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Noble Lords: Howe!

Lord Howe of Aberavon: My Lords, I am grateful to the noble Lord.

Is the Minister aware that I am probably not the only Member of this House who has some admiration for the moderate and balanced way in which he has been presenting the matters he has been dealing with this afternoon? Many of us share the anxiety about the triumphalist note, which was referred to by the noble Lord, Lord Morris, in the opening Statement.

Likewise, is he aware that I certainly would repudiate the idea that we should now all be making absolutist statements, such as the one we have just heard from the noble Lord opposite and, indeed, with great respect, some of those heard from my real and noble friend Lord Howell of Guildford?

Is it not important to follow some of the objectives identified by the noble Lord, Lord Kerr? He showed himself able to prepare a much better speech for himself than he often succeeded in preparing for me. That, I may say, is intended as a tribute. He has excelled all his earlier performances.

If I may give an example for the noble Lord, as long ago as 1985 my noble friend Lady Thatcher and I succeeded in implanting in Part III of the Single European Act the initial proposals for enhanced political co-operation in the European Union. Since then, successive Councils and governments have succeeded in making further progress in the same direction. My noble friend Lord Patten, in concert with Mr Solana, has been making some headway with that in recent years. Is it not important that we should recognise that, although the people of France and the Netherlands have, understandably, reacted to the arrogant overconfidence with which the elite are sometimes perceived, we do not mistake that for a signal to repudiate all the efforts that we have made in the past for closer European co-operation—not just in the field of foreign policy, but in other fields as well?

Lord Triesman: My Lords, I welcome those comments. Until a few moments ago I was going to ask the noble Lord, Lord Kerr, whether he would mind writing any of my speeches, but given that that was apparently such an unusual one—no, I do not mean that at all. It was an exceptional speech.
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The process by which the European Union has opened up its political institutions may have been slow and, on occasions, may have been painful. It certainly went past some important milestones, of which 1985 was one. I think—most seriously—that some of the elements that the Council could adopt, which would open processes still further, would give national parliaments clearer rights, and in the right sequence in the legislative process, and can only be of huge benefit. They will carry the dynamics that have been exhibited over the years forward, in the right direction.

Lord Willoughby de Broke: My Lords, will the Minister please answer the question—

Noble Lords : Time is up.

Lord Willoughby de Broke : Time is up, my Lords, so I will ask in the debate instead.

EU: Future Financing (EUC Report)

4.49 pm

Debate resumed.

Lord Inglewood: My Lords, like the other speakers in the debate, I shall begin by commenting on the constitution. Although I am not clear whether there is a consensus in your Lordships' House about whether the treaty is dead, it seems clear that it will not come back, and that its contents—both good and bad—will not be considered further by us in that form.

The report that the noble Lord, Lord Radice, introduced for debate today was very timely in the context of the financial perspective, but because of the events of the past few days elsewhere in the Continent it now has wider significance. It sets out a logical and coherent budgetary analysis for a European Union that will not develop into an embryonic super-state. If, as I believe is desirable in an interdependent world, we must have proper systems for taking decisions that affect us all together, there is frequently a fair case for making certain budgetary transfers as part of that wider process. The European Union budget should deliver that in the context of the whole of Europe. That expenditure must be firmly set within the framework of how much money is involved and on what it will be spent. In turn, that framework must be founded on the principles of basic equity.

One of the most important aspects of the report is the emphasis on the principle of subsidiarity, to which is always attached that of proportionality, which is less often talked about and is not to be muddled with it. Those ideas have been applied, albeit not as rigidly as they should have been, in the legislative context but they are equally important in the area of expenditure. I believe, as the report emphasises, that the test of value-added should be at the forefront in decisions about expenditure at European level. Furthermore, those in turn should be contained within a framework that is
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not merely contextual but part of a formal set of arrangements of checks and balances around which Community spending decisions are taken.

It follows that the proposals described in the report about, for example, regional policy, research and development and some aspects of trans-border educational systems seem to meet that test of appropriateness. On the other hand, there is no case now for the way in which the common agricultural policy, which needs further reform—I speak both as a farmer and a non-executive director of an agricultural supply company—of the way in which it has a right of pre-emption over European Union spending. There is an element of truth behind the proposition that the CAP is the French rebate.

That brings us to the question of the United Kingdom's rebate, which, as its opponents often seem to forget, only came into being because of a fundamental injustice accorded to our country. Against that background, there is surely no reason why it should not remain, unless and until that fundamental injustice is eliminated.

Given that there are budgetary corrective mechanisms in place in respect of other member states' contributions, there seems to be a case for the whole European Union taking the issue a trifle more seriously in general than it seems to have been doing. What matters here is not the particular mechanism but rather the underlying equity, or inequity, of any member state's gross and net contributions. Our Government must be unbending and unyielding in that matter.

One aspect of the debate about the European budget that I have never fully understood, during the entire time that I have been interested and involved in European affairs, is why some argue that European taxes should be collected directly from the citizen. There is an argument that it brings the European Union closer to the people—that is, at best, arguably true—but it is certainly likely to make the European Union more unpopular. I cannot see why Europe cannot and should not collect its revenue through a system of precepts. I am very pleased that the report reaches a conclusion very similar to my own views.

As the noble Lord, Lord Barnett, said, the great challenge facing our country today is economic—globalisation, in particular. The document rightly touches on the Lisbon agenda, but, as I have said previously, contrary to what many in this country seem to think, the European Union is not primarily about money; it is about laws and rules. The first imperative must be that the laws and rules enable our country and our partners to compete globally in the wider marketplace. Europe's expenditure programmes must run with the grain of those other programmes; at the same time, they cannot and should not attempt to replace, or even to substitute in any form, member states' programmes. We must recognise that and set our thinking about Europe's future spending within that wider context.

One of the obvious conclusions touched on earlier about the recent referenda across Europe—I refer not only to the Dutch and French constitutional referenda;
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it is also true of our own country—is that there is a sense of alienation between the voter and the administration. The framework within which European expenditure is carried out is about as arcane as one can get; hence, the proposals discussed to link the financial perspective to a particular commission and to the European Parliament should be welcomed. However, I confess that I sometimes suspect that the body that should have its reputation harnessed to expenditure and almost everything else that the European Union does is the Council of Ministers. After all, member state governments are the prime force and movers at work in the European Union.

Since the constitutional treaty in its present form seems to be dead, in one sense it does not matter whether it was a good or bad proposal. We are back to where we started. We cannot, and we do not want to, remain where we are now. Nevertheless, it is clear that in a world where we need change, the alliance of forces that prevailed in France and the Netherlands is inherently unstable. That particular alliance has not a very long lifetime ahead.

I believe that we will see a lot more debate and discussion about what happens next. The significance of this report now is that it is an important contribution towards getting something better next time. My noble and learned friend Lord Howe, commenting about the magisterial maiden speech of the noble Lord, Lord Kerr, said that practice makes perfect. Perhaps, in the words of the noble Lord, Lord Kerr, it is a case of sero sed serio.

4.57 p.m.

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