Oral Answers to Questions
Debate between Kelvin Hopkins and David Gauke(7 years, 5 months ago)
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Paula Sherriff (Dewsbury) (Lab)
The Chief Secretary to the Treasury (Mr David Gauke)
Annual funding to the Department of Health is already being increased by £17 billion by 2020-21. This reflects the priority that the Government put on investing in the NHS.
Kelvin Hopkins
OECD statistics show that the Governments of Germany, France, Holland, Sweden and Denmark spend an average of 9% of GDP on health compared with 7.7% in the UK—a massive difference of £23 billion a year. The NHS is desperately underfunded and it is no surprise that it is suffering, so is the Chancellor really going to take this seriously in the Budget?
Mr Gauke
I think the hon. Gentleman will find that the OECD has more recently put out revised numbers to show that the UK’s expenditure on health is very close to some of those other countries. The fact is that we can only have a properly funded NHS if we have a strong economy, and only the Conservative party can deliver it—a point that the people of Copeland may have noticed.
Finance Bill
Debate between Kelvin Hopkins and David Gauke(8 years, 2 months ago)
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Mr Gauke
I appreciate that that is the intention of the amendments, and of course the hon. Gentleman would be the first to accept that it would require some time for that to take effect, but there are other measures elsewhere that the Government are taking that I believe achieve those objectives more effectively.
Kelvin Hopkins
There is a proposal to build a railway line that would take 5 million lorry journeys off our roads every year, transforming current levels of emissions, particularly in towns. This has widespread support apart from in the Department for Transport and the Government. Will the Government look seriously at the scheme and see it as a positive way forward?
Mr Gauke
This Government are committed to a very substantial investment in our railways—the biggest rail building programme since Victorian times. As a Government, we have great ambitions; we intend to spend £60 billion on transport infrastructure over the course of this Parliament.
Turning to supporting testimonials, a point was raised about the definition of “customary”. To reassure the hon. Member for Wolverhampton South West, I point out that HMRC is committed to working with external bodies in the production of guidance on this, which will cover issues such as the definition of “customary”. He also asked about the numbers of testimonials that fall within the contractual or customary categories, or fall outside that. No figures are available, as employers have not had to report this to HMRC. It is worth pointing out that contractual and customary payments are treated as earnings and it is therefore not possible to disaggregate them from the PAYE system.
A number of points were raised on clause 14. It was asked whether this change would disadvantage rural communities. Workers in rural communities who are contracted directly cannot claim travel and subsistence on their ordinary home to work commute. This change equalises the tax treatment of workers employed through employment intermediaries with that of other workers. It addresses an imbalance in our tax system, ensuring that it is fair. It is a long-standing principle of the tax system that tax relief is not allowable for the expense of ordinary commuting—travelling from home to a permanent workplace. I made that point earlier.
In terms of whether it would reduce contractors’ ability to travel, creating a skills shortage or reducing flexibility and preventing growth, where businesses wish or need to recruit workers living some distance away, the Government expect businesses to pay a wage sufficient to attract workers without any special tax subsidy being necessary. This forms part of the Government’s plan to move to a high-wage economy with businesses meeting the costs of paying their workers a wage which does not require a top-up from the state. I should also make the point in this context that this change puts supply teachers —an example that I think was used in the course of the debate—who are engaged through an intermediary on the same terms as other supply teachers who are contracted directly or through an agency. Like other workers, supply teachers not engaged in this way would not receive tax relief on their travel and subsistence expenses on regular home to work travel.
Prior to the last general election, the Labour party said that it would stop umbrella companies exploiting tax relief. It stated this both in its published plan to tackle tax avoidance and subsequently in Parliament, and that is exactly what this change does, so I hope our measures in this area will have cross-party support.
The hon. Member for Aberdeen North (Kirsty Blackman) made a point about the impact on the Scottish oil industry. Employees with a permanent workplace at an offshore oil or gas installation are already exempt from income tax where they are provided with transfer transport, related accommodation, subsistence or local transport. These changes will not affect that exemption.
UK Economy: Post-Referendum Assessment
Debate between Kelvin Hopkins and David Gauke(8 years, 3 months ago)
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Kelvin Hopkins (Luton North) (Lab)
The institutions and individuals forecasting economic doom if we leave the EU have got it wrong time and again in the past and seem likely to do so again. The exchange rate mechanism debacle, driven by the whole Europhile spectrum; the prediction that the skies would fall in if we did not join the euro; and the complete failure to foresee the 2008 crisis coming down the road—all this shows just how hopeless they are. Does the Minister accept that a plausible opposite case—that we would be better off outside the EU—can easily be made? If not, I will happily provide him with one.
Mr Gauke
I look forward to hearing that plausible case when it is made. I look forward to an analysis, supported by leading economists, making that case, but we have not heard it yet. The hon. Gentleman and I agree about our membership of the euro—we always have done—but if we were to single out two politicians in this country perhaps more responsible than anyone else for keeping us outside the euro, I would highlight, from my party, William Hague and, from his party, Gordon Brown, both of whom believe we should remain in the EU.
Protection of the EU’s Financial Interests
Debate between Kelvin Hopkins and David Gauke(8 years, 6 months ago)
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Mr Gauke
I thank the hon. Gentleman for his question. It is 0.02% that is identified as being fraud. I think that a slightly larger number is suspected of and looked at as being fraud, but when it comes down to it, only 0.02% is established as being fraud.
In terms of the UK comparison, it can be difficult to make exact comparisons. All managing authorities across the UK have in place robust anti-fraud measures. Those include fraud risk assessments, mandatory checks on payments, fraud awareness training and regular referrals to OLAF where suspected fraud arises. We also support OLAF through the work of the designated UK anti-fraud co-ordinator, AFCOS, which is based in the City of London Police alongside Action Fraud. AFCOS continues to engage actively with OLAF and other member states to investigate and bring criminal proceedings against perpetrators of EU fraud. It would also be fair to say, looking at the ECA’s assessment of member states, that it samples member states’ activities; it is not intended to be a thorough audit of each and every member state to produce those numbers, so there is not a specific UK error rate on fraud, just as there is not for financial management errors.
Kelvin Hopkins (Luton North) (Lab)
It is a pleasure to serve under your chairmanship, Sir Edward. Hon. Members may notice a sceptical note in my questions, but—[Interruption.] They are just very accurate. We are a very substantial net contributor to the European budget, and 4.4% of the budget going amiss is the equivalent of certainly £1 billion and possibly more. Should we not be more concerned than some of the large recipient countries, because it is our money that is going into the wrong pockets?
Mr Gauke
It is certainly right that we should be concerned about that money. That would be the case regardless of whether we were a net contributor, but the hon. Gentleman makes a fair point: we make a substantial contribution to the EU budget every year. The UK has traditionally played a leading role in ensuring budgetary discipline in the European Union, and I highlight the Prime Minister’s achievement in 2013 of a real-terms cut in the EU budget for the multi-annual financial framework. An important area for us is ensuring that money is spent wisely and that we do not spend too much money at an EU level. We are a strong advocate of sound financial management and are committed to ensuring that EU funds are safeguarded and managed well. The Commission has ultimate responsibility for the implementation and management of the EU budget, but all member states, including the UK, must take responsibility in terms of putting pressure on the Commission and ensuring that money spent by member states is spent well.
Kelvin Hopkins
No doubt there are particular budgets that are more vulnerable and particular countries where the budget is not as appropriately controlled as it might be. The Financial Secretary talked about simplification. Are the British Government targeting certain areas and do they have concerns about particular countries where the budget might not be appropriately spent?
Mr Gauke
In terms of the UK’s action in this area, we have in place comprehensive procedures to ensure that EU funds comply with UK and EU rules, including a role in programme audits and preventive anti-fraud measures. The hon. Gentleman raises concerns about particular areas. Structural funds, for example, which are a sizeable part of the EU budget, have to be focused upon. The Commission set up a high level group on European structural investment funds simplification last year, whose work is ongoing. Although the agenda is in its early stages, the UK continues to engage actively by advising on simplified costs and financial instruments.
In agreeing the terms of the 2014 to 2020 structural funds regulations, the UK actively pushed for and achieved greater use of simplified costs, reductions in document retention periods, and lighter and more automated annual reporting. In terms of good practices, DCLG’s work in improving public procurement procedures was highlighted in an ECA special report last year. The Department has set up an internal network to review public procurement issues, including the issue of guidance, case studies and reviews of public procurement checks and audits.
As I have said, the UK takes this matter very seriously. Although the Commission has ultimate responsibility for implementation and management of the EU budget, we have a role in taking responsibility to push for reforms.
Mr Gauke
Indeed.
I thank the hon. Members for Luton North and for Wolverhampton South West for their questions, which I will attempt to address. I also thank other hon. Members who participated in the debate.
As the Committee is aware, the Government have taken an increasingly robust stance on financial management. Although the estimated European Court of Auditors 4.4% error rate from the 2014 EU budget shows a slight improvement in the estimated level of error, it is a marginal reduction from the 4.5% error rate in the previous year and remains well above the ECA’s acceptable threshold of 2%.
We want to see more ambition and progress in the area, so, as I confirmed earlier, the Government will vote against discharge of the 2014 EU budget at this month’s ECOFIN. That is the most public way for member states to take a tough stance on financial management and the Government continue to make that stand for UK taxpayers. None the less, we welcome the efforts of Vice-President Georgieva to manage the budget better and to focus on performance. The UK is taking a proactive role in driving that agenda forward.
The hon. Member for Luton North asked about the difference between fraud and error, which was touched on by his Front-Bench colleague. Fraud is the deliberate criminal misuse of EU funds. Financial errors are breaches of often complex EU regulations. Of course, the Government take a zero-tolerance approach to fraud. As I said earlier, only an estimated 0.02% of EU payments are established as fraudulent, according to Commission data. The “Fight against fraud 2014 Annual Report” shows that, across the EU, cases of suspected or potential fraud affected around 0.26% of EU payments and 0.8% of EU revenues. Of these, Commission estimates suggest that around 8% are likely to go on to be established as actual fraud. So I do not think we should consider that that 4.4% is all fraud.
Kelvin Hopkins
I thank the Minister for his explanation. However, the discrepancy between definitely defined fraud and the money that has been spent inappropriately suggests a relaxed attitude to expenditure—money splashing about and finding its way into the pockets of people who might be politically helpful and so on. It may not be fraud, but it leans that way.
Mr Gauke
First, where I would agree with the hon. Gentleman is that failures of financial management matter. Whether it is fraud or not, we should have stringent standards and take a robust approach. However, there is another context. We often talk about fraud and error, or error and fraud, in the context of welfare payments, and when politicians allow the percentages that refer to fraud and error to be described as simple fraud, those politicians tend to be criticised. Indeed, I have heard people make the case that we should refer to error and fraud, not fraud and error, because the larger part of the error and fraud budget relates to error and is not proven to be fraud. So I think that approach should also be borne in mind.
It is also the case that, as has been mentioned, much of the legislation governing the EU funds is complex, and the associated guidance does not always offer the necessary level of clarity. Some of the errors identified are systemic, recurrent, and affect various member states and EU institutions. It is therefore clear that the overarching rules governing these areas need to be addressed. I do not wish to downplay the importance of dealing with error or any kind of financial mismanagement, but it is not the same as fraud. It is not synonymous with fraud, and the element that can clearly be identified as fraud is a subset of the overall 4.4% number that we are talking about.
Kelvin Hopkins
Clearly, we must not confuse error and fraud. Nevertheless, if the vast proportion of the money that is inappropriately spent is described as error, it enables those who want to play it all down to be successful in reducing concern about the money that is misspent. There might be a penumbra somewhere between fraud and genuine, innocent error.
Mr Gauke
Yes. I do not in any way want to downplay that 4.4% number. It is too high and needs to be addressed. On the 0.02% that is identified as fraud, there may well be sums of money that in the end are not identified as fraud, but might be getting close to it. I recognise that point. However, I would not want us to consider that the two are synonymous.
The hon. Gentleman raised a point about expenditure levels. It is worth reiterating again that in 2013 the Prime Minister secured the first ever real-terms cut to the multiannual financial framework for the period 2014 to 2020, forcing necessary budget restraint. For example, both the 2014 and 2015 budgets represented cash and real-terms cuts compared with the 2013 budget, which was the last year of the previous MFF. From 2010 to 2013, we were still working on the MFF that had been agreed by the previous Government. Tempted as I am to debate the weaknesses of that agreement, I would rather focus on the successes of the 2013 agreement, negotiated by the current Prime Minister.
Turning to the detailed points made by the hon. Member for Wolverhampton South West, he first raised the directive on the fight against fraud to the Union’s financial interests by means of criminal law—the PIF directive. The UK supports the directive’s broad aims, but the draft text contained several unacceptable elements, such as the inclusion of VAT in the directive’s scope. While the Council’s general approach of 2013 removed many of the unacceptable elements, discussions are ongoing and the final text is yet to be agreed. As such, the UK has elected not to opt in to the PIF directive at this stage but continues actively to engage in EU negotiations and will consider the case for a post-adoption opt-in once the final text has been agreed. I will of course keep hon. Members informed of progress in that respect.
We of course continue to take VAT fraud seriously at both national and EU levels. In addition to working to tackle VAT fraud domestically, Her Majesty’s Revenue and Customs continues to work closely with other member states and international agencies to combat VAT and other cross-border fraud. Additionally, member states continue actively to work together to share knowledge and expertise through the Fiscalis programme and exchange information on potential missing trader intra-community fraud in the EUROFISC network. The UK has also successfully pushed for the increased use of multilateral control systems, involving a co-ordinated exercise in which two or more member states verify the tax liability of businesses, to investigate cross-border VAT fraud. However, the UK Government’s position on VAT fraud is that it should be dealt with at a national level, not an EU level, as it is primarily a national resource.
As for the other detailed points that the hon. Member for Wolverhampton South West raised, I will write to him on the specific policies outlined in the explanatory memorandum to the Commission’s “Fight against fraud 2014 Annual Report”, which, as he said, I signed on 24 August. I reassure him that it did not get in the way of the Gauke family holiday, much excitement though there would have been at the opportunity to run through the memorandum on a wet afternoon in north Wales. In the event, it did not interrupt us and I think we played Uno instead.
On missing trader intra-community fraud, it is worth pointing out that the estimates of attempted MTIC fraud have now decreased from some £2.5 billion to £3.5 billion in 2008-09, which I suspect we debated back then, to between £0.5 billion and £1 billion, which has held steady over the past four years. Nevertheless, we recognise that fraud poses a constant threat, but HMRC remains vigilant. HMRC has been in the vanguard of member states developing tools and arguments to deal effectively with VAT fraud, MTIC fraud in particular, and is active in EU forums to ensure the spread of good practice and greater co-operation between tax authorities.
Rather than attempt a definitive definition of the reverse charge this afternoon, I will include one in my letter. In short, it is about shifting the responsibility for reclaiming input taxes within a chain of transactions involving VAT. The reverse charge was something used by the previous Labour Government to counter MTIC fraud. I will write to hon. Members with a definitive definition.
On the European Public Prosecutor’s Office, the UK will not participate in the establishment of any European Public Prosecutor. Nevertheless, the Government retain a considerable interest in negotiations on the European Public Prosecutor, given its potential impact on us and bodies such as Eurojust in which we currently play a role. The Home Office leads on that matter.
The role of the anti-fraud co-ordination service varies across member states. The UK’s role includes investigating irregularities involving criminal behaviour—a function that the City of London police is well placed to perform. The AFCOS has attended EU conferences designed to facilitate the sharing of information and best practices across member states, enhancing co-operation on the important issue. The UK’s AFCOS actively supports OLAF in investigations in Brussels through facilitating interviews, statements and visits to the UK.
On structural funds, the ECA has indicated that a significant proportion of errors in its audits are related to public procurement procedures, which is partly due to the complexity of the rules. The ECA acknowledged in a recent special report on public procurement issues the good practices introduced by the UK since the errors in 2009-10. The UK authorities are aware of the need to continue improvement of public procurement procedures in structural funds programmes for the 2014 to 2020 period.
The UK welcomes the fact that the ECA recognised the different definitions of customs audit applied across member states and revised its assessment accordingly. The hon. Member for Wolverhampton South West raised a further point about preventing the falsification of documents—one of the primary ways in which fraud is committed. The UK has a number of policies in place. The Government support efforts to reduce fraud in the EU, including the work of the European anti-fraud office, OLAF, in detecting and tackling fraud, and in seeking financial redress for the EU budget when it is found.
Finally, the hon. Member for Kirkcaldy and Cowdenbeath raised the issue of different countries’ practices in ensuring compliance with EU aid spending. Member states are responsible, but ultimate responsibility lies with the Commission, which needs to ensure compliance across the EU by issuing clear guidelines and ensuring that effective control systems are in place.
I hope that those points of information and clarification are helpful to the Committee. I thank hon. Members for their ongoing engagement with the issues and for their continued support of the Government’s strong position on financial management and fraud.
Question put and agreed to.
Resolved,
That the Committee takes note of European Union Document No. 11470/15 and Addenda 1 to 6, a Commission Report: Protection of the European Union’s financial interests—Fight against fraud 2014 Annual Report, and unnumbered European Union Documents, the European Court of Auditors’ 2014 Annual Reports on the implementation of the budget and on the activities funded by the 8th, 9th, 10th and 11th European Development Funds; agrees that budgetary discipline and robust financial management at all levels remains crucial, and that EU taxpayers must have confidence that their funds are being effectively managed and implemented at an EU level; expresses disappointment that the error rate for EU budget payments shows only a slight improvement on last year; supports the Government’s efforts to continue to engage with the Commission and Member States to drive improvements to reduce the error rate, in particular, advancing the simplification agenda; stresses the importance of the EU budget achieving results as well as being compliant; and presses the Commission for a clear action plan to address the European Court of Auditors’ recommendations relating to the European Development Fund in order to improve its error rate.
Oral Answers to Questions
Debate between Kelvin Hopkins and David Gauke(8 years, 7 months ago)
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Kelvin Hopkins (Luton North) (Lab)
Britain has been a significant and, in recent years, a substantial net contributor to the EU budget. For over 40 years, this has had a negative impact on UK economic growth and GDP, the cumulative effect of which has been very large. Would leaving the EU not take that particular brake off UK GDP growth?
HMRC Office Closures
Debate between Kelvin Hopkins and David Gauke(8 years, 9 months ago)
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National Insurance Contributions (Rate Ceilings) Bill
Debate between Kelvin Hopkins and David Gauke(8 years, 11 months ago)
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Mr Gauke
I understand why the shadow Minister does not want to defend the position of the current leader of the Labour party, but let me make this point clear. The Prime Minister came into office in 2010 with a mission to turn around the UK economy. He succeeded and was re-elected with a majority in 2015.
The hon. Member for Luton North always makes entertaining and thoughtful speeches. I noted that he praised the tax system of Denmark, but I would point out that its VAT rate is 25% and it does not have any lower rates. I can assure him that we will not follow Denmark’s example and put VAT up to 25%.
Kelvin Hopkins
I would be happy if the Danes lowered their VAT rate, but can the Minister tell us what Danish income tax rates are?
Mr Gauke
I do not have all the numbers in front of me, but I take it from the hon. Gentleman’s remarks that he would like to put income tax rates up, not down—[Interruption.] Well, I know he is very close to the Labour leadership and I suspect that he may prove to be an influential figure in deciding policy.
I am delighted that we do not appear to be divided on this measure, even though we heard some doubts about it from Labour Back Benchers. I am grateful to hon. Members for their contributions. This is an important part of the Government’s long-term economic plan, providing certainty and stability to the taxpayers of this country. I am pleased that we are making progress on providing that certainty and stability, as well as protecting the British people from tax increases, at least for the course of this Parliament and—we hope—future years as well.
Question put and agreed to.
Bill accordingly read a Second time.
NATIONAL INSURANCE CONTRIBUTIONS (RATE CEILINGS) BILL (PROGRAMME)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the National Insurance Contributions (Rate Ceilings) Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 27 October 2015.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
Other proceedings
(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Charlie Elphicke.)
Question agreed to.
European Union (Finance) Bill
Debate between Kelvin Hopkins and David Gauke(9 years, 2 months ago)
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Mr Gauke
Absolutely. I am keen to make that commitment and I am grateful to my hon. Friend for making that point. Those of us who participated in the equivalent debates after the previous multi-annual financial framework was agreed and on the Act that performed the task that this Bill will now perform will recall that we spent some considerable time focusing on the fact that a large part of the rebate had been surrendered by the previous Government for little or nothing, merely a promise of reform of the common agricultural policy that had not been delivered.
Kelvin Hopkins
Following on from the point made by the hon. Member for North Dorset (Simon Hoare), I have said many times in this House that the deal done in 2005 was a terrible mistake. The Government have made frequent references to it. Is it not now appropriate to consider trying to regain what was lost in that deal, particularly because our net budget contributions have been rising so strongly in recent years?
Mr Gauke
My hon. Friend makes an important point. I would perhaps go further: it is not just member states that recognise that things need to change and that there needs to be better value for money. Vice-President Georgieva, who has responsibility for the budget, also recognises the need to ensure that money is spent in a better way. The Prime Minister has consistently set out the fact that there are two sensible objectives: to cut the whole budget and to protect the rebate. We will continue to make that case.
Kelvin Hopkins
I thank the Minister for giving way once again. The hon. Member for Boston and Skegness (Matt Warman), who is not in his place, made a useful point about expressing our contributions in terms that the citizens will understand—contribution per head, per month or whatever. Would it not be useful to look at the expenditure side of, for instance, the common agricultural policy, and say how much that costs in net terms per head of population, and how much it has cost over many decades in higher food prices? People would be very interested to know that.
Mr Gauke
The hon. Gentleman draws me into deeper waters and wider issues. Perhaps I should resist, Mr Streeter, before you advise me not to spend too much time on the common agricultural policy and some of its costs. It is worth pointing out that the CAP as a proportion of expenditure by the EU is falling and has fallen fairly significantly. The hon. Gentleman’s point is about making things clearer and ensuring that the British public have a better understanding of where their money is spent. There is a wider point, because that does not apply only to EU contributions. I am sure that he and all hon. Members welcome the fact that Her Majesty’s Revenue and Customs sends out tax statements to the British public so that they can see details of where money is spent in various Government Departments and the details of the money spent on our net contribution to the EU.
The scrutiny Committees of both Houses closely scrutinised and cleared the proposal for the new ORD, which was agreed unanimously by member states in May 2014. The Bill and the Prime Minister’s 2013 deal demonstrate that, working with allies, we can achieve change in Europe, and secure a good deal for the UK and for Europe. I commend the clauses to the House. They should stand part of the Bill.
Mr Gauke
I take my hon. Friend’s point. We are, I hope, moving in the right direction. The new Commission has been in place for the past few months or so, and the early signs are—I shall return to the point—that it appears to be more focused on the task. I think there is a link: there was a reduction in the EU budget, which has somewhat focused the mind.
Kelvin Hopkins
Following what the hon. Member for Torbay (Kevin Foster) has said, would it not be sensible and appropriate for our Government to carry out a comprehensive review of how we think the budget should operate, and make that a firm public submission, whatever is undertaken by the EU itself?
Mr Gauke
I am grateful for the hon. Gentleman’s intervention, which he makes in a characteristically constructive way. Clearly, it is important for us to work with other like-minded member states to ensure that we get the focus we need and the prioritisation of expenditure in the areas that add the most value. There are different ways of achieving that, and we can discuss that. It is only fair to note, however, that some progress has been made, as I shall touch on in a few moments.
New clause 2 imposes a requirement on the Government to request a review by the Council of Ministers of the EU
“budget priorities, waste and inefficiency”
in advance of ratification. The new clause relates not to financing, but to expenditure, so I again point out that we will reject it. Although the Government recognise the need to cut down on wasteful spending, requiring the Government to write and ask for a review of waste and inefficiency would add little to what the Government are already doing in this area. We know that there is waste and inefficiency in the EU budget. We need action, not words—and action is what the Government have taken. Our most important step has been to cut the EU budget. Just as Governments across Europe are making tough decisions to consolidate public finances, the multi-annual financial framework deal negotiated by the Prime Minister has forced the EU to make tough decisions to bear down on waste and to economise. By imposing restraint on the EU budget, we can create a culture change in the Commission. The days of Commission officials measuring their success by how much of the budget they have been able to spend should be behind us.
European Union (Finance) Bill
Debate between Kelvin Hopkins and David Gauke(9 years, 2 months ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
I beg to move, That the Bill be now read a Second time.
This is a short but important Bill. Let me begin by explaining the background to it. A little over two years ago, at the February 2013 European Council in Brussels, the Prime Minister secured an historic deal. On the expenditure side, it meant that the EU budget was cut in real terms for the first time, and on the revenue side, it protected our rebate.
As Members will recall, under the financing arrangement that was agreed in 2005 and is currently in force, the then United Kingdom Government gave away part of the UK rebate. That has had, and will continue to have, an impact on the UK’s contribution to the EU budget. The European Commission estimated the cost at £6.6 billion over the previous seven-year financial framework, and in future it will cost us about £2 billion a year.
Kelvin Hopkins (Luton North) (Lab)
I was one of those who complained bitterly about the supposed renegotiation of the British rebate, which was actually a giveaway. What is the cumulative cost, and will the Government seek to reverse the position that was negotiated in 2005?
Mr Gauke
As I have said, the estimated cost over the previous seven years was £6.6 billion, and in future it will be about £2 billion a year. I understand the point that the hon. Gentleman is making: he want us to clear up yet another mess that was created by the last Government, although I acknowledge that he was as disappointed by his Government as we were. As for what the UK Government can do about the financial position, let me explain what we did in the 2013 negotiations. Whereas the last Government had agreed to an 8% increase in the spending ceiling, we proceeded with an agenda that was in the UK’s interests. This time, the two sensible things that we could do to protect the British taxpayer were to get the overall budget down and to protect our rebate, and that is precisely what we achieved.
The agreement that the Prime Minister secured back in 2013 was good for Europe and good for the United Kingdom. At the time, some argued that it was not possible, and that the interests of the UK were in some way incompatible with the wider aims of the European Union, but the Government showed them that they were wrong.
Mr Gauke
Let me make a little progress.
This Bill relates only to agreement reached on the revenue side of the EU budget. This is an area that receives much less interest, but is no less important—nor any less of a success for the UK—than the cut to the EU budget. I would like, however, to first remind hon. Members of the details of the deal reached on expenditure, before moving on to revenue, the nub of the Bill.
When others argued that the EU would never reform, and certainly would not cut its budget, we argued that a cut in the EU budget was the right thing to do, especially at a time when so many countries had had to make difficult decisions in their own budgets. We argued that EU spending should be focused on where it could provide real growth, in areas such as high-value research and development, and tertiary education—from which Britain’s universities are particularly well-placed to benefit. We made sure that the UK would not be overly disadvantaged by reductions in spending: so, for instance, we ensured that structural funds would continue to flow to our less well-off regions. Above all, we argued from the point of the view of the British taxpayer, who expects and deserves good value for money—and I should add that the British taxpayer is not unique in this respect. So the seven-year EU budget deal—2014 to 2020—secured by the Prime Minister represents a real-terms cut to the payments limit to €908 billion in 2011 prices. Overall spending on the CAP over this period will fall by 13% compared with the 2007-13 EU budget period. At the same time, spending on research and development and other pro-growth investment will now account for 13%, a 4% increase on the previous budget. That is a good deal for Britain, a good deal for the taxpayer, and very different from the previous time round.
Kelvin Hopkins
Returning to the issue of the structural fund income to Britain, would it not be easier if we had control of those funds? We could allocate them better, and we would be better off by not having to contribute to the budget. Would it not be more sensible to have regional funds repatriated to Britain, so our Government can decide what and where to spend?