Baroness Keeley
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European Union (Finance) Bill
Baroness Keeley Excerpts(9 years, 5 months ago)
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Mr Gauke
I will certainly make that point. It was estimated by the European Commission to be of the value of €9 billion over the previous MFF period. In this MFF period, it would be in the region of £2 billion a year, which would be a considerable loss. The Government will not be repeating that.
Barbara Keeley (Worsley and Eccles South) (Lab)
I would like to take the Minister back to the intervention of the right hon. Member for Gordon (Alex Salmond), because the Minister did not really answer him. In an article in The Sunday Times this week, one Conservative MP said of the Prime Minister’s intentions that he was keeping things up his sleeve, and that:
“He’ll try to negotiate a lower net contribution to the budget.”
It is definitely being said that the Prime Minister is holding that in reserve. Will the Minister comment on that?
Mr Gauke
We have consistently argued the case for money being spent more wisely and for greater European Union public spending restraint. We have already made progress with that argument—we made progress in 2013 and the Bill relates to the negotiation, although it is on the revenue rather than the expenditure side. We will consistently argue that case.
Barbara Keeley
I invite the Minister to remind himself of a similar debate we had in January 2008, in which he and his hon. Friends on the then shadow Treasury team tabled a strikingly similar new clause that asked for a report on the review by the European Commission covering all aspects of EU spending. It was a very robust debate and he was a signatory to that new clause. He rejects my new clause, but it is very similar to the one he tabled in 2008.
Mr Gauke
I am tempted to point to the remarks made by the hon. Lady’s colleagues in setting out the reasons why that new clause should have been rejected. She might not have been persuaded, but I am tempted to say that six years on, after much reflection, I can see some value in them. The stronger argument I would perhaps make is that in contrast to what happened some years ago, when the previous Labour Government negotiated away part of our rebate, we have just had a successful negotiation in 2013. Let me set out the progress that is being made on that agenda. If I may, I will give a little detail on the substance, putting aside the point that the Bill focuses on the revenue, rather than the expenditure, side of things.
Mr Gauke
I am grateful to my hon. Friend for those remarks. Let me come straight to new clause 3, as he has raised that point.
Along with many across Europe, we share the concern that lies behind new clause 3 that the EU is not sufficiently accountable to EU citizens. Hon. Members will need no reminding that the Prime Minister has already made it clear that strengthening the role of national Parliaments is a central tenet of his reform programme. Within the existing legal framework, the Government already take the role of national Parliaments in scrutinising EU proposals very seriously. That is why, when the European Parliament requested the formation of a high-level group on own resources to review the EU financing system, we insisted that national Parliaments, as well as the European institutions, were given a voice as part of the consultation. We therefore amended the joint declaration on the formation of the group explicitly to take account of input from national Parliaments.
We do all we can to ensure the transparent and effective scrutiny of each year’s annual budget negotiations. An explanatory memorandum is deposited as soon as possible after the publication of the draft EU budget each year. That is followed by debates in both Houses and regular ministerial updates at significant stages of the negotiation process.
We are committed to working with both scrutiny Committees to make this process as efficient and effective as possible for all parties. However, we believe that requiring the Government to write to invited officials to appear before the scrutiny Committees would add little to the scrutiny process and would be a very peculiar precedent, for all the reasons set out by my hon. Friend the Member for Stone (Sir William Cash). It would add little because the Committees can, and have, invited officials to appear before them. For example, in June 2014, Nadia Calvino, the Director-General of the European Commission budget, gave evidence to the Lords EU Economic and Financial Affairs Sub-Committee.
It really should not be the place of Government to determine who the scrutiny Committees should see. It is for the Committees of both Houses to decide for themselves who should appear before them and when. It would be a peculiar precedent for the Executive to begin to interfere with that freedom, no matter how benign the initial intention.
Barbara Keeley
I appreciate the point made by the Chairman of the Select Committee, the hon. Member for Stone, but the Minister cannot have it both ways. In a debate in October 2012, the right hon. Member for Tunbridge Wells (Greg Clark), speaking for the Government, complained strongly—I referred to this in a previous debate—that Ministers had asked the Commission to model costs of €5 billion, €10 billion and €15 billion in relation to staffing. That very reasonable request was bounced back with the very insulting comment:
“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”.
If the Minister is expecting us to believe him, when such a simple request on a staffing issue is not taken seriously, then we do have some points to make.
Mr Gauke
I will return to that point. My remarks, when the hon. Lady intervened, were in respect of new clause 3 and the European Scrutiny Committee. I have been very clear that it would be a curious thing to do to place this in legislation and for the Executive to take that role upon themselves. I very much echo the remarks made on that by my hon. Friend the Member for Stone.
Mr Gauke
In the case of new clause 2, which relates to how we deal with the way in which the Council of Ministers works, we are making progress and taking action, which includes cutting the budget. In the case of new clause 1, I do not need to undertake to write a letter calling for the Commission to do something that it is already doing. As for new clause 3. I have already made it clear that I do not think it would be appropriate for us to impose on members of the European Scrutiny Committee something that is a matter for them.
Barbara Keeley
I am slightly surprised that the Minister is unable to take on board what was actually a very sensible suggestion. He says that overall budget restraint is sufficient, and that there is no need for a focus on “waste and inefficiency”. As I mentioned earlier, back in 2012, the right hon. Member for Tunbridge Wells tried to introduce measures to reduce the staffing budget and asked for modelling, but that request was rejected. Commission representatives should not feel that they can bounce back to UK Ministers simple requests that really would help decision making.
Time and again, Members on both sides of the House raise issues relating to the Commission’s staffing costs. If that is the response that the Minister has been receiving—he is not admitting it today, but the right hon. Member for Tunbridge Wells mentioned it during another debate—we really must press the matter. It is not good enough simply to accept that everything is fine and we do not have a problem. We must push the case for enhanced scrutiny.
Mr Gauke
We care a great deal about eliminating waste and inefficiency in the EU budget. The question is how we should do that. Let me say first that, if we can reduce the MFF, that will place a much greater onus on the Commission to eliminate wasteful expenditure.
The hon. Lady made a perfectly fair point about what happened back in 2012. However, the Prime Minister’s negotiation triumph in 2013 has reduced the MFF, and we are now seeing signs—which we were not seeing three years ago—that the Commission is focusing much more on the issue. Vice-President Georgieva described the 2015 budget, which was agreed last December, as
“a budget of responsibility… a tight budget that reflects the tight fiscal conditions in our Member States.”
She said that it was
“a very focused budget, focused on the priorities that we have established in the new Commission.”
She added:
“It is directed towards investments in competitiveness, for instance supporting the innovative nature of our businesses. It is also a budget where tight controls on spending will allow us to achieve the best possible results.”
Vice-President Georgieva’s “budget for results” initiative, which focuses on better rather than more spending, has come about as a direct result of the imposition of restraint at the top. The United Kingdom is engaging constructively with the initiative, and is working actively with the Commission to ensure that momentum is maintained through regular meetings at political and technical levels. We are working with our allies to increase support for the initiative and to ensure that all member states are represented in discussions. We look forward to the first meeting of the inter-institutional working group in mid-July and to contributing to the “budget for results” conference in September.
Because of what we have achieved in reducing the budget, we are seeing a culture change, but we need to ensure that the momentum is maintained. If the Labour party supports that, I am delighted, but we must remember that it was Labour that surrendered part of our rebate and failed to impose the discipline that we needed.
Barbara Keeley
Again, I am surprised by the Minister’s response. Let me remind him of a point that I made on Second Reading. When Labour Members voted with rebels in the Conservative party, they strengthened the Prime Minister’s hand before he went into negotiations by insisting that the MFF be cut. The Minister really ought to acknowledge that. Surely it helps if, on every occasion, Members in all parts of the House can be strong in saying that we want enhanced scrutiny, and that is what we are trying to do through our new clauses today.
Mr Gauke
The hon. Lady has asked a good question. In the context of the review that the Commission is undertaking and the focus on a budget for results, transparency is certainly important. The Government’s record is clear: we want more transparency in relation to all expenditure, whether at UK or EU level, and I think that more can be done in that regard.
The hon. Member for Worsley made an important point about administrative expenditure. As part of the MFF deal, EU staff salaries were frozen in 2013-14, and EU institutions committed themselves to a 5% headcount reduction by 2017 and an increase in statutory pension age to 66 for officials who started work in or after 2014. I would be the first to accept that those reforms do not go far enough, but, working with like-minded member states, the Government will continue to press the EU institutions to show maximum restraint when it comes to administrative expenditure.
Barbara Keeley
Are this Minister and other Ministers having more success than their right hon. Friend the Member for Tunbridge Wells had back in 2012, when the European Commission dismissed his very reasonable request for some modelling on staffing costs? Are the Commissioners being any more helpful nowadays?
Mr Gauke
Some progress has been made since then. The Commission has improved its transparency record, partly thanks to the Government’s ongoing work. In particular, it released a payments plan containing much more detail on payment forecasts. I accept that we can go further, and that UK citizens expect more, but requiring the Government to write a letter inviting officials to attend Select Committee meetings will not really deliver that. What is required is constant vigilance and discipline. We have shown that, and it is delivering results.
Mr Gauke
The point about our position applies across the piece. To be fair to my right hon. Friend, certain eventualities that he predicted many years ago have come to pass. Because of the current situation in the eurozone, substantial reform could well be needed so that the members of the single currency are able to co-ordinate fiscal policy to a greater extent, with greater fiscal transfers and so on. That raises issues for the eurozone members which do not apply to other members of the European Union that have access to the single market but would not wish to partake in any such arrangement. We would need to ensure that if that is the direction the eurozone goes in, the position of the euro-outs is protected. Ensuring that access to the single market remains in place for all 28 member states is an important part of that, which is why I mentioned it. We need to ensure that our position is protected. That is the point I wish to make, and I fully understand the points that my right hon. Friend is making.
Finally, amendment 1 has been proposed in order that the conditions set out in new clauses 1, 2 and 3 are consistent with the terms of commencement in the Bill. I have explained to the Committee why we will not be supporting the new clauses, and we thus reject the amendment. While I have the opportunity to do so, I wish to identify a typographical error in the explanatory notes. The second line of paragraph 6 refers to a VAT-based rate of call of 15% for Germany, the Netherlands and Sweden, whereas it should have read 0.15%. I draw the Committee’s attention to that in case it caused consternation among right hon. and hon. Members.
In conclusion, let me assure the hon. Member for Worsley that, having made important progress in 2013, this Government are focused on ensuring maximum restraint, budgetary control, value for money and transparency in EU spending. I therefore welcome the spirit of her proposals, but requiring the Government to request that the Commission or the Council of Ministers review these issues adds little to the real work that has been done and continues to be done to improve the working of the EU budget. That work began with the Prime Minister’s historic deal, which cut the budget in real terms and protected the current system of financing—we should not forget that that is what this Bill is about. That work continues through the budget for results, through the Government’s continued engagement on the annual budget and through the discharge of the budget, and it will continue during the mid-term review of the MFF.
With those few, brief introductory remarks, I urge the hon. Lady not to press her proposals to a Division and I urge hon. Members to support the clauses set out in the Bill.
Barbara Keeley
Before we go any further, may I point out that my constituency is now called Worsley and Eccles South? The people of Eccles would rightly be very upset if we left them out of the equation; Eccles is a very important town in my constituency.
I rise to speak to the new clauses standing in my name and those of my hon. Friends. We are dealing with a slight complexity, in that the Bill is simple but drafted in such a way as to make it complex to amend. Amendment 1 is therefore a technical paving amendment which can bring in the new clauses, so it is that amendment that we will push to a vote, if necessary.
The Bill relates to agreement of the own resources decision that will be incorporated into UK law, based on the agreement reached at the February 2013 European Council. The Minister covered that at great length over the past hour and 20 or so minutes. Decisions on UK contributions reaching €14 billion are brought into sharper focus in a week when Ministers are discussing cuts to tax credits for the low-paid and have not been prepared to rule out cuts to financial support for disabled people. We find ourselves in a serious and austere financial context, so we must ensure that we look at every aspect of value for money, budgetary control and the reform of priorities within the EU budget.
When we debated the MFF in this House in October 2012, the Government’s motion talked about agreeing that we must see
“significant improvements in the financial management of EU resources by the Commission and by Member States and significant improvements in the value for money of spend”.—[Official Report, 31 October 2012; Vol. 552, c. 295.]
The last debate contained many examples, some of which I shall refer to, showing that we are not there yet. I am sure the Minister would agree, so what we are simply trying to do with the new clauses is find ways in which we can enhance value for money assessments, budgetary control and the reform of priorities. That is very important to many of the Members in the Committee today and to Members throughout the House.
The proposals standing in my name and those of my hon. Friends will assist greatly in ensuring that reports are made to this House on value for money and budgetary control, and on budget priorities and waste and inefficiency within the EU budget. Examples have been given in interventions that give us an understanding of the extent of concerns about this out in the country—which we explored on Second Reading—and those can only increase.
Tom Tugendhat
Would the hon. Lady let me know which of her hon. Friends are so supportive of her? There appears to be somewhat of a dearth of support.
Kelvin Hopkins
I rise to assure my hon. Friend that I am supporting her very strongly today.
Barbara Keeley
I think the hon. Gentleman will see when we come to the vote that we do have support.
Our new clause 3 would also improve accountability and transparency by inviting EU budget representatives to appear before the European Scrutiny Committees in this House and the other place each year before the EU budgets are negotiated. I appreciate the points made by Conservative Members that of course there should be no interference with the work of the European Scrutiny Committee in this House, but what we have tried to do in these new clauses is send the strongest statement we can send and give the strongest possible support to all those in this House who want to see these important aspects of value for money and budgetary control put in place.
Sir William Cash
I am sure the hon. Lady would appreciate the fact that the European Scrutiny Committee functions by virtue of the Standing Orders of the House of Commons. Leaving aside the merits of this proposal, if there were to be a stream of requirements imposed by Parliament on the manner in which the European Scrutiny Committee, an all-party Committee containing many Labour Members, were to conduct its business, the life of the Committee would be made pretty intolerable and its purpose would probably be undermined.
Barbara Keeley
I very much take that point on board.
New clause 1 requests a review by the European Commission of the basis of appropriations for the European Union budget and a study of whether alternative arrangements might offer improved value and enhanced budgetary control. On Second Reading, I highlighted a concern about the growing gap between the ceiling on spending commitments and the ceiling on payments. That gap, as agreed in the settlement of February 2013, is between €960 billion on commitments and €908 billion on payments. As I pointed out in the earlier debate, that gap has crept up from an average of 2.6% to the current 5.4%, and it is projected to rise to 5.7% in the period from 2014 to 2020. We must now seriously question whether that gap is manageable.
The Commission describes the system as follows:
“Commitments are tomorrow’s payments, and payments are yesterday’s commitments. Commitments are planned future payments whereas payments are legal obligations from the past…if every year the increase in commitments is much higher than that in payments you end up promising many partners to pay their future bills but find yourself unable to pay those bills when they arrive years later.
This is what has been happening over the last years: as many commitments were made years ago for projects that are being completed now”.
That is a key issue with the drive to smaller EU budgets, yet, as the Commission says,
“many bills related to projects remain unpaid and have to be rolled over to the following year. This leaves no choice to the Commission but to call for increases in payments.”
John Redwood
I entirely agree with the hon. Lady about the need to get better value for money in a smaller budget and to bring down the commitments. Does she have some individual proposals on things that could be taken out of the EU budget for which the Government should argue?
Barbara Keeley
I think that we could get to that if we had the information in the review that I am calling for, but what I want first is an examination of the system. This system is a recipe to drive up budgets rather than a way to control them.
Commitments are being made at a level of up to €14 billion a year more than payments. We have had years when the commitments have been €14 billion more, and that means bills being rolled forward, or staying unpaid, which is unacceptable. It is not a sensible system, and I think that the Minister actually acknowledged that. If it is not a sensible system, we should not be going along with it.
Kelvin Hopkins
My hon. Friend is making a fair point. It has been suggested that, in real terms, we should be paying 7% less into the European Union budget by—I think—2020. Given what she has just said, is it not likely that that will not turn out to be true, and we will not see a reduction of that kind?
Barbara Keeley
Indeed, that is a very real fear. If we look down the list of commitments and compare it with the payments made, we will see the level of commitments that are still to roll forward, which is a very frightening prospect. I go back to the point that I have just made. This is a system designed to drive up budgets. We support what has taken place and recognise that the House voted for it back in 2012, but unless this system changes we will be in a situation in which commitments are being made in the period up to 2020 of €960 billion, which is €52 billion more. It is a serious matter. Clearly, it is serious if the Commission is taking on budgets and then not paying bills, but it is the upward pressure on the budget process that is the great concern.
In our last debate on this Bill, the hon. Members for Corby (Tom Pursglove), for North East Somerset (Mr Rees-Mogg), and for Daventry (Chris Heaton-Harris) and my hon. Friend the Member for Luton North (Kelvin Hopkins) referred to a range of concerns that their constituents had about EU finance, how the EU budget is spent and the need for control of the budget. That is a point to which we will keep returning.
In the debate of 15 January 2008 on the Committee stage of the European Communities (Finance) Bill—I have already mentioned this—the Financial Secretary, then shadow Treasury Minister, and his shadow Treasury colleagues called for a report on “all aspects of EU spending”. Clearly, both the Opposition then and the current Opposition have had concerns about this. The Minister and his colleagues called for that report in 2008. I hope that we still have time in the rest of this debate for him to repent his view that we do not need further reviews.
As I have mentioned, there were complications in the wording of the amendment in 2008. I have read through the debate. The difficulty that the hon. Gentleman and his hon. Friends on the shadow Treasury team at that time ran into was that the amendment called for Treasury certification that it
“considers the outcome of the review is satisfactory to the interests of the United Kingdom”.
That seemed to be the sticking point. We have avoided such complications in this Bill by tabling simpler amendments that ask for an analysis of the basis used for appropriations and the study of alternative arrangements.
The Minister has said that such a review is ongoing. Will he tell me at this point when we will see that review?
Barbara Keeley
Will he clarify at which point in 2016? [Interruption.] No, it is just some time in 2016.
Barbara Keeley
The Minister can hear the comments being made by Members from sedentary positions. Clearly, we are working through a crucial time in the run-up to the referendum, and the budgetary information, with all the decisions that have to be made, will be crucial for the people out there.
In our amendments, we have expressed the wish to have these reviews and the reports. We want to send out the message that this House is serious about scrutinising the EU budget.
At the end of our debate on Second Reading, the Economic Secretary talked about the need for scrutiny on the payment gap. She told us that the European Commission has committed to publish more frequently its analysis on payment forecasts. I join the hon. Lady in welcoming an enhanced level of information on the EU budget, but believe that much more needs to be done on that. Does the Minister agree now—after both of us have spoken on the matter—that it is time that the EU moved away from a system in which it can make commitments of billions of euros more than it can pay, creating pressure on member states to ever-increasing budgets?
New clause 2 calls for a reform of the priorities in the EU budget, and specifically requests a review by the Council of Ministers of budget priorities and waste and inefficiency in the EU budget. The Minister has mentioned reviews that are already taking place, but I do not think that he mentioned a review of priorities of the kind that our new clause invites.
On Second Reading, I raised the need for further reform of budget priorities. Labour believes that expenditure on growth and jobs should continue to be prioritised by cutting back even further on agriculture spending.
The Financial Secretary to the Treasury told us that overall spending on the common agricultural policy will fall by 13%, compared with the last financial period, and that spending on research and development will increase by 4%. As welcome as that fall in agriculture spending is, we believe that the level of spending is still too high compared with spending to support growth and jobs. The Minister has responded to points made by his own side today, but he has not really got to the nub of the point.
As I said on Second Reading, agriculture accounts for only 1.6% of the European Union’s total output. If that is the case—I think that we will keep returning to this point—is it still appropriate that it accounts for 30% to 40% of the budget?
Alex Salmond
Is the hon. Lady saying that, in the opinion of the Labour party, agricultural support and spending are too low in Wales?
Barbara Keeley
I am not making that point in particular. What we are asking for in this clause is a review of budget priorities. We can see from the percentages that competitiveness for jobs and growth is the most important. I am not making specific points about specific countries. Under the new method of agricultural spending, I think that there is a great deal of flexibility for allocating the funding between countries.
Kelvin Hopkins
My hon. Friend made a very strong point about the CAP. If there were no CAP, would it not be sensible for us to subsidise sections of our own agriculture according to what we think is right rather than what the European Union thinks is right?
Barbara Keeley
Indeed we could. Let me go on and make a few more points about the proportion that is allocated to that very important priority of competitiveness for jobs and growth. In 2014, only around €15 billion will be spent by the EU on that budget priority compared with over €41 billion for market-related spending and direct payments for agriculture. There is no sense in a system that takes that vital priority—vital for every part of the EU—of competitiveness for jobs and growth and spends so little on it. Out of the €6.3 billion of European Union funding allocated to the UK in 2013, only 23% was spending on jobs and growth compared with 63% on agriculture. It is the balance that we are calling into account.
As my hon. Friend the Member for Luton North said on Second Reading, although the proportion of the budget for agriculture has been falling, there has been a fairly significant increase in money terms over the past eight years. As long as this balance seems wrong to people, it will be very hard for many of us to explain on the doorstep why we are spending only 23% of European Union funding in the UK on jobs and growth but 63% on agriculture. Some hon. Members might find such an explanation easier in their constituencies than others, but it is a difficult argument.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
I am very sympathetic to what the hon. Lady is saying. My one concern would be that if there are reforms, they do not disadvantage some farmers in North East Somerset and other rural constituencies to favour spending on the continent. Reform is quite right, but it needs to be fair for the United Kingdom’s farmers.
Barbara Keeley
The more reviews that we carry out of those priorities, the more that we develop our understanding of where the money is going. Earlier, the hon. Member for Boston and Skegness (Matt Warman) called for these matters to be discussed in a language that his constituents could understand, and I do not think that they are discussed in such a way. Having ploughed through very many debates and very many documents in relation to the Bill, I do not think that those matters are understood. The hon. Gentleman is quite right.
The Economic Secretary to the Treasury said she accepted that expenditure on the CAP is
“still too high both in absolute terms and as a proportion of the overall budget.”—[Official Report, 11 June 2015; Vol. 596, c. 1426.]
If that is what the Treasury team currently feel—that it is still too high, both in absolute terms and as a proportion of the overall budget—what are we doing to understand that better, to review it and to change it?
It is my assertion that previous reviews have not led to the level of reform that we want to achieve. It was our purpose in tabling new clause 2 to keep focus on that vital issue. When most member states are finding it necessary to make very difficult decisions—clearly, we are in that position ourselves—about their own budgets and spending, the European Union must ensure that expenditure is efficient and focused on addressing the major concerns that member states face. As my hon. Friend the Member for Nottingham East (Chris Leslie) said in the October 2012 debate:
“The next seven years of the EU budget should prioritise jobs, growth, infrastructure and practical programmes that rejuvenate fragile economies.”
As I mentioned on Second Reading, this is much needed when we still have 735,000 16 to 24-year-olds in the UK looking for work. That should be our focus—those young people.
We need a better balance of funding and we need the European Union to provide a better framework and strategy to achieve growth and jobs. Looking deeper into the detail, and the spending commitment to the EU’s smart and inclusive growth priority, only a quarter of that is spent on competitiveness for jobs and growth, and three quarters on the EU’s cohesion policies, including structural funds. It probably is not appropriate today to open up further debate about the use of structural funds. That is often discussed when we are discussing EU finance, but as my hon. Friend also said:
“Savings can be made on aspects of EU structural funds that…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.”—[Official Report, 31 October 2012; Vol. 552, c. 304.]
The Opposition say strongly that the proportion of the EU’s smart and inclusive growth expenditure that goes towards securing competitiveness for jobs and growth is too small. That important area of spending accounts for around a quarter of the EU budget in 2014, but that rises to only 27% across the whole six-year period.
Sir William Cash
Does the hon. Lady appreciate that much of what she says in terms of generalities is understandable, and is reflected very much in European Commission documents, which I have been looking at for the last 30 years, one way and another, on the European Scrutiny Committee, but that the inherent problem is the fact that every time there is a need to argue for jobs and growth, the answer from the European Commission is to give more subsidies, more bail-outs, and more cohesion and structural funds, when actually what is needed is deregulation and to provide people with a means of increasing productivity and jobs and to deal with youth unemployment?
Barbara Keeley
I hesitate to say that I think we agree on this point, but I think we do. [Interruption.] All right, then: we enthusiastically agree on this point. It is very clear indeed that, particularly with youth unemployment, we have a serious problem. It is a problem throughout the EU. We must spend more on that and we must find a way of doing so. Although the Minister spoke at great length, he did not tell us at any point what the difference would be between the ongoing review in the EU and the existing commitments. We want to send a very strong message. Until the Bill is passed, it is our last chance for a considerable period to make these points strongly to the EU, and we believe that we should do so.
Jim Shannon (Strangford) (DUP)
One issue that concerns me in the area that I represent is the fishing industry. There is to be a review of the common fisheries policy. One thing that could come off the back of that is our young people getting jobs in the boats, because up until now they have not been encouraged to do so. We need not just a better common fisheries policy, but encouragement and incentives for our young people to take the jobs in the local fishing boats, and thereby create employment and prosperity for them as well. Does the hon. Lady agree?
Barbara Keeley
Indeed. We have focused a great deal on agricultural spending and the CAP, but I do not think any of us would say that there has been a fair deal for people in the fishing industry. Fisheries policy, in many places, has been a disaster and has caused great problems for our fishing industry. It is a shame and a pity if, as I think is the case, young people no longer believe that they can have a career in fisheries.
Alex Salmond
Given that many people who represent fishing constituencies would agree with the hon. Lady on that point, does she not find it passing strange that in all of the possible treaty amendments that have been listed as possibilities for the Prime Minister’s soon-to-be-considered renegotiation stance, not once have I heard from the Government Front Bench that a treaty renegotiation on the common fisheries policy is any part of the Conservative party’s priorities?
Barbara Keeley
That is strange, but I cannot answer for the Minister. He may want to intervene for himself now or at some later point.
I have emphasised jobs and growth, but this EU budget priority also includes policies and programmes to promote vital areas of research and innovation—infrastructure, education, training and enterprise development. My hon. Friend the Member for Sheffield Central (Paul Blomfield) has been a staunch advocate of the importance of EU funding for research and development in the UK. In 2012 he said:
“The more the EU invests in research and innovation, the more the UK benefits, because the quality, breadth and depth of UK research puts us in a position whereby we gain disproportionately from European research programmes.”—[Official Report, 31 October 2012; Vol. 552, c. 292.]
It is self-evident that competitiveness for jobs and growth should be more of a priority, but also that we would benefit more if the priorities were switched to increase funding for research and innovation.
Serious consideration of reform of the EU’s spending priorities is needed if we are to use the EU budget, as the Opposition believe we should, as a mechanism to promote future jobs and growth in the UK and other member states. We can only get that change of spending priorities if we keep a focus on the balance between competing priorities and continue to drive down wasteful and inefficient spending.
Much was said on Second Reading, as I am sure the Minister recalls, about what hon. Members consider to be wasteful and inefficient spending. Some Members might cover that again today, but we have already talked about staffing costs and administration costs, and the costs of the move between Brussels and Strasbourg. Other items of waste and inefficiency can also be drawn to the Minister’s attention.
We have already discussed new clause 3, and I do not need to keep on emphasising this, but in tabling it we did not in any way want to disturb the balance between the Government and the scrutiny Committees. I hope that hon. Members accept that. However, points have been raised in previous debates on why we need that relentless scrutiny. My hon. Friend the Member for Nottingham East said in the debate on the multi-annual financial framework that we need
“a relentless focus on the justification behind detailed expenditure.”—[Official Report, 31 October 2012; Vol. 552, c. 304.]
The Financial Secretary to the Treasury said on Second Reading:
“Many in Europe agree with us that the EU is too uncompetitive, too democratically unaccountable and too inflexible to the concerns of citizens in its member states.”—[Official Report, 11 June 2015; Vol. 596, c. 1389.]
That is a very poor situation that we find ourselves in.
Sir William Cash
The hon. Lady referred to the need for relentless scrutiny. I have a thought in my mind that maybe some people think that the European Scrutiny Committee, at least over the last five years, has indeed been relentless in its scrutiny, and that goes for all members of the Committee, which has produced many unanimous reports. Is she effectively prepared not to press her amendment because of the problem I gave about the constant stream of legislative requirements that might interfere with our status as a European Committee?
Barbara Keeley
Indeed, we could do that. We would definitely want to press the other new clauses, but there was no intention to upset that balance. It has been suggested that the Minister could solve these matters by giving some kind of undertaking on the matters raised in our new clauses. We do not resile from the position that we want to send out the strongest possible message from this House that we are serious about scrutiny. The European Scrutiny Committee is of course relentless in its focus on those matters, and so too must the House be relentless. Doubtless we will have many more reports and reviews.
When in opposition, the Minister was part of the team that tabled an amendment to get a report, as I mentioned earlier. It was not agreed to at the time, but the Commission review went ahead anyway. The results of that report, which was published in 2010, were interesting. Its main finding—it was a very substantial finding—was that the current rules for the EU budget make it slow to react to unforeseen events, while too many complexities hinder its efficiency and transparency.
This is a week of tumultuous events for the European Union. The situation we find ourselves in with the EU budget, with its complexity, its slowness to react, the difficulty in balancing priorities and the fact that it does not represent the priorities that we think are important, means that it is clear to all—there is often broad agreement on this in the House, and I am sure that there will be today—that it is past the time when it needs to change.
Our remaining amendments would assist in ensuring that reports are made to the House on value for money, budgetary control and, importantly, budget priorities and waste and inefficiency. I commend them to the Committee.
Sir William Cash
I have already said much of what I need to say on new clause 3, which is my main concern today, so I will make only a few points. Basically, new clause 3 is inappropriate. The European Scrutiny Committee does its job relentlessly, as the shadow Minister has just indicated, so there is no need for the new clause. We can invite officials to it if we wish to, and we do on occasion, but we are perpetually scrutinising the budget and recommending matters for consideration on the Floor of the House.
Imposing on the European Scrutiny Committee legislative functions that would be monitored by other Government Departments could cause enormous difficulty by interfering with its Standing Orders functions. Under the Standing Orders, the Committee has to form a judgment on what is of political and legal importance. We can invite European Commission budget representatives to see us, and indeed we can also recommend to the Treasury Committee, for example, that it might wish to do the same, so we already have various means at our disposal.
It is not necessary for me to repeat the points that I have already made in interventions. I am grateful to the shadow Minister for agreeing not to press new clause 3 and putting that on the record, so that in future nobody else is tempted to impose on the European Scrutiny Committee, or indeed on any Select Committee, legislative requirements that might in one way or another interfere with their discretionary judgments under the Standing Orders.
Barbara Keeley
I hope that the hon. Gentleman will accept my assurance that we have no intention of doing that, but I also hope that he will agree that it is important to send out the strongest possible message that we are focusing on these matters relentlessly throughout the House, and that the European Scrutiny Committee will continue its excellent work.
Sir William Cash
I am extremely grateful to the hon. Lady. I hope that she will not mind my mentioning the fact that she is sitting in glorious isolation on the Opposition Front Bench, and with nobody behind her, other than my friend the hon. Member for Luton North (Kelvin Hopkins), who is not known to be enthusiastic about all matters European. Perhaps the relentless scrutiny to which she refers could be improved by having a few more Labour Members here to support her.
Mr Gauke
We have had a wide-ranging debate over the past two and a half hours. The hon. Member for Glenrothes (Peter Grant) was not far off the substance of the matter before us: the disagreement is over whether there should be placed in statute a requirement to write a letter.
I recognise the spirit of the proposed changes before us, and the need for us to improve the value of expenditure in the European Union, to cut down on waste and to increase transparency. We strongly support and have advocated those points.
I have to say that writing to the Commission, asking it to review the issues, will not particularly achieve the objectives we have heard set out, but the Government have taken action and continue to do so to improve EU spending. That began with the Prime Minister’s historic deal, cutting the budget in real terms. It has forced the Commission to prioritise, which we very much welcome, and it has led to the Commission’s budget for results initiative. The UK is playing an active role in that process, and we continue to push the Commission to bear down on waste in its responses to the EU budget discharge process. The Government are contributing to the simplification proposals from the Commission, and the UK will continue to fight for restraint in the annual budget.
Those steps have led to concrete results: the Commission has become more transparent and has shifted more funding into pro-growth spending. We certainly make no apologies for that—although there appears to be some resistance to it in some parts of the House—and the UK’s contributions will be lower for every year in this seven-year deal period than in the final year of the last MFF deal. That is a saving of almost £8 billion over the forecast period compared with 2013-14.
Barbara Keeley
If the Minister is resisting the amendments, and it sounds as though he is, will he tell the Committee whether he is happy with the balance of priorities in the spending on competitiveness for jobs and growth, which was a key point that I spent time discussing? He seems to be resisting any attempt to put forward a review or report that would make it easier for the House to push for changes, so is he happy with the current balance?
Mr Gauke
In the 2013 negotiations, we achieved a shift towards a greater proportion of expenditure being on pro-growth measures, such as research and development, and away from other areas of expenditure that contribute less to growth. That includes the common agricultural policy. The hon. Lady says that it is a small amount. Actually, it was not; there was significant progress in terms of a reduction in the common agricultural policy, with more spending on those areas where we think there could be greater added value. That is the right direction. I again have to draw the contrast with the surrender of £2 billion a year in respect of our rebate for common agricultural policy reform that we did not see—I am afraid that that is the record of the last Labour Government with the 2005 deal. I therefore believe that we are moving in the right direction.
If the hon. Lady is asking, “Would we like to go further?”, then, yes, I very much support that view. We want to go further and see a greater emphasis on expenditure that provides better value for money for UK and EU taxpayers. That is very much what we want, but I question the idea that the letter she is calling for will make any difference, particularly when we are seeing progress with the Commission’s budget for results initiative. The working group will meet for the first time in July and there will be a major conference in September 2015. We want to continue that approach during the mid-term review, which, as I said, will occur in 2016.
Barbara Keeley
The Minister was unable to give a date. Mid-term reviews are one thing, but we are moving towards a referendum, as we all know. We are all going to have to build this case for our constituents and for the campaign out there, and we need the information sooner. The slow trundling-on of the EU Commission will not suit our need for that information in this country, in this year and the next. I invite the Minister to come to my constituency and try to explain that this is a really good deal—the split between competitiveness and growth, and the amount that is spent on research and development—when we really should be pushing for that for our economy. We need to explain that and we need the review to be done sooner. He cannot even say when it is going to be done in 2016—it may be too late.
Mr Gauke
The MFF will be in 2016, as I said. The reality is that trying to transfer expenditure in the way we certainly want to—and from what the hon. Lady is saying, she also wants to, although it does not seem to have support in all parts of the House—is a major task. We have made progress. If she is saying that the situation is frustrating and she would like to go faster, I am not disagreeing with her, but I am afraid that that is the way the European Union works. We have clearly made progress and I do not think it does her cause any good to downplay our progress.
Barbara Keeley
I am glad that new clauses 1 and 2 were discussed earlier. Given the result of the vote, I urge the Minister to consider the importance of keeping EU budget spending under review. As I said earlier, the system of commitments and payments is worrying. We want a system of budgetary control, not a system that drives up the pressure for increases through unpaid bills and commitments made in years past.
I also urge the Minister to continue to focus on the need for reform of EU budget priorities, which we spent some time discussing, and, in particular, on the need to increase funding for competitiveness, jobs and growth. It is important for Ministers to be able to reshape EU budget priorities, but, following our discussions, I am not sure that they have that ability.
The Minister resisted our amendments, and resisted our requests for him to make a sensible undertaking that would have removed the necessity for a vote. His position on our amendment and new clauses suggests that he is content with the reports and reviews that are trundling along in the EU, and it does not send the strong message that could be sent about the need for enhanced scrutiny and reformed priorities. That is a pity, and I hope that the Minister will continue to reflect on it.