people’s aspirations for the relationship with our European partners that they are putting the United Kingdom in the worst of all possible worlds. It cannot deliver the engagement of the British state with our European partners on the terms set down in the treaties, and it is not trying to deliver the different terms of agreement with our European partners that the British people would prefer, that our country needs, and that are in the national interest. So wide is this gulf that even the Labour party is picking up the vibrations and is beginning to respond.

Mike Gapes: Will the hon. Gentleman give way?

Mr Jenkin: I will, because I mentioned the hon. Gentleman in my remarks.

Mike Gapes: Does the hon. Gentleman accept that if he got his wish and the UK left the European Union, as did Norway, in order to get access to the single market and to sign up to the acquis, we would pay billions into the EU yet not have any say at all?

Mr Jenkin: I do not want to leave the European Union; I want us to engage in a renegotiation of our terms of membership. Now is perhaps not the occasion for such a debate, but it is quite clear that the European Union is becoming a very different kind of European Union—even from the European Union agreed in the Lisbon treaty, let alone from the Common Market, which the British people voted to join all those years ago. It seems to me that if the EU is changing fundamentally and we do not want to be part of a political union, an economic union or part of a currency union or a banking union, we are going to have to change the arrangements by which the EU can legislate to make the laws in our own land.

That seems to me to be absolutely plain and axiomatic, absolutely simple, yet what we have at the moment is a coalition that is paralysed by that coalition—paralysed by an institutionalised disagreement by the two parties in coalition. The renegotiation opportunities at the moment are passing us by. The British people are aware of that paralysis and I do not think that they will put up with it. We are going to finish up having more debates like this, more crises, more difficulties, more dysfunctionality in how Ministers are forced to conduct themselves in the Councils of Europe—and that will put this country in the worst of all possible worlds. To that extent, I agree with the hon. Member for Ilford South.

What this country needs to do is rapidly reassess what relationship we want with the European Union so that our resources can no longer be appropriated in a manner over which even this House, which founded its powers on the control of supply, has no control. As for “own resources”, it is about the European Union having

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the right to sequester taxation, money and supply from our country, without the consent of this House. I do not think that is what the British people want; it is certainly not good value for money, and they can see that. This relationship is in crisis. The message that a vote for this amendment tonight will convey to the Government is that they are not addressing this crisis with sufficient urgency.

6.27 pm

Sammy Wilson (East Antrim) (DUP): It is a great joy to follow the hon. Member for Harwich and North Essex (Mr Jenkin). In this debate, I believe the people of Northern Ireland would expect me to lay down the marker that if we as citizens of the United Kingdom have to share in the necessary austerity measures required to get us out of our current financial problems, we should expect the same rigours to be placed on the European Union.

I have the honour of serving as Finance Minister in the Northern Ireland Executive. Over the last couple of years, I have had to defend and explain and implement a 40% cut in the capital budget of the Northern Ireland Executive. I have had to resist Ministers who stood out in the streets protesting against cuts to the education budget, the health budget and other budgets, and explain that we were at an end of making money available for all the things we had to do. I think the people would find it difficult if, when it came to the over-fed bureaucracy of Europe, we did not take the same stance. As for the arrogance of the bureaucrats in the European Union—sometimes described as the Bisto bureaucrats who think that the gravy train is still running—we need to put down a marker and say that the years of simply asking for money and getting it are at an end.

Many Members have said today that this is only a cynical exercise, that it will hurt the Prime Minister, that Labour Members are jumping on the bandwagon and that they are a bunch of hypocrites. I must say that I share some of the cynicism about what happened in the past, but this is not about what happened in the past; it is about what we are going to do now. I am sure that if the former leader of my party were here, he would tell the House that there is great joy in heaven over one sinner that cometh to repentance, and that there should be unbounded delight on the other side when a whole party-load of sinners may have come to repentance and renounced their fiscal sins of the past.

Regardless of the motives behind it, the amendment does not weaken but strengthens the Prime Minister’s position. It enables him to go to Europe and say, “The entire House of Commons supports my position, and I have to go back to the House and explain. Either you make changes in the budget, or I cannot carry it in the House of Commons, because I am facing united support for the stance I am taking.”

Mr Dominic Raab (Esher and Walton) (Con): The hon. Gentleman is making his case in typically passionate terms and I am reluctant to interrupt him, but, as a realist, is he aware that the 8% increase in the last multiannual budget was the smallest increase ever agreed in the EU? The chance that Brussels will now accept a real-terms freeze, let alone a cut, is virtually zero, and

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therefore we are almost inevitably heading for a veto. Is not the only real question whether the Leader of the Opposition joins the Prime Minister and the Deputy Prime Minister in supporting that veto?

Sammy Wilson: I have no difficulty with the veto. I do not have to be ambivalent about the veto. Whatever is required in these vital negotiations—whatever leverage is required—must be used. The point I am making is that the best leverage that the Prime Minister can exert in the negotiations is his ability to say, “Regardless of their positions on the party-political spectrum in the House of Commons, all its Members support me in saying that we will not give an extra penny to the European Union, and, furthermore, we want to see a reduction in the amount of money that we give to the European Union.”

John Hemming (Birmingham, Yardley) (LD): I agree that we should constrain the amount of money we send to Europe, but in financial terms the difference between the amendment and the original motion could be less than £1 a year. Why divide the House when we all wish to constrain that amount?

Sammy Wilson: The hon. Gentleman is wrong. As so much of our rebate is not covered in the new arrangements owing to increases for new member states, our contributions would go up by 5.3% over the seven years even if we opted for and secured a real-terms freeze in the budget. We are talking not about pennies, but about billions of pounds.

The bottom line that is suggested in the motion would actually prove very costly for the British taxpayer, which is why a motion proposing not a real-terms freeze but a real reduction in our contributions to the EU could, and in my view should, gain unanimous support in the House. That is the only way of ensuring that the austerity that people in the United Kingdom have had to experience is also experienced in the European Union. It is not that there are no ways in which money can be saved. For 17 years, the European Union’s accounts could not even be signed off because billions could not be accounted for. The amount of waste that takes place in the EU shows that it is not impossible to make reductions.

I do not know whether I shall be on the right or the wrong side of the vote tonight, in terms of who wins, but I do know that the Lobby that I go through will be the Lobby entered by Members who are standing up for people who have experienced austerity, and experienced it stoically because they believe that it is the right way to ensure the financial soundness of the United Kingdom. I will go through that Lobby because I am on the side of those who want to give the Prime Minister the best hand in the negotiations. I will go through that Lobby for the sake of the people who want to see an end to European and bureaucratic waste. For those reasons, I shall support the amendment.

6.34 pm