European Union (Finance) Bill

Debate between Lord Soames of Fletching and David Gauke

Tuesday 23rd June 2015 Commons Chamber

[The Financial Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship this afternoon, Mr Streeter. Clause stand part, the amendment and the new clauses have been grouped, so if it is convenient I shall start with the two clauses, turn to the new clauses and finish with the amendment, which is consequential and related to the new clauses.

The purpose of the Bill is to enable the UK to give effect to the new own resources decision amending the arrangements for financing the annual budget of the European Union. The amendments were agreed at the February 2013 European Council, and the new ORD, reflecting those amendments, was adopted by the Council of Ministers on 26 May 2014.

Clause 1 is fairly simple: it adds the new own resources decision, adopted unanimously in May 2014, to the list of previous ORDs, recognised under the European Communities Act 1972, thus giving it effect under UK law. When passed, the Bill will become the European Union (Finance) Act 2015 and supersede the European Communities (Finance) Act 2008, which approved the previous ORD. Clause 2 cites this legislation as the European Union (Finance) Act 2015 and repeals the 2008 Act.

For the benefit of hon. Members, I shall explain in a little more detail what the new own resources decision, to which clause 1 refers, means. The new ORD will largely maintain the existing financing system framework, which consists of four pillars: levies and duties on trade with non-member countries in agricultural goods, including sugar; customs duties on trade with non-member countries; the yield from applying a call-up rate to a hypothetical harmonised VAT base for each member state; and a fourth resource based on gross national income—GNI. Those four pillars remain largely untouched in the new ORD, and that is no insignificant achievement. During the negotiations over the multi-annual financial framework and before, there was considerable pressure to change the financing system.

[Sir Nicholas Soames (Mid Sussex) (Con)]

Will my hon. Friend confirm that GNI is assessed in the same way across the whole Community?

[Mr Gauke]

Yes, it is. My right hon. Friend raises an important point and I suspect that he has in mind the issues that occurred last year as a consequence of revisions to our GNI and that of other member states, which meant that an additional surcharge was applied to the United Kingdom. He will of course recall the negotiations that followed and how we ensured that payments were delayed and that the rebate applied to the surcharge. There is consistency in the application in this case and that is very important. There is suitable scrutiny and co-ordination, with Eurostat playing a role.